Tories adrift as Major rebuffs Clarke

PM fails to back Chancellor on EU

John Major yesterday conspicuously failed to proffer public support for his Chancellor's contention that monetary union would not threaten the "nation state", after formally warning the Cabinet not to diverge from agreed policy on Europe.

Kenneth Clarke last night gave ground in the prolonged Cabinet dispute over Europe when he approved the text of a letter from Mr Major to the Shadow chancellor, Gordon Brown, asserting that both Prime Minister and Chancellor accepted that a single currency would raise "economic and political and constitional issues".

The move came after Mr Major had successfully - at least in the short term - put his authority to the test by delivering a clear instruction to Cabinet ministers not to indulge in "speculative" comments on Europe that went beyond his own explicit statements of policy towards a single currency and the 1996 Inter-Governmental Conference on the EU.

Mr Major's call, which was followed by a brief but fiercely worded demand for a public show of unity from Richard Ryder, the Chief Whip, was reportedly heard without dissent. But the extent to which Mr Clarke had been brought within the terms of the edict was underlined was underlined by Commons exchanges two hours after the Cabinet.

Mr Major insisted ministers were "utterly united" on the decision to defer a decision on whether to join a single currency, and repeated there was no prospect of a single currency by 1997. This was followed by fuslome declarations from No 10 of the strength of Mr Major's confidence in Mr Clarke.

But Mr Major at least twice rejected an invitation from Tony Blair, the Labour leader, to back Mr Clarke's declaration yesterday that the idea that a single currency is "some threat to the nation state is wrong". Without explicitly disowning the declaration, he attacked instead the position of Labour on Europe.

Allies of Mr Clarke among senior Tory backbenchers strongly endorsed his argument, made in an interview with the Daily Telegraph, that as Chancellor he had a duty to inform Parliament and the public of the implications of a single currency.

Some argued that the Chancellor, in stark contrast to Euro-sceptic Cabinet members like Jonathan Aitken, had refrained over a period of several months from stating his personal views on a single currency. But allies of Mr Clarke also predicted he would exercise as much self-restraint as possible to comply with the new call for public unity.

Ministers and ex-ministers sympathetic to Mr Clarke suggested his pro- European stance over the last fortnight was prompted by disquiet in the Government at the persistence with which Eurosceptics tried to dominate the debate within the Tory party - and that it may even have helped to avert the danger of Mr Major's explicitly ruling out a single currency for good.

But right-wing ministers were equally admant that Mr Clarke's speech last Thursday would not now fall within the terms of Mr Major's remit to his colleagues.

It was argued with some satisfaction on the ministerial right wing that Mr Major's warning yesterday would help to stifle the public debate on the economic case for a single currency, which both Mr Clarke and Douglas Hurd, the Foreign Secretary, have called for.

Mr Major's unusual declaration to the Cabinet, which was said to have referred to "apparent or actual" divergences of view between ministers, reinforced what, it emerged had been a Downing Street missive to the private offices of Cabinet ministers earlier this month.

The letter from Alex Allen, Mr Major's principal private secretary, is understood to have reminded the Cabinet of the stipulation in Questions of Procedure for Ministers on collective responsibility and that the Prime Minister must be consulted before "any mention" is made of matters affecting the "conduct of the government as a whole . . . or of a constitutional character." The document also insists that the foreign secretary and chancellor or the chief secretary must be consulted on areas of their own interest.

Gordon Brown, the Shadow chancellor, seized on the Commons encounter over whether a single currency would threaten "the nation state". In a letter to Mr Major, he said: "I think you would agree that it is important that we now know what the Government's position is and why you have failed to endorse the Chancellor's views."