Ancram to stand on Thatcherite agenda

Mr Ancram, the party's deputy leader, who is also the Earl of Ancram, has been in private talks with the Cornerstone group who have issued a hard-right manifesto calling for tax cuts, renegotiation of Britain's membership of the EU and more emphasis on the family.

In a statement clearly directed at David Davis, who regularly deployed Blairite buzzwords at the launch of his campaign, the group warned: "It is time Conservatives recognised hey are engaged in a struggle against liberal values and they will get nowhere by imitating Tony Blair and New Labour."

Mr Ancram said: "I am considering standing. One of the problems with the contest so far is that there are things we ought to be discussing that are not being raised, such as Europe. It's very frustrating. I am not going to take a decision until the end of the week when nominations have to be in but I haven't ruled anything out."

The Cornerstone group was launched as a luncheon club a year ago by key allies of the former leader Iain Duncan Smith, including John Hayes, Bill Cash and Chris Chope. The group has about 25 MPs and may possess enough influence to take their candidate through the early stages.

The group's manifesto proposes a flat tax of 22 per cent, with no tax paid on the first £10,000 of earnings; education vouchers with schools competing to attract pupils; privatisation of the NHS so hospitals are no longer owned and run by the state; withdrawal from the European Convention on Human Rights; and renegotiating membership of the EU.

Mr Ancram, the son of the Marquess of Lothian, owner of a stately home in Scotland, relinquished his title to remain an MP. He was a Northern Ireland minister who held secret talks with Sinn Fein leaders in the early stages of the peace process. He stood for the Tory leadership race in 2001 when it was won by Mr Duncan Smith.

And the Tory donor Lord Kalms has warned he would withdraw his backing for the party if Kenneth Clarke became leader. The donor, former party treasurer and president of the electrical retailer Dixons, said he believed most of the party was hostile to Europe.

The peer, a David Davis supporter, said if Mr Clarke won, he could not be an "active member, or indeed even a passive member" of the party. "Within my particular world, this is the majority view, that Kenneth Clarke is totally unacceptable as a leader of the Conservative Party. "We've been battling with his views since we started the No campaign 10 years ago," he said on BBC radio. "He is totally unacceptable as a candidate."

The Clarke team claimed the support of business leaders, Sir Christopher Gent, non-executive director of GlaxoSmithKline, and Sir Michael Bishop CBE, Chairman of BMI British Midland. Tory MP James Clappison also joined the Clarke camp but rival camps warned that the contest was "wide open".