Portillo alone on his sceptical quest: As the Chancellor today steers the Tories on course for 'a strong EU', Donald Macintyre analyses the motives behind the Chief Secretary's less-than-enthusiastic speech

JOHN MAJOR yesterday warmly praised Michael Portillo's controversial speech reinforcing Thatcherite Tory views on the welfare state and Europe, calling it 'excellent and serious'.

By contrast, Kenneth Clarke - who will make a key pro-European speech, sharply different in tone, in Bonn today - said yesterday he had not yet read the speech by Mr Portillo, Chief Secretary to the Treasury. But when the Chancellor does read it - which he has promised to do - the chances are that he will find quite a lot to disagree with.

As always, with departmental speeches which have been cleared by Downing Street, there was no explicit challenge to government policy. Mr Portillo was careful to invoke some of John Major's remarks on Europe.

Government officials insisted yesterday that it was merely a restatement of agreed policy. But the language, tone and the issues he raised still make it a speech that few other ministers could have delivered.

None of the territory in the speech is unfamiliar. He has said before that Europe is over-taxed and over-regulated. He has warned of the dangers of protectionism. He has decried the way in which dependency on state benefits erodes self-sufficiency.

But particularly on Europe, Mr Portillo appeared to be subtly questioning conventional wisdom about the EU in a passage in which he cast doubt on one of the standard defences - even among his fellow Cabinet right-wingers - of EU institutions.

In a number of speeches during the European election campaign, not only Douglas Hurd, the Foreign Secretary, but also Michael Howard, the Home Secretary, pointed out that rules were vital to enforce the single market of which most Conservatives approve. If they did not exist, Cabinet ministers argued, the British would be able to do nothing about the French refusal to admit UK airlines to Orly airport, or, even more topically, German bans on British beef. Moreover, on issues like the environment, common regulations were essential to free trade.

But Mr Portillo appeared to open up a debate on even this issue, saying there had been 'two conflicting themes' in the construction of the single market. One was the 'liberal impulse towards creating a free market'. The other had been the urge to 'regulate in order to harmonise conditions in different member states'.

Mr Portillo added: 'Those pressing for harmonisation have argued that it is necessary in order to create equity and fairness. Perhaps. But it also reduces the opportunities for difference, and so, for competition.'

Mr Major had no alternative but to praise the speech yesterday, given that he was pressed on it by Labour. There is not, in fact, a great deal of love lost between Mr Major and his Chief Secretary. Mr Portillo is not thought to be at risk of dismissal. He will probably be moved to a spending department, possibly Transport or Agriculture, in the coming reshuffle.

While Mr Portillo is seeking to stamp himself as leader of the right, he is working largely alone - rather than in a cabal with fellow right-wingers like John Redwood, Secretary of State for Wales, Michael Howard, the Home Secretary, and even Peter Lilley, Secretary of State for Social Security. And his agenda is medium- rather than short-term. He certainly wants to be Prime Minister, when the moment comes, and to assume the leadership as the champion of the new right.

But that opportunity is even less likely to come this side of the election than it appeared as recently as last October. As one seasoned senior Tory put it yesterday, after a week in which Mr Major's veto on Europe has brought him warm praise from the Thatcherites: 'The current leader of the Tory right is in 10 Downing Street.'

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