Clarke's Euro armlock on Major

Kenneth Clarke yesterday put a political armlock on No 10, blocking any attempt by the Prime Minister to jettison the Tories' wait-and-see policy on the European single currency.

Repudiating repeated reports that John Major was tempted to rule out British participation in the first wave of the single currency for the lifetime of a new Parliament, the Chancellor of the Exchequer made it crystal clear that his position would become untenable if that happened.

"I don't believe that for one moment anything of that kind is being contemplated," he told BBC radio's Today programme. "It simply isn't going to happen. It would be senseless were it to happen."

Even the most diehard Conservative opponents of a single currency conceded last night that Mr Clarke's words closed off their escape route from a single currency. Mr Clarke would be unable to remain as Chancellor defending a "senseless" policy in an election campaign - and Mr Major would risk splitting his party wide open if he forced his Chancellor to resign.

That one word from the Chancellor, "senseless", has turned private threats into a public ultimatum. The Government's present policy on the single currency - that a decision will be taken when the precise terms of membership are known - has been designed to keep both sides of the Conservative Party together. The policy was reaffirmed by Mr Major during the Conservative conference in October, and Michael Heseltine, the Deputy Prime Minister, said only on Sunday that there would be no change in the standing policy agreement.

In spite of that, the Euro- sceptic Daily Telegraph yesterday carried a front-page report saying that Mr Major had the backing of 18 of 22 Cabinet members for an "historic policy shift in favour of fighting the election on a pledge to keep the pound".

A senior Conservative Central Office source told The Independent last night that he "did not recognise" the Telegraph story. That tends to confirm the Whitehall suspicion that Mr Major's political staff are sending out signals in an attempt to weaken Mr Clarke's will to resist.

If that is the case, the terms of his Radio 4 reply should be enough to convince No 10 that it has lost the unequal struggle.

"The Prime Minister and I were on the platform together at the party conference about six weeks ago uniting our party around a sensible policy . . . The idea that six weeks later we are all talking about changing it is quite preposterous in my view."

The Chancellor said in Brussels last night that he had won "copper- bottom guarantees" from fellow finance ministers that under the so-called stability pact no rules or fines would apply to countries who chose not to sign up for the first wave of monetary union. "I got wording which completely answered the groundless fears that have been expressed in the House of Commons," he said.

An ICM poll for the Guardian last night showed that Labour had increased its lead over the Tories to 19 percentage points, putting Labour on 50 per cent (up three points), and the Tories on 31 per cent (down three points).

Europhobia, page 13