How come they got it so wrong over Europe?

The Prime Minister yesterday firmly nailed reports that he was prepared to jettison the agreed Cabinet line on the European single currency.

Repeated reports in several newspapers suggested that he was about to rule Britain out of the euro for the five-year lifetime of another parliament, but then John Major said yesterday morning that such stories deserved the Booker Prize for fiction. In contrast, The Independent reported yesterday that Mr Major would not be able to change the policy.

That was underscored in two Commons answers to Tony Blair. The Prime Minister definitively restated government policy - and dashed the raised hopes of Tory Euro-sceptics.

The Labour leader asked whether government policy remained that, "at the next election you will not rule out the option of joining a single currency in the next parliament, remains unequivocally the position of the Government?"

To the general surprise of the House, Mr Major said: "That remains unequivocally the position of the Government."

Having given credit for the clarity of that reply, Mr Blair then asked Mr Major to endorse a statement made by Michael Heseltine, in a lunchtime radio interview, that there would be no change in that position up to, and through, the next election campaign. Mr Major said: "That is our position."

That left frontbenchers and backbench MPs throughout the House to chew over the many conspiracy theories that may or may not lie behind Monday's initial Daily Telegraph report so forthrightly repudiated by Mr Major - until the next time a Euro-sceptic newspaper repeats the same story. Whether the report was planted by Number 10, Conservative Central Office, a rogue Cabinet Minister - or, as one Tory source said only half in jest last night, Labour campaign manager Peter Mandelson, the result was to firm up the Government stance on sterling. Some Tory Euro-sceptics had hoped to unstitch the policy early next year, with a claim that the terms for the creation of the euro were being fudged.

That idea was killed by Mr Heseltine and Kenneth Clarke yesterday, with the Deputy Prime Minister and the Chancellor of the Exchequer both saying that the terms would not be known until the Amsterdam summit in June - after the next election. In an unusual Commons statement on Monday's meeting of finance ministers, in Brussels, Mr Clarke used the same formula that ministers have applied to Northern Ireland peace talks: "Nothing is agreed until everything is agreed." That meant that even when the whole euro package was settled, individual countries would have an overriding right the "revisit" the deal as a whole.

Mr Heseltine and Mr Clarke said the earliest that could happen would be June. Interviewed on BBC radio's World at One, Mr Heseltine also said that it would defy the "national self-interest" to close off the option of joining the euro.

The agreement between the two most senior members of Mr Major's government, and the rare clarity of Mr Major's Commons answers, fuelled Tory Euro- sceptic - and Labour - suspicion that Mr Major had been bullied into submission, on pain of joint resignation. It also left some Labour leadership sources claiming that Mr Blair was now more sceptical about the euro than the Tories.

Andrew Marr, page 17