MPs sullen as Clarke buys time

Tory backbenchers were in sullen mood last night awaiting today's Budget package by the Chancellor after Kenneth Clarke bought them off with assurances that he will take no binding decisions on a single European currency before the Dublin summit in December.

Mr Clarke bought time, but the row with the Euro-sceptics was still simmering after his unprecedented statement to the House to prevent their anger on Europe overshadowing today's package of tax cuts and spending increases for health, schools and police which are intended to be the springboard for the Tory election campaign.

The Prime Minister who will chair a meeting of the Cabinet to hear the Budget this morning was not in the chamber to lend his support to Mr Clarke but the Tory back bench was in subdued mood, and the threatened mauling of the Chancellor never materialised. Mr Clarke gave a clear signal that he wanted to make the statement or face a debate last week, but was stopped from doing so by the Prime Minister.

Mr Major met the "men in grey suits" , the leaders of the 1922 Committee of Tory MPs before the Chancellor made his statement to the packed House. Sir Marcus Fox, chairman of the 1922 Committee, told the Prime Minister that there had been unrest among backbenchers at the refusal of the Government to concede a full debate on the European proposals for a stability pact, which they feared could lead to Britain being forced to accept economic discipline from Brussels even if it remained outside a single European currency.

Mr Major assured the 1922 Committee leaders their fears were ill-founded, and that Britain's opt-out from the single currency will not be compromised. One senior Tory said they had looked over the brink, and had pulled back. They backed off after assurances by the Chancellor that he will enter a parliamentary "scrutiny reserve" when he goes to the European finance ministers' meeting on Monday.

The backbenchers were also guaranteed there would be an extended Commons debate before the Dublin summit, although it is likely to be "on the adjournment", avoiding a damaging split on the vote. Labour leaders last night conceded that "Ken has got away with it", and there seems little likelihood of a confidence motion to bring the Government down before the New Year, although the Government's majority could be wiped out with a by-election in Labour-held Barnsley East.

The Chancellor's assurance to John Redwood, seen as a champion of the Euro-sceptics, was the turning point. Mr Clarke told Mr Redwood that he would seek to amend the documents at the Econfin meeting on Monday to underline Britain's parliamentary "scrutiny reserve". They will be checking to ensure the Chancellor fulfils his promises.

The Tory Euro-sceptics remained unnerved by the Chancellor's commitment to keep open the option of a single currency right through to the election. Although the body of the Tory MPs appears opposed to entering the single currency, at least in the first wave, Mr Clarke remains the obstacle to a more Euro-sceptic policy. He was supported on the front bench by his staunchest ally, Michael Heseltine, the deputy Prime Minister, making Mr Major's absence more obvious. Downing Street said it was because the meeting with the backbenchers ran past 3.30pm, when the Chancellor's statement began, but Sir Marcus was in the chamber.