Tories adrift as Major rebuffs Clarke

So he could not answer. The Prime Minister's silence when asked about his Chancellor's belief that a single currency did not threaten the nation-state, was a moment of truth. It was devastating evidence of what is happening to the Cabinet.

Normally cautious souls have started to ask whether the Government might, after all, be about to collapse. Such talk is premature. Even Conservatives maddened by the intricacies of the European question are unlikely to vote for an election which would, just now, result in the massacre of Tory England.

But if the Conservative coalition is not ready for sudden death, it does seem to be moving angrily towards its end.

This morbid condition is not caused by lack of ideas, or lack of economic success, or the personality of ministers. It is caused by an irreconcilable dispute about the destiny of Britain.

Kenneth Clarke, in yesterday's Daily Telegraph, belligerently reasserted his right to speak out on the single currency: "That's my job. And it is what I am Chancellor of the Exchequer for.''

Quite right. But the Clarke world-view about sterling, sovereignty and British interests is now at odds with the Prime Minister, whose Europhilia has been shaken by his experience of the premiership, and the rising nationalism of the party itself.

What is John Major's view? Though he carefully declines to discuss it publicly, it is not difficult to discover, by talking to friends. He is, by instinct, firmly opposed to the single currency. Further, it is now inconceivable that he would take Britain into a single currency without a referendum.

Against that, he recognises that there may be circumstances in which a single currency might work and when it would be in Britain's interest to join.

He is not an ideologue or die-hard. But he is against it and is making his views ever-plainer. Clarke has honourably spoken out too. The Treasury believes that by by doing so, he may have damaged his own standing in the party, but that he has achieved something genuinely valuable: he has made it impossible for there to be a commitment against a single currency in the next Tory manifesto.

Behind these market-shaking events, there has been a radical shift in the dynamics of the top of government. The troika of Major, Hurd and Clarke, which provided a sort of collective leadership last year, has broken up. Major has made his decision. Douglas Hurd is on Clarke's side - he urged the Chancellor to stick to a toughly pro-European line in his recent speech, and counselled against diluting it. But Hurd may not be around much longer.

This doesn't necessarily add up to a final breakdown of policy or an imminent resignation. Curiously, perhaps, Major is now in a stronger personal position, having distanced himself from ministers who most irritate Eurosceptic power-brokers.

Clarke himself, perhaps the most courageous politician in the Government, has been damaged. In effect, Major has demoted him to the leader of a minority faction.

How he will react to this is anyone's guess: as yesterday's Question Time reminded us, there will be a lot of baiting to come. Discreet silence is not really a long-term option.

For the Government generally, it all means instability and the collapse of Cabinet self-confidence. This will be a death so lingering that it will come to seem like another kind of life. Miraculous recoveries are known to medicine. But depend upon it: a Tory government which cannot answer a straight question about the future of Britain's nationhood has lost its will and its point.