William Hague's sacking of Lord Cranborne backfired spectacularly. Undermined by both left and right of his party, can he survive?
It is the morning of 2 May, 2001. The Conservatives have been defeated in the general election again, but not quite as disastrously as last time - Tony Blair's decision to put his picture on the new euro banknote played badly at the polls. Labour's victory party is a small affair held at the recently founded Citizenship Institute rather than the lavish number at the People's Palace. The Tory leader bought some new suits in the run-up to polling day, but resisted the temptation to have a full makeover. As Ann Widdecombe told the Daily Mail, people will vote for her because of who she is not what she wears.

At the moment, this vision of the future is no more than the tea-room ramblings of disgruntled Tory backbenchers. But in the medium term is it so far from the truth? William Hague can be in no doubt this weekend that the game of Fantasy Leadership has begun. Tory peers may be furious about the sacking of Lord Cranborne, but Conservative MPs, too, are beginning to grumble about the way their party is being led. Most think there is no credible alternative to Mr Hague. Kenneth Clarke is too pro-European for his party, Francis Maude too much like an accountant. Ann Widdecombe is too spinsterly and Liam Fox used to go out with the Neighbours actress- turned-pop starlet Natalie Imbruglia.

The big beasts - Michael Portillo and Chris Patten - are fenced securely out of the jungle. But that does not mean the Tory leader is entirely safe. "The man's not stupid, but he's acted idiotically," one senior backbencher said. "The party clearly can't trust his judgement, and, at the end of the day, how long can we put up with that?"

Most Conservatives agree that last week was a "disaster" for William Hague and a "nightmare scenario" for their party. Mr Hague may have shown firm leadership by sacking Lord Cranborne on Wednesday, but later that night he agreed to the very concession on which he forced him out.

"What is perplexing is how Robert Cranborne can be sacked and then his deal adopted - that is very difficult to explain," said Nicholas Soames. Lord Strathclyde, the jovial new leader in the Lords and a staunch Cranborne ally, accepted the job only on condition that peers could vote for the compromise and that he could act independently in all future dealings with the Government.

As four Lords frontbenchers resigned, it became clear that the Tory leader had also alienated the one group of people with the power to really oppose the Government, turning the Conservative peers against him and into Mr Blair's arms.

Senior backbench MPs are now talking in terms of deadlines for Mr Hague to turn things around in the polls. Some say March, others June, the month of Euro elections. Significantly, there are serious rumblings of discontent among the executive of the 1922 Committee, the group of Tory grandees who run the party in the Commons.

They have the power to organise leadership elections, and they also have the influence to destabilise Mr Hague. And some backbenchers are already privately discussing putting forward a no-confidence motion against the leader if things do not improve. MPs can trigger a leadership election by getting together a list of 25 MPs who are unhappy with the current regime. Three weeks ago, right-wingers almost did so, calling off the move at the last minute. But they are still plotting such a move. The sacking of Lord Cranborne, a staunch Eurosceptic, has intensified the desire among some on the right to get rid of Mr Hague. "I could get you 30 names tomorrow," one MP said, "including lots of the '22 exec."

More worryingly for Mr Hague, discontent with the leader is for the first time an issue that unites both sides of the party. Left-wingers also believe that last week's events raise serious questions about his political wisdom.

David Curry, the former agriculture minister who is close to Kenneth Clarke, was openly critical and is privately discussing the practicalities of a leadership challenge. This weekend even some right-wingers are saying that maybe they will have to "hold their noses" and agree to the former Chancellor - a popular figure in the country - taking the helm if things do not improve.

There is growing concern on both sides of the party about the circle of advisers - young and exclusively male - around Mr Hague. Sebastian Coe, his judo partner, David Lidington, his parliamentary private secretary, George Osborne, his speech-writer and, to a lesser extent in recent months, Alan Duncan, his junior health spokesman, are known at Westminster as "the nursery". "People are incandescent about their incompetence," one MP said. "Somebody should have warned William that what he did would backfire."

THE OLD divisions over Europe, which everyone thought would bring Mr Hague down, aren't relevant to this crisis. Opposition to Mr Hague is coming from both left and right, and it's this that puts him in real danger. "He's altered the mechanism of how the party is looking at him," one left-winger said. "Previously it was a handful on the left who disagreed with him on Europe. Now he's opened up a whole new flank of the party that's critical. The old right, the new right, the moderates all see huge question marks over his judgement."

He has also made a formidable enemy in Lord Cranborne. The former Lords leader retains significant influence in both Houses - it was no surprise that John Major, who cut his teeth in the Whips' Office, chose him to run his leadership campaign. Lord Cranborne's family has been plotting since the time of Elizabeth I, and Margaret Thatcher fell out with him because she considered him a "double-crosser". But over the centuries the Cecils have been responsible for deals that have allowed the House of Lords to be reformed not abolished.

It was hardly surprising then that Lord Cranborne, approached through an intermediary by Lord Irvine, would take up the opportunity of doing a deal with Mr Blair. The Government's starting point was a proposal to allow some hereditaries to convert into life peers. This was rejected out of hand by Lord Cranborne, who argued that some kind of guarantee that Labour would go on to full-scale reform of the Lords after removing the hereditary peers was essential.

As it became increasingly clear last month that the Tory "football hooligans" would wreck all legislation if ministers went ahead without a deal, Lord Irvine, the Lord Chancellor, came up with the plan for allowing some of those with inherited titles to remain in the interim chamber as "hostages".

The crossbenchers had conceived a similar idea - and Lord Pearson of Rannoch, a Tory peer, had tabled a backbench bill independently to this effect, against the wishes of his leaders in the Lords who already knew that a deal was in the offing. Lord Irvine started by offering a small number of hereditary peerages, but as negotiations began in earnest when the Tory peers threatened to wreck the Government's Euro elections bill, he agreed to go up to almost 100.

TWO WEEKS ago, Lord Cranborne took the deal to a sub-group of the Shadow Cabinet. They rejected it. He was told to continue negotiating, but to sign up to nothing without Mr Hague's approval. By the time he rang the Tory leader on Wednesday morning to tell him the crossbenchers were planning to hold a press conference announcing their intentions it was a bit late for that. The Tory leader - who had been urged by his advisers for months to get rid of Lord Cranborne - decided to take the high-risk gamble of blowing the initiative apart in the glare of publicity at Prime Minister's Questions.

Lord Cranborne had agreed to the arrangement over a glass of scotch with Tony Blair in the Prime Minister's flat at No 10 on Thursday 10 days ago. A minute was taken as evidence that he had signed up, and the Tory peers would be on-side.

Extraordinarily, Lord Cranborne returned to Downing Street on Monday to discuss the "media strategy" for the announcement with Alastair Campbell, Mr Blair's press supremo. He should have guessed this could never be good for his party. It appeared the arch-plotter had been outwitted by an even cleverer spinner.

Mr Campbell had been worried that the deal could backfire for the Government, but in the end need not have bothered. The Tories more than did his work for him. As Mr Hague stormed from the Commons to the carefully timed meeting of Tory peers, attention was on splits in the Tory ranks rather than Labour's U-turn on hereditary Lords.

The battle for the future of the Lords was always going to be a fight between roundheads and cavaliers, modernisers versus traditionalists. Everyone thought Cool Britannia Labour would be the roundheads and the royalist Tories the cavaliers. Now it looks like both roundheads and cavaliers are Conservatives. And the war is, once again, about the future, not of the country, but of the Tory party.