Hague is Tory front-runner

Euro-sceptics will use battle to inflict revenge on Kenneth Clarke

William Hague was emerging last night as a front runner in the Conservative Party leadership election after John Major started a bitter battle among his shell-shocked colleagues by announcing he was standing down.

The race immediately threatened to become a damaging contest between the old left of the party and the new right, with leading Euro-sceptics using the battle to inflict revenge on Kenneth Clarke, the ex-Chancellor, who was the first to announce he would stand.

"To have that fat, reckless, ill-disciplined lump as the leader for the future is laughable. Forget it," said one leading Euro-sceptic, as an example of the bile being spilled as the depth of the Tory defeat sank in.

The Independent learned last night that Mr Major could now come out against a single European currency. "He will be free to speak his mind, and it's always been pretty obvious that he was against a single currency," said a close source.

"In the midst of this bloodbath, we will have to focus on the good things we did right, and the bad, and see what we can gain from it," said one of his supporters.

Mr Major stunned colleagues by announcing his decision to step down from the leadership before he had gone to the Palace to tender his resignation as Prime Minister. "When the curtain falls, it is time to get off the stage he said," adding it would be a brief interregnum before a new leader was chosen.

Senior colleagues had urged him to stay on to allow the party to lick its wounds, and rebuild morale with an assault on the Labour emergency Budget in July.

Within minutes of Mr Major announcing he was standing down, Mr Clarke threw his hat in the ring. "I certainly intend to be a candidate in the leadership election," he said.

Mr Clarke said Mr Major had "conducted himself with very great dignity and has come out of the campaign with great personal credit". But the refusal to stay on for a longer period after the worst defeat since 1832 may lead to recriminations if the party is rushed into a decision before the end of the summer.

Mr Major left behind a shattered party, still coming to terms with the extent of the177 losses, including Michael Portillo, who would have been one of the leading contenders for the leadership. The contest cannot be held until fresh elections for the officers of the 1922 Committee, who were decimated in the rout.

Alan Duncan, a leading light behind the election campaign at Conservative Central Office, was preparing to act as Mr Hague's campaign manager for the leadership after the 36-year-old former Secretary of State for Wales secured his seat at Richmond, Yorkshire.

Mr Hague will be promoted as a unity candidate, who could rebuild the right and left of the party. But the other runners were gearing up for the fight, including Michael Heseltine, Mr Clarke and Stephen Dorrell from the left, and limbering up on the right were John Redwood, expected to declare over the weekend, Michael Howard, and possibly Peter Lilley, the former Secretary of State for Social Security.

Mr Clarke insisted that the European issue should not be allowed to continue to cause the damaging splits in the party, which helped to bring its crashing defeat. He said it could be defused by offering a free vote on a single European currency.

But that was rejected by the Tory right, which has scores to settle over Europe. "I have a great regard for Kenneth Clarke but in respect of Europe he is wrong and out of tune with the overwhelming majority of the Parliamentary party," said John Townend, chairman of the right- wing 92 Group of Tory MPs.

Odds on Mr Heseltine were 7/4; Mr Hague was second favourite at 2/1, and Coral bookmakers made him 3/1; with Mr Howard third favourite at 9/2, ahead of Mr Redwood and Mr Dorrell, both on 6/1. Mr Clarke follows at 8/1 and Gillian Shephard at 14/1.