By making his call, Mr Dorrell, a former "wet" on the left of the party, put down a clear marker for the leadership contest, which would occur in the autumn if the Tories lose. He has also made it likelier that they will fight that election on an anti-Brussels manifesto.
"The Cabinet has given up on the general election and are now fighting the leadership election," said Menzies Campbell, the Liberal Democrat spokesman. John Prescott, Labour's Deputy Leader, derided Mr Dorrell's remarks as a "crude effort to outflank Michael Howard in the fight for the Tory leadership".
But some Tories thought the Prime Minister himself was involved. Mr Dorrell's intervention was seen by John Redwood, another contender for the leadership, as an attempt by Mr Major to corner Kenneth Clarke, the Chancellor, into accepting a change of policy.
The Chancellor, who was savaged at a Cabinet meeting before Christmas, is now looking more isolated than ever in his rejection of a more Euro- sceptic stance at the election.
Whitehall sources yesterday said around half the Cabinet want a change of policy, and the rest are waiting for a lead from Mr Major. Mr Dorrell discussed his strategy with Mr Major and had the Prime Minister's tacit backing.
"All these things are cleared within Government before they are made. The key thing [Mr Dorrell is saying] is a shift in our position would help us to win the election. I think that is right," said Mr Redwood.
Mr Clarke has been resisting pressure for a change of policy on the "wait and see" approach to the single European currency. A commitment to use the Inter-Governmental Conference to return the EU to a free-trade common market would reunite the Euro-sceptic Tory MPs.
Mr Major, in his new year address, made it clear he intends to use the IGC as a general election campaign issue, and there will be pressure on Mr Clarke to allow it to be drafted into the Tory election manifesto. It could mean bringing together its proposals to the IGC for the piecemeal renegotiation of EU institutions in a comprehensive demand for change. That would imply ruling out a single currency for the foreseeable future.
Mr Dorrell said: "I am putting a marker down to ensure that the Conservatives win this general election because the general election, as much as anything else, is about the kind of attitude that the British government takes in the second half of this year in discussions within Europe about the future shape of Europe."
Mr Dorrell - once a staunch pro-European - refused to be drawn on whether renegotiation would lead to Britain eventually pulling out of Europe, if it failed to win acceptance from the other member states.
Not surprisingly, his remarks alarmed pro-European MPs. Sir Ray Whitney, knighted in the New Year's Honours list, said it was "dangerously near withdrawal". Quentin Davies said: "There's no question of turning the European Union back into some kind of free-trade area and any idea of that kind is quite unrealistic and indeed would be idiotic."
Guide to the Conservative
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