Major delights Euro-rebels

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Signs of a thaw between John Major and his hard-line Euro-sceptics emerged yesterday after the Prime Minister's optimism over what the Government sees as a successful European summit in Majorca and the repositioning of EU policy by Malcolm Rifkind, the Foreign Secretary.

With Mr Major apparently satisfied that the momentum of the planned 1996 Inter-Governmental Conference towards further integration had been slowed at Majorca, Sir Teddy Taylor, one of the formerly "whipless" Euro-rebels, said he had been "delighted" by the Prime Minister's post summit remarks on monetary union.

Mr Major had said he would be "dumbfounded" if more than a handful of states were ready for a single currency by 1999.

Sir Teddy said that the Government's "new attitude provides the basis for party unity and helps to bring the Conservative Party into line with public opinion".

At the same time, however, he sounded a cautionary note by making it clear that the nine Euro-rebels, who have been meeting regularly since having the whip restored to them, were still pressing for legislation in this Parliament to allow a referendum on constitutional changes as a result of the IGC and for border controls to be legally enshrined by treaty.

But there was satisfaction across much of the Euro-sceptic right, both at Mr Rifkind's firm line on the need to pursue British interests - even if necessary at the expense of influence - in his Chatham House speech last week, and the confusion over EMU's future among the UK's partners. "We are all Euro-sceptics now." said one ex-Cabinet minister on the Tory right.

Kenneth Baker, former party chairman, congratulated Mr Major on "dominating" the EU summit and added: "Germany is edging away from EMU and this is very much the agenda that the Euro-sceptics in the conservative Party have been talking in the last two years. I think it's a very popular agenda."

But debate within the party over "Black Wednesday" threatens to reignite after the the revelation in a book by two of his closest former lieutenants that Mr Major made secret plans to devalue the pound within the ERM in 1991, but decided not to because of optimistic Treasury forecasts.

In their book, serialised in the Daily Express, Sarah Hogg, former head of his policy unit, and Jonathan Hill, his former political secretary, say Mr Major was frustrated by the 10.5 per cent interest rate forced on the UK by the ERM. But in the end he did not raise the idea with his Chancellor, Norman Lamont.

Market fears, page 8

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