Major faces pitfalls and 'summer of discontent'

John Major was yesterday contemplating a new year of potential pitfalls that could see the Government stumble from crisis to crisis at a time crucial to rebuilding shaken Tory morale.

But he stressed in an upbeat message to constituency chairmen that 1996 would see a revival of party fortunes as the economic recovery gathered pace and the elusive feel-good factor returned.

The Westminster rumour mill, however, was alive with speculation that disgruntled Tory left-wingers could follow MP Emma Nicholson and quit the party, while the biggest dangers facing the Prime Minister looked set to come from outside Parliament.

The report of the Scott inquiry into arms-to-Iraq allegations, that could condemn several senior ministers, is expected to be published in February. The political fall-out from what will almost certainly be a damning set of findings remains uncertain, but ministers fear it could severely shake public confidence in the Government.

Looming by-elections in the safe Labour seat of Hemsworth and the Tory marginal of Staffordshire South East are widely expected to result in high-profile reverses for the Tories, cutting the Government's technical majority to just one. With the support of Ulster Unionists and Tory rebel Sir Richard Body, the Government is in little danger of defeat in a vote of confidence, but will almost certainly face lesser parliamentary setbacks.

Around the same time, the possible departure from No 10 of press secretary Christopher Meyer could deprive the Prime Minister of a trusted adviser and competent news manager.

Festering wounds on Europe are likely to reopen in March as the Prime Minister prepares to join other EU heads of government for the opening of the Inter-Governmental Conference designed to build on the controversial Maastricht treaty.

And April brings the deadline for MPs to register their outside earnings with the new Parliamentary Commissioner for Standards, with some back- bench Tories threatening torefuse to obey the ruling.

By far the largest crisis could come with the council elections in May. If the party loses more than a few hundred of the 1,000-odd seats it will be defending, it will effectively cease to be a serious force in local government and hand a propaganda victory on a national scale to Labour. The knock-on effects of the May elections could rumble through a summer of discontent that would further undermine the Government.

The Prime Minister would then have two final chances to seize back the initiative - an almighty charge for victory kicked off at the party conference in October, followed by a populist, tax-cutting Budget in November.

But most Tory MPs admit privately that the game will be up for the Government if it reaches that stage without a noticeable turnaround in support in the polls.