Major winks at the Tory Euro-sceptics

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John Major sent a clear signal to the Tory Euro-sceptic rebels that it was "very unlikely" Britain would join a European single currency in the first wave, even though the Cabinet agreed to make no change in its policy on Europe before the election.

The face-saving compromise enabled the Prime Minister to harden the Government's Euro-sceptic rhetoric without risking the resignation of the Chancellor, Kenneth Clarke, who insisted after a Cabinet meeting lasting one and a half hours that Britain had not ruled out joining the single currency.

It means the Tories can go into the election with the "wait-and-see" policy unchanged, but with the clear impression that they would not go join the first wave. The Cabinet was clearly hoping it was enough to unite the party for the election campaign, but it appeared to have failed in that objective.

The Prime Minister and the Chancellor spent the day underlining the message that Britain was unlikely to join a single currency by the start date of 1 January 1999 in an effort to persuade Tory Euro-sceptic candidates to abandon their threat to issue their own election addresses ruling out their support for a single currency.

"If you're standing as a Conservative candidate you're standing in support of this policy and I very much hope that people not stand for election qualifying the policies of the party whose nomination they've sought," Mr Clarke said on BBC radio.

Michael Howard, the Home Secretary, and leading Euro-sceptics in the Cabinet were outflanked by Mr Clarke with the backing of Mr Major, Malcolm Rifkind, the Foreign Secretary, and Michael Heseltine, the Deputy Prime Minister. They accepted defeat after the Chancellor presented a paper saying Britain could not judge whether the terms for entry were being fudged by other countries until well after the election.

Announcing the policy in the Commons, Mr Major said: "On the basis of information currently available, it is very unlikely but not impossible that the single currency can proceed safely on 1 January 1999, but if it did proceed with unreliable convergence we would not of course be part of it."

Mr Major studiously avoided using Mr Clarke's words, that entry was not being ruled out, to imply that Britain could enter.

Other senior ministers when pressed to say it was not ruled out, repeated the Prime Minister's formula. That could prove difficult to sustain in the campaign.

Mr Heseltine warned Euro-sceptics earlier this week that he and Mr Major would be "hounded" during the election if they fought on different policies. But the message failed to persuade them to back down. "It is not a policy change. It is the same as before," said Iain Duncan-Smith, a leading Euro- sceptic. "It won't do. It just won't wash with the public," said a former minister.

Norman Lamont, the former Chancellor said: "I welcome anything that makes it less likely that we shall join the single currency. A journey of a thousand miles begins with a single step."

The former leadership challenger, John Redwood said the policy of "wait and see" had been reaffirmed by the Cabinet but he welcomed the signal that it was unlikely to see Britain entering the single currency by the start date in 1999. "I trust this means Britain will use its voice and vote to ensure that there is not a fudged currency for anybody."

A former minister said there was now "sullen acceptance" by the Euro- sceptics that they would fight on different agendas at the election, increasing the impression that some have their sights set on the leadership election, which would follow a Tory defeat.

Sources close to Mr Clarke said: "We have had a deepening rather than a change of policy. We have not ruled out our entry but we have said it is very unlikely we will be in the first wave. It is a compromise everyone can live with."