Portillo rebuke fuels Cabinet war on Europe

The Cabinet truce over Europe was shattered yesterday as arch Eurosceptic Michael Portillo delivered an apparent rebuke to the Chancellor, Kenneth Clarke, over his remarks on a single currency.

As fury from Tory Eurosceptics rained down on Mr Clarke over his Wednesday night speech spotlighting the potential benefits of monetary union, Mr Portillo invoked John Major's insistence that a single currency was a constitutional, not just economic, issue.

And to add to Mr Major's troubles, a senior Brussels commissioner last night criticised "Mrs Thatcher's nonsense" over British sovereignty.

In direct contradiction of Mr Clarke, who had decried "ridiculous suggestions" about loss of sovereignty, Mr Portillo emphasised: "It is a constitutional issue. I think we all have our opinions about what might happen later, but giving voice to those personal opinions won't help." Broad backing for the Chancellor's position came, however, from the Labour leader, Tony Blair, who agreed that monetary union did not necessarily equal political union.

Mr Portillo's intervention undermined a vain attempt by Mr Major to keep the lid on Cabinet dissent by suggesting during a tour of Oxfordshire that the Chancellor had only repeated what he himself had said since 1990.

Lord Tebbit, another arch Euro-sceptic, warned on BBC Radio 4's Today programme: "It's very, very dangerous for a Prime Minister if his Chancellor goes off making speeches which are not in line with the policy the Prime Minister has enunciated." He claimed later that the party's "Euro-fanatics" were moving towards running a "stalking horse" challenger to Mr Major's leadership in the autumn.

Tory pro-Europeans, led by Sir Edward Heath, insisted it was Mr Portillo who was speaking beyond his brief. But James Cran, MP for Beverley and one of the 100-plus members who have signed an anti-single currency Commons motion, said: "We are prepared to rally round what the Prime Minister has said, and Michael Portillo is saying the same thing."

Mr Blair said that the gulf between the Chancellor and his critics, including those in the Cabinet, was "unbridgeable". As Mr Clarke agreed in television interviews that joining a single currency "of course" involved a political dimension, Mr Blair said he could envisage Britain joining if the economic conditions were right "and if the political task of persuasion and consent had been achieved".

But the Belgian commissioner responsible for competition policy, Karel Van Miert, attacked Britain's "bad example" to new member states by seeking "opt-outs" from key Euro policies, such as the single currency.

And Mr Van Miert told businessmen in Brussels that the EU's progress would be impeded if countries such as Britain continued to demand a right of veto.

He said: "Misgivings that the EU is all about destroying the sovereignty of the member states and steam-rollering the member states. . . is what I would call Mrs Thatcher's nonsense."

Referring to countries seeking EU membership, he said: "I have some fears that some might be tempted to follow the bad example of Britain and of some others who are likewise being tempted by opt-outs and who want to loosen rather than tighten and develop Europe."