With a spring in his Hush Puppies, Ken takes on the Right brigade

The former chancellor insists Baroness Thatcher's intervention has not damaged his campaign and may even have helped it

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Kenneth Clarke: the man and the message

Kenneth Clarke really ought to be in a bad mood. He has woken up to radio and newspaper reports that Baroness Thatcher believes he would be a "disaster" as Tory leader. He has been ridiculed for revealing he would abstain on a key European vote on the first day back at Parliament. And his beloved Nottingham Forest struggled to beat lowly Hartlepool in a Cup tie.

Yet as he chats during a brief break in his packed schedule of media appearances, speeches and member meetings, the Rt Hon Member for Rushcliffe is remarkably buoyant. While some in his team are worried his campaign has just gone up in smoke, Westminster's most famous soft-shoed shuffler has an undeniable spring in his step.

His good humour is clearly because of, rather than in spite of, The Mummy's Return (Mk II). The statesman in him would prefer to ignore the former Prime Minister's intervention, but the bruiser in him cannot resist exploiting it to the full. "It's certainly done no harm and it might be an advantage," Mr Clarke says, lighting up one of his trademark cigars with a boyish grin that belies his 61 years.

The former chancellor's analysis is simple and controversial: by backing Iain Duncan Smith, Lady Thatcher has proved just how much his rival has become a "prisoner" of the hard right. The former leader herself is now, he declares, on the "extreme" wing of the party.

"When you talk about Margaret today, I think she's become much more extreme and much more strident in her politics the longer she's been in retirement," he says.

"She's backing Iain Duncan Smith because she thinks he will move the party to a position where we could leave the European Union and never ever join the single currency under any circumstances. Everybody knows and the public now know that Iain Duncan Smith is the candidate of the hard right because Margaret Thatcher and Norman Tebbit chose him."

Combative and determined, this is the Ken Clarke his supporters have wanted to see after his fortnight away, a period when his opponent gained some valuable momentum in the race. Mr Clarke may look like the smiling Toby Jug of Middle England, ruddy faced and fond of his beer, but he has decided to show some of the steel that propelled him to high office.

Contrary to media caricature, Conservative Party members are not swivel-eyed ideologues and many are beginning to tire of Lady Thatcher's repeated interventions, he says. It is the older members, in particular, who are worried that she is deterring younger supporters.

"Margaret no longer has the appeal to people under the age of 50 today that she had when she was Prime Minister. I know the argument is, 'Well, that view may be shared by the members of the public, but not by the paid-up members of Conservative associations who are Margaret's last bastions of support'.

"I don't agree with that. I think very many members of Conservative associations hold Margaret in the highest regard, but do accept that her interventions are becoming ever less helpful to the Conservative cause."

The unknown quantity of an unprecedented one-member, one-vote ballot is what gives Mr Clarke and his supporters most cause for optimism.

"I don't think anybody has the slightest idea who is ahead in this campaign. Either one of us could be substantially ahead for all we know. It is the original great unknown among an electorate who can't be contacted and can't be polled," he says.

If Mr Clarke is scathing on Lady Thatcher, he is even more savage about Mr Duncan Smith, his "vague" policies and his refusal to take part in hustings debates for members. "I find it absolutely amazing that Iain has almost vanished from public view. He's just refusing all interviews and he won't debate with me. Is he going to take the same view towards Mr Blair? Is he going to behave in this way when he's leader?

"I would have thought that the selectorate, the membership of associations, want to see what Iain Duncan Smith is like under pressure when interviewed by the press, how he performs on radio and television. He appears to avoid that kind of public exposure like the plague at the moment."

But the most damaging charge he lays against his rival is that he will repeat William Hague's mistake of allowing Lady Thatcher to overshadow his leadership.

"I'm sure Iain has the sense to be thinking already about how he prevents himself from being the prisoner of Margaret Thatcher," he says.

"At the coming party conference, whoever is leader of the Conservative Party does not want to be put in a position of trotting in the corridors of Blackpool in the wake of Mrs Thatcher. My expectation is that she won't want to lead me round the corridors of Blackpool," he adds, chuckling at the thought. "But presumably she is expecting she will turn up in order to present Iain Duncan Smith to the assembled gathering."

Mr Clarke also spoke for the first time about reports that the Monday Club, a far-right group that proposed repatriation of immigrants, had backed his opponent.

"I wasn't remotely surprised to see the Monday Club backing Iain Duncan Smith. He puts up a spokesman, John Bercow, on air who was an activist in the Monday Club. They can't disown the Monday Club when the Monday Club has supplied enthusiasts on their behalf," he says.

Mr Clarke is particularly critical of one of Mr Duncan Smith's most cherished policies as shadow Defence Secretary, a firm line against "a Euro Army" set up by the EU.

"I'm in favour of a rapid reaction force so long as it is compatible with Nato and is conceived as a strengthening of the European contribution to Nato," he says. "[Mr Duncan Smith] insists on calling it a European Army, which it plainly is not. Again, he was responding to Margaret. It shows again that Iain is an acolyte of Margaret Thatcher and he is her chosen heir."

With Lady Thatcher back in the news, it seems appropriate to ask Mr Clarke about the event that led Eurosceptics to loathe him quite so much: his part in her downfall. He was the first member of the Cabinet to put it to her that she should stand down in the face of Michael Heseltine's leadership challenge. What exactly did he say to the Prime Minister way back in November 1990?

"We had a perfectly friendly conversation," he says. "I gave her my opinion that if she went on to the second ballot she would be defeated and the time had come to step down. I do remember that she said I was being defeatist. I said, 'I don't think I was being defeatist, Margaret, I think you have been defeated'.

"I seem to recall saying that to carry on to the second ballot would be something equivalent of the Charge of the Light Brigade."

According to Mr Clarke, a Duncan Smith leadership could lead to a similarly catastrophic outcome. The question now is whether the 300,000 members of the Tory party believe him.