Good on schools, but what else?

Some say Gillian Shephard could one day lead the Tory party. John Rentoul marks her progress

Gillian Shephard has come through a hard winter of education "cuts" with her position so strengthened that weekend newspapers reported she was prepared to stand for the Conservative leadership, should if John Major go. The story was an important indicator of the extent of turmoil at the highest levels of the party. There is now much corridor talk of a new leader being a prerequisite to the party regaining public confidence, and Mrs Shephard is emerging as a possible "Stop Portillo" candidate among the centre-left of the party, who recognise the drawbacks of Michael Heseltine (a fading but still divisive star) or Kenneth Clarke (still rudely offending potential supporters to left and right).

Mrs Shephard is no stranger to leadership speculation. She was an active member of the small circle of John Major supporters, including Norman Lamont and Graham Bright, who were keen to start his leadership campaign before Margaret Thatcher resigned. According to Bruce Anderson's account in his book John Major, she claims that "all activity ceased" when Mrs Thatcher insisted she would stand in the second round of the contest. However, all activity resumed - with Mrs Shephard at the centre of it - when Mrs Thatcher reversed her decision in order to allow Chancellor Major to join the contest and stop Mr Heseltine.

Since then Mrs Shephard has been one of Mr Major's most loyal supporters. She is his parliamentary next-door neighbour, being MP for South West Norfolk, which borders Mr Major's Huntingdon constituency. And two years after entering the Commons in 1987, she followed in his footsteps - albeit at some distance - in her first ministerial posting at social security. She cultivated connections on the right of the party - she was parliamentary aide to Peter Lilley before becoming a minister - and used her first post to make right-wing noises, warning against the benefits system subsidising single parenthood.

When Mr Major became prime minister he promoted her fast, to Treasury minister, and then to his Cabinet as Secretary of State for Employment in 1992. She, in return, has publicly and loudly defended him, such as the time, a year ago, when Michael Portillo broke ranks and declared on television that a single European currency would mean "giving up the government of this country". The remark sparked an immediate bout of leadership speculation. It was Mrs Shephard who rushed to Mr Major's defence, complaining of the sense of "despair" caused by the "crazy" situation in which the supporters of two Cabinet ministers - Mr Portillo and Mr Heseltine - were disloyally canvassing for the future leadership.

Now someone has been disloyally canvassing her own name as a future leader. And there has been a noticeable cooling in her relationship with Mr Major.

Mrs Shephard is not, it should be said, a serious candidate to become prime minister before the next election. Even if Mr Major is forced out in a panic reaction after appalling local election results next month, she is hardly likely to be his successor; that distinction would belong to Mr Heseltine or Mr Portillo.

But could she be positioning herself for a longer timescale? She is quick- witted and sure-footed, giving the refreshing impression of a politician who is enjoying herself. But there are unanswered questions about her leadership potential: where does she stand politically, and does she have the intellectual clout?

The Sunday Telegraph reported at the weekend that she has been "persuaded" to stand in the event of Mr Major's departure, as the candidate of the "soft right". This is an interesting piece of positioning, as she is a natural centrist with no known views on the one issue that really matters, Europe. But she was given the education department with a "left-wing" brief: "be nice to teachers". She has carried out this task with remarkable success, infuriating the ideologues of the Thatcherite right. But it has also been responsible for the growing distance in her relationship with the Prime Minister. She seems to have pursued the battle for education spending too vigorously.

In her speech to secondary school headteachers yesterday, she raised the stakes: "I cannot predict the outcome of the public expenditure discussions, which have not even begun yet," she said, before going on to put in her bid - and co-opting the Prime Minister's own words at the "relaunch" of the Conservative agenda 10 days ago. "He gave an assurance then, and I repeat it today, that education will be at the top of our priorities as the economy delivers further growth."

Her warning to Cabinet colleagues that this year's spending limit for education could mean up to 10,000 teachers losing their jobs was leaked in January, providing a big boost to the gathering campaign against new education budgets. Given its timing, two months after she had lost the funding battle, it is doubtful whether Mrs Shephard was responsible for the leak. But it has strengthened her hand for next year's negotiations.

However, she still has tough negotiations ahead with the Chancellor, Kenneth Clarke. He gently patronised her attempt last month to reopen the spending issue to get more money to fund the teachers' pay settlement: "We have settled that. Gillian is making excellent progress, and a satisfactory amount of finance is on offer ... This is not the Labour Party. It is the Labour Party that every time wants to spend public money on things."

She has also fought a fierce ideological battle with Mr Clarke's deputy, Jonathan Aitken, over the right's scheme for vouchers to pay for the expansion of nursery education. Right-wingers propose that vouchers should be given to parents to "spend" on under-fives provision. Mrs Shephard tried, unsuccessfully, to prevent Mr Aitken opening a seminar on vouchers held by the Thatcherite think tank, the Centre for Policy Studies, last month, when he said that such a scheme had "powerful attractions".

It is not yet clear whether she has won that argument - it depends on whether she wins the backing of her old ally the Prime Minister, who had appeared to favour vouchers.

Her speech yesterday showed her skill in appeasing the hostility of headteachers: "I know you have been through - and are still coping with - a period of great change in school education," she said soothingly, continuing: "I am not going to apologise for that. But as I am sure you know, I very much appreciate the crucial part you as leaders have played in putting those reforms into place." She wants, she has said, to get over to the teachers that she is on their side.

In some senses, she really is. As a former teacher and schools inspector herself, she campaigned for comprehensive education in Norfolk when she was a councillor there in the Eighties.

Her conciliatory approach is working, at least in the short term. Fred Perkins, chairman of the governors at Cirencester King's Hill school, in capped Gloucestershire, said on the radio yesterday: "Well, if she really means it and she is going to succeed with the rest of the Cabinet, we would be extremely happy. The large majority of secondary schools are in a very desperate situation at this moment."

But in the longer term, harder questions remain. Her tenure of her first Cabinet post, Employment, was undistinguished and her detractors say that education is the only subject she knows anything about. While her small but growing band of supporters on the Conservative benches admire her political agility, a larger number have seen a series of "next leaders of the party" burn up in the stratosphere. Those close to her believe that if there is a vacancy before the next election, Mrs Shephard will be a candidate. But it will not be until after then that we will know if she will be taken seriously as a potential leader.