Shephard says she will be candidate

JOHN RENTOUL AND PATRICIA WYNN DAVIES

The interventions of Michael Portillo, Secretary of State for Employment, in tonight's Panorama, and Gillian Shephard, Secretary of State for Education, in announcing her candidacy yesterday, have furthered Tory leadership speculation.

Mrs Shephard repeated through "friends" quoted in the Mail on Sunday her intention to stand if John Major were forced out of office this autumn. She is being positioned as a centrist candidate between the left-wing frontrunner Michael Heseltine, President of the Board of Trade, and Margaret Thatcher's endorsed candidate, Michael Portillo, Secretary of State for Employment, although her position is firmly pro-European.

Further evidence of the momentum building behind Mr Heseltine's undeclared candidacy is the emergence of a new "Stop Heseltine" campaign on the right. William Hill, the bookmakers, has reduced the odds on Mr Heseltine becoming the next Tory leader, replacing Mr Portillo as favourite.

In a Panorama profile of Mr Portillo to be shown on BBC1 tonight, Lord Parkinson, the former Tory chairman, reports what Baroness Thatcher is said to have told his recent birthday party: "We brought you up, we were responsible for your upbringing. We expect great things of you. You will not disappoint us."

As the speculation continues, backbench MPs are publicy lining up behind the leaders of the different factions. The right-wing "Stop Heseltine" campaign includes Sir Nicholas Bonsor, who warned last week against creating an opening for Mr Heseltine, James Cran, the MP for Beverley, former minister Sir Archie Hamilton, the former defence minister, and Michael Spicer, the former housing minister. Mr Cran and Mr Spicer were the unofficial whip and spokesman for the Euro-sceptics through the months of rebellion on the Maastricht Bill. Sir Nicholas is a hard-line Euro-sceptic who nearly won the chairmanship of the backbench 1922 Committee last year, and his warning against ousting Mr Major was backed last week by Lord Parkinson, the Thatcherite former party chairman. Another of the group complained privately: "Nobody is talking for the Prime Minister - who is the bulwark against Heseltine."

The MP set out the group's private thinking: "I don't like some of the Prime Minister's policies, but I fear greatly what will happen if Heseltine takes over. We will be hung out, dried and kippered. He will wield such power that there will be absolutely nobody to challenge him. He will deliver a Heath Mark II."

The "Stop Heseltine" campaign is expected to try to recruit Euro-sceptic Tory MPs over the summer, in order to isolate potential "stalking horse" leadership challengers such as Norman Lamont and John Carlisle. Meanwhile, Mr Major is being increasingly deserted by the left of the party, which ought to be his natural constituency. Edwina Currie, the former minister who supported Mr Heseltine in 1990, told yesterday's Sunday Telegraph: "This is a good, decent, honourable man. But perhaps politics in the mid-1990s needs a sharper edge than that. He has been in the job five years. Maybe his family will be saying to him that is enough." And she tells Panorama: "If Michael Portillo became our leader before the election, we would lose."

The unusual decision made public last week of the executive of the 1922 Committee to compile a dossier calling on the Prime Minister to sharpen up his policies can also be seen as part of the "Stop Heseltine" initiative.

The executive is elected by all Tory backbenchers and is dominated by Euro-sceptic right-wingers.

It also illustrated the dangers of the strategy, because it was seen as further weakening Mr Major when it in fact seems to have been genuinely designed, at least by most of the backbenchers' elected representatives, to prop him up.

The fundamentals of the leadership question have not changed since the last general election. Any likely replacement for Mr Major would be unacceptable to one or other wing of the party.

The Prime Minister's uniquely ambiguous stance on Europe means that only he could hold together a divided party - and yet it progressively weakens his reputation as a leader.

Mr Portillo's paraphrase of it yesterday approached parody: "The Cabinet has taken a decision, led by the Prime Minister, which is to take the decision when a matter is presented for us to decide upon."

Paddy Ashdown, the Liberal Democrat leader, said on GMTV yesterday: "The problem isn't the leaders, although Mr Major is a weak leader. The problem is the Conservative Party."