`Headbangers' warned not to use euro in Tory leadership battle

Mr Kenneth Clarke has warned Tory "headbangers" not to turn his leadership contest with Mr Iain Duncan Smith into a referendum…

Mr Kenneth Clarke has warned Tory "headbangers" not to turn his leadership contest with Mr Iain Duncan Smith into a referendum on the euro. And the new front-runner for the Tory crown has again insisted the battle to succeed Mr William Hague need not prove divisive.

However, as Mr Hague made his last appearance at Prime Minister's Questions in the House of Commons, the Conservative Party in the country was facing the nightmare prospect of a choice already being cast as one between Thatcherism and Europe.

Bloodied but unbowed, the defeated Mr Michael Portillo accompanied Mr Hague into the Commons chamber to hear Mr Tony Blair pay fulsome tribute to the departing Tory leader, while enjoying a quip at the expense of the one-time darling of the Right who has now disavowed any lingering interest in the top job.

Describing his experience as leader of the opposition, Mr Hague said that in four years he had asked Mr Blair 1,118 questions. No one had counted the prime minister's answers although Mr Hague ventured it might not take very long. And there was laughter on all sides as he reflected: "Debating with you at this despatch box has been exciting, fascinating, fun and an enormous challenge and, from my point of view, wholly unproductive."

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Although he had been the object of most of it, Mr Blair told Mr Hague: "We will miss your wit and humour." Making his first reference to Mr Portillo's decision to abandon front-line politics, Mr Blair then expressed the hope that Mr Hague would not be retiring to the backbenches "since I think they are getting rather overcrowded." Indeed Mr Blair suggested there was every possible role for Mr Hague in the future: "If Kenneth Clarke was to win (the leadership) you could come and tell us about the virtues of a single currency. If Iain Duncan Smith was elected you could come and tell us what a dreadful idea it was and how the country would have none of it."

In any event, Mr Blair told Mr Hague: "Whatever you do, we wish you well." With the formalities completed Mr Blair then displayed his own touch of humour, borrowing from Labour's election poster and the memorable phrase from The Two Ronnies television programme, to bid farewell to Mr Hague and Mr Portillo: "It's goodbye from Mr Boom and goodbye from Mr Bust."

Meanwhile Mr Clarke - who topped the poll in the final parliamentary ballot on Tuesday - began making his pitch for support from the defeated Portillo camp with an apparent promise to build a coalition of progressive forces in the run-up to the September ballot of the party's estimated 300,000 members. However, Mr Nicholas Soames' prediction that the choice between the Europhile Mr Clarke and the right-wing Mr Duncan Smith could "make flesh" of the polarisation within the party was borne-out by hints of further defections to Labour or the Liberal Democrats should Mr Duncan Smith win the leadership, and alternatively by suggestions that many Eurosceptic MPs would find it impossible to serve under Mr Clarke.

One of the party's vice chairmen and leading moderates, Mr Steve Norris, threatened to quit the party should Mr Duncan Smith claim the prize. Mr Norris - the party's defeated London mayoral candidate - reflected the bitterness of senior Tories who had believed Mr Portillo was best-placed to unite the Tory party and recover its base with greater emphasis on rights, tolerance and social inclusion. Asked whether he would stay following Mr Portillo's exclusion from the leadership race, Mr Norris said: "That depends on who wins in the end."

Pressed whether his obligation was to accept the party's democratic decision, Mr Norris replied: "Goodness no. My democratic right is to look across all the parties and see which of them most reflects the views that I hold."

A defeated general election candidate, Mr Mark Magregor, reflected the building anxiety on the opposite wing of the party meanwhile, insisting success for Mr Clarke would spell "political suicide" for the party.

The fear that the Clarke-Duncan Smith battle could finally split the Tory party was also reflected by Mr John Broughton, chairman of the party's Clwyd South constituency party, who said: "Should the day dawn that Kenneth Clarke is elected leader I shall resign because of his pro-European views."

Mr Clarke yesterday accepted that his shadow cabinet would contain a Eurosceptic majority reflecting the balance of opinion within the party. But he insisted: "Unity involves a broad balanced approach to subjects, and above all to Europe. We have wrecked the party over Europe in the last 10 years and headbangers on either side will wreck it again if we allow them."