Return of Portillo

Before he was unceremoniously ejected from the Commons by Enfield's voters in the 1997 General Election, he was one of the darlings of the Tory Right.

Although he was beaten in the first round of the 1994 leadership contest by John Redwood as the hard Right candidate in a bid to succeed John Major, he was tipped to lead the Tory party down an increasingly right-wing path.

His record was anti-Europe, appealing to the ''little Englander'', xenophobic populist stream of British public opinion.

Suitably chastened by the electorate in 1997, he returned to the Commons in a by-election two years later and immediately, on appointment as Shadow Chancellor, reversed Tory policy and backed independence of the Bank of England and Labour's minimum wage.

In his speech yesterday, his message was one of moderation and understanding; the Tories must show they care about public services and - crucially - there must be engagement in friendly debate about Europe, he said.

''Unless the party makes major changes in its style and the issues it chooses to focus on, there is a danger that we will go further down in the public's respect,'' was his message.

Whilst cynics might scoff, it was a message for our time.

The reality is that the only way the Tories stand any chance at the next election - no matter how unlikely that is - they must recapture the centre ground from New Labour.

Tory eurosceptics might take some cheer from the latest inflation figures and Bank of England Governor Sir Edward George's comments that the chances of joining the euro in the short term are remote.

However, given that Europe is the main issue upon which the Conservatives so seriously miscalculated in this election, could a Tory party led by right-wingers Iain Duncan Smith and Ann Widdecombe become anything more than a hardline rump with no prospects of electoral success?

It is true that entry to the euro is a significant issue which has all the signs of being one of Labour's biggest headaches in this Parliament - especially if the reported divisions between Chancellor Gordon Brown and Tony Blair become more high profile in the coming months and years.

It must, however, be remembered that Labour was not elected for having a better line on the Europe issue.

It was on whether it should be given another chance and more time to ''deliver'' on public services.

Whichever Tory leader is chosen, he or she will have to offer a real alternative - not concentrate on cutting taxes, which, in the public's mind, means cutting even further on public services - no matter how much the Tories might protest otherwise.

That is where former Chancellor Kenneth Clarke, another possible leadership contender, comes in.

Although there has been talk of a deal between him and Portillo as a so-called ''dream ticket'' - Portillo as leader, Clarke as a senior member of the shadow cabinet - there is, as yet, no indication of such an accommodation. Clarke may yet still declare himself as a candidate - he has already said he will not make his mind up, probably for a couple of weeks.

How could a Portillo/Clarke dream ticket work? Remember the ill-fated pact between Labour's Neil Kinnock and Roy Hattersley in the 1980s?

Despite Kinnock's overt move to the centre, it is argued that one of the reasons they were ultimately consigned to electoral oblivion was no one believed him - and was he what voters wanted anyway?

Nonetheless, Kinnock was responsible for setting in train the shift in his party that paved the way for Tony Blair so successfully to marginalise the Left, and embrace big business, without ditching social ideals.

Even if Portillo and Clarke move together as one on social and economic policy, the media will be merciless in exploiting their past divisions over Europe.

Even if that works, would the papering over of past cracks between them stand any chance of being believed by the electorate?

On top of that, the Tories have a huge electoral mountain to climb to come anywhere near the winning post in 2005/6 - and Labour, pledged to deliver on public services, would have to have failed miserably.

Portillo may now be the odds-on favourite, but that - if the history of some past Tory leadership contests is anything to go by - does not guarantee success.

Margaret Thatcher, when elected as Tory leader, came in successfully as a last minute candidate - a deal stitched up in the backrooms by Willie Whitelaw.

When Thatcher was challenged for the leadership by Michael Heseltine, and she was forced to resign after failing to get a majority in the first round of the contest, it was John Major who ultimately emerged triumphant.

Similarly, William Hague only entered in the second round of the 1997 Tory leadership race.

Hague, however later changed the rules - the 160 Tory MPs who are left will elect two candidates, who will be submitted to a one member one vote ballot of Tory party members.

No matter how realistic the MPs themselves might be about a move to the centre, if there is a right wing candidate who can make the correct noises that appeal to the Tory ''blue rinse'' workers, he or she might just pip Portillo to the post.

There is another theory.

There are some rumours circulating at Westminster that Portillo may try to get himself into such a strong position, and do deals with other candidates that they drop out altogether - including those on the right like Duncan-Smith and Widdecombe.

With only 160 MPs to deal with and the party in such desperate post-election straits, it could be that his opponents might decide to bide their time and back a move to appoint Portillo unopposed.

However Portillo, if successful in his bid, could end up being the Kinnock of the Tories, who set the party in train to being elected again, but without savouring that success himself.