David Cameron hopes to heal divisions and unite a party split over Europe

European Union

It is a battle that has created the most damaging divide in the Conservative party since the Corn Laws in the 19th century.

Europe played a part in driving Margaret Thatcher out of office and it haunted John Major from the moment he laid the basis for Britain's current place in the EU when he secured an opt out from the single currency in the 1991 Maastricht treaty.

David Cameron hopes to heal the division and achieve, from a Eurosceptic stance, a goal that eluded Tony Blair. The prime minister is convinced he can settle Britain's troubled membership of the EU by using a future treaty negotiation that will underpin the euro to repatriate powers to Britain.

But Cameron presides over a Conservative party that has radically changed from the era of Thatcher and Major. Many Eurosceptics have become more strident and are not afraid to say they want to leave. The pro-Europeans, whose leader Michael Heseltine brought down Thatcher, barely add up to double digits.

The largest group, numbering 150 to 200, support the thinking of the Fresh Start group whose members will publish a manifesto on Wednesday with a series of proposals to renegotiate the terms of British membership. The next grouping, numbering about 30, want to leave the EU though some are willing to give the prime minister a hearing when he outlines plans to renegotiate Britain's membership. The final grouping, numbering between 80 and 100, believe Britain faces more important challenges.

The breadth of opinion was highlighted by the veteran Bill Cash, chairman of the commons European scrutiny committee, who called for the re-enactment of a historic Roman battle with Tory pro-Europeans. "If Michael Heseltine and Ken Clarke want to take us on over the argument then let's meet them at Philippi," Cash said, quoting Shakespeare about the epic battle in Macedonia in 42 BC. Cassius, one of the leaders of the plot to kill Caesar, says in Shakespeare's Julius Caesar: "We'll along ourselves, and meet them at Philippi."

The pro-Europeans tend not to match Cash for classical scholarship, though they believe passionately that he is wrong. Robert Buckland, the MP for South Swindon who is one of the few Tory followers of Kenneth Clarke on the EU, told the Guardian: "I understand that the nature of our relations with the EU is changing because of the eurozone. I accept that. I am worried that this does not become a proxy for withdrawal altogether.

"What if the renegotiating package isn't seen as sufficient by a sizeable body of opinion at home? What if we don't get a renegotiation. What then? Are the voices going to get louder and louder for outright withdrawal.

"I am not saying we shouldn't have any referenda. But isn't it time to have a reality check here and to understand that we are talking about people's jobs and businesses and it is vitally important that the debate moves away from abstruse legal argument and onto the reality of business and competiveness and inward investment into the UK. That is why it is important that Conservative voices, who are robustly in favour of our membership of the EU, are heard now before it is too late."

Tories in the Fresh Start group take a different view and believe the prime minister has no choice but to renegotiate the terms of British membership. David Rutley, parliamentary aide to the pro-European police minister Damian Green, said: "We need to bring about a fundamental resettlement in our relationship with Europe. Some people say this is about being little Englanders. I think it is more about being big Britons because we can then face into the challenges in the global economy. If you look at what has gone on in the western European model, particularly the way it faced into the credit crunch, it has been found wanting. We need to face into the new economic realities and the prime minister's speech will be the starting point on which we can do that on a confident basis."

Dominic Raab, the Conservative MP for Esher and Walton who is writing one of the chapters for the Fresh Start manifesto, said: "The basic idea of "top and tailing" a British renegotiation with a referendum or an alternative mandate is vital, for democratic legitimacy and to leverage our negotiating position. The optimum UK relationship would guarantee market access, dislocated from supranational regulation of social, justice and foreign policy.

"The real question is whether the EU will give us any more than crumbs out of renegotiation. If so, given the status quo is not an option, Brussels could push Britain out altogether."

Nadhim Zahawi, another leading member of the Fresh Start group, says the "heart and soul" of the Conservative party supports the prime minister's plan to renegotiate the terms of Britain's EU membership which would then be put to the British people in a referendum.

However, Zahawi differs from Raab and is confident of a yes vote after a YouGov poll in the Sunday Times reported a narrowing of the gap between those who want to leave the EU and those who want to remain.

The MP said: "For the European realists a referendum is a good thing because we do need to finally nail this. I think there will be a resounding vote to stay in the EU not to come out. The heart and soul of the Conservative party is in a place that says let's get a decent deal and put it to the country."

Zahawi dismissed suggestions that leading German figures will block the prime minister's plans after an ally of Angela Merkel condemned him for seeking to blackmail the EU. "I am in no doubt that Germany wants the UK to remain within the EU. Senior figures say it is not an irritant that we are trying to work out what that new settlement looks like and therefore what our position is. Nobody is asking chancellor Merkel to do anything between now and her election for the obvious reason that a domestic audience takes priority. The idea that David Cameron's speech is seen as a terrible thing in Europe is naive.

"We will be able to come to a position where, when we know what that new settlement is within eurozone, to have a negotiation that then allows the prime minister to come back to the country and say this is what we can have – safeguarding the single market, issues around criminal justice, issues around the working time directive and then putting it to the country."

Tories who want to leave the EU, some of them supporters of the Better Out group, regard the MP for Clacton Douglas Carswell as a folk hero. They say that the United Kingdom Independence Party declined to stand against Carswell at the last election because he pledges in his election addresses to withdraw from the EU.

Carswell said: "I think we should leave the EU and have fought and won two elections on that platform. But if David Cameron thinks he can get some all new fantastic deal – associate membership – I'm pragmatic about these things. If David Cameron has got to put the result of his new deal to the people it is either Dave's new deal or it is out. That could actually open up opportunities that we simply haven't thought of.

"There are a couple of absolutes. One is we need to be able to, as a country, negotiate free trade deals with third countries on our own. We would also need to be able to say I am really sorry but our law on this issue is going to take precedence over EU law on something that is really important to us."

Powered by Guardian.co.ukThis article was written by Nicholas Watt, chief political correspondent, for The Guardian on Monday 14th January 2013 23.30 Europe/London

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