Ken Clarke appreciates the irony of Peter Lilley, one of Margaret Thatcher's leading ideologues, making a keynote speech earlier this week in which he apparently repudiated one of Thatcherism's central tenets.

In the speech, delivered the very evening senior Tories gathered to mark the 20th anniversary of Thatcher's election as prime minister, Lilley declared there were limits to what the free market and privatisation could do.

Peter Lilley, one of Thatcher's arch apostles, now says there are limits to what the free market can achieve

"Well it may be that they've taken a good lesson from New Labour. If I had made that speech it wouldn't have created a great deal of stir. Indeed, I think I've made it several times before," says Clarke.

"I actually think Peter restated what we did in the Thatcher government, as opposed to what some of our ideologues claimed we were doing and what some people would now like to do."

The Thatcher governments, Clarke believes, are more right-wing in memory that they ever were in practice. "I think the people who call themselves Thatcherite today, including Mrs Thatcher, have moved very much further to the right than the Thatcher government," he says.

Consistent Clarke: "Thatcher and Thatcherites have moved further to the right than her governments"

"Half the views which Mrs Thatcher espouses today were not held by her government, which continued to have large numbers of people then categorised as 'wets' in it until the end of her period of office."

Similarities have been claimed in the governing styles of Thatcher and Tony Blair: both absolutely dominant within Cabinet and with sufficient parliamentary majorities to do just about anything.

Tory leaders past and present gathered this week to mark the 20th anniversary of Baroness Thatcher's rise to power

Clarke is having none of it. "Margaret Thatcher was a conviction politician and that's why I liked her as prime minister. We did things because we believed they were the right thing to do," he says.

There is no comparison with New Labour, he insists. "Tony is a man who leads from behind. He is risk-averse. His policy is based on focus groups, following opinion polls, never running ahead of public opinion."

He has also "taken on techniques from America which I regard as wholly undesirable and which were honed up by the Clinton team in particular, of running policy by focus groups and a constant popular appeal to currently populist sentiment".

Too much Tory spin

To Clarke's chagrin, the Tory leadership, impressed by Labour's heavy emphasis on aggressive news management and marketing techniques, has started down the same path.

Spindoctors and focus groups: "The danger for the Tories is they are imitating the way Labour ran things before the election"

"The danger for my party is that some of them have mistakenly taken the lesson that we must imitate the way Labour ran things before the election," he says.

Appearing in casual dress, rather than pin-striped suits, appears to have become a major policy initiative. The latest Tory attempt to sell the party to the country has been the promotion of "kitchen table Conservatism". And last month Amanda Platell, the ex-Sunday Express editor, was noisily appointed to the post of media supremo at Tory Central Office.

Clarke is incredulous at the way his party trumpeted her arrival. "I just don't understand that. I thought that was crazy publicity.

William Hague shows off his new casual, shirtsleeves style of leadership

"I don't know Amanda Platell, and I've a completely open mind about her competence and whether she can improve things," he says. "I actually believe that the previous team was unbelievably weak. So, to use a phrase, things can only get better.

"Having said that, even if you want to change the image of a politician, I have always presumed that was a discreet, behind-the-scenes thing."

Far from it, these days. Instead, the supposedly behind-the-scenes work of image-makers and advertising salesman is now proudly pushed centre-stage. A big mistake, in Clarke's view.

"If you start advertising what clothes your victim is going to wear, or what style he's going to approach, all you succeed in doing is making the next few appearances a public farce as people comment on 'Where's the [kitchen] table?' and 'Why haven't you got your sleeves rolled up?'," he laughs. "And I find that very painful!"

'Shut up' about ground troops

The government's inability to kick its media manipulation habit can also been seen in its handling of the conflict in Kosovo, according to Clarke.

Clarke on Kosovo: "Ground troops will be required - and government ministers should just shut up about it"

He believes that using Nato ground troops is inevitable and that they will be involved for many months. "I do think the answer will now require ground troops," he says.

"I wish the government would decide precisely what its position is on ground troops and not keep sounding off day by day, causing confusion about what it wishes to do. I think journalists and politicians have to accept that during a war there is a limit to the kind of day by day public debate you can engage in on strategy.

John Major and Ken Clarke: When the ex-PM stood down as Tory leader, Clarke threw his hat in the ring

"I would advise the current Labour ministers to just shut up about ground troops," he says. Instead, they should concentrate on planning with Nato allies on how troops would be deployed. "You can announce you're using ground troops on the day they enter Kosovo."

Instead, though, Blair until recently was repeatedly ruling out their use. "Oh this must cheer Milosevic up quite a lot, yes," Clarke declares with heavy irony.

He appreciates the need in a time of conflict to win the information war. "But the instinct of this government is so media-dominated that I think at times they lack the self-discipline to just to shut up - particularly when there's some confusion in their own minds about exactly what they're going to do next.... I have to say to the prime minister that it doesn't require daily press conferences and soundings off."

Lucky escape from leadership

Clarke dismisses as untrue tittle tattle the constant speculation that he is waiting to challenge Hague for the party leadership this year.

In the 1997 leadership contest he won massive backing from Tory members but was thwarted by Eurosceptic MPs determined to elect anyone but Clarke, the party's most prominent pro-European.

He says now he "never expected to win that contest". He adds: "I probably had rather a lucky escape, because it would have been very difficult for someone of my views to lead the present parliamentary party."

I ask him why a man whose political reputation is assured, has served many years in high office, and is praised by commentators and politicians of all party, would want to lead the Tories during what may be their Michael Foot wilderness years.

Clive Hollick: The Labour peer is one of the chief organisers and a financial backer of Britain in Europe

"Well, I haven't lost my enthusiasm for politics. Although I'm now an ex-minister and a backbencher engaging in politics in a more freelance fashion, I would go back into office if the opportunity ever occurred."

Ready to join pro-euro campaign

Once the European elections in June are out of the way, Clarke plans to join with Labour pro-Europeans to promote the case for joining the single currency.

Clarke on Britain in Europe: "I'm minded to sign up quite soon"

For the first time, the Tory former Cabinet minister confirms he will join Britain in Europe, the pro-euro campaign group launched earlier this month that includes Labour's Lord Hollick, Liberal Democrat Menzies Campbell and AEEU leader Ken Jackson on its board.

Asked how quickly after the Euro-elections he and fellow pro-European Michael Heseltine will sign up to Britain in Europe, Clarke says: "Well I'm minded to sign up quite soon, because I think it's a convenient time to do so.

"My desire is not to destabilise the Conservative Party any more than it is already destabilised on the European issue," he explains. "I therefore think the mid-term of the Parliament is quite a good time to build on what William's already acknowledged, that there are going to be all-party campaigns on both sides. And so I'm inclined to join quite shortly after the Euro-elections, which I want to see conducted on a party basis.

Clarke warns Blair not to use pro-European Tories like himself and Chris Patten (above) to score party political points

"I still wish to make it a condition that it is genuinely all-party," he adds. If Blair "gets all risk-averse again and says it's far too risky for the government to raise this, then I see not the slightest reason why people like Michael Heseltine and myself should get themselves involved in the campaign".

He also warns the prime minister not to make party political capital out of senior Tories like himself, Heseltine, Chris Patten and Leon Brittan being on the prime minister's side on the issue of joining the single currency.

"I very much hope Tony doesn't see the whole thing in terms of using Tory trump cards because the one feature of the four people you've named is they are all Tories. We don't wish to be used as part of this to destabilise the Conservative Party," he insists.

"It's no good playing clever games with Tory trump cards. He [Blair] has to ally himself with the best Conservatives he can find, but that involves a full commitment on his part so that Labour, Liberal and a good part of the Tory vote is all on the same side."

The cult of Clarke

Ken Clarke is in the fortunate position of being the nation's favourite Tory - to the great annoyance of the party's right wing. He is a politician with fans on all sides of the House, and something of a cult figure among Labour MPs. There are a fair few ministers in the current government who, before the last election, were privately willing to say they wished he'd stay on as chancellor under Blair.

Labour MPs like Clarke's unconcerned cigar smoking, hush puppied style

They like his insouciance, the way he speaks his mind, his unconcerned beer-drinking, cigar-smoking, hush-puppied style. He is, in short, unspinnable - and doesn't care.

"I wasn't aware I was a cult figure for Labour," he laughs. He explains that one of his rules on being involved in politics is that it is only worth doing if you do your own thing.

"One thing I always stick to is if you are going to be a politician, including being a government minister, at least you should enjoy the job," he says. "And there's absolutely no point in spending your entire time in getting yourself into a ministerial office in order to do anything which you do not want to do.

"The politicians I have least regard for are the people who lose office and then wander round saying 'Of course, it wasn't my idea that I did all the things that I was doing and say at the time, it was forced upon me'."