Lamont lets his wrath simmer. Clarke moved up to 'refresh' the Cabinet

turned down a junior job and threw the normal courtesies aside. Mr

Kenneth Clarke replaces him as Chancellor in the media-led reshuffle.

Mr Lamont joins Lord Lawson and Lord Howe in the ex-Chancellors league

to leave office in unhappy circumstances. His friends reported him to be

deeply hurt and angry last night. They await his ''resignation'' speech

in the Commons with interest.

As Mr Lamont was nursing his wrath, Mr Clarke was choosing his time to

indicate how Government economic policy will change with his

appointment. Last night, No. 10's description of the reshuffle as a

''refreshment of the Cabinet'' was seen to point to a change of style

rather than policy. Shares moved up, but the pound fell back a little.

Mr Clarke, a jazz fan and fellow cricket addict of Mr Major's, will be

expected to provide the sure political touch that escaped Norman Lamont.

Pro-Europe, centre-left, Mr Clarke has been tipped for party leadership

for years.

The disastrous May 6 elections were described by him as ''a dreadful

hole'', a candour that was appreciated by all Tories. It was also

typical of his adroitness to reassure Tory right wingers a fortnight ago

that there is no chance of Britain re-entering the European Exchange

Rate Mechanism this Parliament.

From a noted supporter of the ERM, this was a significant statement.

The City and the media intensified a campaign against the former

merchant banker Lamont because he failed to resign when sterling was

forced out of the ERM on Black Wednesday last September. There seemed no

point in a reshuffle by Mr Major only 13 months after he formed his

first Cabinet unless his Chancellor was moved.

Mr Lamont feels he has been abandoned by a Prime Minister whose

economic policies he pursued, in panic action by Mr Major to try to give

his Government a new look. Mr Lamont was told the campaign against him

since Black Wednesday by the City and the Tory press was dragging the

whole Government down.

The Prime Minister wrote him the customary letter, lamenting the

departure of the man who led his campaign team to succeed Lady Thatcher

as Prime Minister. It was kindly, but curt.

Mr Lamont did not reply, choosing instead to send a statement to the

press, copied to No. 10, saying: ''I have always been willing to be

judged on my record. . .I don't intend to say anything for several

weeks.''

He had been offered a move to Environment (now taken by Mr John Selwyn

Gummer) which was a stark way of saying ''we don't need you any more''.

His 82-year-old mother in Grimsby broke the news to the nation shortly

after her son's 9am meeting at No. 10 on the ground that she thought his

old school chums would like to know.

Mr Major, it emerged last night, decided last week that the pressure

for a reshuffle was irresistible. He told no-one except his Chief Whip,

Mr Richard Ryder, who began to plan for the complex organisation of a

make-do-and-mend revamp of the ministerial team.

Mr Lamont was also heavily criticised because he accepted Treasury and

party financial help towards legal fees in evicting a sex therapist from

his London property. There was also outrage on the Tory benches when it

emerged that their Chancellor failed to pay his Access bills on time.

Yesterday Mr Major's loyalty to Mr Lamont ended. Mr Clarke's Home

Office job has gone to right winger Michael Howard, who leaves

Environment. And another right winger, Mr John Redwood, is brought into

Cabinet as Welsh Secretary.

The up-and-coming left of centre David Hunt is moved from Wales to

Employment. He was the man who voted for Mr Michael Heseltine to replace

Lady Thatcher.

The Redwood appointment is probably the most daring move by the Prime

Minister and may help to head-off a challenge to his leadership this

autumn or next. The right-wing 92 Group of Tory MPs have been pressing

for more hard line influence in the Cabinet.

Mr Redwood, who commuted the poll tax into the Council Tax, inherits

the benign administrations of Wales conducted by Mr Peter Walker and Mr

Hunt, who buried monetarism there over the past eight years.

All rival political parties in Wales denounced the appointment. Mr

Redwood said of yesterdays reshuffle: ''I think it is a strengthening of

Government. It is a clear indication that there is a lot of business to

be done. I shall be there as a Cabinet member making my views known.''

Mr Major has effected a left-right balance in about 30 changes which

bring back into Government two former Scottish Ministers, Mr Ian Sproat

and Mr Michael Ancram.

Mr Sproat, who has made a fortune out of cricket publications, goes to

the Heritage Department where he will be in charge of sport. Mr Ancram,

a leading Roman Catholic, goes to Northern Ireland in place of Mr Jeremy

Handley, son of comedian Tommy Handley of ITMA fame, who takes over from

Mr Archie Hamilton as Armed Forces Minister.

Mr Hamilton and Mr Tristan Garel-Jones, who masterminded European

policy and the Maastricht Bill, asked the Prime Minister to be relieved

of their duties for family and commercial reasons. Mr Garel-Jones is

replaced by deputy Chief Whip Derek Heathcote-Amory, a Euro-sceptic.

Sacked Ministers, other than Mr Lamont, are Mr Edward Leigh, who

wanted to privatise the post office, Mr Kenneth Carlisle (Transport) and

the academic Mr Robert Jackson (Science). Mr Major dropped them to move

or bring in various juniors who have been showing some flair.

Labour leader John Smith described the reshuffle last night as a

''desperate attempt to divert attention from the weakness of John

Major's own leadership by changing the chairs around his Cabinet

table.''

He cast the Prime Minister as ''the captain of a ship throwing his

first mate off the bridge as they head for the rocks''.

SNP leader Alex Salmond called it ''an act of desperation from a Prime

Minister on the run. This is a weak and cowardly move from a Prime

Minister dancing to the tabloid tune''.

Mr Paddy Ashdown, Liberal Democrat leader, called it ''a new coat of

paint for a discredited Government. What Britain needed was a

fundamental change of approach.''

Mr Major has clearly made an enemy of Mr Lamont, but has judged that

he cannot be harmed for sacking someone who was denounced as

discredited. It now falls to Mr Clarke to establish a new style at the

Treasury, as he builds up for the first ever November Budget combining

strategy on revenue and spending.

If Mr Clarke, a former barrister who has served in many Whitehall

departments, fails to establish a new authority, the Prime Minister will

be seen as acting in haste and panic yesterday, merely throwing his

Chancellor's scalp to the Tory critics.