Tory rows over Europe have been compared to debate over free trade and protectionism that split party for entire Victorian era and beyond

A virus, which deprived the Conservative party of a parliamentary majority for the best part of 30 years in the late nineteenth century, is lurking once again in the Tory underbelly, even as it celebrates its general election victory.

A loyal grandee, who believes David Cameron “silenced all his critics” with his surprise election win, warns that the themes that led to the historic split over the repeal of the Corn Laws in 1846 are returning to the fore over the EU.

“Free trade and protectionism – this virus that lasted in the Tory party over the Corn Laws from about 1846 down until the 1920s is still there,” the grandee said, recalling the battles when the Conservative prime minister Sir Robert Peel repealed the protectionist tariffs on imported corn in 1846. “Today there is a nihilist section of the [EU] outers. Nothing that is ever said or done will satisfy them. They see conspiracy and betrayal everywhere.”

Cameron found out this week that, even as he savours his achievement in winning the first Tory parliamentary majority in 23 years, Europe has an unerring ability to unsettle Conservative prime ministers. A hint over the weekend at the G7 summit that ministers would have to resign if they decided to campaign against him in the EU referendum was hastily clarified as it became clear to senior figures in Downing Street that the prime minister had unnecessarily provoked eurosceptic ministers.

The prime minister’s uncomfortable experience showed how he needs to tread with care. One former minister says: “Europe is the one issue upon which the Tories can ... go walkabout and be unable to function properly.”

Cameron’s misjudgment highlighted one of the main challenges he faces as he settles in as leader of a majority administration. The divisions within his government are no longer between the coalition partners. The divisions are instead within his own party, requiring careful management by Downing Street and by the understated but skilful new chief whip, Mark Harper.

“Mark is very wily and canny,” one veteran Tory says. “He knows he is sitting on a volcano on Europe.”

Harper has three principal challenges: the EU referendum and George Osborne’s £12bn welfare cuts, the two issues where ministers are divided, and the plans to scrap the Human Rights Act and assert the UK’s supreme court as the “final arbiter of human rights” in the UK. Cameron is assured of unity among ministers on this issue but he faces a rebellion from the backbenches, led by the civil liberty supporters, known as the Runnymede Tories. This explains why the new justice secretary, Michael Gove, is taking his time to set out his plans.

Trouble is not in view, for the moment, according to one former minister. “There are ingredients for great trouble in the future but not today. For now, the sun is shining, there is not a cloud in the sky, the prime minister is in his pomp, he walks on water. However, the one thing that will happen is that at some stage the clouds will descend and he will sink beneath the waves, his footprints no longer on top or moving underneath.”

Some Conservatives believe it is possible for the prime minister to manage the party’s divisions when the inevitable split occurs in the run up to the referendum. But he will need, as one senior MP said, to show a light touch by allowing ministers to follow their consciences in the referendum, and by ensuring a decent amount of time for substantive negotiations.

Another MP says the prime minister will win a yes vote but he needs to establish whether “he is after power or after a settlement”. A limited ambition of simply retaining power would signal a quick run to a simple, and possibly narrow, yes win. A more ambitious target would see the prime minister, according to the MP, seek to achieve a lasting settlement, which would put the EU to bed as a divisive issue.

The prime minister gave the appearance that he was aiming for the more ambitious “settlement” when he appointed the highly eurosceptic former Tory leader, the work and pensions secretary, Iain Duncan Smith, to the cabinet committee that will oversee the EU referendum.

Duncan Smith, who was encouraged by his appointment, believes Britain needs to know that it can take control over its borders, possibly through an emergency brake, if the number of EU migrants becomes too high. This means looking at the free movement of people, an idea Cameron dropped in the autumn after the German chancellor, Angela Merkel, ruled out any concessions in this area.

Duncan Smith, who believes ministers should be free to follow their consciences in the referendum, will be listening and talking with care on the cabinet committee. The work and pensions secretary, who also has his work cut out trying to identify the £12bn of welfare cuts identified by George Osborne, has not ruled out playing a prominent role in the no campaign if the prime minister’s renegotiations fall short.

Cameron can be assured of cabinet unity over his plans to scrap the Human Rights Act, not least because he sacked the mild-mannered Dominic Grieve as attorney general last year. Grieve is now a leading light in the Runnymede group – named after the place where King John agreed Magna Carta 800 years ago next week – whose members are opposed to the repeal of the Human Rights Act and any weakening of Britain’s links to the European court of human rights (ECHR).

But Andrew Mitchell, the former Tory chief whip, believes the prime minister lacks the numbers in parliament. “I think it will be extremely difficult to get it through the House of Commons, let alone the House of Lords,” Mitchell says. “Human rights are not just for nice middle class people. They are not negotiable. They are human rights and that is it.”

George Osborne under pressure to slow welfare cuts Read more

Mitchell suggests that his determination to retain full British participation in the ECHR is inspired in part by his experience of the justice system in the Plebgate affair. He believes a system of appeal beyond the British justice system is vital. “I would be very reluctant to expose my constituents to the British justice system without an appeal outside. The British justice system is very difficult to access. It is for the very rich, the very poor and the very foolish. I place my own experience firmly in the latter category.”

As they scan the sky for Black Swans, which could unsettle the party, some Tories wonder whether Cameron and Osborne, who are the first prime minister and chancellor in living memory to maintain warm and harmonious relations, may have competing interests. The prime minister is, in the words of one Tory, “legacy hunting”, as he adopts a cautious approach in the final years of his premiership. The chancellor wants to produce radical change as he looks to the future as Cameron’s successor.

But one former minister says their interests will remain aligned as Cameron follows the example of Ronald Reagan, who said, in his farewell address, that “Reagan’s regiments will have to become the Bush brigades”. The former minister said: “Being able to say, as you stand down, that you have accepted my guy is a big thing.”