Well, if Kenneth Clarke says it's good then it must be! :-)
"..we can be in a free trade area without being full EU members" schtick - why would they let us do that?"
Because (a) other nations (Iceland, Norway, Switzerland and Liechtenstein, forming the European Free Trade Area and seven more nations forming the Central European Free Trade Area) do it quite successfully to the mutual benefit of both them and the EU and (b) the EU sells far more to the UK than the UK sell to the EU.
People have been bamboozled into believing that if we left the EU all trade between us and them would suddenly cease. Believe it or not it would not. Also believe it or not nations outside the EU manage to trade with each other and with the EU quite successfully.
For forty years the myth has been expounded that nations cannot survive outside the EU. At present, as a direct result of its Federalist, interventionist and centralist policies, that moribund organisation has presided over the decline in fortunes of huge swathes of the continent condemning millions of people to penury. Growth in the eurozone has declined to zero or even less, deflation is a real threat, and a chaotic break up of the single currency is still highly likely. Why on earth should the UK continue to align itself with such a shambles?