I believe that line is supposed to be s/(('|").*?\2)/ ($£ = $1) =~ s!\s+!\cA!g; $£ /ge;. AFAICT, the nonstandard $£ is just supposed to be a scratch variable, so you can replace it with e.g. $a (assuming there's no sort in the call stack) or a lexical of your choosing.

However, note BrowserUk's words: "I probably deserve hate mail for this one but..." - see e.g. Regexp::Common::delimited or Text::Balanced.