Britain's two major political parties shaken by bitter internal struggles

After 18 months in power, Margaret Thatcher's government has experienced its most harrowing week in Parliament amid rumors that a Cabinet reshuffle is in the cards with Chancellor of the Exchequer Sir Geoffrey Howe expected to be among the likely casualties.

This comes at a time when struggles between moderate and radical forces within both of Britain's main political parties have begun to intensify sharply.

In the opposition Labour Party, riven by arguments about the movement's aims, Shirley Williams, a leading moderate, has declared that she will not seek to regain the seat she lost at the last election, or even to enter Parliament under the Labour banner, unless and until the party changes its left-wing ways.

On both sides, the battle is between political fundamentalists determined to see their hard-line views prevail and people of a more pragmatic persuasion eager for political rigidities to be removed from party policy.

Of the two battles, the one within the Conservative Party is currently the more spectacular, as it has suddenly erupted onto the floor of the House of Commons, to Mrs. Thatcher's embarrassment.

After presenting a minibudget designed to further the government's monetarist policies, Sir Geoffrey came under heavy attack for allegedly misleading Parliament about one of its key provisions. He failed to tell the House that employers, already hard pressed by economic recession, would have to pay up to L 1 billion ($2.4 billion) in national insurance (social security) contributions if the package were to work effectively.

When the truth emerged, the employers complained, and moderate Tories at Westminster began pressing Sir Geoffrey for an explanation.

In the debate that followed, former Conservative Prime Minister Edward Heath for the first time in Parliament turned on Mrs. Thatcher and assaulted her policies. He said the policies were harming the country and the Conservative Party and must be changed.

Mrs. Thatcher was severely jolted as Mr. Heath ticked off the points he had been wanting to make to the House since the government came to power in April 1979.

Neither Mrs. Thatcher nor her chancellor was prepared to accept that an error had been made. There was talk in Westminster corridors that Sir Geoffrey's behavior was below the standard expected of the chief economic minister of the government.

Labour's internal problems also focus on ideology and its place in policy. They have simmered since the party conference at Blackpool two months ago proposed to change the way Labour's leader is elected and announced that it was against the European Community and retention of a British nuclear deterrent.

The election of Michael Foot as leader of the Labour Party was intended to paper over divisions opened up at Blackpool. Mrs. William's announcement about her political future brought the rights out into the open again.

Known as "the darling of the Labour right," Mrs. Williams has been severely troubled by Labour's lurch to the left. She told her constituency party at Stevenage, an area north of London, that Labour, as it stood, did not reflect her beliefs and that she could not seek election while present policies were unchanged.

She appeared to leave her options open for joining or leading a breakaway party of the moderate left. Such a party is currently being planned by the former Labour minister, Roy Jenkins, who gives up his post as president of the European Commission at the end of the year.

Mr. Jenkins plans to return to Britain in January and campaign for the formation of a party of the center. For the moment, Mrs. Williams is denying that she is interested in the planned Jenkins initiative.

In late January the Labour Party will hold a special conference at which leftwingers ranged under the flag of Tony Benn hope to get approval for a new, more populist method of electing the party leader. Depending on how that vote goes, Mrs. Williams will probably decide her future tactics.

Other prominent moderates, including two former senior Labour government ministers, David Owen and William Rodgers, are also waiting for the outcome of the special conference. If the party opts for a collegiate system of leader selection, they are thought likely to leave the Labour movement.

The parallel struggles inside the Tory and Labour parties reflect growing concern about Britain's economic plight and the failure of successive postwar governments to put the nation back on the road to recovery.

Mrs. Thatcher's monetarist policies have started to bring down inflation, but have not halted the unemployment spiral. Government experts fear unemployment will increase for at least another year.

This puts Mrs. Thatcher under pressure from critics like Mr. Heath, who commands a lot of sympathy and respect when he says, as he did in the Commons last week, that the Conservative Party stands to destroy its reputation as a party of government unless it soon changes course.

Mrs. Thatcher's advisers deny the prime minister is planning a Cabinet reshuffle, but the chancellor's actions over the latest minibudget are believed to have angered her. Apparently he failed to tell her or the Cabinet about the size of employers' contributions to national insurance, and may not even have been aware of the details himself.