British Conservatives Seek `Radical Agenda' To End Tory Setbacks

BRITISH Prime Minister John Major has initiated a wide-ranging policy review aimed at redefining Conservative Party goals and restoring his government's credibility.

Meeting yesterday at Mr. Major's official country residence, Chequers, members of his policy unit considered what one adviser said would "have to be a radical agenda" to "equip the government with a coherent economic strategy" for the next three or four years. Unemployment, a property market in the doldrums, and sluggish exports were among the topics under review, government officials said.

On the eve of the Chequers strategy session, Norman Lamont, chancellor of the exchequer, met with senior Treasury advisers to draw up the framework for what a government source said would be a "year of two budgets" - one in March and one in December.

The first budget, the source said, would set new economic objectives. The other was likely to create a revised tax framework to pay for sharply rising government borrowing. Options considered by Mr. Lamont and his officials included an increase in the value-added tax above the current rate of 17.5 percent and a phasing out of tax relief on home loans.

The flurry of planning activity, which Downing Street sources say is likely to continue for some weeks, comes at the end of a series of government setbacks.

Senior supporters say that the man who replaced Margaret Thatcher two years ago and led the Conservatives to a stunning ballot victory in April has fallen on a "time of troubles," beginning with the forced devaluation of the pound in September.

Since the currency turmoil of Black Wednesday (Sept. 16), when Britain was forced to quit the exchange rate mechanism (ERM) of the European Monetary System, Major has come under fire for his clumsy handling of a coal mine closure program, for his government's part in selling arms to Iraq, and for keeping Lamont in charge of the economy. Lamont's reputation was severely dented by his decision to leave the ERM after saying repeatedly that under no circumstances would he let that happen.

Major admitted publicly on Jan. 3 that he had failed to explain his political objectives clearly enough.

Since April, unemployment has risen to nearly 3 million, Britain's trade gap has widened, thousands of companies have gone bust in a prolonged economic recession, and David Mellor, a senior minister, resigned amid a morals scandal.

A senior Conservative member of Parliament said Major's difficulty lies in "the expectations raised among ordinary people" by "a dozen years of high-profile Thatcherism.... Even when she made mistakes, Margaret Thatcher left us in no doubt about her political convictions," the legislator said. "John's problem is that although he believes in many aspects of Thatcherism, he lacks the rhetoric and the personality to match his convictions."

David Willetts, who served Ms. Thatcher as a policy adviser in the mid-1980s, said Major's problem lies in finding ways to coordinate "a host of bold individual departmental initiatives which are not linked together in the public mind as part of a wider strategy." Mr. Willetts said the initiatives, each being pursued by individual Cabinet ministers, included measures to increase police efficiency, improve health care, raise standards in schools, and combat social security fraud.

"Bringing these initiatives together as part of a wider political strategy is essential for political success in 1993," Willetts said.

Others say Major should increase taxes to offset a projected borrowing requirement equal to 7 percent of national output.