Murmurings in Thatcher Cabinet may make the 'Iron Lady' bend

At the root of the debate about why so many British cities -- 30 at the latest count -- have erupted in violence is a question Prime Minister Margaret Thatcher seems certain to have to answer.

The question is: Are the disturbances, at least in part, a result of Conservative government economic policy?

The point is being raised, naturally enough, by Mrs. Thatcher's political foes. This week's important by- election at Warrington has been used by senior opposition Labour Party figures as an occasion for insisting that there must be a link between the violence and unemployment now nearing 3 million.

If it were only Mrs. Thatcher's opponents who were letting their thinking flow in these channels, she would have comparatively little to worry about. The trouble is that within her own Cabinet, and in the upper levels of the Conservative Party, there are murmurings too -- and in some cases more than murmurings.

It is being suggested that far from facing a problem of law and order in the narrow sense, Mrs. Thatcher is up against a major social crisis which can only be handled in the long term by modifying her economic policies. So far she has flatly refused to contemplate any major changes at all.

According to one Conservative Party insider, Mrs. Thatcher's firmness of purpose is not in question, but her apparent lack of flexibility seems less and less attractive, especially at a moment when violence has become so widespread.

The pressures are rapidly mounting on the prime minister to adapt her economic policies and her style of promoting them.

The "Iron Lady" is being gently advised by her closest political friends that civil order and Conservative rule beyond the next general election could both be promoted by creating the impression that she is capable of bending a little.

The area where she seems likely to be asked to bend most is where, since coming to power, she has contrived to appear most rigid: in her commitment to monetarist principles and her reluctance to sanction government intervention to contain unemployment and improve social conditions in cities where violence has reached crisis proportions.

Among her internal critics, James Prior, her secretary of state for employment, is the most vocal in his reservations about Thatcherite economics and the government's attachment to the tenets of monetarism.

But as many as half a dozen other senior ministers are also having serious doubts about the character and direction of government economic policy. These ministers are coming to believe that there is a connection between this great social upheaval and the way the government in the past 2 1/2 years has been dealing with the economy.

Home Secretary William Whitelaw, the most loyal of men, has nonetheless left the impression that in responding to the wave of violence the government must do much more than merely strengthen police powers.

Agriculture Secretary Peter Walker, and the even more influential House of Commons leader, Francis Pym, are thinking along similar lines.

Behind a front of apparently solid support for Mrs. Thatcher, these and other ministers are wondering whether the moment has not arrived to take a fresh look at monetarism, at least in its assumptions that public spending must be curbed and the economy allowed of its own accord to pick up and grow.

Senior Conservative politicians say not only joblessness, but the decline of Britain's inner cities, the growth of racial ghettos, and the shortage of decent housing are among the causes of the violence. In dealing with such problems, Thatcherite monetarism -- even according to its own precepts -- has little short-term solace to offer.

The government's strategy has been to cut public spending, permit industry to shed surplus labor, and wait for a reinvigorated private sector to create new growth. In the meantime urban blight has persisted in many areas.

While Mrs. Thatcher has strong support from colleagues for her plan to toughen police methods and deal summarily with rioters, there is less enthusiasm for her stubborn determination to leave economic policies in place, without significant modification.

In Whitehall there is talk of the need for special youth employment schemes to clear derelict building sites in cities and turn them into parks, and of using unemployed youths to repair faulty drainage systems and roads in poor condition.

A more sophisticated line of approach is that the government should step in and encourage apprenticeships in areas of industry likely to benefit the economy , rather than let apprenticeships decline as they are now doing.

At present these and other ideas are being mulled over, but the mulling is taking place very close to the prime minister's Downing Street home, and it is clear that much of this thinking will soon enter discussions around the Cabinet Room table.