Margaret Thatcher tries to end Cabinet war of words

Britain's Parliament has broken up for the summer holidays, but it looks as if much of Prime Minister Margaret Thatcher's vacation will be spent trying to produce an economic policy that will end an open war of words in her government.

No sooner had members of Parliament vacated their Commons benches than a huge policy rift opened up between her Chancellor of the Exchequer, Sir Geoffrey Howe , and the influential chairman of the Conservative Party, Lord Thorneycroft.

Sir Geoffrey had told the party faithful that Britain's recession was "at an end" and that economic recovery was about to resume. But Lord Thorneycroft, a former chancellor himself, promptly declared that he did not share Sir Geoffrey's optimism and that the recession had not bottomed out, as he claimed.

This open split angered Mrs. Thatcher, but worse was to come. Francis Pym, the leader of the House of Commons, declared that the British people were nearing the end of their tether in putting up with the effects of recession, including high unemployment.

Mr. Pym, a key Conservative figure who is tipped as a likely party leader if Mrs. Thatcher were to be replaced, called for a new package of measures to bolster public confidence in the government. It is well known that economic policy differences exist within the Thatcher Cabinet, but this is the first time they have surfaced in public with such clarity.

Lord Thorneycroft's comments amounted to repudiation of Howe's economic judgment. Mr. Pym's reflected a growing feeling that the time is fast approaching when monetarist solutions for the economy's ills will have to be abandoned.

Among Mrs. Thatcher's ministers no one is more closely identified with monetarist theory and practice than Sir Geoffrey Howe.

But the chancellor, a cool and detached speaker, showed no sign of being upset by Lord Thorneycroft's criticism or Mr. Pym's alternative policy ideas.

He subtly shifted ground, claiming the recession was "nearing an end," but otherwise spurned, suggestions that it was becoming an urgent matter to take stock of economic policy failures and chart a new course for the future.

In some ways Pym's criticism of government economic policy looks the most dangerous. A stolid, determined politician who has crossed swords publicly with Mrs. Thatcher on defense policy, he is seen by a number of senior Tories as a likely rallying point in the event of a new leader having to be found.

Pym is worried about the Conservative Party's low standing with the public, demonstrated last month in a by-election in which the Tory candidate came a bad third.

Like other senior party figures, he disagrees emphatically with Treasury proposals for the economic. The Treasury wants to make even deeper cuts in public spending, in line with Howe's monetarist strategy.

Instead, Pym has begun to argue publicly, more money will have to be spent to stimulate business. His ideas are shared by other Cabinet figures, including James Prior, the employment secretary, and Peter Walker, the agriculture minister.

For Mrs. Thatcher, the open dissension in her Cabinet creates both short-term and longer-term problems.

Immediately after the summer parliamentary recess, she must face the prospect of the Conservative Party conference. She must find ways of avoiding an acrimonious debate between monetarists and those who want to modify economic policy.

The conference will set the scene for future political strategy. But if the economic recovery Sir Geoffrey Howe is predicting does not occur by the end of the year, pressures on Mrs. Thatcher to adopt election-winning policies will pile up.