Only the man in Hush Puppies can lay the ghost of Thatcherism

The brutal regicide perpetrated nearly a decade ago is still traumatising the Conservative Party

THERE IS something magnificent about the way in which, almost a decade after her fall, Margaret Thatcher continues to haunt the psyche of the Conservative Party. The question of whether or not it dares step out of her shadow is unique, at least in this century. Even the lady herself, despite breaking with the era of Macmillan and Heath, felt more comfortable with her party's recent past than her successors do.

It is all the more remarkable since, at least in economics, she laid down a set of rules to which every serious modern politician now conforms. Indeed, that is just what lies behind the - for Conservatives - cruel irony that it is a Labour Prime Minister, rather than a Tory leader, who can effortlessly invoke this illustrious ghost for his own purposes.

Mr Blair can, of course, pick and choose the parts he likes: strong national leader, international beacon, union-tamer, privatiser of the nationalised industries, while eschewing those he doesn't: tribalist, social divider, laissez-faire individualist. The ease with which he does exactly that serves only to mock the Tories' chronic hang-up with their electorally and ideologically most successful leader this century. This is particularly so since, on the one peacetime issue on which she is most adamant - the euro - Mr Hague is on her side and Mr Blair isn't.

So why can't William Hague come to terms with his party's past? Why is so much of his energy devoted to devising a story about its relationship to the last leader but one, that will pass muster in explaining what modern Toryism really is?

The answer can only lie in the brutal regicide perpetrated more than nine years ago but still traumatising the party. The minority who were then genuinely and fearlessly confident that it was high time she went, have no difficulty in talking about her now in tones of respect. But, for the majority of the party, it is as if in childhood they had witnessed an unspeakable murder with which they are still either complicit or enraged, depending on how they voted then.

How appropriate, therefore, that Peter Lilley should now be the man being fitted up by the right wing for execution for daring to suggest that dismantling the core public services of education and health may not be the best starting- point from which to rebuild the credibility of a party brought to its knees on 1 May 1997 by an opposition committed to renewing those very services? For Lilley was always seen as a Judas in the Thatcherites' midst, the one hitherto true disciple who deserted her in her hour of need by telling her the dumbfounding news that he, too, thought she could not win a second leadership election in November 1990. He may have been on a hit list for longer than he realises.

This isn't to say that psychic trauma is the only reason for the downward spiral into which the Tory party now appears hell-bent on hurling itself. There were two problems with the Lilley lecture, the principal content of which was stoutly defended by William Hague in his speech on Wednesday night, for all the nervous passages of obeisance to Lady Thatcher. The first was tactical. For this, practically everybody is getting the blame. Some point to the fact that the party's chief of staff, Archie Norman, was absorbed by the merger of his company, Asda, with Kingfisher, and thus absent from the fray.

Others ask, with lethal force, what on earth Sebastian Coe, Mr Hague's chief of staff, has been doing. But whoever is to blame, a big statement of policy was to be made which apparently cut directly across the kind of hints that, say, Ann Widdecombe has been issuing, about an expanding private health sector. It should have been cleared by, or at least discussed with, the Shadow Cabinet first.

It was not smart to bill a speech as breaking with Thatcherism at the time of an anniversary dinner to mark her victory in 1979. And finally, while Francis Maude has been busily distancing himself from Mr Lilley, his own robust reaffirmation of the Tory pledge to match Labour spending on the NHS, however admirable, is tactically problematic. If the Tories are sticking by Labour's spending totals, how do they propose to pay for them other than through the "stealth taxes" which they routinely accuse Mr Brown of imposing?

The second problem, however, is more profound. If Mr Lilley's speech was not merely some bogus focus group-driven exercise to lull the electorate into a bout of further state-shrinking, then it was as dangerous - for him - as it was justified.

There is a fault-line in politics. On the one hand, some believe in NHS rationing and the use of private money to help deliver better public health and education services, with some choice within the public sector. On the other hand are those who believe in encouraging more people to go private.

Miss Widdecombe's sidekick and junior health spokesman, Alan Duncan, almost certainly believes in the latter. So, despite energetic protestations to the contrary, did Margaret Thatcher, who was stopped from wholesale tax breaks for private health care in the late Eighties only by the stubbornness of Ken Clarke and Nigel Lawson.

Put another way, it is the fault-line between the Chris Patten-John Major view that the NHS and the education service should be so good that people won't want to go private, and Mrs T's that she wanted to be able to see the doctor she wanted, at the time she wanted and on the day she wanted.

If Mr Lilley and Mr Hague were putting themselves on the Patten- Major side of that line, Lilley was saying something genuinely important.

The problem is that it looks as though most of the Tory party is now on the other side of that line from Mr Lilley. That, and the hugely botched handling of his announcement mean, I suspect, that Mr Hague will now gradually go into retreat.

You don't have to spend much time with right-wing members of the Shadow Cabinet to form the distinct impression that the virtually unsackable Ms Widdecombe, for example, will press on regardless with a "radical" agenda. This may prove rather humiliating for Mr Hague.

Mr Hague may never been more vulnerable. But it would be rash to bet on it. It's worth remembering that not many people want the job of leading the Tories into near-certain defeat at the next general election.

It's possible that the local and European election results will be so bad that the party will turn to the man most likely to lead them out of their quagmire - Ken Clarke. But it may be that the Tories will have to suffer first a general election defeat - and then, even more importantly, one in a euro referendum - before they finally begin to realise that it is the Europhobic element of the Thatcher legacy that is really the medium- term threat to their recovery among an electorate that is deeply pragmatic about Europe. Then, and perhaps not until then, they will finally come to terms with the hideous traumas of November 1990.