Lamont in the firing line: Calls for Cabinet reshuffle after Tories given 'bloody nose' by voters across the country

The Government's catastrophic double defeat in the county council elections and the Newbury by-election could see the removal of Norman Lamont, the Chancellor - or a challenge to the Prime Minister himself.

As John Major admitted that electors had been 'determined to give the Government a bloody nose' and had done so, he faced an outcry from senior Tories for a full-scale Cabinet shake-up.

According to recent backbench rumblings, failure by the Prime Minister to 'get his act together' could risk the emergence in November of a 'stalking horse' candidate, which could spark a contest for the leadership. Some MPs feel he should prove his leadership qualities within 12 months.

The grim scenario facing Mr Major comes after one of the biggest by-election upsets since the Second World War and the slaughter of the Tories in elections for the 47 county councils in England and Wales.

Traditionally Conservative Newbury not only broke the habits of 70 years by electing David Rendel, the Liberal Democrat, as their MP but delivered a massive vote of no confidence in the Government.

With a swing from the Conservatives to Liberal Democrats of a stunning 28.4 per cent, Mr Rendel turned a 12,000-plus Tory majority into a 22,000-plus defeat for the Tory candidate, Julian Davidson.

Worse, if anything, was the comprehensive rout of the Conservatives in the county council contests. Their control plummeted from 16 counties to just one, Buckinghamshire, and they lost 490 seats while most other parties gained. Tory losses included such gems as Surrey, Kent, Essex and West Sussex. Labour captured the most seats, 1,388, while the Liberal Democrats scored noteworthy victories, including taking control of Somerset. A record 27 councils are now 'hung'.

The humiliating episode spotlights the ability of electors to vote tactically in their droves when the occasion calls for it - and to register a devastating message of disapprobation.

Sylvia Russell, one of many defeated Tory council leaders, who lost her seat in Teignmouth, south Devon, said Mr Major should possibly listen to those urging a reshuffle.

Sir George Gardiner, the senior Tory MP, whose Reigate constituency is in Surrey, said grass-roots Tories had 'rebelled with their feet or with their backsides simply by sitting on them. They are not impressed by the performance of the Cabinet. They have not forgiven ministers for prolonging the recession by clinging to the exchange rate mechanism.'

Speaking in Cambridgeshire, Mr Major said: 'We are clearly coming out of recession but the effects of that are not felt. People feel bruised, they feel hurt . . . We'll note it and we'll learn from it.'

But because Mr Major has identified himself so closely with Mr Lamont throughout such debacles as Britain's undignified exit from the ERM, sacking him may not be enough to reassert his authority and re-establish much-needed stability for the Government.

Delaying implementation of this year's national curriculum English tests for 14-year-olds or putting privatisation of the railways - like the Post Office - on hold are possible further concessions to criticism that could be considered. Both are controversial nationally and figured in the Newbury by-election, as the Tory campaign team would have reported. Ministers have not conspicuously rallied to the defence of John Patten, the Secretary of State for Education, who now becomes a candidate for the reshuffle which the Prime Minister had hoped could be confined to more junior

ministers.

But senior Tories positioned their sights most firmly on Mr Lamont yesterday. Sir George said that whoever had wheeled out the Chancellor at Newbury should be presented with a revolver on a silver tray.

'Je ne regrette rien' was Mr Lamont's verdict on his recent economic career when he made an appearance in support of Mr Davidson.

Ironically, Mr Lamont's removal could bring about another by-election. He would like the job of Foreign Secretary, but that is unlikely, and life as a backbench MP would be financially unrewarding. Because his Kingston constituency will disappear under impending boundary changes, he would also face the indignity of touting for a new seat.

A continuing lack of confidence in Mr Major's leadership - set to be exacerbated when the running sore of Maastricht reaches the Lords - would be most likely to see the emergence of Douglas Hurd, the Foreign Secretary, as a potential replacement. Right-wing MPs might well back him, because their choice, Michael Portillo, Chief Secretary to the Treasury, is not ready for high office.

At the first meeting of Labour's new policy forum, John Smith, party leader, declared the county successes proof that Labour could win a general election on its own.

(Photograph omitted)