INTERVIEW / Extra-dry and off the rocks: He was bright but ineffective, says Stephen Castle. Now his speeches have made him unsackable; Peter Lilley

IT IS becoming almost a tradition for Peter Lilley, the ultra-dry Secretary of State for Social Security, to arrive unnoticed for a Tory party conference that boasts a bill of much bigger names, and then cheekily steal the show.

Last year, his 'I have a little list' speech, employing Gilbert and Sullivan to attack left-wing councillors and single mothers jumping council-housing queues, brought the faithful to their feet. This year he did it again, likening Labour's modernisers, Smith, Brown and Blair, to Macbeth's three witches, making risky jokes about being a cabinet 'bastard', and singling out for opprobium lone parents (again) and foreign benefit scroungers. Next day, Sir Edward Heath demanded his resignation - the ultimate accolade for a real right-winger.

But talking last week in a cramped and untidy bedroom at the Imperial Hotel, Mr Lilley seemed an unlikely rabble-rouser. He sits almost motionless, his legs crossed. He is softly spoken - so much so that a constituency selection committee once asked him how he made himself heard when speaking publicly. And conversation is staccato. Why did he raise this rather embarrassing issue of bastards? 'I always like to break the ice and it is hard to ignore that this word has been bandied about.' Did this not amount to an admission that he is, indeed, one of those singled out? 'I know I'm not' - just a hint of tongue in cheek - 'the Prime Minister and I have joked about it and he assures me not.'

In the matter-of-fact tones of the City analyst he once was, he admits to a number of puzzling paradoxes: he is tough on crime but does not believe in capital punishment; he wants the welfare state to shrink but does not use private health care; he targets foreigners in his conference speech but has a home in France.

He understands the visceral instincts of the Conservative Party conference, but what makes him tick is a more complex question.

BORN and bred in Hayes in Kent, Peter Lilley comes from the same village as William Pitt the Younger. His path to power has been slower and more precarious; he was 40 before he became an MP. His childhood was not impoverished - his father was a BBC personnel manager - but there was no television or car. And, although he now enjoys financial independence - he was bought out of a partnership at the City firm Greenwell's in the 1980s - a streak of puritanism persists. The Lilley home in Normandy, though regularly visited, is uncarpeted, has no central heating and has only recently been painted.

Neither of his parents was political; it was when he went to Cambridge, after attending Dulwich College on a scholarship, that he found Conservatism - a reaction to 'left-wing school friends whose philosphy I saw as destructive'. By his own admission Mr Lilley, a scientist, was on the fringes of the older 'Cambridge mafia' that included the young Clarke, Gummer, Howard and Lamont. After university, he worked as an economic adviser in the Third World before moving to the City, where his political career blossomed in the Bow Group. Already a man of the right, he invited Hayek, the right-wing economic guru, to address a meeting in 1972, and wrote a book with Samuel Brittan, the economic commentator.

Elected to Parliament in 1983 the No Turning Back Group was a natural home and most of Mr Lilley's political friends are drawn from it. In 1979 he married Gail, an artist. They have no children.

Mr Lilley's political career has been dominated by the thinking of the Treasury, where he spent six years in the 1980s, beginning as Parliamentary Private Secretary to Nigel Lawson. In his memoirs, Lord Lawson recalls asking Mr Lilley to move an amendment to a motion at the 1982 Tory conference. When the moment came Mr Lilley was nowhere to be seen; instead he was searching through the hotel dustbins for his notes, thrown away by a chambermaid. An ex-Treasury official says: 'He was clearly very bright but not very effective as a PPS, because lots of administrative tasks - like arranging planted questions - are required.' Only when he got a ministerial job, first as Economic Secretary and then as Financial Secretary, did his potential show through.

In 1990 he made it to Cabinet as Secretary of State for Trade and Industry, a promotion which was to prove disastrous. Business was looking for help and reassurance in the recession but got neither from this free-marketeer who did not believe in bailing out lame ducks. Feeling grew so bad that in the run-up to the election, John MacGregor, then Leader of the House, had to be called in to woo leading businessmen. Worse still were Mr Lilley's Commons performances, as he received regular shreddings from Gordon Brown, his opposite number. But a post- election move to the Department of Social Security proved a godsend. The budget is huge and the complex work and scale of the problems suited him.

His political position has also been greatly strengthened by his recent party conference speeches. As one supporter put it: 'If he were sacked now it would not be seen as a sacking of a bad minister but because of his views, and that would be politically impossible.' At the age of 50, Mr Lilley finds himself one of the leading hopes of the right.

This is an asset he may need. On Europe he has been at odds with the Prime Minister, having been caught smiling on camera when a crucial Maastricht division was lost. His views are those of, in the words of one friend, 'a romantic nationalist', although he never opposed entry into the ERM, regarding it as a useful instrument of financial discipline. He is, he insists, 'very keen on foreigners' but just doesn't 'want to be governed by them'.

While his economic liberalism and Euro-scepticism are straight Thatcherite tenets, his arguments about the family seem less convincing. He has no examples to illustrate his alarm over the breakdown of family life, arguing simply that he has lived close to council estates for many years and sees life in the raw. And when pressed about the effects of the 1980s on society he answers with a technical justification of Thatcherism, which, he argues, has been wrongly presented as a doctrine of selfishness. 'You will never find any statement of that idea from the Thatcher era.'

Mr Lilley has seen other Cabinet ministers of the right come a cropper and has learnt the lessons. Radical change in social security will not proceed until the public has been softened up. The equalisation of pension age, for example, now almost certain to be at 65 rather than 60, will be attempted only after more than a year of leaks and discussions.

Moreover he lacks charisma, and he knows it. His answer is hard work. For the Blackpool speech he drafted in advisers, including Steve Hilton, an executive with Saatchi & Saatchi. Early drafts were circulating as far back as June, according to some accounts. Dinners were held to discuss progress, and there were frequent rehearsals.

The result may not have have been in the best taste but it underlined one truth of this year's conference: the Tory right's show is back on the road.

(Photograph omitted)