Election '97: Tories smell blood as New Labour wobbles

Labour wobbled over privatisation policy yesterday, leaving itself dangerously exposed to concentrated and effective Tory fire for the first time in the run-up to the election.

With Labour leaders openly contradicting each other, the focus of the campaign was diverted from the Tories' own vulnerability on broken tax promises and on sleaze, with Martin Bell's high-profile challenge to Neil Hamilton in Tatton.

The danger of the mid-election crisis was critically illustrated by an ITN Channel 4 News poll last night, showing that half of the voters were still not firmly committed either way; the voters, too, are wobbling.

After John Prescott, Labour's deputy leader, had given an interview in which he stuck strictly to the manifesto line on privatisation - but contradicted a statement by Tony Blair earlier this week - the Prime Minister went for the Labour jugular.

Addressing a public meeting in a market square in Brecon, South Wales, Mr Major said Mr Prescott had escaped from his 'round the world hide-me- if-you can' campaign tour.

The Prime Minister said that Labour spin doctors had intervened to say there was no policy of privatisation. "They said Labour had an open mind - an open mouth, an open mind, open warfare. That is the real Labour Party up and down the country these days."

Tory strategists said the mood in the Major camp had lifted as a result of Labour's five changes in policy since the launch of their manifesto. "They are clearly unhappy under fire," one leadership source said. "If we can keep up the pressure, we could have a field day."

That pressure was increased by Michael Heseltine, the Deputy Prime Minister, who pounced on a lunchtime ITN interview in which Mr Prescott said: "We don't have a policy of directly wanting to privatise anything quite frankly, but we will face the realities of what has to be done with public assets...

"But as Tony Blair has said, it's not total privatisation which in many cases hasn't worked, which the electorate knows, or total nationalisation... it's a combination of practical common sense."

That line was in strict conformity with the manifesto, published last week. But it clashed directly with what Mr Blair himself said in a City speech on Monday, "that where there is no overriding reason for preferring the public provision of goods and services... then the presumption should be that economic activitiy is best left to the private sector, with market forces being fully encouraged to operate."

Mr Heseltine told BBC radio's World at One: "John Prescott has completely spat in the eye of the leader of his own party, making it clear that all this stuff about privatisation is just so much for the birds."

But the focus of Tory attack - as with Labour - was on trust. Mr Heseltine said of the Labour leader: "This is a man who has sold every principle he ever had in order to gain power, and he talks about trust."

Fending off such attacks, Mr Blair told his own daily press conference earlier that if he had made - and broken - the promises Mr Major had made in the 1992 election, "I would not have the gall to ask the British people to trust me again."

But as Gordon Brown, the shadow Chancellor, tried to keep attention directed at the Tory tax record - backed by a powerful study from the independent Institute for Fiscal Studies, showing that the tax burden had gone up by pounds 7 a week for the average household since the 1992 election - he was forced to defend the Labour line on privatisation.

Mr Brown repeated that Labour would consider privatisation of the National Air Traffic Control Services, but said there was nothing in the manifesto about the privatisation of any "public provision of goods and services".

The dispute over privatisation also served to deflect attention from Tatton, and the prospective battle between former minister Neil Hamilton - the man at the heart of allegations about the Commons cash-for-questions controversy - and Mr Bell, who announced that he had resigned from the BBC after 35 years' service.

Mr Major was left with no option at his daily press conference; he was cornered into saying that if he had a vote in Tatton, Mr Hamilton's seat, he would vote for him, and he urged all Tories to follow suit.