Mr Lilley's attempt to define a new "caring Conservatism", made in a separate speech last night, has angered some Shadow Cabinet colleagues. They complain they were not consulted about the apparent U-turn, and that the shift has put the leadership at odds with Ann Widdecombe, the health spokeswoman, and Iain Duncan Smith, the social security spokesman, who have both raised the prospect of greater private-sector provision.
At a dinner to mark the 20th anniversary of Baroness Thatcher's election as prime minister, Mr Hague said: "It is a great mistake to think that all Conservatives have to offer is solutions based on free markets." The Tory leader called for a new approach which applied the party's enduring values to the public sector. "We can offer a real transfer of power away from Whitehall to schools and hospitals, patients and parents," he said.
He told Lady Thatcher that when she declared the National Health Service was "safe in our hands," she was attacked by critics who did not believe her. "Today we are being attacked by critics because they do believe us," he said.
Tory sources insisted Mr Hague was not abandoning Lady Thatcher's legacy, saying what she did for Britain in the Eighties was right, but events had moved on. They denied a U-turn on public services, saying Mr Hague was merely trying to kill off the "damaging and wrong perception that the Tories would sell off the hospitals".
In her speech at the dinner in London, Lady Thatcher defended the "transformation" of Britain during her 11 years as prime minister. Jokingly playing down the idea that she was responsible, she said: "All that we did was to create the right framework: it was the British people who did the rest."
Lady Thatcher also paid a rare tribute to Sir Edward Heath, her predecessor as Tory leader, with whom she has barely spoken since she ousted him in 1975. She described him as "one of Britain's most forceful and effective prime ministers".
Meanwhile, Lady Thatcher attacked the Blair government's "third-way" philosophy but without criticising Tony Blair personally. She said that Britain ought to be doing "much better" given Labour's economic inheritance.
"Raising pounds 40bn of extra taxation by stealth, as Gordon Brown is planning, is evidence that behind the New Labour mask, Old Socialism smirks," she said.
William Hague last night committed the Tories to leading "the national campaign to save the pound" at the next general election. He insisted that a single European currency was not inevitable.Reuse content