Top Tories in last-minute plea to voters: Labour and Lib Dems aim to gain 300 seats - Clarke puts unemployment at top of agenda

THE TORY hierarchy yesterday made a last-ditch effort to prevent heavy and morale-sapping losses in today's local elections as the Chancellor of the Exchequer went out of his way to reassert the party's commitment to high employment and a 'strong welfare state'.

Kenneth Clarke's effort to re-emphasise its appeal to the centre ground will inevitably be seen as a further rebuke to Thatcherite forces coalescing behind Michael Portillo, Chief Secretary to the Treasury, during the Tories' current period of instability.

The party faces its most daunting mid-term electoral test since coming to power in 1979, but Sir Norman Fowler, party chairman, insisted the poll should be on local issues.

Acknowledging a respectable outcome in the contest for 5,000 seats in 198 councils in Britain would hinge on the willingness of natural Tory supporters to vote, he made a final appeal to them to turn out, saying: 'There is everything to play for in these elections.' He vowed to take take responsibility for the outcome, adding: 'The buck stops with the party chairman.'

With Labour and the Liberal Democrats hoping to inflict between 100 and 300 net losses throughout the country, there were private fears among some senior Conservatives that in the key battleground of London they would even have an uphill struggle to retain the political showpiece borough of Wandsworth.

As MPs left Westminster early to canvass in their local councils, Mr Clarke reopened the debate on the future direction of the Conservative Party with an unequivocal defence of the goal of social justice and 'state welfare provision'.

In the most important statement of his own brand of Tory philosophy since becoming Chancellor, Mr Clarke put the tackling of unemployment at the top of the party agenda and argued that a strong social security system was essential to underpin economic and industrial change.

Though he is a heavyweight candidate for the party leadership should a crisis result from today's poll and next month's European elections, Mr Clarke was careful not to revive the internecine party squabbling which characterised the eve-of poll weekend. His lecture was cleared by Downing Street.

However, the tenor of his long-planned lecture to the City University Business School will be taken as an implied contradiction of the domestic agenda set out by Cabinet right-wingers, including his deputy, Michael Portillo, who was rebuked by Mr Major on Tuesday for going beyond party policy in opposing a single currency.

Mr Portillo's relative isolation within the Cabinet was underlined when Douglas Hurd, the Foreign Secretary, made it clear to activists that the party would fight a 'positive' European election campaign. The Euro-manifesto's studied neutrality on a single currency has been preserved intact.

Mr Clarke also re-emphasised his beliefs in 'American enterprise and free market efficiency combined with the European commitment to the welfare state'. He warned the 'pace of change had created fears and uncertainties amongst men and women in every walk of life'.

Indicating he was as committed as Beveridge to the 1944 White Paper ideal of 'high and stable employment', the Chancellor added: 'Not only adequate state welfare provision but a whole range of other social policies should alleviate such fears, and offer a sense of security in a world where retraining and changes of jobs are becoming necessary events in most people's working lives.'

Gordon Brown, the shadow Chancellor, sought to exploit the lecture as a further sign of Tory divisions. He said Mr Clarke was making a 'leadership bid to stop the momentum behind Mr Portillo . . . not only are they totally split over Europe, they clearly have different views on how to run the economy.'

Labour remained cautious about the scale of its potential national election gains after warnings that they could be offset by losses of up to 200 seats in regions such as the North West where it scored spectacularly in 1990 as a direct result of the poll tax. But in London there were Labour hopes of taking Brent, Ealing, Redbridge, Barnet and even Croydon, which has never been lost by the Conservatives.

The Tories' best hope of headline-making gains are in the West Midlands, with Wolverhampton and Dudley target councils. If they take Birmingham - which Labour remains optimistic of holding - it would go a long way to offsetting the adverse impact of expected losses elsewhere on Tory morale and the stability of Mr Major's leadership.

Meanwhile, senior Liberal Democrats predicted that a Tory vote collapse could assist Paddy Ashdown in making important gains in traditional northern Labour strongholds such as Liverpool, Sheffield and Greater Manchester.

Mr Ashdown insisted last night: 'The Liberal Democrats are the new force sweeping through Britain's town halls, winning support by delivering the goods.'

However, John Smith, the Labour leader, predicted that his party would emerge today as 'clear winners'.

Clarke speech, page 9

Lib Dem hopes, page 9

Leading article, page 19

Andrew Marr, page 20

Among the doubtfuls, page 20