POLITICS MICHAEL WHITE

When things go wrong for a political party they go badly wrong. That is the lesson we should draw from the row within the shadow cabinet over Peter Lilley's 'safe in our hands' speech about the party's future commitment to state-funding for education and the NHS.

'So what?' I hear you murmur. 'The Tories are not going to be in power for years, probably not until after the Balkan crisis is finally over.' But we should not mock William Hague's struggle to get back on the political rails after the 1997 disaster. The Tories managed it quickly enough under Rab Butler after Labour's 1945 landslide, as Mr Lilley pointed out.

But Lilley is no Rab, no sinuous political brain. He messed up big time. There is genuine anger in the Tory ranks, not just mischief-making. Ann Widdecombe is among those offended. In her efforts to 'move the debate on' over health funding, the shadow health secretary feels her task has been made harder. The mild and saintly Sir Norman Fowler feels the same.

So does Labour, which gleefully dug up Alan Duncan's speech to the Social Market Foundation on 29 March, the one in which he called for 'the expansion of personal healthcare. We need to build a larger public-personal mix', that is to say, more BUPA-ism, encouraged by tax reliefs, he said.

Tory thinkers like Lord Maurice Saatchi, also struggling for new ideas, now argue that all tax reliefs should be abolished in return for lower tax rates. All the same, I was actually puzzled by the Lilley row - at least at first. His tone seemed so mild, so reasonable, part of Hague's 'risk-averse' coterie, as Mr Duncan might rudely put it.

All the man seemed to be saying was that the Tories had always pumped extra money into schools and the NHS, often more than Labour, but they had not got the credit for it because their free-market language and political body language made voters suspect they'd privatise both if they could get away with it.

'We all accept, and have done for 50 years, that the public services cannot be left to the free market in practice. But some (Tories) seem to believe that maybe they could in theory,' he said. Across town at Maggie's big dinner, Mr Hague agreed. The shadow chancellor, Francis Maude, has since promised to match Labour's£40bn spending pledges in 1999-2002 - just in case Labour falls over Kosovo, you understand.

Actually Lady T would have privatised NHS funding if she could, as us oldies remember very well. But she couldn't find a formula that would work: as usual her head ruled her anti-socialist heart. The Lilley speech briskly made the case against compulsory insurance: poor people and sick people (often the same people) can't afford it. Much better to 'pool risk' and contribute to a common fund via our taxes.

As for privatising health provision - ie hospitals - Mr Lilley pointed to the US model where 'perverse incentives' (ie profits) make doctors opt for costly treatments. Half US health spending 'is incurred in the last few months of life', he dryly noted. There, I think, is the nub. Lilley went on to acknowledge a role for insurance in welfare provision, but he didn't say the same for healthcare.

Bang! Widdecombe saw the speech before it was delivered and demanded changes, some of which were made. Most shadow ministers were in the dark until they read unsubtle pre-speech spin ('this is our version of 'Blair's clause IV battle') and the final text. Many were dismayed. In a weekend article for The Times, Hague redefined the message more towards a public- private partnership theme.

'After all, that's what Labour's now saying,' complained one top Tory. Widdecombe felt that if Lilley had simply adjusted party rhetoric to reassure voters that 'the NHS is safe with us', she could then have moved the debate on to her familiar theme - the need to expand healthcare resources, partly via social insurance on the Franco-German model.

Instead, Lilley appeared to posit public and private options in opposition to each other, the critics complained. Knowing Lilley, I think that's a misreading. It was loose drafting and bad spinning, nothing more. And his basic thrust is correct. Don't expect young William to sack him. I would not offer that guarantee for William's own career.