Thatcher, Conservatives Drubbed as Seat Slips to Labor : Britain: Results of a special election could fuel sentiments that it will soon be time for the prime minister to step aside.

Voters in a semi-rural constituency north of Birmingham confirmed Thursday what the opinion polls have been suggesting here for a long time: Prime Minister Margaret Thatcher is in serious trouble.

Her ruling Conservative Party suffered one of its most humiliating defeats in more than half a century in a special election to fill a vacant parliamentary seat. The party had overwhelmingly won that seat during the last general election in 1987.

The rival Labor Party’s candidate, social worker Sylvia Heal, won the Mid-Staffordshire seat with 27,649 votes, or 49% of the vote--a margin of 9,449 over Conservative contender Charles Prior, who collected 33%. It was almost as large a margin of victory as the Conservatives enjoyed less than three years earlier.

The Liberal Democrats took 11%, Social and Liberal Democrats won 3%, the Green Party 2% and the remaining 2% of the vote was split among the other nine candidates.

“People are absolutely fed up with Mrs. Thatcher,” commented a jubilant Labor campaign coordinator, John Cunningham. “They think she’s out of touch, isolated.”

Heal, 47, said her victory showed Britain is turning toward the Labor Party.

“The dark age of Thatcherism is drawing to a close,” she said.

Prior, 43, an accountant, said Heal had won the by-election, but not the campaign. “The Labor Party is a sham party with no policies at all,” he said.

Conservative Party chairman Kenneth Baker conceded that he found the results “disappointing,” and that his party is “going through a period of unpopularity.”

However, he insisted that the by-election was not “a referendum on the position of the prime minister. The result will not have any effect upon her position. She will remain the leader of our party; she will remain the prime minister, and she will lead us into the next (general) election and lead us to victory.”

The by-election will have no immediate, direct effect on Thatcher’s position, which is based on a 98-seat majority in the 650-seat House of Commons. She does not have to face another general election until mid-1992.

Also, various polls suggested that one-third or more of those who switched their votes to the Labor Party in Thursday’s by-election did so primarily as a protest over an unpopular new local tax and economic policies that have left Britain with rising inflation and 15% mortgage interest rates. Many of those protest voters said they are likely to switch again at the next general election.

Nevertheless, the Mid-Staffordshire result will inevitably fuel a deepening unease within the Conservative Party and could swing more party stalwarts to what is still a minority view that after 11 years in office, it is time for Thatcher to stand aside.

And it could cause more trouble in the British financial markets, where the pound has already been coming under pressure because of nervousness about the future of Thatcher’s government.

Conservative support in national polls conducted for the BBC has fallen to 30% from 45% at the beginning of 1989, BBC television reported Thursday. Support for the socialist Labor Party grew to 51% from 35% in the same period, it said.

If those patterns were to hold in the next general election, the BBC added, Labor would emerge with an overwhelming 210-seat majority in Parliament.

Thursday’s by-election results were particularly disturbing to Conservatives because Mid-Staffordshire is a semi-rural area with a high proportion of young homeowners and skilled workers. Those are the very kinds of voters on whom the party built its last two election victories.

John Heddle, who committed suicide in December because of personal and financial troubles, won the Mid-Staffordshire seat for Thatcher’s Party in 1987 with nearly 51% of the vote.

Now, however, those same constituents are particularly hard hit by a doubling of mortgage interest rates since the 1987 general election. The rise has added the equivalent of hundreds of dollars to most homeowners’ monthly payments.

The government is keeping interest rates high in hopes of so discouraging spending that the country’s inflation rate--at 7.7%, it is among Europe’s highest--might fall. But instead, Chancellor of the Exchequer John Major admitted in his budget message this week that inflation is likely to get worse over the next few months.

Most of all, however, Mid-Staffordshire voters were protesting a highly unpopular community service charge to be levied beginning next month in place of local property taxes, or “rates.” The new charge, known popularly as the “poll tax,” consists of a flat charge on every citizen over the age of 18 in the country.

While charges vary widely based on the cost of providing local services in different communities, the average poll tax will be about $580 a person, or about $136 higher than the government had originally expected. The difference means that even property owners, who had been expected, on average, to benefit from the change, instead face even higher local taxes than they did under the old “rates” system. The resulting taxpayer revolt here has turned angry at times, with scores of people arrested and hundreds hurt in anti-government demonstrations over the last few weeks.

In the strongest sign yet of government concern over the poll tax, Thatcher announced in Parliament on Thursday that there will be more than $6 million in retroactive community charge relief to residents in Scotland, where the system went into effect a year ago. It was an embarrassing retreat for the government.

BACKGROUND

Margaret Thatcher, 64, the longest-serving British prime minister, was elected to Parliament in 1959 and became the first woman to hold the country’s top post in 1979, when the then-opposition Conservative Party won a general election. She won her second five-year term in 1983, after recovering the Falkland Islands from Argentina in a 74-day war. She survived an IRA assassination attempt Oct. 12, 1984, and won another five-year term in 1987, with a plurality of 43%. Her party now holds a 98-seat majority in the 650-seat House of Commons. Thatcher does not have to face another general election until mid-1992.