Thatcher Forced Into Runoff Vote : Britain: The prime minister fails by a two-vote margin to gain a first-ballot party leadership victory over Heseltine. A showdown is set for next week.

British Prime Minister Margaret Thatcher, in a sharp setback to her leadership of the Conservative Party, failed to gain the necessary votes for a first-ballot victory Tuesday and will face former Defense Secretary Michael Heseltine in a runoff election next week.

In the most serious threat to her political career, Thatcher won more votes than Heseltine in the balloting by Conservative members of Parliament, but she failed by a two-vote margin to win an outright victory.

When it was obvious that the prime minister had been forced into a runoff, some Tories urged Heseltine to quit the contest in the interest of party unity, but he refused. Likewise, Heseltine supporters immediately called for Thatcher’s resignation, but she declared Tuesday night that she would continue the fight.

“Naturally, I was very pleased I got more than half the vote but disappointed it was not quite enough to win on the first ballot,” Thatcher told reporters at the British Embassy here.

“So I confirm it is my intention to let my name go forward in the second round.”

Then, in evening dress, she drove off to a glittering dinner at Versailles Palace with 33 other national leaders who are here for the Conference on Security and Cooperation in Europe.

If Thatcher loses the leadership election, she would have to step down as prime minister after more than 11 years in office. She has been the longest continuously serving British leader in this century.

Even if she wins next week, she will emerge much weakened as a political leader because of the lukewarm support for her within her own party.

The vote threw London into political turmoil. The absence of a clear-cut victory for the party leadership was, in the words of Transport Secretary Cecil Parkinson, “the worst possible result for the party.”

And many other Tory leaders sounded that theme. They fear that another fractious week of in-fighting between the Thatcher and Heseltine camps would irreparably damage the Conservative Party in the run-up to the next general election, opening the door to the opposition Labor Party.

The Conservative Party holds its leadership election every year, but serious challenges to the party leader are rare, and the vote in recent years has amounted to a pro forma endorsement of Thatcher. This year’s vote was a notable exception.

The secret vote took place all day Tuesday in a committee room of the House of Commons, with the 372 Tory members casting ballots.

The final count was Thatcher, 204; Heseltine, 152; abstentions or invalid ballots, 16.

Under the complicated party voting rules, Thatcher’s edge was not enough for an outright victory. She needed a majority plus 15%, which she missed by two votes.

In next Tuesday’s vote, only a simple majority is needed to win, but the election may be more complicated than a two-candidate affair, since others are allowed to run. They have until noon Thursday to declare their candidacy.

Thatcher’s fellow national leaders here at the Paris summit were puzzled by the fact that the prime minister, a senior world figure, had not been able to rally more support among Tory members of Parliament, even though she has won three national elections and the Falklands War.

Labor Party leader Neil Kinnock, whose party has led the Tories in public opinion polls for months, called the Thatcher government “disabled” Tuesday, presented a no-confidence motion in the House of Commons and called for an immediate general election.

Left-wing Labor member of Parliament Dennis Skinner declared, “The Tory party is split, and Mrs. Thatcher is impaled on barbed wire.”

Paddy Ashdown, leader of the Liberal Democrats, called Thatcher a “lame-duck prime minister at the head of a broken-back government.”

Political observers in Parliament suggested that some Tory leaders may urge the 65-year-old Thatcher to pull out of next Tuesday’s race in order to prevent the humiliation that would result if she lost or only squeaked through.

However, former Cabinet minister Norman Tebbit, one of Thatcher’s staunchest supporters, pointed out that the prime minister received 55% of the vote and declared that Heseltine himself should be the one to quit.

“People in other countries must wonder what sort of crazy game this is,” Tebbit said. “She has won three elections, has a majority of 100 in the House. . . . Yet she is asked to stand down because she only gets 55% of the vote. They must think we are out of our minds.”

Some commentators suggested that either Foreign Secretary Douglas Hurd or Chancellor of the Exchequer John Major should enter the second-round balloting as a stop-Heseltine measure.

But Major said he would not run as long as Thatcher continued in the race. And Hurd issued a short statement declaring, “The prime minister continues to have my full support, and I’m sorry this destructive, unnecessary contest should be prolonged in this way.”

The Thatcher-Heseltine struggle pitted long-time Conservative Party members of Parliament against one another.

One lawmaker, Emma Nicholson, said, “In the next round, we will vote a clear majority, and I hope Michael Heseltine will win.”

Former Cabinet Minister Nicholas Ridley attributed Thatcher’s poor showing to the fact that after 11 years in office, “you have MPs with grudges and jealousies--I think 55% is a pretty good figure.”

A number of Tory lawmakers said the party will rally around whoever is chosen next week, but they were mindful that the split in the party would undoubtedly affect its showing in the next elections. And the polls show that in a national election, the Conservatives would fare better under Heseltine than under Thatcher.

Thatcher took the leadership in 1975 from Prime Minister Edward Heath and won the 1979, 1983 and 1988 national elections. The next one must be held within 18 months, the precise date left to the prime minister.

Thatcher has been criticized by many in Parliament for her imperious style of governing, attributed as one of the reasons for the resignation two weeks ago of her deputy prime minister, party stalwart Geoffrey Howe.

Heseltine, 57, a self-made millionaire, was environment secretary in Thatcher’s first Cabinet in 1979 and was named defense secretary in 1983. He resigned from the Cabinet in 1986, specifically criticizing the prime minister’s opposition to a vigorous British role in the European Community as well as the unpopular local community taxes that she had introduced.

Opinion polls show that Heseltine would be the strongest contender the Tories could field against Kinnock and the Labor Party.

Still, Thatcher supporters say she has badly trailed in the opinion polls before and still come back to win large majorities.

They argue that she has 18 months to reduce inflation and interest rates, sort out the tax problem and go into another election in much better shape than she is in today.

In the event that three or more candidates are entered in next week’s second-round balloting and no one gains an absolute majority, the three leaders would go into a final runoff two days later.