Britain's Conservatives lose critical vote to Labor


LONDON -- Prime Minister John Major's ruling Conservative Party suffered a crucial by-election loss yesterday that ruled out any prospect of an early general election this summer and cast doubts on the Conservatives' chances of ever winning a fourth term in office.

The country's leading bookmakers immediately made the opposition Labor Party favorites to form the next government.

A general election must be called before June 1992, and there had been speculation that Mr. Major might seek a popular mandate as early as next month.

The latest in a series of political setbacks for the Conservatives came from Monmouthshire, the Welsh border constituency where the Labor Party, on a political roll, overturned a previous Conservative majority of 9,350 to win by 2,406 votes.

Most worrying for the government was that the central election issue was reform of the National Health Service, jewel in the crown of this country's cradle-to-grave social provision.

The government is seeking to improve the efficiency of the hugely expensive service but has been accused of trying to promote a two-tier system in which the rich would get speedier and better treatment than the poor.

The row over health care has replaced popular outrage over the recently rescinded head tax, a flat tax judged unfair by the majority of voters.

The government was knocked so off balance by the by-election result that it was unable to benefit from the announcement yesterday of the largest fall in the annual inflation rate in 10 years.

Chancellor of the Exchequer Norman Lamont said the inflation reduction -- from 8.2 percent to 6.4 percent -- marked a turning point in the recovery from recession, but deferred any reduction in the interest rate. He had been cautioned by the Bank of England not to reduce interest rates immediately for fear of refueling inflation.

John Smith, Labor's economic spokesman, pointed out that while interest rates were falling, the number of jobless was rising.

The word from Mr. Major's office in Downing Street was that the prime minister was "in no hurry" for a general election and might wait until next year.

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