The political crisis over the fate of Britain's Westland Helicopters took a new turn today, as Prime Minister Margaret Thatcher was forced to defend her trade secretary against charges that he had misled Parliament over key aspects of the controversy and should resign.
As Thatcher parried hostile opposition questions during a brief appearance in the House of Commons, opinion polls indicated that the government has suffered significant damage over the way she has handled the Westland affair.
In a survey on the national mood published by the usually progovernment London Standard, 38 percent favored the opposition Labor Party, with only 33 percent backing Thatcher's Conservative Party. Last month, the same poll, conducted by Market Opinion Research, showed the two neck and neck at 35 percent each.
Fifty-eight percent said they were not satisfied with the way Thatcher is running the government, compared to 53 percent last month.
Meanwhile, the political uncertainty began to have at least a temporary effect on financial markets here, as a second increase in interest rates in a week was averted only through Bank of England intervention.
A statement by the treasury said that the central bank move reflected the view that the market was affected by "temporary factors" that would rectify themselves. Interpreting this as a reference to the Westland affair, National Westminster Bank adviser David Lomax noted that the financial market "feeds on rumors."
Base interest rates rose by 1 percentage point last week, to 12.75 percent, and went briefly up to nearly 14 percent this morning before the Bank of England intervention.
The Westland controversy revolves around two separate financial rescue bids to save the British firm from bankruptcy. One, jointly proposed by the U.S. company Sikorsky and Fiat of Italy, has been backed by the Westland board of directors. The other is by a consortium composed of three European companies along with British Aerospace and Britain's GEC electronics firm.
The two bids are basically equal in financial terms, and Thatcher has said that the government -- which purchases 90 percent of Westland's products -- believes that the company shareholders should decide between the two without official interference.
What appeared to be a relatively straightforward financial deal turned into a political crisis last week, when Michael Heseltine resigned as defense secretary, charging that Thatcher was secretly orchestrating policy in favor of the Sikorsky-Fiat bid.
Today's episode in the drama involved Trade and Industry Secretary Leon Brittan, who has been Thatcher's closest ally on the issue.
Heseltine, in his resignation statement last week, accused Brittan of putting pressure on British Aerospace to withdraw from the consortium. In a statement yesterday, Brittan denied the charge. But he acknowledged that he had warned the company that the consortium bid against Sikorsky, a division of United Technologies, might be interpreted as anti-American.
In the House of Commons yesterday, Heseltine asked Brittan if he was aware of a letter from British Aerospace to the government giving its own version of the warning. Brittan said no. But later in the day, the prime minister's office acknowledged that such a letter had been received. Since it was marked "confidential," a government statement said, Brittan felt he could not acknowledge its existence.
Although Brittan late last night told Parliament he "apologized unreservedly" if his remarks had been interpreted as misleading, opposition calls for his resignation began.
In her statement today, Thatcher said that Brittan's explanation of his answer was clear. She said that she hoped to be able to make the letter, and her response to it, public by Wednesday, when a full-scale Parliamentary debate is scheduled on the Westland question.
Meanwhile, the Westland board postponed from today until Friday a shareholders meeting to vote on the Sikorsky proposal.