Who could Lady Thatcher have been talking about?

NOT ONCE in the blistering, hour-long demonstration of oratorical bombast was his name mentioned. But the audience at the London dinner given by the National Association of Conservative Graduates did not need their degrees to work out who was in Lady Thatcher's firing line.

In the week when John Major sued two magazines, she gave short shrift to the idea that politicians should care about what is written about them. Without referring to any libel actions she said: 'Goodness me, I didn't read the papers. I just got on with the job.'

Adopting a mariner's metaphor, she spoke of a government's need for ideals and principles: 'If you do not have stars to steer by, a fixed point in the heavens and a compass to guide you, you will then become merely the slave of your in-tray. There are new stars in the firmament . . . shooting stars. They are called Compromise and Consensus.'

Could these errant stars be guiding British government economic policy? Lady Thatcher did not quite say so, although she knew the course to navigate: 'We knew we had to cut expenditure; you only get into difficulties, financially, when you depart from orthodox financing (huge applause). You don't garner the respect of the people if you say 'yes' to every request only to land them in terrific debt.'

And on defence, at a moment when the armed forces are at full stretch, she observed: 'At no time did we ever have to think 'do we have the correct defence equipment?' We knew we had.'

Lady Thatcher had taken her text from Theodore Roosevelt: 'Far better is it to dare mighty things, even though chequered by failure, than to dwell in that perpetual twilight that knows not victory or defeat.' Strangely, my dictionary of quotations substitutes 'grey' for 'perpetual'.

The 600-strong audience at London's New Connaught Rooms on Thursday had expected a rousing speech from the former prime minister, and they were not disappointed. Besides the coded baiting of Mr Major's government, there was a tribute to Churchill; thoughts on foreign policy ('pragmatism is never enough'); and a heartfelt demand for more Western aid for Russia.

Then on to Europe. Lady Thatcher, whose position on the Maastricht Bill will gain increasing significance as it passes to the Lords, defended her decision to sign the Single European Act but attacked the notion of a single currency. The Maastricht Bill, she said, 'goes further than before'. The process, she said (to more tumultuous applause) would mean 'surrendering more and more to bureaucracy and that less and less is done by democracy in our own elected Parliament'.

The guests were a strange mixture of very old and very young Tory faithful. Staff from Conservative Central Office kept a low profile, and the one member of the Cabinet who was due to introduce the main speaker - the very dry Chief Secretary to the Treasury, Michael Portillo - sent his apologies. He had to cancel, due to a three-line whip on the Maastricht Bill.