That which you have contributed, you should get when you retire, not have it taken away

Lady Thatcher

But, as she arrived at the Conservative Party conference in Bournemouth, she said it was wrong for pensioners to be means-tested for a benefit towards which they had contributed all their working lives.

Lady Thatcher said: "For years, as a young MP, I was a junior minister for pensions and the money people paid into their pensions they got out in their pensions in their old age.

"Not now. This government has put a means-test of old age pensions, so that thousands and thousands of people who paid contributions all their lives are not getting their pension.

"That to me is outright fraud. That which you have contributed, you should get when you retire, not have it taken away - that is what Labour is like."

Thatcher and Heath disagree

Despite pressure, Labour has refused to restore the link between state pensions and average earnings, which Mrs Thatcher - as she was - broke.

"People should get out what they pay in": Lady Thatcher

Instead, the government is targeting money at the poorest pensioners, by means of the Minimum Income Guarantee, which gives an extra weekly amount to those who have few savings.

Critics say this has become a disincentive for people to save for their old age.

Lady Thatcher was greeted in Bournemouth by William Hague whom, she said, was doing "very well" as leader.

Her praise was in marked contrast with another former Tory prime minister, her traditional rival, Sir Edward Heath.

Hague under attack

Sir Edward launched a stinging attack on Mr Hague's leadership, accusing him of producing policies "out of the blue".

That is a very dangerous technique to follow

Sir Edward Heath

He said the party was wrong to emphasise tax cuts at the expense of increased spending on the National Health Service and questioned whether they could really be afforded.

He told BBC Radio 4's Today programme: "What people are saying is that he suddenly produces these policies out of the blue - this was certainly true of petrol - and of course then people aren't impressed.

"They say you are just making it up on the spur of the moment ... That is a very dangerous technique to follow."

Sir Edward: "Tories are wrong to emphasise tax cuts"

Sir Edward said Mr Hague still had to show that he would, as he claimed, govern in the interests of all of the British people.

"It is not enough to say we're the One Nation party. You have got to show you're the One Nation party by the action that you take," he said.

He said Tories still had to convince the public that their sums added up and that they could raise spending on public services while cutting taxes.

"This is one of the biggest doubts that people have in their minds," Sir Edward said.