A SEISMIC shift of political opinion is occurring in Britain now, with

the Tory Party suffering from internal collapse, John Smith, the Labour

leader said yesterday. However, he warned that Labour could not afford

to be complacent.

In what looked like a rejection of nationalisation as a general Labour

policy, he said: ''I don't believe the Government should run industry or

own industry -- but I do believe the Government has got to work with

industry. We have got to create a partnership.''

However, Mr Smith seemed confident that the Tories are now on the run.

He told the Daily Mirror in a wide-ranging interview published today

that the Conservatives were making ''a very good job'' of destroying

themselves.

Mr Smith said that Labour needed two terms in office, that is why they

had to win not merely the next General Election but the one after that.

He believed he could deliver Labour's vision without clobbering people

on tax.

''There has been a revolution in attitudes on tax because people have

found out the Tories have been conning them on tax. What annoys people

is that they are not paying this extra tax to get better things, but

paying for Tory economic failure.''

Mr Smith promised prudent finances. ''It is the failure of the Tories

to get steady economic growth that is at the heart of our problems.

He said that if Mr Major fell, then the Tories would be obliged to go

to the country. ''It is not enough to be selected. You have got to be

elected. You have got to go out for a General Election.''