In a hugely provocative speech, London mayor Boris Johnson has launched the latest phase in his undeclared bid to become Tory leader by invoking the Thatcherite "greed is good" slogan and suggesting that people with low IQs can never succeed.

In words immediately branded as profoundly divisive and a form of "economic eugenics" by Labour, the mayor went where even the most ardent Thatcherites have hesitated to go.

Delivering the annual Margaret Thatcher Lecture to the rightwing Centre for Policy Studies thinktank, Johnson echoed the words of the infamous character Gordon Gekko from the film Wall Street: Greed is good.

Calling for an updating of Thatcherism, he said: "I hope that this time the Gordon Gekkos of London are conspicuous not just for their greed, valid motivator though greed may be for economic progress, as for what they give and do for the rest of the population."

Supporters of the former Tory prime minister's ideology have always refused to accept the "greed is good" label, aware of its implications of heartlessness and divisiveness. Johnson deliberately chose to embrace it.

Even more controversial, however, was the Old Etonian's suggestion that he believed inequality was a good thing and that people of low IQ were condemned not to succeed.

Suggesting that he accepted the strongly contested view that IQ is genetically programmed at birth, he said: "I am afraid that violent economic centrifuge is operating on human beings who are already very far from equal in raw ability, if not spiritual worth.

"Whatever you may think of the value of IQ tests, it is surely relevant to a conversation about equality that as many as 16% of our species have an IQ below 85, while about 2% have an IQ above 130.

"The harder you shake the pack, the easier it will be for some cornflakes to get to the top. And for one reason or another - boardroom greed or, as I am assured, the natural and God-given talent of boardroom inhabitants - the income gap between the top cornflakes and the bottom cornflakes is getting wider than ever.

"I stress I don't believe that economic equality is possible. Indeed, some measure of inequality is essential for the spirit of envy and keeping up with the Joneses that is, like greed, a valuable spur to economic activity," he said.

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His comments came in the wake of recent remarks in which he said the rich should be hailed as heroes because of the taxes they paid.

Although his speech has be seen as a calculated attempt to appeal to the right wing of the Tory party in preparation for a future leadership bid, they will not be welcomed by the party as a whole, revealing a view of Conservatism that David Cameron has specifically attempted to dispel.

The prime minister, who in October said he would welcome Johnson back in the Commons as an MP, would not get drawn into the row around the speech with his spokesman simply stating that Cameron supported equality of opportunity.

But Labour's leader on the London Assembly, Len Duvall, branded the remarks "absolutely disgraceful".

"He seems to have forgotten one of the causes of the financial crash - greed. If the mayor really thinks the answer to spurring economic growth and getting our young people into high-quality jobs is greed then it shows just how clueless he really is.

Some kind of sub-species

"He spoke about those who are less able as if they were some kind of sub-species. This kind of rhetoric is deeply offensive and does nothing except create division. "

What puzzled many was that, while Johnson's remarks will very likely strike a chord with the right wing of the party, they reveal a side to both him and the Conservatives that Cameron and his team have been attempting to throw off in the belief it is electorally unattractive.

Those who know the mayor have no doubt that his remarks precisely represent his views but are still surprised that he expressed them so dramatically and in a way bound to cause division and controversy.

And they will raise the inevitable question of exactly what type of programme Johnson would follow if he ever became Tory leader or prime minister.