The Times Great Women's Lives

by Sue Corbett

  In only two areas did Thatcher take obvious risks. First, in January 1978 she courted the populist right-wing vote on race by referring to fears that the country would be “swamped” by Asian and West Indian immigration. Both the criticism and the praise which she elicited were predictable and strident. Secondly, while almost totally inexperienced in defence and foreign affairs, she chose to question more publicly than others the Helsinki agreement with the Soviet Union and the policy of detente. Not for the last time, she abandoned the customary euphemisms of diplomacy and earned Moscow’s sobriquet of “the Iron Lady”. This did her no harm in her own party.

  Following the inflationary storms of 1975 and 1976, and the agreement with the International Monetary Fund in that year, the Labour Government under James Callaghan made a slow but steady recovery in public esteem. Its fragile parliamentary position was temporarily secured by a pact with the Liberal Party in March 1977, and for a while a more orthodox economic policy helped to restore economic stability, albeit at the expense of a rise in unemployment to more than 1 million. By the autumn of 1978, living standards showed an annual advance of 6 per cent, and the political standing of the Government had risen too. At the same time, the Conservative Party still had difficulties in living down its defeat at the hands of the miners in 1974, and in explaining how it would avoid similar difficulties in the future.

  Much against expectation, Callaghan announced in September 1978 that there would not be an election that autumn, but committed the Government firmly to a 5 per cent wage limit for the coming year. The initial consequence was a row within the Conservative Party, with Heath bitterly attacking Thatcher’s refusal to support this pay policy in the national interest. At the Berwick and East Lothian by-election at the end of October there was a swing to Labour. However, the Labour Party’s pleasure was short-lived. In the first days of 1979 a lorry drivers’ strike against the pay policy began and this was followed by a series of strikes in the public sector. A Government which had been thought to have a special relationship with the unions was left looking helpless as union action, sometimes of a deliberately vindictive nature, disrupted the health and local government services. The Conservative Party’s main handicap was removed at a stroke, and Thatcher took advantage of the chaos to appeal for an all-party agreement on legislation to prevent this sort of industrial militancy.

  Any doubts that the Conservatives might win the forthcoming election disappeared. With the Lib-Lab pact ended, the Government lost a confidence vote in the Commons by one vote. A general election was called for May 3. The polls favoured Thatcher from the start of her campaign, which concentrated more on sophisticated public relations techniques than on the setting out of detailed policies.

  She exploited her personality, energy and convictions for the cameras. Simple themes were reiterated in campaign speeches, broadcasts and the advertisements which had been designed by the agency Saatchi & Saatchi. Most damning was the slogan “Labour isn’t working”, set against a picture of the unemployed.

  The Conservative Party won 43.9 per cent of the vote — little more than its postwar average but enough to give it a majority of 43 over all other parties, since Labour’s share fell to 36.9 per cent, its lowest since 1931.

  In Downing Street, after being asked to form a Government by the Queen, Thatcher quoted the purported words of St Francis of Assisi: “Where there is discord, may we bring harmony. Where there is error, may we bring truth. Where there is doubt, may we bring faith. Where there is despair, may we bring hope.” Her years in office were characterised more by faith than harmony.

  She saw the main tasks of her Government as lying in the economic field. She wanted to revive private enterprise and initiative, to curb public spending, to reform the tax system, to reduce the size of the Civil Service and to break away from the Keynesian fine-tuning of the economy which had in her view led to ever higher rates of inflation and to an aggrandisement of trade union power. Her Chancellor of the Exchequer, Sir Geoffrey Howe, accordingly took an axe to the controls over pay, prices, dividends, bank lending, hire purchase and foreign exchange. In his first budget he cut taxes on income (particularly the higher rates) and doubled VAT. He also began the attack on the spending plans inherited from Labour, squeezed public borrowing hard and set tough targets for monetary growth.

  The initial results were disconcerting. The new Government’s first months had been accompanied by a steep rise in the price of oil, and this, taken with the transfer of part of the tax burden from income to spending, helped to push inflation up from 10 per cent to 22 per cent by May 1980. High interest rates at home hurt industry, and the pain was intensified by a soaring exchange rate — a result of sterling’s status as a petro-currency and the tight domestic squeeze. Manufacturing industry in particular found it expensive to borrow at home and difficult to sell abroad. The reduction in industrial over-manning, essential to the restoration of Britain’s competitiveness, arguably went far further than was necessary.

  The result was a sharp contraction in production and output, a rush of bankruptcies and an alarming rise in unemployment. While inflation fell after its peak in May 1980, the jobless figures doubled in the two years after the 1979 election and exceeded three million in January 1982.

  Other measures were introduced at home to encourage ownership and an enterprise economy. The first steps were taken in a substantial programme to privatise nationalised industries. Council tenants were allowed to buy their own homes. This was popular and led to a marked increase in home ownership. It was the first of a series of interventions in local government under Thatcher. Her ministers took powers to limit rate rises and to check town hall spending. Under Thatcher, while economic power was devolved, political power was ruthlessly centralised.

  Rising unemployment and the recession helped to produce a calmer period on the industrial relations front. There were disputes with steel workers in 1980, civil servants in 1981 and railway workers in 1982. In 1981 a dispute with the miners over pit closures was avoided by a government climbdown. The time was not yet ripe for taking on this most powerful of industrial unions.

  Despite this tactical retreat, however, the political and industrial grip which the unions had seemed to exert over the country was steadily weakened. “Beer and sandwiches” at No 10 — political deals between ministers and union leaders — were things of the past. The Government began a reform of union legislation with limitations on secondary picketing and the closed shop.

  In its first two years the Government’s greatest successes were secured abroad. At the first meeting she attended of the European Council, in Dublin in November 1979, Thatcher raised the question of the UK’s high contribution to European Community revenues. She asked in effect for a renegotiation of the terms of the UK membership of the Community. She continued this campaign (more militantly than her European partners and many of her advisers cared for) and at the Venice summit of 1980 she secured much of what she had sought. In a rare example of Cabinet government, her colleagues insisted that enough was enough. It was a bruising but ultimately successful diplomatic episode, and set the pattern for her subsequent treatment of European affairs.

  Even more notable was the Government’s success in ending the long-running Rhodesian dispute. Prolonged negotiations in London, during which Lord Carrington’s formidable diplomatic skills were fully stretched, led to an end to the guerrilla war and agreement on elections and a constitution. Lord Soames as Governor presided over elections in which guerrilla leaders and their supporters were involved, and then over the granting of independence to the new Prime Minister, Robert Mugabe. This ended the Rhodesian whites’ 15 years of unilateral independence.

  The year 1981 proved to be the most testing for Thatcher’s policies. In his spring Budget Howe tightened the squeeze on the economy despite pressure — not least from sections of the Conservative Party — to allow a moderate expansion. Supporters of the Government’s strategy later argued that this tough Budget was crucial to the subseq
uent upturn in the economy. But at the time criticism (including coded comments by members of the Cabinet) was intense. The Government’s popularity sank. By the end of the year, support in the polls had fallen to 23 per cent.

  Thatcher’s own standing fell too, hitting in the autumn the lowest mark ever recorded for a prime minister. Riots in Brixton in April and Toxteth, Liverpool, in July further dented the Government’s image.

  Thatcher’s reaction was to make it clear that she would not change her strategy. Critics who advocated a “U-turn” were reminded of what she had said at the previous year’s autumn conference: “The lady’s not for turning”. She had already made this clear with a Cabinet reshuffle. Gilmour, Soames and Mark Carlisle, all identified with the moderate left of the party, were ousted, as Norman St John Stevas had been in January. Jim Prior was moved from the Employment Department to the Northern Ireland Office. He was replaced by Norman Tebbit. Cecil Parkinson was made chairman of the party. The ministerial changes were a decisive act of prime ministerial authority. Thatcher had nailed her colours to the mast more firmly than ever before.

  The following year saw a transformation of the Government’s electoral prospects under surprising circumstances. The apparent electoral liability of Thatcher’s obstinacy was transformed into a glittering asset. Since 1979 the UK had been involved in a dispute with Argentina over the Falkland Islands. But any compromise with Argentina over sovereignty had been bitterly resisted by the House of Commons and the Falklanders themselves. Suddenly the Argentine military junta lost patience and invaded the Falklands on April 2, 1982. The political effect was calamitous. Carrington and two other Foreign Office ministers had to resign on the grounds that they had misread Argentinian intentions. (The Franks inquiry into the causes of the war later concluded that the Government could not in fact be blamed for the Argentinian invasion.)

  After initial uncertainty, Thatcher moved decisively, in support of the advice she received from the Royal Navy that an expedition to recover the islands could succeed. It was an enterprise fraught with political and military peril. Despite anxious moments, most notably the sinking of HMS Sheffield and the loss of two landing ships and 51 men at Fitzroy, the expedition succeeded. South Georgia was recaptured on April 25, and the expedition pressed on to relieve Port Stanley and secure the surrender of the Argentinian forces on June 15. During the campaign 255 British servicemen were killed and four fighting ships were sunk. After the first military success in South Georgia, Thatcher had advised the nation to “Rejoice”. Watching the successful campaign unfold on their televisions, the nation did rejoice. There was an upsurge of patriotic feeling, and any criticisms of the Government’s handling of the war (most notably, the sinking of an Argentine cruiser, Belgrano) were given short shrift.

  The Falklands campaign led to a steep rise in the Government’s popularity, which was assisted by a fall in inflation and a rise in the living standards of those in work. The pressure to cash in on the change of electoral mood became irresistible and Thatcher eventually accepted the view of her closest advisers and went to the country in June 1983, buoyed up by an unassailable lead in all the polls.

  One other factor played decisively into the Conservative Party’s hands in the campaign. In October 1980 Callaghan had retired as leader of the Labour Party, to be succeeded by Michael Foot. The choice confirmed the electorate’s fears of a leftward shift in the Labour Party and helped to precipitate the departure of some of its leading members to form the new Social Democratic Party. Foot’s unpopularity, combined with the mid-term unpopularity of the Government, helped to launch the SDP in alliance with the Liberal Party on a successful run of by-election campaigns.

  By the general election campaign in the summer of 1983 a recovering Conservative Party was well placed to face a split opposition. Labour’s avowedly left-wing manifesto and unilateralist defence policy played into Conservative hands. The Conservatives took full advantage in a smooth campaign masterminded by Parkinson and on June 9 it won the largest margin in terms of seats since 1945 and the largest in terms of votes since 1935.

  The Conservatives claimed 61 per cent of the 650 seats in the Commons, with 42.4 per cent of the vote. Their majority increased from 43 to 144, even though their vote was lower than in 1979. An indication of the importance of the split in the opposition was that in 1964 the Conservatives had lost an election with a slightly higher proportion of the vote than they secured in 1983.

  While the election result was never in doubt, there was more uncertainty about what the Government would do with the fruits of victory. It had played safe in the election campaign and given little hint of a strategy, let alone of any radical proposals, in its manifesto. With no clear guidelines, it stumbled from one banana skin to another. A personal scandal caused the resignation of Parkinson and added to the Government’s misery. Much parliamentary time and some political credit were dissipated in bruising battles with Labour local authorities.

  The struggle between central and local government played a prominent part in Thatcher’s second administration. Exasperation at the antics of left-wing Labour councils (for example in Liverpool) and anxiety that over-spending by local government could jeopardise the Government’s economic policies triggered an ill-judged attack on the rights and functions of town and county halls. Eventually this was to lead the Government into its most electorally damaging policy, the poll tax. Legislation was first introduced to protect ratepayers from the consequences of high-spending local authorities. The Greater London Council and the Metropolitan County Council were abolished after a long battle.

  Thatcher also pressed ahead with plans to replace rates with what was formally called a community charge, initially in Scotland, where a revaluation of the domestic rates had greatly increased the unpopularity of this local tax.

  A long, bitter dispute with the teaching unions over pay and the introduction of a contract of employment brought to a head dissatisfaction about the management of education by local authorities. Thatcher supported moves by her education ministers, Sir Keith Joseph and Kenneth Baker, to transfer more power from local authorities to parents and to central government.

  A greater strategic grasp was evident in her Government’s programme of privatising state-owned assets. With the sales of British Telecom, British Gas and British Airways in the van, the Government had by the end of the Parliament sold 40 per cent of the state sector that it inherited. This helped to stimulate a threefold increase in share ownership and improved performances in some industries. The Jaguar car company, for example, increased its profits, investment, output and workforce. British Airways became one of the foremost world carriers.

  The middle period of the Parliament from 1984 to early 1986 was dominated by the miners’ strikes and the Westland affair. These events showed Thatcher at her best and her worst.

  During her first administration, the miners had been treated with kid gloves. The threatened walkout over pit closures in 1981 had been bought off, and generous pay settlements in the industry helped to ensure that three subsequent attempts to call strikes were defeated in pithead ballots. But Thatcher was in no doubt that sooner or later the militant leader of the National Union of Mineworkers, Arthur Scargill, would try to engineer an industrial confrontation with her Government, aiming to break it as he had helped to break the Heath Government.

  She ensured that the ground was carefully prepared for a battle which she reckoned was inevitable. She moved Peter Walker to the Energy Department, where his political skills could be deployed in a cause where he shared the Prime Minister’s views.

  Sir Ian MacGregor was moved from British Steel to the chairmanship of the National Coal Board. Stocks of coal were built up against a possible strike and police preparations were carefully made. The first skirmishes began in the winter of 1983. Through the following year the confrontation was fought out with considerable brutality. There were pitched battles between rioting miners and the police. Mining communities were divided between those who
wanted a settlement and those who stuck by Scargill.

  The Coal Board, the police and the Government stood firm, and with the more moderate among the miners breaking off from the NUM to form their own union, the militant leadership was eventually routed. While the dispute had provoked as much bitterness as any in Britain’s industrial history, it was essential for constitutional as well as economic reasons that it should be resolved in favour of the Government and the National Coal Board. Thatcher saw it through with steely resolve.

  The Westland affair blew up out of a clear sky. This Somerset helicopter manufacturer, faced by a tightening market and growing competition, was seeking a foreign company which could take it over and secure its future. This relatively slight issue was inflated into a heated argument about whether the British armaments industry should be associated with European or US technological competitors. The Defence Secretary, Michael Heseltine, championed the European cause, while the Trade and Industry Secretary, Leon Brittan, supported Westland’s preference for a deal with the US company Sikorsky.

  Instead of restoring order between her warring ministers, Thatcher allowed the affair to boil over into a major political scandal which came close to bringing her down. In a welter of fabrications, leaks and banner headlines, Heseltine quit and Brittan was forced to resign, and the Government’s survival in the subsequent parliamentary debates owed more to the inadequacy of the Opposition and the skill of the whips than to the strength of the administration’s case.

  The affair demonstrated the weakness of Thatcher’s style of political management, her difficulty in dealing with strong-minded colleagues, and her excessive reliance on close personal advisers such as her press spokesman, Bernard Ingham, and her Private Secretary, Charles Powell.

  On the economic front, in the meantime, Thatcher continued to pursue fiscally cautious policies with what seemed to be growing success. Nigel Lawson, whom she had appointed to the Treasury in 1983, was able to point to steady economic growth, low inflation and public borrowing and growing investment. As the Parliament drew towards its end, the Chancellor was able to offer the prospect of increased public spending in areas such as health and education, reductions in taxation and an easing of interest rates. Moreover, in industrial relations, ministers were able to note that disputes were at their lowest level for 50 years.