I had one overriding positive goal. This was to create a single Common Market. The Community’s internal tariffs on goods had been abolished by July 1968. At the same time it had become a customs union, which Britain had fully accepted in July 1977. What remained were the so-called ‘non-tariff’ barriers. These came in a great variety of more or less subtle forms. Different national standards on matters ranging from safety to health, regulations discriminating against foreign products, public procurement policies, delays and overelaborate procedures at customs posts — all these and many others served to frustrate the existence of a real Common Market. British businesses would be among those most likely to benefit from an opening-up of other countries’ markets. For example, we were more or less effectively excluded from the important German insurance and financial services markets where I knew — as I suspect did the Germans — that our people would excel. Transport was another important area where we were stopped from making the inroads we wanted. The price which we would have to pay to achieve a Single Market with all its economic benefits, though, was more majority voting in the Community. There was no escape from that, because otherwise particular countries would succumb to domestic pressures and prevent the opening-up of their markets. It also required more power for the European Commission: but that power must be used in order to create and maintain a Single Market, rather than to advance other objectives.
I knew that I would have to fight a strong rear-guard action against attempts to weaken Britain’s own control over areas of vital national interest to us. I was not going to have majority voting applying, for example, to taxation which the Commission would have liked us to ‘harmonize’. Competition between tax regimes is far more healthy than the imposition of a single system. It forces governments to hold down government spending and taxation, and to limit the burden of regulations; and when they fail to do these things, it allows companies and taxpayers to move elsewhere. In any event, the ability to set one’s own levels of taxation is a crucial element of national sovereignty. I was not prepared to give up our powers to control immigration (from non-EC countries), to combat terrorism, crime, and drug trafficking and to take measures on human, animal and plant health, keeping out carriers of dangerous diseases — all of which required proper frontier controls. There was, I felt, a perfectly practical argument for this: as an island — and one quite unused to the more authoritarian continental systems of identity cards and policing — it was natural that we should apply the necessary controls at our ports and airports rather than internally. Again, this was an essential matter of national sovereignty, for which a government must answer to its own Parliament and people. I was prepared to go along with some modest increase in the powers of the European Assembly, which would shortly and somewhat inaccurately be described as a Parliament: but the Council of Ministers, representing governments answerable to national Parliaments, must always have the final say. Finally, I was going to resist any attempt to make treaty changes which would allow the Commission — and by majority vote the Council — to pile extra burdens on British businesses.
Right up to the beginning of the Luxemburg Council I thought that we could rely on the Germans to support us in opposing any mention of the EMS and economic and monetary union in the revisions of the treaty. Then, as now, however, there was an inherent tension between, on the one hand, the German desire to retain control over their own monetary policy to keep down inflation and, on the other, to demonstrate their European credentials by pressing further towards economic and monetary union.
I had discussed this with the Chancellor of the Exchequer and he and I were at one. A few days before the Council began Nigel Lawson set out his views with admirable clarity in a note urging me to stand firm. He recalled that Chancellor Kohl had told me the previous day that the Germans, like us, were totally opposed to any amendment to the monetary provisions of the Treaty of Rome. But he added that if the position deteriorated I would have to have some possible form of words up my sleeve. Nigel stressed that it would be essential that the language used should contain no obligation on us to join the ERM, make it clear that exchange rate policy is the responsibility of national authorities, minimize any extension of Community competence and avoid any treaty reference to EMU. He concluded that having reviewed the options he was bound to say that the better course by far looked to be not to get caught up in this whole exercise. I agreed.
THE LUXEMBURG EUROPEAN COUNCIL
I arrived in Luxemburg at 10 o’clock on Monday morning, 2 December 1985. The first session of the Council began soon afterwards. The heads of government went through the draft treaty — what would become the Single European Act — which the presidency and the Commission had drawn up. At first the discussion dragged on, with several hours being spent on a single clause. The ability of those present to argue at great length and with much repetition about matters of little interest was, as ever, astonishing. It would have been far better to have agreed on the principles and then let others deal with the details, referring back to us. But of course it would have been better if, as I had wanted originally, there had been no IGC, no new treaty and just some limited practical agreements.
I was also dismayed that the Germans shifted their ground and said that they were now prepared to include monetary matters in the treaty. I was, however, able in a side discussion with Chancellor Kohl to reduce the formula to what I considered insignificant proportions which merely described the status quo, rather than set out new goals. This added to the phrase ‘Economic and Monetary Union’ the important gloss ‘co-operation in economic and monetary policy’. The former had been the official objective, unfortunately, since October 1972: the latter, I hoped, would signal the limits the act placed on it. But this formulation delayed M. Delors’s drive to monetary union only briefly.
Perhaps even those heads of government with the most insatiable thirst for Euro-jargon had become a little bored after the first day. Certainly, Tuesday’s discussions, though long and intense, were far more productive. It was midnight when I gave my press conference on the conclusions of the Council. I was pleased with what had been achieved. We were on course for the Single Market by 1992. I had had to make relatively few compromises as regards wording; I had surrendered no important British interest; I had had to place a reservation on just one aspect of social policy in the treaty.[71] Italy, which had insisted on the IGC in the first place, had not only applied the most reservations on it but also demanded that it must be agreed by the European Assembly.
Perhaps I derived most satisfaction from the inclusion in the official record of the conference of a ‘general statement’ recording that:
Nothing in these provisions shall affect the right of member states to take such measures as they consider necessary for the purpose of controlling immigration from third countries, and to combat terrorism, crime, the traffic in drugs and illicit trading in works of art and antiques.
I had insisted on the insertion of this statement. I said that otherwise terrorists, drug dealers and criminals would exploit the provisions of the act to their own advantage and to the danger of the public. Without it I would not have agreed the Single European Act. In fact, neither the Commission, nor the Council nor the European Court would in the long run be prepared to uphold what had been agreed in this statement any more than they would honour the limits on majority voting set out in the treaty itself. But this is to anticipate.
The first fruits of what would be called the Single European Act were good for Britain. At last, I felt, we were going to get the Community back on course, concentrating on its role as a huge market, with all the opportunities that would bring to our industries. Advantages will indeed flow from that achievement well into the future, even though harmonization and standardization regularly threaten to become ends in themselves. The trouble was — and I must give full credit to those Tories who warned of this at the time — that the new powers the Commission received only seemed to whet its appetite.
Even at t
he time different people had very different ideas of the significance of what had been agreed at Luxemburg. M. Delors described it as a ‘compromise of progress’, regretted that his proposal for extra power for the European Assembly did not find favour, but welcomed what had been said about monetary matters since he regarded the ecu as ‘part of the European dream’. The Dutch, natural federalists, were also disappointed. But some of them lived in hope. A comment in one of the Dutch papers said that ‘the ideal of European unity would have to wait until there was a new incumbent in No. 10.’ The Germans, rightly, saw that the momentum towards their objective of European Union had been resumed. Welcoming the outcome, Chancellor Kohl told the Bundestag that the Council had ‘taken the political and institutional development of the Community a decisive step forward’.
At the time I had a different view. Answering questions in the House of Commons on the outcome of Luxemburg I said at one point:
I am constantly saying that I wish that they would talk less about European and political union. The terms are not understood in this country. In so far as they are understood over there, they mean a good deal less than some people over here think they mean.
Looking back, I was wrong to think that. But I still believe it was right to sign the Single European Act, because we wanted a Single European Market.
European affairs took second place for me during the rest of this Parliament, with just a few exceptions. The main decisions had been made and even the Commission’s search for new ‘initiatives’ had been slowed for the moment by the need to work out and implement the Single Market programme. The Community was overspending its resources, but had not yet reached the new limits of VAT revenue which had been set. Enlargement had to be carried out. There was plenty to be getting on with.
THE LONDON EUROPEAN COUNCIL
Britain took up the presidency and the European Council met in London on Friday 5 and Saturday 6 December 1986. We were to meet in the Queen Elizabeth II Conference Centre. The great expense and unpleasing design of this building can only be justified by the unsightliness of the original gaping hole — an overflow car park — which it filled. I took a close interest in the physical as well as the diplomatic preparations for our big summits. For example, I had earlier had the swivel chairs around the big conference table at the ‘QE II’ replaced by light wooden ones: I always thought there was something to be said for looking at your opposite number in the eye without his being able to swivel sideways to escape. On this occasion I took care to have the battleship-grey walls covered up with beige hangings and pictures, deliberately having some drawings by Henry Moore, borrowed from the Moore Foundation, placed opposite President Mitterrand, who I knew loved Moore as much as I did.
Undoubtedly, the main achievement of the British presidency was adoption of or agreement to a record number of measures to implement the Single Market. This was the sort of solid progess the Community needed, rather than flashy publicity-seeking initiatives which came to nothing or just caused bad feeling.
But the London Council itself could only be a modest success. On the way into dinner Chancellor Kohl had made it clear to my private secretary, Charles Powell, that there was no question of Germany being able to take major decisions on agriculture — the most vexed question at this time — before their forthcoming elections. If nothing dramatic could be accomplished on agriculture or the budget, however, the Council was notable for the emergence of M. Delors as a new kind of European Commission President — a major player in the game. I had a brief foretaste of this at the first evening’s dinner, when, to my surprise and unconcealed irritation, he used the discussion period before dinner to launch into a long speech about the parlous financial state in which the Community found itself as a result of the CAP and to put forward a range of quite detailed suggestions. I replied that we should have all been told this before: it was plain from what he said that the Community was broke. I agreed that M. Delors should visit European capitals, as he proposed, to try to find a solution. But this sort of thing ought not to be repeated. I reflected to myself that no one could have imagined a top British civil servant springing surprises on ministers in this way: it illustrated all too well what was wrong with the Commission — that it was composed of a new breed of unaccountable politicians.
As President of the Community I had to give a press conference reporting on the outcome, at which I was accompanied by M. Delors. This time — again to my surprise — he refused to say anything, even when I asked him to comment on one of my answers. I continued to urge him, but to no avail. ‘I had no idea you were the strong silent type,’ I remarked.
M. Delors soon broke his silence. Three days later I gave a speech reporting on the presidency to the European Assembly in Strasbourg on Tuesday 9 December. It could not have been more communautaire. But when I sat down, M. Delors — a quite new M. Delors whom I had never seen or heard before — began to speak. It was Euro-demagogy, designed to play to the prejudices of his audience, to belittle the British presidency and to ask for more money. I was not having this. When he finished I stood up and demanded a right of reply — something quite unknown, apparently, in this ‘Parliament’. Speaking off the cuff, I answered the points which had been raised, as I would in a wind-up speech in the House of Commons. And I did not fail to observe how he had said none of this when he had had the chance at the press conference we had held together. He came in late to the lunch afterwards and took his place beside me. I told him then that time after time I had stood up for his position in the House of Commons, refusing to rule out extra money, even though under the most intense pressure. Of one thing he could be sure, I said: that would never happen again.
In the two years of European politicking that led up to the Single European Act, I had witnessed a profound shift in how European policy was conducted — and therefore in the kind of Europe that was taking shape. A Franco-German bloc with its own agenda had re-emerged to set the direction of the Community. The European Commission, which had always had a yen for centralized power, was now led by a tough, talented European federalist, whose philosophy justified centralism. And the Foreign Office was almost imperceptibly moving to compromise with these new European friends. We could, of course, look to the veto, to legal safeguards, and to declared exemptions. In the future, however, these would increasingly be circumvented where they were not overthrown entirely.
CHAPTER XIX
Hat Trick
The preparations for and course of the 1987 general election campaign
All election victories look inevitable in retrospect; none in prospect. The wounds which Westland, BL and reaction to the US raid on Libya inflicted on the Government and the Conservative Party would take some time to heal. Economic recovery would in time provide an effective salve, as it became clear that our policies were delivering growth with low inflation, higher living standards and — from the summer of 1986 — steadily falling unemployment. But in the meantime, Labour had developed a thirst for power, moderated their image and gained a lead in the opinion polls. It was important that I should unify the Party around my authority and vision of Conservatism. This would not be easy.
STYLE AND TONE
Perhaps the most damaging accusation made against me during the Westland affair was that I did not listen. Like most allegations which stick, this contained a grain of truth. Once I begin to follow a train of thought I am not easily stopped. This has its advantages. It means that I can concentrate on a tricky point almost no matter what is going on in the background, a useful ability, for example, at Prime Minister’s Question Time. But it does, of course, also mean that I am inclined to talk over people and ignore timid or inarticulate objections and arguments. People who do not know me and how I work conclude that I have not taken in what has been said to me. Those who know me better will confirm, however, that this is generally not the case. I will often go away afterwards to revise my views in the light of what I have heard. Indeed, I have even been accused by some supporters of taking too m
uch notice of those who do not agree with me.
The suggestion that I do not listen, particularly when it comes from ex-ministers, can, however, simply mean that I do not agree with their views. You might say I ‘chair from the front’. I like to say what I think quite early on and then see whether arguments are adduced which show me to be wrong, in which case I have no difficulty in changing my line. This is, of course, not the traditional formal way of chairing meetings. My experience is that a group of men sitting round a table like little better than their own voices and that nothing is more distasteful than the possibility that a conclusion can be reached without all of them having the chance to read from their briefs. My style of chairmanship certainly nonplussed some colleagues, who knew their brief a good deal less well than I did. But I adopt this technique because I believe in argument as the best way of getting to the truth — not because I want to suppress argument. In fact, I would go further: nothing is more important to successful democratic government than the willingness to argue frankly and forcefully — unless, perhaps, it is the willingness to recognize collective responsibility when the decision is made.
So I set in train a series of steps to make plain that the Government encompassed — and was receptive to — a wide range of views. My first concern was to deal with the impression — that was apparently very widespread — that the Government was unaware of people’s worries. I could do this without diluting the Thatcherite philosophy because, whatever commentators imagined, the hopes and aspirations of the great majority were in tune with my beliefs. It was because I did listen to people that I knew this. But I never confused the leader page of the Guardian with vox populi.
The Downing Street Years, 1979-1990 Page 73
