But he was wrong. Like so many of the crises to come, the strike was a public-relations disaster for Heath. One reason the government shrank from sending troops in to run the pumping stations, for example, was their fear that it would alienate the unions and inflame public opinion (another theme repeated during many strikes in the 1970s). Even the Cabinet noted that ‘there was a good deal of sympathy’ with the striking workers: since park-keepers, dustmen and sewage handlers were not well paid, many people thought it was unfair to make them foot the bill for Heath’s economic rigour. And in yet another preview of what was to come, the strike ended in defeat for the government, when an independent panel under Sir Jack Scamp gave in to almost all of the unions’ demands and awarded the strikers an extra £2 10s. a week (a settlement of some 18 per cent) on the grounds that ‘a non-inflationary settlement was never in prospect’.30
For Heath, it was a humiliation. Appearing on Panorama a few days later, he dismissed Scamp’s decision as ‘completely nonsensical’, but refused to accept that it was time to return to an incomes policy. ‘People must face up to their own responsibilities,’ he said, insisting that it was wrong ‘for the Government to compel the people’. Under fire, he lost his temper. ‘Are you really trying to tell me the British people are not capable of facing up to their responsibilities and solving their problems in a free society?’ he snapped. It was a disastrous performance, bearing out the caricature encapsulated by Private Eye’s fortnightly ‘Heathco’ parody. This cast the Prime Minister as the perennially grumpy, small-minded managing director of a beleaguered little firm, forever hectoring his staff on the correct use of the coffee machine or the right way to dispose of their plastic beakers: ‘a man drowning in management-speak but entirely unable to motivate his workforce’, as one account has it. It might not be as good as ‘Mrs Wilson’s Diary’, but not even Heath’s greatest admirers could deny that it had the ring of truth.31
Since polls showed that most people favoured some kind of pay controls, Heath’s refusal to countenance a statutory incomes policy impressed neither the public nor the press. The Times memorably called the government’s economic policy ‘a mint with a hole’. Heath preferred to talk of an ‘N–1’ policy, in which the government would set the moral tone by encouraging settlements that were each slightly lower than the one before. But in many ways this was merely the worst of all worlds: a step away from the supposed free-market principles on which he had been elected, but without any statutory force to back it up. In any case, further humiliation was at hand. On 7 December, the power workers, who were legally barred from walking out because of the danger to public safety, began a work-to-rule and overtime ban in pursuit of a massive 25 per cent pay increase. The effect was immediate. Just before eight that morning, Labour’s Tony Benn noted in his diary, the electricity suddenly blinked off, plunging his home – and millions of others, in the cold winter morning – into darkness. ‘Cold, and the electricity go-slow hits harder and quicker than expected,’ Douglas Hurd wrote that evening. The next day, he recorded, was ‘a bad day. It is clear that all the weeks of planning in the civil service have totally failed to cope with what is happening in the electricity dispute; and all the pressures are to surrender.’32
More than any other dispute, it was the power strike of December 1970 that established the image of the early 1970s as an age of television blackouts and guttering candles. After just two days, power supplies were down by almost a third, and virtually every household in the country had experienced cuts. Early mornings and evenings, peak times for electricity consumption, were the worst: with cuts beginning at seven in the morning, it was common for people to be brushing their teeth or eating their breakfast when the lights suddenly went out. In London in the evenings, lines of cars snaked out towards the suburbs beneath darkened street lamps. In Liverpool, the city ring road came to a standstill as the traffic lights were extinguished; in Edinburgh, thousands of children were sent home after heating and lighting failed at eighteen schools; in Norwich, a couple returned from work to find their house in ashes because they had not realized that their electric fire, cold during the morning’s power cut, had actually been switched on. In the City of London, telephone switchboards failed while banks and brokers’ offices stood cold and lifeless; in Britain’s car factories, workers stood drinking tea around motionless assembly lines. In Bloxwich, Staffordshire, a mother almost died of a severe haemorrhage when the power went off in the maternity ward; in Christchurch, Hampshire, a surgeon operated on an elderly woman in virtual darkness, the theatre lit only by a nurse with a hand-torch. Pubs that relied on electric beer pumps ran dry; hardware stores ran out of candles, which had rocketed in price from 4d. to 15s.; laundrettes raised their prices more than tenfold. And everywhere people sat in impotent fury as the grills cooking their breakfasts went dead and their evening’s television entertainment disappeared before their eyes. Even the Queen had to take her tea by candlelight.33
By the fourth day of the dispute, the government was under intense pressure to give way. Many hospitals were now relying on army generators, while there were genuine fears for outpatients with heart or kidney disease, who relied on their respirators and dialysis machines merely to survive. Outside the House of Commons, demonstrators shivering in the winter frost waved placards condemning Heath’s proposed Industrial Relations Bill. Inside, Parliament was plunged into darkness, with MPs assembling for Prime Minister’s Questions by the dim light of candles and paraffin lamps. ‘The Commons must have looked something like it was 200 years ago,’ one correspondent wrote. ‘Only the quill pens and the winged collars were absent’, and as the ‘voices below boomed out of the gathering gloom … an occasional shaft of light from the windows high above the Chamber picked out landmarks such as a gleaming bald head or the white, flowing locks of Mr Michael Foot’. To many members, the occasion had an almost apocalyptic feel. ‘Driving home that evening through the darkened streets, which only weeks before had been littered with rubbish,’ wrote Chingford’s young Tory MP Norman Tebbit, who had prudently brought his own candle, ‘I wondered for how long this succession of strikes would continue.’34
Jak takes a dim view of the electrical workers in the Evening Standard, 9 December 1970. The printers were in turn so outraged by the cartoon that many walked out, interrupting production of the paper for twenty-four hours.
A few days later, a group of physically handicapped patients in a Cheshire care home, stranded without heat or light, sent a telegram to 10 Downing Street. ‘Don’t weaken,’ it read, ‘we can take it.’ But Heath’s Cabinet had long since acknowledged that for all their fighting talk, there was simply nothing they could do to break the strike. On 12 December, the government declared a state of emergency, which allowed them to forbid the use of electricity in advertising or displays – including Christmas lights, of course – but they could hardly send in the troops to take over and run the power stations. On the same day, Reginald Maudling asked MI5’s Deputy Director General, Anthony Simkins, if the intelligence service would bug a crucial union leaders’ meeting the following morning. To his credit, Simkins refused point-blank, arguing that ‘an eavesdropping attack against this target would take us right outside the field in which the Security Service had operated throughout my twenty-five years with it’. That the government was even contemplating this kind of scheme was a sign of its desperation, and three days later it approved a compromise, although it took hours of late-night talks between Carr, the unions and the Electricity Council before the deal was done. The unions agreed to call off their go-slow, while the government set up an official Court of Inquiry to investigate their pay claim, headed by Lord Wilberforce, a descendant of the great anti-slavery campaigner and one of the most respected judges in the country, with a reputation for pragmatism and fairness. Since the Court’s terms of reference asked Wilberforce to consider ‘the interests of the public and of the national economy’, Heath was confident of a favourable result, while the electricians’ leader Frank Ch
apple complained that the Court was clearly ‘prejudiced before it had opened’.35
But when Wilberforce reported in the middle of February 1971, his findings made a mockery of their predictions. Far from keeping the settlement at or below 10 per cent, as Heath had hoped, he handed the power workers a new deal worth between 12 and 15 per cent by most calculations, and by some estimates closer to 20 per cent. The unions were naturally delighted, although they did their best not to show it; by contrast, ministers were furious, although they pretended they were satisfied. At the very least, Wilberforce had proved that strikes worked: it was no wonder that the edition of The Times reporting the decision had the headlines ‘Hopes of Postal Strike Settlement Dashed’ and ‘Nurses May Seek Public Inquiry on Pay’ on the next two pages. As an internal report for the Department of Employment wearily put it, the report was bound to ‘influence the general attitude to wage inflation for some considerable time to come’, not least since the government was already embroiled in a fresh battle, this time with the postal workers, and expected further challenges from the engineers, gas and water employees, local authority craftsmen, police and NHS craftsmen. In the event, the government prevailed against the postmen, although ministers reportedly felt sorry to have made an example of a small and moderate union. But this minor victory did not change the fact that in the strike that mattered, Heath had lost. ‘Even when the government wins the battle, as it won the battle with the electricity go-slow,’ said The Times, ‘it loses the peace.’ Like most newspapers, it believed that Heath was mad to have ruled out an incomes policy, not least since Wilberforce had smashed his much-vaunted pay norm into pieces. ‘N–1 may be a policy,’ the paper dryly concluded, but ‘N+3 is a disaster.’36
The debacle of the Wilberforce report made it perfectly clear, if it was ever in doubt, that Heath was sailing into choppier waters than he had ever imagined on that warm June evening when he had snatched victory from the jaws of defeat. By February 1971, the government had fallen almost 8 per cent behind Labour in the opinion polls – this despite the fact that Wilson’s party had descended into a bout of fratricidal bickering bitter even by its standards – while only 31 per cent said they were satisfied with Heath’s record in office. His personal image, never very good anyway, had taken a battering from which it never recovered. Ensconced in Downing Street, he seemed permanently grumpy, even arrogant: when Anthony Sampson interviewed him a month after Wilberforce, he noted that although Heath seemed ‘more relaxed, rather fatter’, with his hair ‘much longer, coming down thickly at the back’, power had brought out some of his ‘monarchic and eccentric tendencies’. Public relations remained a terrible problem: even in private Heath often seemed rude and dismissive, and in front of the cameras he became more stiff and pompous than ever. In Private Eye a few weeks later, the acerbic Auberon Waugh unmasked him as ‘not human at all’, but a ‘wax-work’. This, Waugh thought, was ‘the secret of the amazingly unattractive blue eyes, the awful, stretched waxy grin, the heaving shoulders and the appalling suntan. Even scientists admit that something has gone wrong with the pigmentation.’37
The early months of 1971 were not good to Heath. Not only was he losing the battle against inflation, but the situation in Northern Ireland was rapidly deteriorating, economic growth remained stagnant, and his energies were absorbed by Britain’s bid to join the Common Market, which was far from universally popular. And on 4 February came news of the most humiliating kind: Rolls-Royce, one of the most famous companies in the world, ‘a worldwide symbol of British technology and engineering skill’, as one paper put it, had collapsed. Although it was most famous for its cars, Rolls-Royce also made diesel and petrol engines, nuclear reactors, industrial and marine gas turbines, helicopter engines and aero engines, and it was the last that had brought its downfall. In the late 1960s, egged on by Tony Benn at the Ministry of Technology, the firm had signed a fixed-price deal with the American Lockheed Corporation to make engines for the new RB-211 Tristar airbus. Unfortunately, the contract almost immediately ran into trouble; the deadline was absurdly unrealistic, the time penalties were far too harsh, and even before Heath took office Rolls-Royce had needed £20 million from Benn’s Industrial Reorganization Commission. By November 1970, with its debts mounting, the firm had returned to the government and begged for a further £42 million to stave off its creditors, with an additional £18 million coming from the banks. But even while the company was waiting for the transfer of funds, the losses piled up. By February Rolls-Royce faced a staggering £110 million in production losses, far more than the cost price in the contract. Early on the morning of the 4th, the company released a simple ten-point statement, announcing that, since its losses were ‘likely to exceed the net tangible assets of the company’, it had no choice but to call in the receivers. As one commentator put it the following morning, a more ‘shattering blow to both international prestige and industrial confidence’ could hardly be imagined.38
The collapse of Rolls-Royce left Heath with an apparently impossible dilemma. Allowing the company to fold was unthinkable for national security reasons alone: as he grimly told the Cabinet, the ‘consequential dependence of United Kingdom air defence on a foreign interest would be unacceptable’. What was more, not only the RAF and Royal Navy but 81 foreign air forces and 200 international airlines depended on ‘continuing supplies and servicing of Rolls-Royce engines’, and if the company simply went under the international ramifications would be enormous. The only solution, then, was for the government to step in; and yet that ran counter to everything Heath had been saying about government non-intervention and the virtues of competition. Had not his manifesto in June 1970, after all, promised ‘a vigorous competition policy’, rejected ‘the detailed intervention of Socialism’, and pledged to ‘progressively reduce the involvement of the state in the nationalized industries’? Had not his industry team cut a swathe through Labour’s bureaucratic state, repealing the Industrial Expansion Act and abolishing the National Prices and Incomes Board, the Consumer Council, the Shipbuilding Industry Board and Benn’s beloved Industrial Reorganization Corporation? And had not his Secretary of State for Trade and Industry, the industrialist and former CBI chief John Davies, told the Commons only in November that he would avoid ‘the soft, sodden morass of subsidised incompetence’, and promised to stop giving money to ‘lame ducks’?39
And yet there was rather less to Heath’s economic radicalism than met the eye. Although he was often perceived – and liked to sell himself – as the champion of ruthless neo-liberalism, slashing and burning his way through piles of red tape as he rolled back the frontiers of the state, he was always much more cautious than many people realized. In opposition, he had commissioned a major report by the future minister Nicholas Ridley on how to handle Britain’s gigantic nationalized industries, but while Ridley recommended taking major steps towards what was then called ‘denationalization’, with the ultimate goal of selling off public corporations such as coal, buses, railways, gas and telecommunications, many senior Conservatives (including, interestingly, Sir Keith Joseph) urged caution. Far from embracing Ridley’s proposals, the Tory manifesto was more ambiguous than is often remembered, talking vaguely of pulling the state back from industry without offering concrete details. Even John Davies at the DTI, supposedly the standard-bearer of the new free-market approach, told the party conference that ‘simply to abandon great sectors of our productive capacity at their moment of maximum weakness would be folly’, and pointedly excepted the aircraft industry from his lectures about the madness of bailing out failing industries. Like Heath, Davies was devoted to economic modernization rather than ideological radicalism: the point was to improve British industry by whatever means necessary. And above all there was a basic inconsistency at the heart of Heath’s policy. As the Permanent Secretary at the DTI, Sir Antony Part, later recalled, his job was both to ‘disengage from industry’ and to ‘act like Great Britain Limited’, which were mutually incompatible. Heath wanted to moder
nize industry and trim the power of the state, but he never seemed to realize that this might mean allowing major corporations to fall victim to market forces, condemning thousands to unemployment. When it came to the crunch, he would have to choose: stick to his guns and throw thousands out of work, or change his mind and step in?40
To push through the first nationalization of a privately owned industry since 1949, Heath said later, was a ‘bitter shock’. But essentially he had no choice: if Rolls-Royce collapsed, not only would 80,000 people lose their jobs, but the implications for Britain’s reputation would be enormous. The effects on Lockheed, which might then go under too, would ‘badly sour relations with the Americans’, while Willie Whitelaw told the Cabinet that the collapse ‘would have the most serious implications for confidence, both in the City and internationally’. On 2 February, therefore, two days before the news was made public, the Cabinet agreed to nationalize the firm’s aircraft assets and sell the rest, including the famous car division, to the highest bidder. When the news was announced to a stunned House of Commons, Labour members jeered with delight, but most Conservatives accepted that Heath had not really had a choice. Even future Thatcherites such as Ridley and Norman Tebbit agreed that Rolls-Royce was an exceptional case, while in the Cabinet Keith Joseph and Mrs Thatcher unquestioningly went along with the plan for nationalization. Only the remorselessly logical Enoch Powell condemned the government’s retreat from its free-market principles, but since not a single other MP shared his view, there could be no division of the House and so he was denied the pleasure of voting against it.41
State of Emergency: the Way We Were Page 11
