But Enoch was right. He had made the two intellectual leaps in economic policy which Keith Joseph and I would only make some years later. First, he had grasped that it was not the unions which caused inflation by pushing up wages, but rather the Government which did so by increasing the supply of money in the economy. Consequently, incomes policies — quite apart from their other effects of diminishing incentives, imposing distortions and leading to strikes which pitted the state against organized labour — were a supreme irrelevance to anti-inflation policy. In effect, Government was creating a problem which it then blamed on others. The only aspect of the matter which Enoch then and later failed sufficiently to grasp was the importance of the indirect link between trade union power and inflation. This lay in the fact that over-powerful trade unions could raise real wages well above market levels, but that in turn priced their own members out of jobs, and inflicted unemployment on both union and non-union workers alike. Governments, supremely sensitive to the length of dole queues, would then react by lowering interest rates and expanding the money supply. This would increase demand and jobs for a time, but it also increased inflation. All these effects would prompt the trade unions to ratchet up wages once more. And the whole process would start up again, from a higher level of inflation. But this could only be tackled by tightening monetary policy and by reducing the power of the unions — the first to halt inflation, the second to prevent the unions from creating unemployment. We would therefore at some point have to tackle trade union law. That said, Enoch’s insight into the cause of inflation was of supreme importance.
Secondly, he had seen that the consensus economic policy nurtured another damaging delusion. This concerned the ‘constraint’ allegedly exercised by the current account of the balance of payments. It was in order to increase exports and reduce imports that corporatist, interventionist industrial policies were considered necessary. But the real ‘constraint’, which was assumed and not challenged, was that imposed by a pegged exchange rate. If sterling were allowed to float freely, as Enoch advocated, the alleged constraint of the balance of payments disappeared. And so did some of the pressure for other kinds of interventionism. As he put it in a seminal Institute of Economic Affairs pamphlet in 1967: ‘The control of the international price of currencies, like every other suppression of market prices, leads to other controls, which make a mockery of the individual’s freedom to trade, travel or invest.’[11]
True, in abandoning pegged exchange rates, one loses the anchor of the dollar (or gold). True too, a country which persists in running a large trade deficit may well be one with a weak economy which needs radical restructuring. (Though that may not always be so: a current account deficit may be evidence of large inflows of private capital into an economy which, because of reforms, has a high rate of return on investment.)
None of these qualifications, however, diminishes the fundamental importance of Enoch Powell’s contribution. By showing that it was government monetary policy rather than wages which caused inflation, and that freely floating exchange rates would break free of the ‘constraint’ allegedly exercised by the current account of the balance of payments, Enoch permitted a radical revision of Conservative economic policy. He allowed us to break out of the mind-set which seemed to condemn Britain to an increasingly planned economy and society.
In October 1967 Ted made me front-bench spokesman on Fuel and Power and a member of the Shadow Cabinet. It may be that my House of Commons performances and perhaps Iain Macleod’s recommendation overcame any temperamental reluctance on Ted’s part. My first task was to read through all the evidence given to the inquiry about the causes of the terrible Aberfan disaster the previous year, when 116 children and 28 adults were killed by a slag tip which slipped onto a Welsh mining village. Many of the parents of the victims were in the gallery for the debate, and I felt for them. Very serious criticisms had been made of the National Coal Board and as a result someone, I thought, should have resigned, though I held back from stating this conclusion with complete clarity in my first speech to the House as Shadow spokesman. What was revealed by the report made me realize how very easy it is in any large organization to assume that someone else has taken the requisite action and will assume responsibility. This is a problem which, as later tragedies have demonstrated, industrial civilization has yet to solve.
Outside the House, my main interest was in trying to find a framework for privatization of electricity generation. To this end I visited power stations and sought all the advice I could from business contacts. But it turned out to be a fruitless enterprise, and I had not come up with what I considered acceptable answers by the time my portfolio was changed again — to Transport — in October 1968. Transport was not one of the more interesting portfolios, because Parliament had just passed a major Transport Bill reorganizing the railways, nationalizing the bus companies, setting up a new National Freight Authority — in effect, implementing most of the Government’s transport programme in one measure. In the brief period during which I shadowed Transport I argued our case against nationalization of the ports. But, all in all, Transport proved a brief with limited possibilities.
TED AND ENOCH
As a member of the Shadow Cabinet I attended its weekly discussions, usually on a Wednesday, in Ted’s room in the House. Discussion was generally not very stimulating. We would begin by looking ahead to the parliamentary business for the week and agreeing who was to speak and on what line. There might be a paper from a colleague which he would introduce. But, doubtless because we knew that there were large divisions between us, particularly on economic policy, issues of principle were not usually openly debated. Ted was a competent chairman. On matters which really interested him, like Europe and trade union legislation, he would lead the discussion. But generally he allowed the spokesman to make the running on whatever subject was being considered.
For my part, I did not make a particularly important contribution to Shadow Cabinet. Nor was I asked to do so. For Ted and perhaps others I was principally there as the statutory woman whose main task was to explain what ‘women’ — Kiri Te Kanawa, Barbara Cartland, Esther Rantzen, Stella Rimington and all the rest of our uniform, undifferentiated sex — were likely to think and want on troublesome issues. I had, of course, great affection for Alec Douglas-Home, then Shadow Foreign Secretary, and got on perfectly well with most of my colleagues, but I had only three real friends around the table–Keith Joseph, Peter Thomas and Edward Boyle. And Edward by now was very much on the opposite wing of the Party from me.
The atmosphere at our meetings was certainly made more difficult by the fact that the most senior figures now had somewhat tense relations with each other. Ted was settling into the role of Party Leader with determination, but without any real or easy assurance. Reggie Maudling, Deputy Leader, had never really recovered from his unexpected defeat for the leadership. Iain Macleod was the most politically acute of us, with a special understanding of how whatever line we took would be interpreted by the press. But though a superb public orator he was in truth a rather private and reserved character. He was also growing out of sympathy with his old friend Enoch Powell, who was increasingly concerned about immigration, a topic about which Iain felt equally strongly on the other side. Undoubtedly, Enoch was our finest intellect — classicist, historian, economist and biblical scholar. In a quite different way from Iain, he was a powerful public orator and able to command the House of Commons, or indeed any audience, with his remorseless logic and controlled passion. But as regards the Shadow Cabinet, by this stage he had largely withdrawn into himself. He was disliked and probably feared by Ted Heath. He had fought and lost his battle against the chimera of incomes policy. As Defence spokesman, he had the uneasy task of attacking Labour’s policy of withdrawal of British troops from east of Suez when he himself believed such withdrawal was inevitable. Above all, as a West Midlands MP witnessing the effect of large-scale immigration in his constituency he was frustrated by the Party’s failure to take
a tougher stance on the question.
The first modern immigration control measure had been introduced by Rab Butler in 1961. Hitherto, Commonwealth citizens had not been subject to the controls which applied to the admission of alien immigrants from foreign countries. The Commonwealth Immigrants’ Act 1962, bitterly opposed by Labour and the Liberals, introduced an annual quota of employment vouchers to limit the inflow, a system subsequently tightened up by the Labour Government in 1965. During 1967 the Kenyan Government’s discriminatory policies against Kenya’s Asians resulted in a large inflow of immigrants into Britain. This raised awareness both of the scale and impact of past immigration and fears about its unchecked future size. There was particular worry about UK passport holders who were not connected by birth or descent with the United Kingdom. In February 1968 Jim Callaghan announced legislation to deal with this. The issue was also closely linked to the introduction of race relations legislation, which became the Race Relations Act 1968, aimed at curbing discrimination on grounds of colour. This was opposed by many on the right who saw in it a danger of making immigrants a legally privileged community which would have no incentive to integrate fully into British society.
On Monday 26 February 1968 Shadow Cabinet discussed the Government’s Commonwealth Immigrants’ Bill to introduce the new controls. A statement had been issued the previous week setting out the principles on which we would judge the measure. Ted Heath said that it was now up to Shadow Cabinet to decide whether the Bill came sufficiently within those terms. In fact, it did some of the things which we advocated. But it did not provide for registration of dependants, nor for appeal by those refused entry, nor for financial help for voluntary repatriation. It was decided to support the Bill, but also to move amendments where possible and appropriate. Iain Macleod, however, said that he would vote against the Bill, and he was as good as his word.
On Wednesday 10 April Shadow Cabinet discussed the other side of the Government’s policy, the Race Relations Bill. Ted again opened the discussion. He said that though the Bill itself appeared to have many faults he thought that some legal machinery would be necessary to help improve the prospects for coloured immigrants in Britain. Quintin Hogg, the Shadow Home Secretary, outlined his own views in some detail. He thought that legislation was necessary, but that we should move amendments. However, he noted that our backbenchers were very hostile to the Bill. Reggie Maudling agreed with Quintin on both points. In the discussion which followed, in which I did not participate, the main point in dispute was whether, flawed as the Bill was, to vote against it at Second Reading would be misinterpreted as racist. Shadow Cabinet’s view was that the best assurance for good race relations was confidence that future numbers of immigrants would not be too great and that the existing law of the land would be upheld. In the end it was decided that a reasoned amendment would be drafted and there would be a two-line whip. Keith Joseph, Edward Boyle and Robert Carr, on the liberal wing, reserved their positions until they had seen the terms of the amendment. In the event they all supported it, though there were to be a number of abstentions by backbenchers.
On Sunday 21 April 1968 — two days before the debate — I woke up to find the front pages of the newspapers dominated by reports of a speech Enoch Powell had made in Birmingham on immigration the previous afternoon. It was strong meat, and there were some lines which had a sinister ring about them. But I strongly sympathized with the gravamen of his argument about the scale of New Commonwealth immigration into Britain. I too thought this threatened not just public order but also the way of life of some communities, themselves already beginning to be demoralized by insensitive housing policies, Social Security dependence and the onset of the ‘permissive society’. I was also quite convinced that, however selective quotations from his speech may have sounded, Enoch was no racist.
At about eleven o’clock the telephone rang. It was Ted Heath. He said: ‘I am ringing round all the Shadow Cabinet. I have come to the conclusion that Enoch must go.’ It was more statement than enquiry. But I said that I really thought that it was better to let things cool down for the present rather than heighten the crisis. Ted was having none of it. ‘No, no,’ he said. ‘He absolutely must go, and most people think he must go.’ In fact, I understood later that several members of the Shadow Cabinet would have resigned if Enoch had not gone.
Yet for several reasons it was a tragedy. In the short term it prevented our gaining the political credit for our policy of controlling immigration more strictly. This was an issue which crossed the political and social divide, as was demonstrated when London dockers marched in support of Enoch. Moreover, in practical terms there was very little to choose between the policies of Ted and Enoch on the matter. Although it is true that as a result of the speech the official Conservative line on immigration became more specific, essentially we all wanted strict limits on further New Commonwealth immigration and we were all prepared to support financial assistance for those who wanted to return to their country of origin.
But the longer-term consequences of Enoch’s departure on this issue and under these circumstances extended far beyond immigration policy. He was free to develop a philosophical approach to a range of policies, uninhibited by the compromises of collective responsibility. This spanned both economic and foreign affairs and embraced what would come to be called ‘monetarism’, deregulation, denationalization, an end to regional policy, and culminated in his opposition to British membership of the Common Market. Having Enoch preaching to such effect in the wilderness carried advantages and disadvantages for those of us on the right in the Shadow Cabinet and later the Cabinet. On the one hand, he shifted the basis of the political argument to the right and so made it easier to advance sound doctrines without being accused of taking an extreme position. On the other hand, so bitter was the feud between Ted and Enoch that querying any policy advanced by the leadership was likely to be branded disloyalty. Moreover, the very fact that Enoch advanced all his positions as part of a coherent whole made it more difficult to express agreement with one or two of them. For example, the arguments against prices and incomes policies, intervention and corporatism might have been better received if they had not been associated with Enoch’s views about immigration or Europe.
At this time, as it happens, other Conservatives were moving independently in the same direction, with the notable exception of Europe, and Ted gave me an opportunity to chart this way ahead. The annual Conservative Political Centre lecture is designed to give some intellectual meat to those attending the Tory Party Conference. The choice of speaker is generally reserved to the Party Leader. It was doubtless a pollster or Party adviser who suggested that it might be a good idea to have me talk about a subject which would appeal to ‘women’. Luckily, I was free to choose my subject, and I decided on something more topical which might appeal to thinking people of both sexes: I spoke on ‘What’s Wrong With Politics?’
There is no better way to clarify your own thinking than to try to explain it clearly to someone else. I was conscious that there were great issues being discussed in politics at this time. Whatever else can be said of the sixties they were intellectually lively, even if too many of the ideas motivating change originated on the left. I took armfuls of books on philosophy, politics and history, White Papers, Hansard Society publications and speeches down to Lamberhurst. I had no one to guide or help me so I just plunged in. Like the proverbial iceberg, most of the work lay below the surface of the document I finally wrote.
I began by listing the reasons why there was so much disillusionment with politics. Some of these really consisted of the growth of a critical spirit through the effects of education and the mass media. But others were the fault of the politicians themselves. Political programmes were becoming dominated by a series of promises whose impact was all the greater because of the growth of the Welfare State. This led me on to what I considered the main cause of the public’s increasing alienation from political parties — too much government. The competiti
on between the parties to offer ever higher levels of economic growth and the belief that government itself could deliver these had provided the socialists with an opportunity massively to extend state control and intervention. This in turn caused ordinary people to feel that they had insufficient say in their own and their families’ lives. The Left claimed that the answer was the creation of structures which would allow more democratic ‘participation’ in political decisions. But the real problem was that politics itself was intruding into far too many decisions that were properly outside its scope. Alongside the expansion of government had developed a political obsession with size — the notion that large units promoted efficiency. In fact, the opposite was true. Smaller units — small businesses, families and ultimately individuals — should once again be the focus of attention.
Apart from these general reflections, my CPC lecture also contained a section about prices and incomes policy. Although I stuck to the Shadow Cabinet line of condemning a compulsory policy while avoiding the issue of a voluntary one, I included a passage which reads:
We now put so much emphasis on the control of incomes that we have too little regard for the essential role of government which is the control of the money supply and management of demand [emphasis added]. Greater attention to this role and less to the outward detailed control would have achieved more for the economy. It would mean, of course, that the government had to exercise itself some of the disciplines on expenditure it is so anxious to impose on others. It would mean that expenditure in the vast public sector would not have to be greater than the amount which could be financed out of taxation plus genuine saving.
The Path to Power m-2 Page 17
