CHAPTER VII
No End of a Lesson
The Heath Government 1970–1974
GLAD CONFIDENT MORNING
Shortly before 11 o’clock on Tuesday 23 June 1970 my new ministerial car dropped me in Downing Street, where with other colleagues I ran the gauntlet of press and television outside No. 10. The hubbub in the ante-room was of enthusiasm and laughter. There was a spring in our step as we filed into the Cabinet Room where Ted Heath, with the Cabinet Secretary Sir Burke Trend beside him, awaited us. I found my place at the Cabinet table, but my mind was at least as much on the department[21] as on the large strategic issues before the Government. As I shall explain, it remained there — perhaps excessively so. But I felt an exhilaration which was prompted by more than the fact that this was my first ever Cabinet meeting: I felt, as I suspect we all did, that this was a decisive moment in the life of the country.
It was an impression which Ted himself did everything to justify. Speaking with the same intensity which had suffused his introduction to the manifesto on which we had just fought the election, he announced his intention of establishing a new style of administration and a fresh approach to the conduct of public business. The emphasis was to be upon deliberation and the avoidance of hasty or precipitate reactions. There was to be a clean break and a fresh start and new brooms galore.
The tone was just what we would all have expected from Ted. He had a great belief in the capacity of open-minded politicians to resolve fundamental problems if the processes and structures of government were right and advice of the right technical quality was available and properly used. This was the approach which would lie behind the decision that autumn to set up the Central Policy Review Staff under Victor Rothschild, to reconstruct the machinery of government on more ‘rational’ lines (including the setting up of the mammoth Department of the Environment) and the establishment of the PAR system. More generally, it inspired what turned out to be an excessive confidence in the Government’s ability to shape and control events.
Inevitably, this account contains a large measure of hindsight. I was not a member of the key Economic Policy Committee (EPC) of the Cabinet, though I would sometimes attend if teachers’ pay or spending on schools was an issue. More frequently, I attended Terence Higgins’s sub-committee on pay when the full rigours of a detailed statutory prices and incomes policy — the policy our manifesto pledged us to avoid — were applied, and made some contributions there. And, naturally, I was not a member of Ted’s inner circle where most of the big decisions originated. The role of the Cabinet itself was generally of reduced importance after the first year of the Heath Government until its very end. The full account of these years will, therefore, have to await Ted Heath’s own memoirs.
This, however, is said in explanation not exculpation. As a member of the Cabinet I must take my full share of responsibility for what was done under the Government’s authority. Reviewing the events of this period with the benefit of two decades’ hindsight (including more than one of these as Prime Minister), I can see more clearly how Ted Heath, an honest man whose strength of character made him always formidable, whether right or wrong, took the course he did. And as time went on, he was wrong, not just once but repeatedly. His errors — our errors, for we went along with them — did huge harm to the Conservative Party and to the country. But it is easy to comprehend the pressures upon him.
It is also important to remember that the policies Ted pursued between the spring of 1972 and February 1974 were urged on him by most influential commentators and for much of the time enjoyed a wide measure of public support. The Nixon administration in the United States adopted a broadly similar approach, as did other European countries. There were brave and far-sighted critics who were proved right. But they were an embattled, isolated group. Although my reservations steadily grew, I was not at this stage among them.
But some of us (though never Ted, I fear) learned from these mistakes. I can well understand how after I became Leader of the Conservative Party Enoch Powell, who with a small number of other courageous Tory backbenchers had protested at successive U-turns, claimed that: ‘If you are looking for somebody to pick up principles trampled in the mud, the place to look is not among the tramplers.’
But Enoch was wrong. In Rudyard Kipling’s words, Keith Joseph and I had ‘had no end of a lesson’:
Let us admit it fairly, as a business people should;
We have had no end of a lesson; it will do us no end of good.[22]
In this sense, we owed our later successes to our inside knowledge and to our understanding of the earlier failures. The Heath Government showed, in particular, that socialist policies pursued by Tory politicians are if anything even more disastrous than socialist policies pursued by Labour politicians. Collectivism, without even the tincture of egalitarian idealism to redeem it, is a deeply unattractive creed.
How did it happen? I have already outlined some of the background. In spite of the acclaim for the Selsdon Park manifesto, we had thought through our policies a good deal less thoroughly than appeared. In particular that was true of our economic policy. We had no clear theory of inflation or the role of wage settlements within it. And without such a theory we drifted into the superstition that inflation was the direct result of wage increases and the power of trade unions. So we were pushed inexorably along the path of regulating incomes and prices.
Ted was also impatient. I share this characteristic. I am often impatient with people. But I knew — partly of course by seeing what happened under Ted — that, in a broader sense, patience is required if a policy for long-term change is to work. This is especially true if, like Ted’s Government in 1970 and mine in 1979, you are committed to a non-interventionist economic policy that relies on setting a framework rather than designing a plan. Sudden shifts of direction, taken because the results are too long in appearing, can have devastating effects in undermining the credibility of the strategy. And so a government which came to power proud of its principle and consistency left behind it, among other embarrassing legacies, a host of quips about ‘the U-turn’. Ted’s own words in his introduction to the 1970 manifesto came back to haunt him:
Once a decision is made, once a policy is established, the Prime Minister and his colleagues should have the courage to stick to it. Nothing has done Britain more harm in the world than the endless backing and filling which we have seen in recent years.
At another level, however — the level of day-to-day human experience in government — the explanation of what happened is to be found within the events themselves, in the forces which buffeted us and in our reactions to them. We thought we were well enough prepared to face these. But we were not. Little by little we were blown off course until eventually, in a fit of desperation, we tore up the map, threw the compass overboard and, sailing under new colours but with the same helmsman, still supremely confident of his navigational sense, set off towards unknown and rock-strewn waters.
The squalls began early. Within weeks of taking office the Government had been forced to declare a State of Emergency[23] as a national docks strike began to bite. At the same time a Court of Inquiry was set up to find an expensive solution. Although the strike evaporated within a fortnight, it was an ambiguous triumph.
The following month the crisis was international. On Sunday 6 September terrorists from the Popular Front for the Liberation of Palestine (PFLP) hijacked four aircraft (none of them British) and demanded that they be flown to Jordan. Three of the hijacks were successful, but on the fourth — an Israeli plane en route to London — the hijackers were overpowered by security men. The surviving terrorist, Leila Khalid, was arrested at Heathrow.
The PFLP demanded her release, and just before Cabinet met on Wednesday 9 September they hijacked a British aircraft in order to bring more pressure to bear. The plane was flying to Beirut as we met. It was explained to Cabinet that we had already acquiesced in an American suggestion to offer the release of Leila Khalid in return for
the freedom of the hostages. Over the next few weeks Cabinet discussed the question many times as negotiations ran on. Meanwhile, Jordan itself fell into a state of civil war as King Hussein fought the Palestinians for control of his country and the Syrians invaded and occupied much of the north. Ted resisted any British involvement on the King’s side and was certain that we were right to negotiate with the PFLP. Though it went against the grain to release Khalid, in the end the deal was made. In due course all the hostages were released, though the hijacked aircraft were blown up by the terrorists, and King Hussein survived the events of ‘Black September’ — barely but triumphantly.
But by then the Government had already suffered a blow from which, perhaps, we never fully recovered. In mid-July Iain Macleod had gone into hospital for a small abdominal operation. It had been a success and he had returned to No. 11 for a few days’ rest. At about midnight on Monday 20 July my telephone rang. It was Francis Pym, the Chief Whip. He said that Ted had asked him to ring round to tell us all that Iain had suffered a heart attack that evening and had just died. He was only fifty-six.
I felt the blow personally, for Iain had always been a generous and kind man for whom to work. I knew that he had given me my chance to shine and so make my way into the Shadow and then the real Cabinet. But I also immediately recognized that we had lost our shrewdest political intellect and best communicator. How Iain would have performed as Chancellor I do not know. But if one accepts, as I did and do, that the worst mistakes of economic policy derived from Ted’s overruling the Treasury, it is reasonable to suppose that matters might have turned out better if Iain had lived. He was succeeded by Tony Barber, a man of considerable intellectual ability, who by and large had an unhappy time at the Treasury. The economic problems of the next few years were founded in this transition. Although Tony may have had sounder economic instincts, Iain boxed at a much higher political weight.
The Cabinet which met after Iain Macleod’s death was a sombre one. Around the Cabinet table already sat nearly all of those who would be my colleagues over the next four and a half years. Their personal qualities would be severely tested. Tony Barber was an old if not particularly close friend from the Bar, an able tax lawyer, but not someone to stand up against Ted. Reggie Maudling, Home Secretary until his resignation over the Poulson affair in 1972,[24] was still interested in and had strong views about economic policy. By contrast, he was less than fascinated by his new brief. Technically still extremely competent, he was unlikely to oppose any shift back towards a more interventionist economic policy, which indeed he had always favoured.
Alec Douglas-Home had returned effortlessly to his old Foreign Office brief where, however, plenty of effort was soon required in giving effect to our promises made in Opposition to lift the arms embargo on South Africa and in trying to devise an affordable way of retaining a British military presence east of Suez. He was unlikely to take much part in domestic political affairs now, any more than he had in Shadow Cabinet. Quintin Hailsham had found his ideal role as Lord Chancellor, beginning a long spell in that office under Ted and then me, where he managed to combine his old sense of mischief and theatre with the sedate traditions of the Upper House. Peter Carrington was Defence Secretary, a post for which he was well suited and which he filled with aplomb. I knew that he was close to Ted. He doubtless became still closer when later as Party Chairman and Energy Secretary he had a crucial role in dealing with the final miners’ strike which precipitated the general election of February 1974. He was one of Ted’s ‘inner circle’.
Keith Joseph, by contrast, though a senior Cabinet figure and someone whose views had always to be taken seriously, was certainly not part of that circle and was never, so far as I know, invited to join it. Having been appointed to be Secretary of State for Social Services, Keith’s compassionate, social reforming side had become uppermost at the expense of his more conservative economic convictions, though he retained a profound distrust of corporatism in all its forms. His passion became the need to tackle the problem of the ‘cycle of deprivation’ which condemned successive generations to poverty. Like me, Keith had been given a high-spending ‘social’ department, and there was a natural opposition between what he (also like me) wanted for his own preferred programmes and the requirements of tight public expenditure control. Whether by chance or calculation, Ted had ensured that the two most economically conservative members of his Cabinet were kept well out of economic decision-making, which was left to those over whom he could wield maximum influence.
John Davies, the former Director General of the Confederation of British Industry (CBI) (who knew nothing of politics when he was summoned after Iain Macleod’s death to become Minister of Technology), certainly fell into that category. John was someone I liked and indeed appointed later to a post in my Shadow Cabinet. But his warmest admirer would have been hard put to make a case for his handling of the turbulent industrial politics which would now become his responsibility. John also represented ‘business’, a concept which Ted, with his latent corporatism, considered had some kind of ‘role’ in government.
With Tony Barber and John Davies, Robert Carr was, as Employment Secretary, the third key figure responsible for economic strategy under Ted. He was a good deal senior to me and we had different views and temperaments. He was a decent, hard working though not a colourful personality. But he had a difficult, arguably impossible, brief in trying to make the flawed Industrial Relations Act work. His reputation as a left winger in Conservative terms was less useful than some might have expected; trade unionists used to regard left-wing Conservatives not as more compassionate but merely as less candid. As Employment Secretary at the time of the first (1972) miners’ strike and Home Secretary at the time of the second (1974), few people faced greater difficulties during these years.
One who did was Willie Whitelaw as, successively, Leader of the House, Northern Ireland Secretary and finally Employment Secretary at the time of the three-day week. Willie was part of the generation which had fought the war. We seemed to have little in common and neither of us, I am sure, suspected how closely our political destinies would come to be linked. Since Education was not a department requiring at this time a heavy legislative programme, our paths rarely crossed. But I was already aware of Willie as a wise, reassuring figure whose manner, voice and stature made him an excellent Leader of the House. By the end of the Government his judgement and qualities were playing a role second in significance only to Ted’s own. Willie’s bluff public persona, however, concealed a shrewd political intelligence and instinct for managing men.
After Iain Macleod’s untimely death, Geoffrey Rippon was given responsibility for negotiating the terms of our entry into the European Economic Community. Although we had superficially similar backgrounds — both having been Presidents of OUCA and barristers — Geoffrey and I were never close. It always seemed to me that he tried to overwhelm opponents with the force of his personality rather than with the force of his argument. This may have been because Ted had given him the task of getting the best deal he could in negotiations with the EEC — and that deal was not always in our best long-term interests. This was something we were to realize more and more as time went on.
My impression was that the two members of Cabinet Ted trusted most were Jim Prior and Peter Walker. Both had proved their loyalty, Jim as Ted’s PPS in Opposition, and Peter as organizer of his 1965 leadership campaign. Jim was Agriculture Minister, a post which his farming background and rubicund features helped him make his own, before becoming Deputy Chairman of the Party under Peter Carrington in April 1972. Peter Walker’s thirst for the ‘modernization’ of British institutions must have helped draw him closer to Ted. He soon became Secretary of State for the huge new Department of the Environment, where he embarked with vigour upon the most unpopular local government reforms until my own Community Charge — and at the cost of far greater bureaucracy. Later he would go to the other conglomerate, the Department of Trade and Industry (DTI). Jim an
d, still more so, Peter were younger than me, but both had far more influence over the general direction of Government. Although their political views were very different from mine, I respected their loyalty to Ted and their political effectiveness.
The other members of Cabinet — Gordon Campbell at Scotland, George Jellicoe as Lord Privy Seal and Leader of the Lords, Peter Thomas, a close parliamentary neighbour and friend, as Secretary of State for Wales and Party Chairman, and Michael Noble briefly at Trade — did not figure large in discussions. I therefore found myself with just one political friend in Cabinet — Keith. Although I generally had polite and pleasant relations with my other colleagues, I knew that we were not soulmates. Doubtless they knew it too. Such things often show through more clearly in casual conversation and spontaneous reactions than in argument. What with the formidable difficulties I faced in Education, I therefore had little incentive to try to win wider strategic points in Cabinet.
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