The question of British entry into the European Economic Community was revived, both because it reflected Heath’s genuine enthusiasm for the project and because he hoped to exploit Labour divisions on the subject. Mrs Thatcher spoke up too, thinking in the terms of making ‘Europe’ a world power which she was later to deride. ‘Europe has become a cornerstone of our campaign,’ she told an election meeting. ‘You will be aware of Mr Heath’s [earlier] efforts to get us into the Common Market. Many of the difficulties facing us then [1963] no longer exist … I believe together we could form a block with as much power as the USA or Russia.’52 But even in this campaign there was a hint of suspicion underlying her Europeanism: ‘I don’t like the idea of a Europe without us there, directing and guiding its powers.’53
The Liberal vote, nationally and in Finchley, fell sharply, so that Mrs Thatcher, though winning fewer votes than on the previous occasion, increased her majority by 662. The results were:
Mrs Margaret Thatcher (Conservative) 23,968
Mrs Yvonne Sieve (Labour) 14,504
F. Davis (Liberal) 13,070
Conservative majority 9,464
Although the Labour victory was huge, economic problems closed in upon Harold Wilson’s government. Inflation, wage rises, high government spending, low government revenues and an unfavourable balance of payments bore down upon the administration, resulting, eventually, in the devaluation of the pound from its fixed rate of $2.80 to one of $2.40, on 18 November 1967.* Mrs Thatcher was moved from her shadow Treasury brief in the month before the final collapse, but from the 1966 election until then she had a ringside seat, and she used it effectively to heap obloquy on Labour’s head. Three things particularly struck her about what she witnessed. The first was the way that economic and financial difficulty diminished the personal credit of political leaders. Harold Wilson, she believed, was exposed as a trickster: ‘The Prime Minister’s problem is that Britain’s creditors now understand him perfectly,’ she told the House of Commons on 26 July 1966. The lack of trust meant that no specific remedy could work its effect: ‘They are not judging the measures themselves; they are judging the set of men, headed by the Prime Minister, who brought them into operation.’54 Her deputy villain in this set was the Chancellor of the Exchequer, James Callaghan. If, to Mrs Thatcher, Wilson was devious, Callaghan was incompetent. SET was brought in, she asserted, because the Chancellor got his forecasts wrong.55 ‘You can’t say he has lost command of the situation – he never had it.’56 Invited to give a platform speech at the Conservative Party conference in Blackpool that October, she hinted criticism of past Tory governments, saying that the tax burden under them had been ‘high enough in all honesty’. She then announced the results of her careful study of all post-war Budgets to show that three of the four highest-taxing Budgets ever had been introduced by Jim Callaghan. ‘This chap Callaghan’, she told the cheering audience, ‘must go.’
Her second lesson was to find her anxiety for the rule of law, and for clarity and due form in law-making, confirmed. Alert to the drafting of Bills, she always noticed when a clause was obscure, or gave the authorities arbitrary power, or covertly changed the purposes of a tax. She quickly spotted, for example, that SET would break the rule which as a minister she had overseen, that National Insurance should perform the purpose for which it was named; SET showed ‘the unwisdom of using the National Insurance system as a means of raising general revenue’.57 It also gave arbitrary powers to the Ministry of Labour to decide who would get a rebate and who a penalty. The introduction of wage freezes, she believed, was also unfair. It meant that employers could not keep faith with promises they had already made to employees, and so undermined the sanctity of contracts. Bargains freely made were nullified: ‘It is the first step on the journey to coercion.’58 As individual ‘prices and incomes orders’ were laid before Parliament, Mrs Thatcher could fasten on the absurdity of individual situations to illustrate her point. In January 1967, the Rockware Glass Company wanted to pay a promised increase to its thirty-four maintenance engineers in their extra payment for keeping the furnaces going continuously. Mrs Thatcher angrily scorned the bureaucratic idea that to permit such a case would have ‘repercussions’: where was the rule of law if workers and bosses could not make and stick by their own agreements?59 Again and again, she criticized prices and incomes policy for its inequity: ‘It used to be a civil offence to break a contract, now it can be a criminal offence to keep a bargain.’60
Her third and most important lesson from her period as Treasury shadow, but also from her entire experience of the six years of opposition, was about the state’s role in the economy. She had always believed that nationalization, high taxes and government interference were bad. Now she saw the car-crash she had predicted happening before her eyes. The government, she felt, was little better than a robber: ‘the Government dislike[s] the fruits of investment going to those who supply the money to invest.’61 It did not see that profits were good, representing the successful common interest of labour and capital. She said that Callaghan’s ‘message to all who work is “If you make it, I’ll take it” ’.62 And she was not frightened of standing on moral high ground about taxation: ‘Members of the Government have talked about social justice. There are many ways in which one can be socially unjust. One of them is to take away too high a proportion of anyone’s income.’63 She argued that tax avoidance (as opposed to evasion) was perfectly justified, indeed essential when rates were high. Clashing with Eric Heffer, who accused her of complaining about the top rate of tax although it affected only a very few people, she was unabashed: ‘The honourable Gentleman is quite right. We are concerned with a comparatively small group of people, I do not deny that, but I say that the future of people in industry depends tremendously on the small group of people who can create more wealth, and they are far more valuable to the ordinary working person than those of us who work here, including the honourable Gentleman, who cannot.’64
Her dislike of tax led her to develop the idea, later so important in her attitude to housing, that tax relief was a far, far better thing than cash subsidy. Subsidy, she wrote in the Building Societies Gazette, ‘implies that all income is ultimately vested in the State’, whereas relief ‘rightly enables people to keep more of their own money with which to discharge their own responsibilities’.65 She went further, arguing that, because tax was where the shoe pinched each citizen, revolts against it were the main engine for British liberty. She told the Conservative Party conference in Brighton in October 1967 that:
freedom has been gained in this country – not by great abstract campaigns, but through the objections of ordinary men and women to having their money taken from them by the State. In the early days, people banded together and said to the then Government, ‘You shall not take our money before you have redressed our grievances.’ It was their money, their wealth, which was the source of their independence against the Government. This is crucial.66
*
On 10 October 1967, ten days before she spoke in this vein to the party conference, Edward Heath at last gave Mrs Thatcher the recognition he knew was due to her talent, and promoted her to the Shadow Cabinet, as shadow minister for fuel and power. She was up against a minister, Dick Marsh,* whom she knew from Dartford days, and whose charm, good looks and relatively right-wing views endeared him to her. It indicates something of where she stood in the political firmament that, earlier in the year, a Sunday Times ‘Spot the Prime Minister’ magazine feature about rising political talent had given Mrs Thatcher’s odds as 1,000–1, whereas Marsh was favourite at 5–1.67 Nevertheless, she was now well known, well respected, popular with the party rank and file, and sufficiently trusted by the leadership to be asked to tackle subjects that went beyond her shadow portfolio. This last point was particularly important to her, as she did not want to lose touch with the wider economic debate from which she had learnt so much. She entered the Shadow Cabinet without any access to the confidences of the leadership, nor any
notable influence on its ideology, nor any clear independent power base. Yet it was also clear that she was formidable.
At fuel and power, Mrs Thatcher became more closely acquainted with the constraints under which the Conservative Party operated at this time. Although it found it easy to attack extensions of state ownership, it was much more uncertain about what should be done with those industries which were already state owned and run. Nationalization was not unambiguously unpopular with voters, and the Conservatives laboured under the belief that most of the industries involved would be unsellable, a view which reflected the overall weakness of the private sector at that time and an underlying lack of confidence in the future of free markets. In the same party conference speech, therefore, in which Mrs Thatcher was so robust about tax, she was more circumspect about nationalization. Positioning herself as someone with ‘deep philosophical reasons’ for opposing nationalization, she then added a caution: ‘we must accept that many people judge these things purely upon the practical results, so let us start adopting that approach.’ Privatization (as it was not then called) did not at present offer ready answers because ‘No one will buy a rotten enterprise.’
Already in the 1960s, coal was the most contentious of the matters in the fuel and power brief. It still employed the largest numbers of men – more than 300,000 – and great swathes of its production were uneconomic. It also held a special place in the aristocracy of labour, one which Tories respected and feared from what they hoped was a safe distance. Mrs Thatcher’s first encounter with it in her new post, however, was in a narrower but deeply emotional context. In October 1966, a coal-slag heap at Aberfan in Wales had slipped, engulfing a school and killing 116 children and 28 adults. A year later, the House of Commons debated the report of the investigating tribunal. Aberfan was an issue too painful for normal political argument, but Mrs Thatcher was struck by some of the lessons that emerged. She said she was shocked that the chairman of the National Coal Board, Lord Robens, had not gone to the scene of the disaster at once. She noted that the NCB’s director-general of production had been given a report about the state of the coal tips but had not read the material. ‘I despise any organisation or person’, she told the House, ‘who attempts to pass the buck further down the line,’ and she added that ‘It is a jolly sight easier to exercise control in private industry.’68
When she appeared on Any Questions? in Wales the following month, Mrs Thatcher described the report as ‘the most damning indictment of a management that I have ever read’, and she took the occasion, in answer to a question from an Aberfan bereaved mother, to give her view of the future of coal: ‘… I don’t think coal-mining as such is on the way out. I think it will be reduced in amount, the uneconomic pits will go’, and then it would revive.69 Later in the month, in the House of Commons, she elaborated her views. She argued that the production target of 200 million tons was too high and that ‘The future policy is undoubtedly to plan for a contracting coal industry.’ The Central Electricity Generating Board’s preference for coal, enforced by government, was very expensive, she said, and would be made more so by the Coal Industry Bill. If public money was to be spent, it would be better used closing more pits and helping unemployed miners get new jobs. Although her main case was economic, she made a moral one as well. Three miners were killed each week at work and there was a high incidence of industrial disease: ‘if one were given a choice one would not send a son down a pit. I would not do so …’* She renewed her criticisms of the NCB: ‘While the numbers of miners in the industry are being run down, the number of people on the Board is being put up. If a private enterprise did that, all hon. Members opposite would have a fine old time debating against me.’70 Always the housewife, Mrs Thatcher never forgot to consider the effect of government fuel and power policy on the consumer. Attacking Barbara Castle in Parliament about rising prices in general, she turned to the cost of electricity: ‘My bill is up. It came with a nice little apologetic note, but that does not alter the fact that it is up by 15 per cent, 3s. in the pound. This was another increase which was not referred to the Prices and Incomes Board.’71 Although she and Keith Joseph did fantazise in this period about splitting power-generating capacity into three as a prelude to privatization,72 Mrs Thatcher and her party did not come up with a plan for coal, and had no inkling of how the pits would eventually provide the political battleground on which Ted Heath would founder and she – much later – would triumph. All that is notable about her approach at this time is that she rejected the mystical approach to coal which was still so pervasive in British political culture.
Now that she was in the Shadow Cabinet, Mrs Thatcher began to show the first signs of developing an overall, publicly argued political position of her own. Her first big opportunity to present this came with the invitation to deliver the Conservative Political Centre Lecture at the party conference in Blackpool in October 1968. The CPC Lecture was the most prestigious fringe meeting of the conference. The person asked to give it was thus marked out as a coming man, so this was Heath’s way of saying that Mrs Thatcher was a coming woman. Indeed, it was on the subject of women’s rights that he invited her to speak, but she rejected this with something approaching scorn. ‘Ted said would I do “women in politics”,’ she remembered. ‘I thought that was much too dull.’73 She boldly told the Daily Mirror at the time that she had refused the subject of women – ‘They’ve been around since Eve, you know.’74 She chose instead the all-embracing title ‘What’s wrong with politics?’
To understand Mrs Thatcher’s resolute unfashionableness throughout her career it is worth noting what she was doing at any particular time and compare it with what was happening elsewhere. Thus, on the day of John F. Kennedy’s assassination in 1963, she was opening a charity bazaar in her constituency and attending a Rotary Club dinner. In the summer of 1968, when the Western world was turning on, tuning in and dropping out, and the Soviet Union was invading Czechoslovakia, she was sitting at The Mount, Lamberhurst, studying the thirty or so works of Conservative political philosophy, including the writings of Karl Popper on the open society, which she had got out of the library in preparation for her lecture. This was her first effort at organized philosophizing, and, unlike her later productions, it was her own entirely unaided work.
Some have criticized Mrs Thatcher’s CPC Lecture for being rather naive, even plodding. Certainly its use of extensive quotation has a clumsily autodidactic feel, and her enumeration, point by point, of the seven reasons why the public now distrusted politicians was an uncomfortable survival of her barristerial training. But the lecture is interesting all the same for setting out many of the main beliefs that animated her, most of which were to matter more and more as the years passed. She herself recognized the lecture’s importance, both intellectually and politically. She delivered it in a gold brocade coat-dress which she had deliberately chosen to attract the greatest possible amount of attention.75
The lecture attributed the growing distrust of politicians to a mixture of factors as various as the disappearance of independent Members of Parliament, more instant news on television and an increasingly disrespectful society. Her remedies were more coherent. ‘I believe’, she said, ‘that the great mistake of the last few years has been for the government to provide or to legislate for almost everything.’ The Tories themselves had not been guiltless. In the early 1960s, ‘the emphasis in politics shifted.’ At about that time ‘growth’ became the key political word and the contest between the parties became too much about economics, not enough about people. Those who promised the most through governmental agency seemed the most attractive, and so Britain entered into the era of national plans and then prices and incomes policy to control inflation. Now, she went on, there were calls for more ‘participation’ by the voter, but this was no good if it meant participation in more government decisions, rather than ‘making more of his own decisions’. The trend was so bad that on incomes policy Conservatives and Labour sounded ‘almost indistingui
shable’. Governments could not run prices or incomes: ‘we have too little regard for the essential role of government which is control of the money supply and the management of demand.’ Governments had been paying for expenditure by ‘printing the money’. Enter, for the first time, Thatcher the monetarist. The whole idea of ‘keeping down incomes’ made little sense to her, she continued: ‘There is nothing wrong with people wanting larger incomes,’ but the ‘condition precedent’ was ‘hard work’. If people could keep more of what they earned they could contribute more to the general good, Mrs Thatcher said, and she used an image of which she and her supporters in later years would never tire: ‘The point is that the Good Samaritan had to have the money to help, otherwise he too would have had to pass by on the other side.’
She ended with a call to Conservatives. She said that it was a distinctive and admirable feature of the British parliamentary system that there was no automatic consensus. An ‘alternative policy’ was always on offer, rather than a futile ‘attempt to satisfy people holding no particular views about anything’. She ended by sounding the trumpet for conviction politics while blowing her own at the same time. At a recent university meeting, she said, ‘a young undergraduate came to me and said, “I had no idea there was such a clear alternative.” He found the idea challenging and infinitely more effective than one in which everyone virtually expects their MP or the Government to solve their problems. The Conservative creed has never offered a life of ease without effort.’ Here the voice of Alderman Roberts in the pulpit was coming through. ‘Democracy is not for such people. Self-government is for those men and women who have learned to govern themselves’. ‘No great party’, Mrs Thatcher concluded, ‘can survive except on the basis of firm beliefs about what it wants to do.’
Margaret Thatcher: The Authorized Biography Page 27
