The Cabinet, however, was not placated. It wanted a showdown. Fresh from his Liverpudlian experience, Michael Heseltine took up the charge, previously led by the Wets, against Geoffrey Howe’s plans for cuts of £5 billion. ‘Reducing taxes’, he said, ‘has nothing to do with problem of Merseyside. Colleagues don’t understand how bad it is … We have a society which is close to much more violence.’ He described Howe’s paper on public spending as ‘deeply disappointing’ and said that the government should ‘get a grip on the national economy’ by going for a pay freeze and thus having ‘£5 billion at our disposal’. What was he proposing, cried Mrs Thatcher, a pay freeze, a pensions freeze, a social security freeze? ‘I want the maximum of that package I can get,’ said Heseltine, whose use of the first person singular was not calculated to make Mrs Thatcher comfortable about his motives. Ever conscious of the terrible Heath example, she said, ‘it must not get out of this room that a pay freeze is being talked about’.64
All the Cabinet critics pitched in. The problem was ‘desperate’, said Peter Walker. Unemployment was much more of a worry than inflation, said Francis Pym. ‘This paper points to the decline and fall of the Tory Party,’ said Ian Gilmour. Jim Prior warned that the problem might ‘overwhelm us, and destroy what we stand for as a party and as a country’. Carrington said that support was melting away. John Nott and John Biffen, intellectually committed to ‘monetarism’ though they were, sided with the Wets. Only Joseph backed the Treasury team. Willie Whitelaw played for time by pointing out that July was always a bad time to make any final decision, but he did tell Mrs Thatcher that ‘There comes a moment in politics when you have pushed the tolerance of a society too far. We aren’t there, but we aren’t far from it.’ He thought that ‘We just aren’t going to make these cuts.’ It was the Lord Chancellor, Lord Hailsham, always mercurial, but also respected for his intelligence and experience, who made the most wounding intervention. He drew a comparison with the America of the 1930s, and the President at the beginning of the Great Depression, Herbert Hoover. ‘Hoover succeeded in destroying the Republican Party,’ said Hailsham; ‘we are in danger of destroying our own. Almost all Roosevelt’s policies were wrong, but political economics is applied psychology, and they worked.’ Geoffrey Howe hit back that the 1980s were not like the 1930s, because inflation was ‘still rampant’. Mrs Thatcher responded with her own historical example: ‘We have been here before. We reflated in 1972/3 – it led to Barber boom, property market boom and collapse, 6 years of socialism.’ Interest rates were on the way up again and yet people were speaking of increasing public expenditure. ‘The most frightening thing I’ve heard is that we should abandon policy of keeping inflation down. OK for people with muscle … The rest would see savings being confiscated.’ She concluded, ‘Let’s get a paper with both sides of the balance sheet. We must not get to a pocket money society [her phrase for a socialist, high-tax economy]. That’s the end of us.’65
On the same day, Mrs Thatcher gave her end-of-term talk to the 1922 Committee, of which the message, according to Ingham’s digest of the next day’s press, was ‘Now or never for Government’s economic policies; stick to our guns; we can do it; no phoney boom.’66 But, although she was combative as ever, she was also ‘very upset’ by the Cabinet arguments, and especially by Hailsham’s comparison with Hoover.67 She minded the disagreement with her policies less than the suggestion that she was destroying her party. The press duly reported the split in the public spending Cabinet, and some mentioned Francis Pym as an alternative leader to Mrs Thatcher. A reshuffle was expected in the autumn, they said. Discontent was public. The US Ambassador, John Louis, reported home under the title ‘Britain drifts’. ‘The problems begin with Thatcher and her government. It has visibly lost its grip on the rudder in recent weeks … the recent riots were a sharp shock. All along, the moderates in the party have insisted Thatcher was sacrificing too much to the fight against inflation. Last week, these moderates won a hard cabinet fight to achieve a youth employment package. Now they feel vindicated, but they’re also frustrated: the moderates themselves have no better prescriptions than creeping reflation and more soothing rhetoric …’68
And yet, at this grim time, the atmosphere changed. On 27 July it became clear that the Civil Service dispute which had been running since March would be called off, a return to work presented as a defeat for the unions. On 29 July the Prince of Wales married Lady Diana Spencer, amid scenes of general happiness not witnessed since the Coronation. For Mrs Thatcher’s amusement, Ingham included in his digest Soviet TV’s reaction to the occasion: ‘People of London hope the sound of wedding bells will drown out the rioting in Ulster and the shouts of young people being beaten mercilessly in Liverpool.’ In the same day’s report, Mrs Thatcher put a large arrow of approval beside the news that the House of Representatives had voted for Reagan’s tax cut.69 Ingham himself, who had written so gloomily to Francis Pym at the beginning of the month, wrote again at the end of it. He reported the conclusion of a meeting with his colleagues that ‘we had emerged from a most difficult month … in far better shape than we might have reasonably expected, considering.’ Warrington had been worse for Labour than for the government. Inflation, unemployment and industrial disputes had ‘all turned out better than expected’, and the Royal Wedding had been a ‘national tonic’.70
No sooner were the words out of Ingham’s typewriter than the row restarted. Geoffrey Howe’s public announcement on the same day that the recession was now over was too much for some of the critics. Francis Pym denied that this was the case and called for remedial measures. The party chairman, Lord Thorneycroft, said in an interview that a ‘survival package’ was needed and played on the Wet/Dry division: he felt in himself ‘a little rising damp’.71 These were damaging criticisms from the two men charged with the public presentation of policy, but for that very reason they rebounded upon them. It looked as if they were plotting, and as if they had a vested interest in bad news. Tory supporters were outraged. The Sun said that a reshuffle was planned, which would include the sacking of Thorneycroft.72 An opinion poll gave an SDP–Liberal Alliance 45 per cent, Labour 29 per cent and the Conservatives 25 per cent. It was time for the recess, which would work to Mrs Thatcher’s advantage.
At the public spending Cabinet in July, Mrs Thatcher had said that the recess would allow time for ‘fresh examination’. But, as Jim Prior put it, ‘It wasn’t fresh examination: it was fresh faces.’73 The summer had shown her that it had become impossible to govern with her existing team. She railed against the Wets in private, calling them ‘dumb bunnies’.74 The impossibility of the existing Cabinet was even more visible to some of those advising her than it was to her. Willie Whitelaw and Michael Jopling, the Chief Whip, had been particularly ‘outraged’ by the challenge to her authority in the Cabinet of 23 July. Despite the fact that both men leant to the ‘moderate’ tendency in the party, they urged her that a Cabinet that did not support her was ‘intolerable’.75 Some of her supporters thought she was too passive in the face of insurrection. Charles Douglas-Home,* the deputy editor of The Times, wrote to her privately to tell her that he had been talking to her senior colleagues – Prior, Pym, Nott and Whitelaw himself – and had found their tone ‘pretty depressing’. ‘You cannot let them go on like this,’ he said. ‘The whole thrust of the government is crippled … by your ministers parading their consciences, frustrations, hysteria, snobberies, masculinities or ambitions before an audience.’76 He recommended that she confront each critic individually and ask him to state his case. She did not follow his advice. The woman who had the reputation of being too dictatorial was really suffering from the opposite problem. With a shudder, she envisaged her own political mortality. ‘I could always scrub floors,’ she told her private secretary.77
Although Mrs Thatcher saw the process of the reshuffle in retrospect as a straightforward matter of weeding out dissidents and waverers and promoting true believers, it was rather more wayward than that. At first, she
was sufficiently shaken by what had happened in the course of the summer to think seriously of getting rid of Geoffrey Howe. ‘She came quite close to accepting this in private discussion,’ remembered Clive Whitmore. Implicitly rebuking her for her tendency to see ‘the government’ as an entity from which she was somehow separate, Whitmore told her that she could not distance herself from her Chancellor’s economic decisions: ‘If Geoffrey Howe goes, you’ve got to go.’78 ‘She frequently behaved when in government as if she was still leading the Opposition,’ he said. This was partly because she was ‘shrewd politically and she always wanted to be in an “I told you so” position.’79 But the strength of her position, such as it was, came from the fact that no one could drive a wedge between her and her Chancellor: it would have been fatal for her to have done the work of destruction herself. Howe himself got wind of the threat to his position, and warned his new private secretary, John Kerr,† that he might be gone by the party conference that October.80 In the view of the Chief Whip, Michael Jopling, she was never serious about getting rid of Howe, but she did harbour suspicions about him because he was ‘instinctively on the moderate side’.81 She was right in sensing this, but unwise to consider getting rid of Howe. Although Howe did not disagree with her, at this stage, about the main policies, his attitude was very different. He believed that his Welsh background gave him a stronger understanding than Mrs Thatcher of the pain of unemployment.
Her doubts about Howe were part of a wider problem, produced by the stress of the year, that she was almost as irritated with her allies as with her opponents, and they with her. In the first week of August, Hoskyns settled down to what he called a ‘blockbuster’ memo to his boss. To avoid her dismissing it as ‘just me being disagreeable’, he got David Wolfson and Ronnie Millar to add their names to his (though, since the paper mentions the merits of Millar by name, the pretence that he was one of its authors cannot have fooled Mrs Thatcher). The rather surprising involvement of Millar, who never saw government papers and was in no way a policy-maker, was sought by Hoskyns because Millar was, for Mrs Thatcher, ‘that rare thing, a trusted friend who wanted her to succeed and was therefore prepared to tell her things she did not want to hear’.82 Millar was extremely fond of Mrs Thatcher and used to say, ‘Bless her little cotton socks!’ when he spoke of her,83 but he felt desperate at the idea that, partly through her own fault, her great enterprise might founder. The fact that Wolfson, so close an associate, was prepared to help Hoskyns is also striking. The frankness of the paper showed how bad they all felt the situation was. The paper was put into the Prime Minister’s red box as she went on holiday on 20 August. It was entitled ‘Your Political Survival’.84
The ‘blockbuster’ was quite possibly the bluntest official document ever seen in Downing Street. Although it recognized that ‘your Government has achieved the beginnings of a near-revolution in the private sector and especially in Industry,’ and ‘things in the economy are better than people realise,’ the note warned that ‘it is exactly at this moment that colleagues’ nerves begin to crack and internal revolt (now clearly recognised in all the newspapers), threatens your own position.’ Hoskyns told her that ‘Your own credibility and prestige are draining away very fast.’ The most likely outcome was ‘you as another failed Tory prime minister sitting with Heath’, but it was a serious possibility that she would be simply thrown out before the next election. He then listed her faults. ‘You lack management competence’ was the headline of one paragraph. ‘Your own leadership style is wrong’ was another. He warmed to his theme: ‘You break every rule of good man-management. You bully your weaker colleagues. You criticise colleagues in front of each other and in front of their officials. They can’t answer back without appearing disrespectful, in front of others, to a woman and to a Prime Minister. You abuse that situation. You give little praise or credit, and you are too ready to blame others when things go wrong.’ ‘The result’, the next paragraph was headed, ‘is an unhappy ship’: ‘This demoralisation is hidden only from you. People are beginning to feel that everything is a waste of time, another Government is on its way to footnotes of history. And people are starting to speculate as to who might reunite the Party, as Macmillan did after Suez, if you go. But no-one tells you what is happening, just as no-one told Ted.’ To survive, ‘you have an absolute duty to change the way you operate.’
The Hoskyns memo called for Mrs Thatcher to ‘Lead by Encouragement, not by Criticism’: ‘Churchill provided the element of will and courage, as you do, without which nothing could have been achieved. But when the Battle of Britain was over, he gave all the credit to others. You must make the members of your team feel ten feet tall, not add to their own human fears and self-doubts. Say “we” and not “I”.’* Hoskyns wanted a new party chairman, a thoroughgoing reshuffle and a ‘Cabinet steering group’ to provide direction, and movement towards ‘a Radical Cabinet for the next Parliament’. Mrs Thatcher should restore her public image, taking more advice from Ronnie Millar and cut her diary commitments: ‘To be frank, I believe you fill your diary because it’s a good way to avoid having to do the unpleasant strategic thinking, involving unknowns and uncertainties, which you don’t enjoy and which is not your forte.’ He concluded: ‘There is no other Politician … who is likely even to attempt to lead the country in the right direction. But it will be no comfort to you, to us, or to the Country as a whole if you go into the history books with the prize for the “Best Loser”.’ He begged for the chance to ‘talk through this paper calmly and carefully’.
In Hoskyns’s view, the ‘blockbuster’ failed: ‘Two or three weeks later she hissed at me, out of the corner of her mouth as we sat down to start a meeting in her study: “I got your letter. No one has ever written like that to a prime minister before” … She had clearly never experienced advice of this kind before, and our working relationship, often uneasy at the best of times, was undoubtedly damaged … Only if we had talked it through together could the letter have been helpful to her. But we never did. I suspect that it marked the point at which she decided she had had enough of me.’85 Hoskyns continued ever afterwards to believe that 1981 was the time when Mrs Thatcher first began to suffer the isolation of high office: ‘however it happened, the seeds of her downfall were being sown.’86 This analysis may be right, but he surely underplayed the simple fact that almost no human being, particularly one, like Mrs Thatcher, under intense strain, can be expected to take such brutal criticism easily. In his frustration at the inadequate use she made of the Policy Unit, Hoskyns made personal criticisms that were so negative that it was hardly possible for Mrs Thatcher to discuss them ‘calmly and carefully’.
But Hoskyns’s anger did reflect widespread views among people sympathetic to Mrs Thatcher. As well as being, in their eyes, inspiring, admirable, brave and, to many, surprisingly loveable, she was also intensely annoying. Hoskyns’s criticisms of her overwork, lack of consideration for Cabinet colleagues, dislike of long-term thinking and poor management were essentially true, though he never made enough allowance for her remarkable political gift for seeing when the time was ripe and when it was not. His ‘blockbuster’ is testimony to how very trying she could be, even – perhaps particularly – to her friends. It is evidence, too, of the sense of crisis that prevailed in her administration that summer.
Although she never acknowledged the justice of criticism directly, Mrs Thatcher did have ways of listening to it. The sort of changes for which Hoskyns, Millar and Wolfson argued did take place. Mrs Thatcher deputed Ian Gow to fly to Venice, where Thorneycroft was on holiday, to ask him to resign as party chairman. It was a frosty encounter. Following it, on 25 August, Thorneycroft wrote to Mrs Thatcher offering his resignation. His letter included carefully phrased praise for ‘the determined, undogmatic and caring party which we have always been’.87 The next day, Mrs Thatcher, already back from a brief respite at the flat in Scotney Castle (she had earlier in the month spent a few days with the Wolfsons in Cornwall, where, Wolfson told
Hoskyns, she had ‘seemed like a zombie’ because of the strain and tiredness),88 revealed the main parts of her proposed Cabinet reshuffle to a meeting of Hoskyns, Wolfson and Ian Gow. The most important thing was that Jim Prior would be replaced at Employment by Norman Tebbit, and would be offered Northern Ireland instead. Cecil Parkinson would succeed Thorneycroft as chairman. At his own request, Keith Joseph would move from Industry to Education. Christopher Soames would be out. Ian Gilmour would go from his position as number two at the Foreign Office, and be replaced by Douglas Hurd. David Howell would move to Transport and Nigel Lawson would take his job at Energy.89 This preview was fulfilled in all particulars, except that it was not Douglas Hurd, but Humphrey Atkins, moving from Northern Ireland, who displaced Gilmour.
Jim Prior heard what was afoot, however, and decided to resist. His determination was sharpened when he heard the rumour that he was to be succeeded by Tebbit, whom the Wets considered particularly rough and socially inferior. The next day’s Daily Mail carried a big interview with Prior under the headline ‘I’ll fight like hell’.90 On 2 September, Mrs Thatcher, Prior and others met to discuss the reform of trade union immunities now that the consultation period for his green paper had ended. The meeting was ill-tempered. Prior dug his heels in, saying that ‘History showed that the unions could defeat legislation if they wanted to.’ Mrs Thatcher said his ideas, such as the ending of union-only agreements, were ‘far too modest’. Thinking of the SDP, she warned that ‘The field should not be left open to others to put proposals which would secure electoral support.’91 There was impasse. It was widely believed that Mrs Thatcher was not in a strong enough position to move Prior. As the reshuffle approached, however, Prior’s camp overplayed their hand. Richard Needham,* one of his young supporters in Parliament, told the press that Prior would resign if he were offered Northern Ireland. This gave the damaging impression that he regarded the job as unimportant, even perhaps that he was frightened of its dangers. A television interview that he gave sitting on his combine harvester at his Suffolk farm added to the feeling that he was presenting such a direct challenge to Mrs Thatcher’s authority that she had to move him. Besides, for the first time since the general election, the politics of confronting the trade unions were starting to shift. The emergence of the SDP, which was vigorously anti-trade union political power, meant that the Tories could no longer assume that they had the monopoly of anti-union votes. Prior’s caution on the subject might lead his party to be outflanked: his position was not as strong as he had believed.
Margaret Thatcher: The Authorized Biography Page 86
