Margaret Thatcher: The Authorized Biography

by Charles Moore

  The reshuffle took place on 14 September 1981. Prior accepted Northern Ireland, with the sop that he could remain on E Committee, and take the ultra-Wet junior minister Nicholas Scott with him to the province. Christopher Soames reportedly complained to friends that he would have sacked his gamekeeper with more courtesy than Mrs Thatcher had shown him (though why one should expect gamekeepers to be shown less courtesy than Lord Soames in matters of employment was not clear). Soames was replaced as leader in the Lords by Janet Young, an old friend of Mrs Thatcher with a background in Oxford city politics, the first and last woman ever appointed to her Cabinet. Gilmour wrote to Mrs Thatcher, in the normally courteous exchange of letters customarily published when a minister departs: ‘You asked for my resignation … this was, in view of our disagreements, neither surprising nor unwelcome.’92 But of course it was unwelcome: the Wets looked much less dignified sacked than they would have looked if they had resigned on principle; and there was something in their sense of affront at being sacked by a woman which was haughty. They had not bargained for this. Reporting the press reaction to the reshuffle to Mrs Thatcher, Bernard Ingham noted ‘A good welcome (apart from Mirror and a v. sourpuss Guardian)’.93 In the Daily Mail, Paul Johnson called it the ‘most magisterial demonstration of a prime minister’s authority since the Night of the Long Knives [Harold Macmillan’s dismissal of a third of his Cabinet in July 1962]’. Mrs Thatcher still did not have a majority of true believers in her Cabinet, but by the addition of Tebbit, Parkinson and Lawson she had installed a new generation of active, clever, enthusiastic supporters. Equally important, she had proved that she could sack the grandees without the heavens falling.

  There was no obvious or immediate improvement, however, in Mrs Thatcher’s fortunes. On the same day as the reshuffle, interest rates, lowered with a fanfare at the time of the Budget, went up by 2 per cent to protect sterling. A combination of rising world interest rates, the great expansion of private domestic credit because of the relaxation of controls and worries about the gilts market forced the government to act. On 23 September the stock market index fell to its lowest level for seventeen years. On 1 October interest rates rose by 2 points yet again to 16 per cent, which was agonizingly high.*A Gallup poll privately conducted for the Conservatives showed that if a Social Democratic Alliance were to come into being, 40 per cent of voters would support it, and only 16 per cent would support the Conservatives.94 In a decision which probably saved the party from complete collapse, Labour voted narrowly for the moderate Denis Healey as its deputy leader, rather than Tony Benn.

  Ted Heath chose the run-up to the party conference to launch his fiercest and most direct attack on the government’s economic policy: ‘If more than three million unemployed are needed to get inflation down to a level higher than it was 2½ years ago, how many more millions of unemployed will be required to bring it down to … to what level? – to a level that has never been revealed?’ He said that ‘The time has come to speak out.’ He wanted ‘a return to consensus politics’, membership of the ERM and the reintroduction of exchange controls, as well as much more capital investment and a ‘massive’ retraining programme.95 Angrily, he exclaimed, ‘How dare those who have run the biggest budget deficit in history reproach others with the heinous crime of printing money?’

  Heath’s advance text reached Mrs Thatcher, who was in Australia. She interpolated her repudiation of it into the Sir Robert Menzies Lecture about the virtues of choice which she was giving in Melbourne. Consensus, she said, was ‘the process of abandoning all beliefs, principles, values and policies in search of something in which no one believes, but to which no one objects’.96 In fact, as was almost always the case, Heath’s intervention was useful to Mrs Thatcher. It made the dispute look personal, and as soon as that happened the party faithful naturally rallied to the leader.

  In the same week, representatives of the younger generation of Conservative MPs produced a pamphlet called Changing Gear, which politely but definitely put down a marker against the trend of Mrs Thatcher’s policies. The pamphlet issued from an informal group known as the Blue Chips, which included most of the brightest and best connected of the 1979 intake. Led by Chris Patten and William Waldegrave, the group also included Lord Cranborne, John Patten,* Tristan Garel-Jones† and Richard Needham. Soon afterwards, it was joined by John Major. It was seen by its own members as a rather grand network,97 and even had its group portrait painted by Lord Cranborne’s sister, Lady Rose Cecil. Most members of the group eventually attained ministerial and often Cabinet rank, and many people came, in later years, to see the Blue Chips as conspirators. In 1981, they were clearly ambitious young men, and the fact that, in Chris Patten’s phrase, ‘we asked one question too many’,98 was an ill omen for Mrs Thatcher. By the time the pamphlet was published, Waldegrave had actually taken a junior post in the government.

  Full of the spirit of the Macmillan era and published, indeed, by Macmillan’s firm, the pamphlet used as its epigraph two-edged words from the old man himself: ‘We have at least the most important thing of all at the head of our Government, a Prime Minister of courage, who I hope will not be led away from the old tradition of consensus.’ The pamphlet called for greater capital expenditure in return for organized wage restraint, and included mildly heretical notions like elections to the House of Lords using proportional representation. After ‘arm-wrestling’ between Waldegrave and Chris Patten,99 the document reflected the economically Drier views of Waldegrave, rather than the Heathite Keynesianism of Patten, but it was nevertheless a criticism of the social effects of Thatcherism by people who believed that the Conservatives would lose the next election. It declared that ‘a political strategy based on economic theory is a house built on sand.’ Geoffrey Howe wrote to Mrs Thatcher about it at once. The pamphlet’s launch had been overshadowed by Heath’s attacks, he said, but ‘in the longer run I suspect that their relative importance could switch, Ted’s outbursts being so much more immoderate in both tone and content, and much less well-written too’. He went on: ‘in some cases the proposals offered are unrealistic … e.g. a Heseltine-like trade-off of lower pay for higher investment’, but the arguments were chiefly about tone and flexibility and ‘we must heed them.’100

  At the party conference itself, Heath said, in the hall, what he had recently said in rather more explicit terms outside it. Almost every leading Wet, both inside and out of the government, made speeches of what the press called ‘coded’ criticism, though in truth the code was so easy to crack as hardly to deserve the name. The rank and file, however, were more worried that Mrs Thatcher might not be allowed to succeed than they were critical of her policies: revolt did not take off. The most notable platform speech of the week was by the new Employment Secretary, Norman Tebbit. Playing on the tough times he had known as a child in the 1930s, and speaking in the tone of slight menace which made him compelling to listen to, he said that he had grown up with an unemployed father: ‘He didn’t riot. He got on his bike and looked for work.’ This was forever afterwards known as the ‘on your bike’ speech, and it became an object of hatred to the left and an encapsulation of the Thatcherite approach to work. It was particularly popular with its audience, both because of its way of dealing with the summer riots which they had so detested and because it was a message of defiance to the very angry and numerous ‘Right to Work’ protesters who were besieging the Blackpool Winter Gardens and shouting insults at Tory representatives as they went in and out. From then on, although his political course was in reality much more subtle, even changeable, Norman Tebbit was always considered as the bootboy of Thatcherism.

  For her own speech to the conference, Mrs Thatcher’s advisers pushed for what John Hoskyns called ‘a serious effort to convey the historic significance of what was being attempted’, but got instead what he thought was ‘the most boring and anti-climactic speech I ever heard her make’.101 The drafts by Hoskyns and Millar were full of rallying calls reasserting the difference between right and wro
ng. They quoted Mrs Thatcher’s favourite chorus from T. S. Eliot’s The Rock about ‘dreaming of systems so perfect that no one will need to be good’ and exalted the moral value of choice, and therefore of capitalism, above such dreams.102 But the drafts were more or less superseded by ‘large chunks of “wallpaper” from Jock [Bruce-Gardyne], and even worse stuff from [John Selwyn] Gummer’ which, Hoskyns moaned in his diary, ‘commend themselves to Margaret, who has no taste or judgment whatsoever’.103 What the speech tried to do was to mix a conciliatory tone with the tough message of persistence in the face of economic difficulty. It welcomed ‘strenuous discussion and dissent’, and said of Ted Heath: ‘We may have different ideas on how best to navigate but we sail the same ocean and in the same ship.’ There were acknowledgments of the pain of unemployment, and of ‘the dignity which comes from work’. The argument against any U-turn was presented pragmatically: ‘It is sheer common sense,’ she said. Outlining moves towards greater denationalization (the word ‘privatization’ was still avoided), Mrs Thatcher said, ‘if this is dogmatism then it is the dogmatism of Mr Marks and Mr Spencer, and I’ll plead guilty to that any day of the week.’ She sought ‘the common consent of the people of Britain to work together for the prosperity that has eluded us for so long’.104 Without resiling from anything, the speech was fairly unspecific, declining to lead its audience into new areas of reasoning. Reform of the trade unions, for example, though so high on the agenda of the reshuffled Cabinet, was not discussed. Bernard Ingham’s press digest to Mrs Thatcher the following day reported the newspaper view – ‘shortest standing ovation any leader has received for years’.105 The audience in Blackpool felt somewhat reassured, but not inspired. The press confidently predicted a leadership challenge.

  On 20 October 1981 the Cabinet reconvened to discuss the proposed public spending savings of £3.5 billion. Despite the reshuffle, there was still very little agreement. Geoffrey Howe tried to reassure everyone that this was ‘Not a matter of dogma, but of judgment based on practical experience. Markets decide how much we pay for our borrowing.’106 Between the middle of August and September, the government had failed to sell any debt at all. The annual interest charges on government debt were now £15 billion, having been £8.5 billion in 1978–9. That was more than was spent on health, or defence, or education. There was no other route, Howe argued, but cuts in plans because of the danger of going beyond what the government could sensibly borrow. Many colleagues were unsympathetic. Michael Heseltine, whose paper on Liverpool, It Took a Riot, had been sidelined by Mrs Thatcher, complained: ‘I have failed to persuade colleagues to take the right choices … I can’t see my way through.’ He said he would rather increase the PSBR than make the cuts proposed. John Biffen, who had been wavering since the Budget, argued for higher taxes because of the ‘requirements of political survival’. Prior, of course, said the same. Lord Carrington said: ‘I don’t think this package is saleable … Some of your proposals are bashing the poor. If you are going to leave the rich unscathed and hit the poor, you are going to be very divisive.’ Peter Walker declared that ‘there is no possibility of getting out of the slump’ with current policies, and Francis Pym warned: ‘We haven’t produced a ray of light; and we are asking people to make sacrifices without hope.’107

  This time, however, some voices as well as that of Keith Joseph hit back in support of the Chancellor. Patrick Jenkin, now at Industry, and the new boys, Parkinson, Lawson and Tebbit, all backed Howe. Tebbit, seeing the way the external financing limits of the nationalized industries played havoc with the PSBR, argued for a ‘fudging’ to get investment in them off the figures. This came the day after privatization had been announced in relation to the British National Oil Corporation (BNOC) and gas showrooms, as well as the sale of the National Freight Corporation to its employees. Nigel Lawson, as Energy Secretary in charge of BNOC, proudly described it as the biggest programme of denationalization ever put before Parliament. The logjam of excessive caution was gradually breaking.

  The Cabinet agreed to set up a small ad hoc group (MISC 62) under Willie Whitelaw to try to work through the options for cuts. But, as had happened so often before, the press were leaked details of disagreements: ‘Headlines claim you are opposed by most of Cabinet and that MTFS is in ruins,’ said Ingham in his press digest.108 Mrs Thatcher angrily told the Cabinet that ‘If anyone here is doing things which result in leaks to the press, the honourable course is to resign.’ If it happened again, she said, Cabinet government would have to be differently conducted in future.109 Ill feeling persisted.

  But the spirit of innovation also strengthened. With Prior gone to Northern Ireland, the way at last lay open for trade union reform. Towards the end of October, Norman Tebbit presented his proposed changes to Cabinet colleagues in E Committee. In doing so, he adhered to the ‘step-by-step’ approach of Prior, but included the step which Prior had refused to take – an end to the immunity of trade union funds from claims for damages. His proposals revoked Section 14 of Labour’s Trade Union and Industrial Relations Act 1974, which had given unions immunity even if their action was not taken in furtherance of a trade dispute. The privileges of unions were to be reduced to those of individuals in the same situation. The definition of a lawful trade dispute was to be more strictly limited, and various changes, including periodic ballots, were offered to weaken, though not to abolish, the closed shop. The measures were explicitly presented by Tebbit to colleagues as, among other things, a means of outflanking the SDP, then gearing up for the Crosby by-election in late November with their candidate, Shirley Williams. The essence of the proposals managed to reach the statute book by December 1982. The end of the unique legal privileges of trade unions was eventually to prove decisive. In later years, Jim Prior magnanimously conceded this, saying simply: ‘Tebbit was right rather than me.’110

  As autumn turned into winter, there was no dramatic improvement in the economy or in Mrs Thatcher’s political position. The small signs of recovery which had appeared in the summer, though genuinely present, now seemed, to most people, invisible. At the end of November, Shirley Williams won the Crosby by-election for the SDP with a majority of over 5,000, taking the seat from the Conservatives. A Gallup poll the following month gave 50.5 per cent to the SDP and Liberals in alliance, 23.5 per cent to Labour and 23 per cent to the Tories. Unemployment, as had long been expected, hit 3 million for the first time in the figures announced at the end of January 1982. Despite the failure of critics to mount the leadership challenge which, under the rules, had to happen in November, Mrs Thatcher did not feel secure. On the night before the Chancellor’s Autumn Statement on public spending on 2 December 1981, fretting that Howe might be mishandling the preparations, she burst in, unannounced, on the late-night meeting he was holding with officials. John Kerr, Howe’s private secretary, remembered her as ‘quite full of whisky’.111 In front of everyone, she berated Howe for his proposed speech and indeed rejected it completely (though this was forgotten in the morning). Howe records that at one point she shouted, ‘If this is the best you can do, then I’d better send you to hospital and deliver the statement myself.’112 This outburst was probably a sort of revenge. A couple of weeks earlier, she had given her annual speech at the Lord Mayor’s Banquet, hailing ‘some first signs of recovery’.113 The Treasury had tried to make three changes to the draft and pressed her new economic private secretary, Michael Scholar,* very hard that these should be done. When Scholar put the points to her, ‘She absolutely bristled: “Look here, young man, you’re here to do my bidding.” I thought I was finished.’114* The precariousness of her position, as had been the case all year, kept her in a state of tension which made her very difficult to work with. But when she got back to No. 10 from the Guildhall banquet she waited at the door until Scholar entered, and invited him and his wife upstairs for a conciliatory glass of whisky.115

  Nevertheless, Mrs Thatcher was not wrong about the trend which she mentioned at the Lord Mayor’s Banquet. It was true, as sh
e told the Guildhall audience, that the trough of the recession had been passed in the middle of the year. Small signs – a rising stock market, housing starts increasing by 20 per cent over the previous year, exports at their second highest ever (all these in November) – began to compose a picture of improvement. Howe’s Autumn Statement was unpopular: MISC 62 had achieved compromises which meant that spending would not be cut as the Treasury had wished, but neither would the Treasury give way on the need to raise more revenue. More than £5 billion extra had to be found. Employees’ National Insurance contributions rose by a further 1 per cent, council house rents and prescription charges rose, and most social security benefits went up by less than the rate of inflation. At the Cabinet meeting to thrash it out beforehand, Francis Pym said gloomily: ‘It is a very grave position we have reached. The central plank of our strategy has gone … Yes, we are spending more money, but all the talk is about reductions.’116 A group of Tory backbenchers, known as the Gang of Twenty-Five, wrote a letter expressing anxiety, and there was talk of Conservative defectors to the SDP. It was, the Chief Whip told Mrs Thatcher, ‘a very serious situation’.117 And yet the revolt against the measures – fourteen Conservative MPs abstained in the vote – was half-hearted compared with the anger and division of the summer. ‘A brief obituary of Thatcherism is now in order,’ pronounced Peter Jenkins in the Guardian,118 but in fact the fight was going out of the Tory rebels. In November, Mrs Thatcher finally got rid of the Civil Service Department, which had been a thorn in the side of her efficiency drive in Whitehall. Ian Bancroft retired, and responsibility for the Civil Service was split between Robert Armstrong, the Cabinet Secretary, and Douglas Wass, Permanent Secretary at the Treasury. After Wass retired in 1983, the Cabinet Secretary assumed full responsibility. This reorganization could not have happened – indeed Mrs Thatcher had publicly declined to do it – when Christopher Soames had been the minister responsible, just as the trade unions’ immunities could not have been removed so long as Jim Prior stayed at Employment. Now weakened in Cabinet, the Wets began to realize that it was too late to change course before the next election. All sides, including the Dries, knew that some sort of truce was needed for the party to survive: ‘Telegraph says the Chancellor is determined last week’s announcement will be the last unpalatable one before the Election,’ Bernard Ingham reported to Mrs Thatcher.119 That was about the sum of it.