by Andy Beckett
But there was a clearer sign of the more money-orientated Milton Keynes and Britain to come: the opening of the shopping centre in 1979. Walker was heavily involved in the design. It was more elegant and more careful with public space – more high-minded, you could say – than other shopping centres. The ‘shopping building’, as he and the other architects called it instead, rose from the still half-empty centre of Milton Keynes as a series of airy glass boxes. They were only a few storeys high and undecorated on the outside except for their slim cream frames: no logos, no gimmicks, nothing but a near-infinity of glass and, reflected in it, passing cars and the shifting north Buckinghamshire sky. On the inside, even in 2006, after three decades of consumerism in Milton Keynes beyond the city planners’ wildest seventies imaginings, the shopping building still seemed comparatively civilized and calm. The halls linking the shops were very broad and smooth, with views of the outside world. There were benches and flower beds in frequent clusters, less token and pathetic-looking than usual. People sat talking on the benches, holding proper conversations, not just pausing for breath. Birds even sang in the palms. Other people strolled past, sometimes with no shopping bags at all. The building felt as much civic as commercial; like the Heelands estate, still faintly utopian.
On 25 September 1979, four months after taking office as prime minister, and five years after its construction had begun, Margaret Thatcher formally opened the shopping building. ‘Lunch was arranged in marquees for a thousand people while the building itself was packed,’ record Terence Bendixson and John Platt in their history of the city. ‘Light poured through the glass walls and bounced off the honey-coloured travertine floor as Mrs Thatcher toured the shops and bought some oranges.’ Walker met her. ‘She was very kind about the building,’ he said. How did he feel about meeting her? ‘I was …’ His voice trailed away to nothing.
Thatcher told the crowd, ‘Building a city for nearly 100,000 people is an immense and complex undertaking … Here in Milton Keynes we can see success.’ Then she quickly moved on to more political themes. ‘This morning, at Willey Court in the Galley Hill Estate, I visited Mr and Mrs King, who are buying their house from the [development] corporation. Encouraging people to own their homes … is something to which this government attaches great importance. We shall be making the necessary changes in the law …’ That morning she had also visited a local centre for small businesses. ‘This government,’ she said, ‘aims to create the conditions in which … free enterprise generally can flourish.’ But first, she went on, ‘More people’ needed to ‘accept some simple economic truths’. As she was listing them, the Milton Keynes Standard reported, ‘Several hundred trade union members barracked Mrs Thatcher … forcing her to shout. After declaring the centre open she commented: “I think we won”. She received an ovation from the crowd.’
At the next general election, in 1983, the first in which Milton Keynes had its own constituency, the Conservative candidate won with a majority of 11,522.
17
Pressures Building
A new Britain was emerging in the late seventies. Yet its hopes and fears, as the unresolved political mood of 1977 and 1978 showed, did not necessarily imply a change in Downing Street. There were two things that gave Margaret Thatcher rather than Jim Callaghan the chance to mould this new Britain for the long term. One was an unease about the direction of the country, encompassing everything from the unemployment rate to the unwinnable war in Ulster to the state of race relations, an unease which persisted in the late seventies despite the economic recovery and the growing confidence of the government. The other, more decisive factor in Callaghan’s downfall was a sudden nationwide revolt against the social contract.
It was made possible, in part, by Jack Jones’s retirement. In March 1978, at the age of sixty-five, he stepped down as general secretary of the TGWU. The occasion was marked the month before by a ceremony at the Royal Festival Hall in London attended by Callaghan, Michael Foot and 2,700 other Labour and union dignitaries. Important government business, including a meeting of the TUC–Labour Party Liaison Committee, was suspended to make room for the day-long tribute to the Emperor Jones. The left-wing actress Prunella Scales read out messages of appreciation from trade unionists around the world. Entertainment was provided by a Chilean dance troupe – opposing Pinochet was a favourite Jones cause – the Nolan Sisters and the impressionist Mike Yarwood, who put on a cloth cap and told a joke to happy applause about Callaghan needing permission from Jones to form a government.
The prime minister himself sat next to Jones, both of them beaming like amused old patriarchs in the front row of the stately Attlee-era auditorium. The rest of the audience, reported the Daily Mail, was ‘friendly-looking, respectably dressed… mostly middle-aged … very like an oversize diocesan meeting’. Jones was presented with a cheque for £10,000 donated by TGWU members. He immediately handed it back, to be spent on a campaign for pensioners and on the union’s convalescent homes.
Yet the standing ovation Jones received for his altruism was deceptive. In the TGWU and other unions such an approach to money matters was already falling out of fashion. At the Festival Hall, Jones’s successor as general secretary, Moss Evans, a less shrewd and flinty left-winger and a self-proclaimed ‘man of the shop floor’, told the audience: ‘We must hold fast to free collective bargaining to get the best obtainable return for our members.’ Stripped of the traditional pipe-smoking, passive-aggressive jargon of union wage negotiators, this meant: I want to get the largest possible annual pay increase for the 2 million people in the TGWU, regardless of the effect on inflation, on the economic and political situation in general, and on the government’s finances; and I want to negotiate that increase directly with my members’ employers, unhindered by any government limits on wage settlements, of the sort in place until now under the social contract.
There was a celebratory, nostalgic atmosphere that day in the Festival Hall. Even the Sun had qualified praise for ‘Emperor Jack’: ‘He is straight. He is always frank.’ His successor’s ominous words about the future of British industrial relations went largely unremarked upon. In fact, abandoning the social contract was already TGWU policy. Eight months earlier, in a less famous hall on the Isle of Man, and while Jones was still general secretary, a TGWU conference had voted to go back to the pay ‘free-for-all’, in Jones’s disapproving phrase, that had existed before the Wilson and Callaghan governments began making their annual deals with the unions. In his memoirs, Jones presents the vote as a watershed:
The alternative composite motion called for ‘a return to unfettered collective bargaining’ … An avalanche of delegates spoke out for [it] … Towards the end of the debate I was asked to speak. I realized that whatever I said would not change the minds of the majority in the hall, and yet I felt that when they returned to their homes many would reflect on my words … I warned that a mad scramble for larger wage increases would only make our troubles ten times worse in the years to come. ‘The benefits of North Sea oil … are on the horizon. If this Government fails you will hand these to the party of privilege. You will put back the mighty in their seats and kick the people of low degree in the teeth.’
In 2004, I asked Jones how he felt about the vote now. ‘I understand why I was defeated,’ he said calmly. ‘As it happens, you know,’ he continued less evenly, ‘I could say, “Well, I was right after all, because the Tories got in, and the unions”’ – he let out a sudden stuttery laugh – ‘“lost.”’ After a short pause his calm returned. ‘But I think I’d have probably been against [continuing with pay restraint] if I’d been on the shop floor. I would’ve identified with those who thought they could get better.’
Under the social contract, wage increases for union members had been consistently at or below the rate of inflation – controlling inflation being, in large part, the contract’s raison d’être. Between July 1975 and July 1976, the first year of pay restraint, or ‘phase one’ as it was officially known, average earnin
gs rose 13 per cent and so did inflation. Between July 1976 and July 1977, ‘phase two’, earnings rose 9 per cent while inflation rose by twice that. The result was a brutal cut in the standard of living of some of the Labour Party’s most natural and loyal supporters, and, sometimes, anger towards those considered responsible – regardless of their political status. During 1977, the political journalist John Cole wrote afterwards, ‘when [Jones] went round factories workers knew what was happening to prices… and they simply shouted at him’.
The better-paid, better-skilled members who had always been influential in British unions had an additional grievance about the social contract and its pay agreements. Although the latter were voluntary, administered by the TUC rather than the government, and vulnerable to a degree of rule-bending by unions, with the effect that wage settlements usually ended up higher than the officially acceptable percentage – which was 12 per cent in 1975–6 and 5 per cent in 1976–7 – limits were also set on pay increases in cash terms: £6 a week in 1975–6; £4 a week in 1976–7. One consequence of these cash limits was to erode the skilled workers’ precious ‘differentials’, the gap between their wages and those of less valued colleagues. For the low-paid, and egalitarians like Jack Jones, this levelling was a good thing. Shirley Williams told me that in the late seventies her ministerial postbag was full of letters from badly paid women urging her to fight to keep the social contract. But egalitarianism was not and never had been the main business of British trade unionism.
Nor, for that matter, was helping struggling Labour governments to stay afloat. As the miners’ leader Joe Gormley put it bluntly in his autobiography, the social contract ‘put us [the unions] in a false position… Our role in society is to look after our members, not run the country.’ In the second half of the seventies, British trade union membership was higher than ever before, and still rising: exceeding 50 per cent of the national workforce in 1975, and reaching 55 per cent in 1979. (Despite the result of the next general election, membership would not actually peak, according to an authoritative official survey, until the middle of 1980.) Yet, if the TUC and the government were going to set wages, what was the point, you could ask, of having individual unions? And if the TUC and the government were going to run the country jointly, what was the point, you could just as well ask, of having independent political parties? Or of normal democratic government? During 1977 and 1978, these questions began to trouble people beyond those who were always crying wolf about the state of British democracy. ‘I thought the social contract was extremely dangerous,’ Bill Rodgers, Callaghan’s transport secretary, told me. Was there something humiliating for a Cabinet minister about the social contract? ‘Good word,’ said Rodgers quietly. ‘Good word. It was humiliating.’
Jones and other supporters of the alliance disagreed. They argued with some force that the economic crisis Britain and many other countries faced in the mid-seventies justified the suspension of normal politics. In a way, the social contract was the temporary ‘national government’ called for by commentators and politicians of many persuasions, just as the Lib–Lab pact was. However, this argument became harder to make during 1977 and 1978 as the crisis began to pass and the social contract lingered on. In August 1977, a third year of pay restraint began. It was less rigorous than before: the TUC was no longer prepared to tell its member unions to hold back their wage demands to the government’s chosen figure, this time 10 per cent, except in the most general terms. But the arrangement just about worked. Between August 1977 and August 1978, average earnings rose by 14 per cent, while inflation rose by 8 per cent. In the gap between these two numbers much of the period’s sudden surge in goodwill towards the Callaghan government was generated. Perhaps the social contract, or some improved version of it, would endure after all.
But then ‘Sunny Jim’, his personal popularity soaring, his confidence as prime minister strengthening, had a moment of boldness. ‘Shortly before Christmas’ in 1977, he writes in his memoirs,
At the Cabinet Meeting on 22 December, I threw out the idea that from August 1978, we should aim to get pay settlements down to 5 per cent … As far as I can recall, because no formal proposal was before the Cabinet, there was no discussion … Ministers probably assumed that I was thinking aloud – as indeed I was. However, when I made my New Year Broadcast … the 5 per cent idea hardened and popped out when the interviewer tempted me …
Several explanations have been given as to why Callaghan insisted on this soon-to-be-notorious figure. In his memoirs, he cites the inflation rate: though much lower than it had been earlier in the seventies, it was still ‘too high when compared with … other major industrial countries’, and tighter restrictions on wage increases would be needed to get it down to a more competitive level. Denis Healey, sometimes as barbed about his allies as about his enemies, told me that the 5 per cent was a symptom of Callaghan’s general overconfidence: ‘Jim wanted 3 per cent originally.’ Peter Jay told me that Callaghan, an old union man himself but also a moralist, had simply had enough of the unions’ recurring tunnel vision about pay: ‘He said to me, “They don’t deserve 1 per cent. They deserve zero per cent.”’
There was also a machismo about Callaghan as a politician – you could see it in his later remarks to Michael Cockerell about ‘stabbing’ his Labour opponents in the sixties ‘in the front’ – which his gentle, lulling voice and considerable patience and cunning could not always disguise. In early 1978, when he decided for good on the 5 per cent figure, there were still over six months to go until a new pay target was actually required. Callaghan had not consulted the TUC or individual unions. But, by early 1978, in less than two years as prime minister, he had already gone against Labour and union orthodoxy twice on fundamental issues: over the IMF cuts and over Keynesian economics. Both times he had got his way and, it seemed, been proven right. Why not a third time?
As well as a political ego, there was some original thinking behind the 5 per cent limit. In 1978, Callaghan and the Downing Street Policy Unit had hopes that Britain could learn from abroad, not from America as it usually tried to, but from a more comparable country. ‘We looked to Germany a lot,’ Gavyn Davies recalled. ‘The Social Democrats were in power. Germany was doing well surviving the oil shock. It had high productivity, low inflation; consensus between trade unions, management and government.’ Influenced by this much-publicised West German ‘miracle’, Callaghan envisaged a Britain where, rather than the bumpy back-and-forth of the social contract, smooth annual pay discussions took place between these three interest groups.
Coming from a leader so familiar with the combative industrial relations of post-war Britain, there was an air of unreality about this vision. And so there was about the 5 per cent figure. In July 1978, the Cabinet agreed to it, such was Callaghan’s authority and the absence of other ideas, but without much enthusiasm. However, the TUC and the unions refused to support it or even treat it seriously. Most trade union leaders, like most ministers, political journalists and politically interested Britons, expected there to be a general election in the next few months. The economy was relatively healthy, and so were the government’s poll ratings. The termination of the Lib–Lab pact over the summer had removed Labour’s Commons majority. The real argument about pay, it was widely assumed, would take place after the election. At the TUC conference in September, a resolution was put forward calling for Britain to adopt the German approach to industrial relations, but it was easily defeated. The margin was so large it was not felt necessary to count the exact number of votes. By now, writes trade union historian Robert Taylor, ‘There was little support among the unions for any form of wage understanding with the government.’ The social contract was effectively over, at least for the foreseeable future. Callaghan’s stated desire for a 5 per cent pay limit remained, but in reality only as a provocation to the unions. It would prove hugely effective.
Yet, until the winter of 1978–9, the Conservatives could not quite see how to turn the end of the social
contract to their advantage. For all Margaret Thatcher’s periodic, blazing-eyed condemnations of the power and supposed excesses of the unions, the fact that she kept the much more pro-union Jim Prior as her shadow employment secretary and chief spokesman on union matters revealed her party’s hesitancy and divisions over Labour’s pay policy, over what should replace it, and over government relations with the unions in general. ‘The unions do pose a real dilemma,’ admitted an internal Conservative briefing on election strategy in 1978. ‘It seems to most observers … that the Tories can either challenge the trades union status quo – and risk losing the election in the subsequent rumpus; or they can promise to govern on the unions’ terms, and probably win the election on safer issues, knowing that they are then almost certain to fail the country in office.’ At a meeting of the Leader’s Steering Committee in late January, the minutes record that when a colleague ‘argued that if we told the truth about the unions we should certainly lose the election, Mrs Thatcher acknowledged that this could not be the centre-piece of our election strategy’.
This Tory nervousness about taking on the unions persisted at least until the end of 1978, and in some instances – well-publicized at the time but forgotten now – into the early eighties. It can seem puzzling to the modern political mind, filled with tales of the mid-and late-eighties confrontations of ‘the Iron Lady’, rather than the earlier compromises of ‘Cautious Margaret’. For even in the seventies there was already a potent union-bashing impulse in British popular culture and the British media. In fact, there had probably been such an impulse for as long as potent unions had existed. I’m All Right, Jack, the famed, extremely funny British film about a factory strike, featuring feeble ministers, bullying pickets, grasping pay negotiators, lazy workers, unjustified sympathy walkouts, and Peter Sellers as a pompous shop steward with a love for the Soviet Union and a Hitler moustache – in short, almost all the favoured motifs of the antiunion argument – was released in 1959. Even then, when Jack Dromey was still in short trousers, the casual intricacy of the satire and the success of its title catchphrase suggested that a large audience knew exactly what the film was talking about.
