The Downing Street Years
Page 1
MARGARET
THATCHER
THE
DOWNING STREET
YEARS
MARGARET, THE LADY THATCHER. O.M., P.C., F.R.S.
HOUSE OF LORDS
LONDON SW1A 0PW
Contents
Introduction
CHAPTER I
Over the Shop
CHAPTER II
Changing Signals
CHAPTER III
Into the Whirlwind
CHAPTER IV
Not At All Right, Jack
CHAPTER V
Not for Turning
CHAPTER VI
The West and the Rest
CHAPTER VII
The Falklands War: Follow the Fleet
CHAPTER VIII
The Falklands: Victory
CHAPTER IX
Generals, Commissars and Mandarins
CHAPTER X
Disarming the Left
CHAPTER XI
Home and Dry
CHAPTER XII
Back to Normalcy
CHAPTER XIII
Mr Scargill’s Insurrection
CHAPTER XIV
Shadows of Gunmen
CHAPTER XV
Keeps Raining all the Time
CHAPTER XVI
Men to Do Business With
CHAPTER XVII
Putting the World to Rights
CHAPTER XVIII
Jeux Sans Frontières
CHAPTER XIX
Hat Trick
CHAPTER XX
An Improving Disposition
CHAPTER XXI
Not So Much a Programme, More a Way of Life
CHAPTER XXII
A Little Local Difficulty
CHAPTER XXIII
To Cut and to Please
CHAPTER XXIV
Floaters and Fixers
CHAPTER XXV
The Babel Express
CHAPTER XXVI
The World Turned Right Side Up
CHAPTER XXVII
No Time to Go Wobbly
CHAPTER XXVIII
Men in Lifeboats
Chronology
The Cabinet and Other Offices
List of Abbreviations
Index
Acknowledgements
Copyright
About the Publisher
Introduction
‘Ayes, 311. Noes, 310.’ Even before the figures were announced by the tellers, we on the Opposition benches knew that Jim Callaghan’s Labour Government had lost its motion of confidence and would have to call a general election. When the four tellers return to read the total of votes recorded in the lobbies, MPs can see which party has won from the positions they take up facing the Speaker. On this occasion the two Tories walked towards the Speaker’s left hand in the space usually occupied by government whips. A great burst of cheering and laughter rose from the Tory benches, and our supporters in the spectators’ galleries roared with out-of-order jubilation. Denis, who was watching the result from the Opposition box on the floor of the House, shouted ‘hooray’ and was, quite properly, reproved by one of the Serjeants at arms. Through the din, however, the stentorian guards’ officer tones of Spenser Le Marchant, the 6′ 6″ Tory MP for High Peak who was famous for his intake of champagne, could be heard booming out the result — the first such defeat for a British Government in more than fifty years.
We had known the figures would be close, but we had not known how close as we filed in and out of the lobbies. I looked for the unexpected faces who might decide the outcome. Labour whips had been assiduously rounding up the handful of independent MPs whose votes might put them over the top. In the end everything turned on the decision of one elusive Irish MP, Frank Maguire, who did indeed arrive at the Palace of Westminster, lifting the hopes of Labour ministers. The wait before the announcement was filled with rumour and counter-rumour across the Chamber. It seemed endless. Our Chief Whip quietly gave me his own forecast. I said nothing and tried to look inscrutable, doubtless without success. Some on the Labour benches, hearing of Mr Maguire’s appearance, began to grin in anticipation of victory. But Mr Maguire had arrived only to abstain. And on 28 March 1979, James Callaghan’s Labour Government, the last Labour Government and perhaps the last ever, fell from office.
The obsequies across the despatch box were brief and almost formal. Mr Callaghan told the House that he would take his case to the country and that Parliament would be dissolved once essential business had been transacted. Replying for the Opposition, I said that we would co-operate in this to ensure a dissolution of Parliament at the earliest opportunity. A slight sense of anti-climax after all the excitement took hold of MPs. On all sides we felt that the Commons was for the moment no longer the centre of events. The great questions of power and principle would be decided elsewhere. I got up to leave the Chamber for a meeting of the Shadow Cabinet in my Commons room, and Willie Whitelaw, who could often sense my mood even before I realized it myself, put an encouraging arm around my shoulder.
The Shadow Cabinet meeting was brisk and businesslike. Our main concern was to prevent the Labour Government from scoring any parliamentary runs in the limited time left to it. In particular, we were strongly of the view that there should be no budget statement, whatever limited tax changes might be needed to keep public finance on an even keel. We resolved that in office we would honour the Labour Government’s pledge to increase pensions by the amounts which the Prime Minister had announced in the confidence debate. And we decided to press for an election on 26 April, the earliest possible date, knowing that Labour would wish to stretch out the timetable in the hope of restoring their party morale. (In the end we had to settle for 3 May.) Then, the business concluded, we had a celebratory drink and broke up.
Driving back to my home in Flood Street, Chelsea, with Denis, I reflected on the coming battle. We had a fight on our hands, of course; but barring accidents it was a fight we should be able to win. The Government’s defeat in the confidence debate symbolized a larger defeat for the Left. It had lost the public’s confidence as well as Parliament’s. The ‘winter of discontent’, the ideological divisions in the Government, its inability to control its allies in the trade union movement, an impalpable sense that socialists everywhere had run out of steam and ideas — all these gave a fin de siècle atmosphere to the approaching election campaign.
The Tory Party, by contrast, had used its period in Opposition to elaborate a new approach to reviving the British economy and nation. Not only had we worked out a full programme for government; we had also taken apprenticeships in advertising and learnt how to put a complex and sophisticated case in direct, clear and simple language. We had, finally, been arguing that case for the best part of four years, so our agenda would, with luck, strike people as familiar common sense rather than as a wild radical project. On all these scores I felt a reasonable confidence.
The prospects after an election victory were another matter. Britain in 1979 was a nation that had had the stuffing knocked out of it with progressively more severe belabourings over the previous hundred years. Beginning in the 1880s, our industrial supremacy had been steadily eroding in the face of first American, then German competition. To be sure, some part of this erosion was inevitable and even welcome. As the pioneer of the industrial revolution, Britain enjoyed a head start over its competitors that was bound to diminish as nations with larger populations and more abundant natural resources entered the race. But since their rise would mean the growth of large export markets for Britain as well as fierce competition in domestic and third markets — Imperial Germany, for instance, was Britain’s second largest export market in 1914 — this commercial rivalry was more blessing than curse.
With the election of Attlee’s Labour Government, however, there began a sustained attempt, which lasted over thirty years, to halt this relative decline and kick-start a resurgence along lines which — whether we call them socialist, social democrat, statist or merely Butskellite* — represented a centralizing, managerial, bureaucratic, interventionist style of government. Already large and unwieldy after its expansion in two world wars, the British Government very soon jammed a finger in every pie. It levied high rates of tax on work, enterprise, consumption, and wealth transfer. It planned development at every level — urban, rural, industrial and scientific. It managed the economy, macro-economically by Keynesian methods of fiscal manipulation, micro-economically by granting regional and industrial subsidies on a variety of criteria. It nationalized industries, either directly by taking ownership, or indirectly by using its powers of regulation to constrain the decisions of private management in the direction the Government wanted. (As Arthur Shenfield put it, the difference between the public and private sectors was that the private sector was controlled by government, and the public sector wasn’t controlled by anyone.) It made available various forms of welfare for a wide range of contingencies — poverty, unemployment, large families, old age, misfortune, ill-health, family quarrels — generally on a universal basis. And when some people preferred to rely on their own resources or on the assistance of family and friends, the Government would run advertising campaigns to persuade people of the virtues of dependence.
The rationale for such a comprehensive set of interventions was, to quote the former Labour Cabinet minister, Douglas Jay, that ‘the gentleman in Whitehall really does know better what is good for the people than the people know themselves.’ A disinterested civil service, with access to the best and latest information, was better able to foresee economic eventualities and to propose responses to them than were the blind forces of the so-called ‘free market’.
Such a philosophy was explicitly advocated by the Labour Party. It gloried in planning, regulation, controls and subsidies. It had a vision of the future: Britain as a democratic socialist society, third way between east European collectivism and American capitalism. And there was a rough consistency between its principles and its policies — both tending towards the expansion of government — even if the pace of that change was not fast enough for its own Left.
The Tory Party was more ambivalent. At the level of principle, rhetorically and in Opposition, it opposed these doctrines and preached the gospel of free enterprise with very little qualification. Almost every post-war Tory victory had been won on slogans such as ‘Britain Strong and Free’ or ‘Set the People Free’. But in the fine print of policy, and especially in government, the Tory Party merely pitched camp in the long march to the left. It never tried seriously to reverse it. Privatization? The Carlisle State Pubs were sold off. Taxation? Regulation? Subsidies? If these were cut down at the start of a Tory government, they gradually crept up again as its life ebbed away. The welfare state? We boasted of spending more money than Labour, not of restoring people to independence and self-reliance. The result of this style of accommodationist politics, as my colleague Keith Joseph complained, was that post-war politics became a ‘socialist ratchet’ — Labour moved Britain towards more statism; the Tories stood pat; and the next Labour Government moved the country a little further left. The Tories loosened the corset of socialism; they never removed it.
Indeed, Keith’s formulation may have been too kind. After a reforming start, Ted Heath’s Government, in which we both served, proposed and almost implemented the most radical form of socialism ever contemplated by an elected British Government. It offered state control of prices and dividends, and the joint oversight of economic policy by a tripartite body representing the Trades Union Congress, the Confederation of British Industry and the Government, in return for trade union acquiescence in an incomes policy. We were saved from this abomination by the conservatism and suspicion of the TUC which perhaps could not believe that their ‘class enemy’ was prepared to surrender without a fight.
No theory of government was ever given a fairer test or a more prolonged experiment in a democratic country than democratic socialism received in Britain. Yet it was a miserable failure in every respect. Far from reversing the slow relative decline of Britain vis-à-vis its main industrial competitors, it accelerated it. We fell further behind them, until by 1979 we were widely dismissed as ‘the sick man of Europe’. The relative worsening of our economic position was disguised by the rising affluence of the West as a whole. We, among others, could hardly fail to benefit from the long economic expansion of the post-war western world led by the United States. But if we never had it so good, others — like Germany, France, Italy, Denmark — increasingly had it better. And, as the 1970s wore grimly on, we began to fail in absolute as well as relative terms.
Injections of monetary demand, which in the 1950s had produced a rise in real production and a fall in unemployment before causing a modest rise in prices, now went directly into high rates of inflation without so much as a blip on the charts for production and unemployment. State subsidies and direction of investment achieved progressively more inefficient industries and ever lower returns on capital. Laws giving protective immunity to the trade unions at the turn of the century were now abused to protect restrictive practices and overmanning, to underpin strikes, and to coerce workers into joining unions and participating in industrial action against their better judgement. Welfare benefits, distributed with little or no consideration of their effects on behaviour, encouraged illegitimacy, facilitated the breakdown of families, and replaced incentives favouring work and self-reliance with perverse encouragement for idleness and cheating. The final illusion — that state intervention would promote social harmony and solidarity or, in Tory language, ‘One Nation’ — collapsed in the ‘winter of discontent’ when the dead went unburied, critically ill patients were turned away from hospitals by pickets, and the prevailing social mood was one of snarling envy and motiveless hostility. To cure the British disease with socialism was like trying to cure leukaemia with leeches.
Another approach was needed — and for international reasons as well as domestic ones. Britain’s weakened economic position meant that its international role was bound to be cramped and strained as well. Our most painful experience of the country’s reduced circumstances was the failure of the Suez expedition in 1956. This was the result of political and economic weakness rather than military failure, because the Government withdrew a victorious force from the Canal Zone in response to a ‘run on the pound’ encouraged by the US Government. Whatever the details of this defeat, however, it entered the British soul and distorted our perspective on Bri
tain’s place in the world.
We developed what might be called the ‘Suez syndrome’: having previously exaggerated our power, we now exaggerated our impotence. Military and diplomatic successes such as the war in Borneo — which preserved the independence of former British colonies against Indonesian subversion, helped to topple the anti-western dictator, Sukarno, and thus altered the long-term balance of power in Asia in our interest — were either dismissed as trivial or ignored altogether. Defeats, which in reality were the results of avoidable misjudgement, such as the retreat from the Gulf in 1970, were held to be the inevitable consequences of British decline. And comic opera enterprises, such as Harold Wilson’s ‘invasion’ of Anguilla in March 1969 (for once, ‘police action’ seems the right term) were gleefully seized upon to illustrate the reality of reduced British power. The truth — that Britain was a middle-ranking power, given unusual influence by virtue of its historical distinction, skilled diplomacy and versatile military forces, but greatly weakened by economic decline — seemed too complex for sophisticated people to grasp. They were determined to think themselves much weaker and more contemptible than was in fact the case, and refused all comfort to the contrary.
What made this more dangerous in the late 1970s was that the United States was undergoing a similar crisis of morale following its failure in Vietnam. In fact, the ‘Vietnam Syndrome’ was perhaps more debilitating than its Suez counterpart because it embodied the conviction that the United States was fortunately incapable of intervention abroad since such intervention would almost certainly be inimical to morality, the world’s poor, or the revolutionary tides of history. Hobbled by this psychological constraint and by a Congress also deeply influenced by it, two presidents saw the Soviet Union and its surrogates expand their power and influence in Afghanistan, southern Africa and Central America by subversion and outright military invasion. In Europe, an increasingly self-confident Soviet Union was planting offensive missiles in its eastern satellites, building its conventional forces to levels far in excess of NATO equivalents. It was also constructing a navy that would give it global reach.