The Downing Street Years

by Margaret Thatcher

  In the last part of 1979 and the early months of 1980 we continued refining the Employment Bill and spent a good deal of time on the question of secondary action and immunities. We also discussed item by item measures to deal with the burdens which past Labour legislation had placed on industry. One such burden was Schedule 11 of the Employment Protection Act, 1975. Schedule 11 was a typical case: it showed how an apparently harmless measure, introduced for the best of motives, could defeat the intentions of its originators and result in higher unemployment. Schedule 11 provided that the ‘recognized terms and conditions’ of employment for a particular industry should apply throughout that industry. The original aim was to deal with pockets of low pay; the principle had wartime antecedents, but in recent years it had been exploited by higher paid groups, such as those working for the BBC. In that instance the unfortunate television licence holder had to foot the bill. Generally, by forcing wage levels up to the level obtaining in the strongest firms, Schedule 11 caused jobs to be lost.

  But by far the most contested issue was that of trade union immunities. Our proposals on secondary picketing had already begun to address it. But we now took a further step. We had received the report of the enquiry set up earlier into the recruitment activities of the printing union SLADE, undertaken by Mr Andrew Leggatt QC* In response, we decided to remove the immunity where industrial disruption was called or threatened by people other than those directly working for a particular firm with the intention of coercing its employees into joining a trade union.

  We decided to go further, following the House of Lords decision in the MacShane case on 13 December. The MacShane case was important because it confirmed the wide scope of existing immunities in the case of secondary action. Most of the immunities then enjoyed by trade unions had their origin in the Trade Disputes Act (1906), which Labour extended significantly after its narrow election victory in October 1974. The MacShane case arose from a dispute that began in 1978 between the National Union of Journalists (NUJ) and a number of provincial newspapers. The provincial papers managed to keep going during the dispute by publishing stories supplied to them by the Press Association. The NUJ unsuccessfully attempted to prevent this, first, by direct appeal to NUJ members working for the Press Association and then, when that failed, by instructing its people on national newspapers to black Press Association material altogether. In response the Daily Express applied for an injunction against the NUJ. The Court of Appeal in December 1978 ruled in favour of the Express that the NUJ secondary action had exceeded that which could be regarded as furthering the objectives of the dispute and therefore did not enjoy immunity. As a result of this decision, injunctions could be and were granted. However, when the case went to the House of Lords, the Appeal Court’s ruling was overturned. Essentially, the Lords decided that for purposes of law an industrial action was ‘in furtherance of a trade dispute’, and therefore immune, if trade union officials genuinely believed it to be so. This subjective test had the most disturbing implications. It meant that henceforth there would be virtually unlimited immunity for secondary industrial action.

  The position was complicated by the outcome of two other court cases. One of these — N. W. L. Limited v. Nelson & Wood, or the ‘Nawala Case’ — resulted from the attempts of the International Transport Workers’ Federation to prevent the employment by a British shipping company of overseas seamen in British registered ships. The Federation’s action threatened the future of the British shipping industry. Still more important, however, was the second case, which widened the scope for secondary action in the steel strike. The Iron and Steel Trades Confederation (ISTC) had called out its members in the private steel sector as part of its dispute with the British Steel Corporation which had begun on 2 January 1980. Duport Steels, a private steel company, was granted an injunction by the Court of Appeal against Bill Sirs, General Secretary of the ISTC. The Court of Appeal ruled that immunity did not apply in this case because the ISTC’s argument was essentially with the Government rather than BSC itself. But again, the House of Lords unanimously reversed this ruling, relying on broadly the same grounds as in the MacShane case. The practical result was that the strike spread once more to the private steel companies.

  We were all agreed that the law as now interpreted by the Courts must be changed. In Opposition, we had opposed all of the moves Labour made to extend trade union powers and immunities and in our manifesto we had said that, ‘the protection of the law should be available to those not concerned in a dispute.’ We agreed that it was right now to clarify the precise limits of immunity. But we disagreed both about what immunity, if any, there should be for secondary action and about the timing of the introduction of the necessary change into the Employment Bill. Again and again, Jim Prior said that he did not want decisions about changes in the law to be linked with a particular dispute. But as the steel strike worsened, with none of our proposed legislation yet in force — let alone measures to deal with secondary strikes and blacking — the public criticism grew. I had the greatest sympathy with the critics, though I wished that some employers had earlier been rather more robust. Whenever those of us who felt that we ought to go faster put our case — and our number included Geoffrey Howe, John Nott, Keith Joseph, Angus Maude, Peter Thorneycroft and John Hoskyns — Jim Prior was always able to argue against ‘hasty action’ by reference to the cautious attitude of the CBI.

  On the afternoon of Wednesday 30 January Jim came to see me at his request and poured out a tale of woe. Apparently the unions’ mood had changed markedly for the worse since Christmas. We were facing a ‘day of action’ from the unions in Wales. The steel unions had managed to call out their members in private steel companies. I replied that, while I had every respect for his views, I did not share his pessimism.

  In fact, by this stage I did not share Jim’s analysis of the situation at all. He really believed that we had already tried to do too much and that we should go no further, whether in the area of trade union law or general economic strategy. I, for my part, had begun bitterly to regret that we had not made faster progress both in cutting public expenditure and with trade union reform.

  There was, of course, a more profound and general divide between us. For all his virtues, Jim Prior was an example of a political type that had dominated and, in my view, damaged the post-war Tory Party. I call such figures ‘the false squire’. They have all the outward show of a John Bull — ruddy face, white hair, bluff manner — but inwardly they are political calculators who see the task of Conservatives as one of retreating gracefully before the Left’s inevitable advance. Retreat as a tactic is sometimes necessary; retreat as a settled policy eats at the soul. In order to justify the series of defeats that his philosophy entails, the false squire has to persuade rank-and-file Conservatives and indeed himself that advance is impossible. His whole political life would, after all, be a gigantic mistake if a policy of positive Tory reform turned out to be both practical and popular. Hence the passionate and obstinate resistance mounted by the ‘wets’ to the fiscal, economic and trade union reforms of the early 1980s. These reforms had either to fail or be stopped. For if they succeeded, a whole generation of Tory leaders had despaired unnecessarily. Ian Gilmour expressed this feeling in the clearest form; but Jim Prior was infected by it too, and it made him timid and overcautious in his trade union policy. I had to stake out a more determined approach.

  Brian Waiden interviewed me for Weekend World on Sunday 6 January. I used the occasion to say that we would be introducing a new clause in the Employment Bill to rectify the problem left by the MacShane judgement. I made it clear that we did not intend to remove the immunity enjoyed by trade unions as regards action intended to cause people to break their employment contracts, but would concentrate on the immunity relating to action designed to cause employers to break their commercial contracts. I also drew attention to the way in which trade union immunities had combined with nationalized monopolies to give huge power to the trade unions in these in
dustries. We needed to restrict the immunities and to break the monopolies by introducing competition.

  All my instincts told me that we would have strong public support for further action to restrict union power, and the evidence supported me. An opinion survey in The Times on 21 January 1980 asked people the question: ‘Do you think sympathy strikes and blacking are legitimate weapons to use in an industrial dispute, or should the new law restrict their use?’ Seventy-one per cent of those who replied — and 62 per cent of trade unionists who did so — said that a new law should indeed restrict their use.

  It would, though, be difficult to go further without support from business leaders. On the morning of Tuesday 5 February I had two meetings with industrialists. The first was with the CBI. Some of them said that the present bill, as drafted, went as far as possible. On hearing this I did not conceal my frustration. I said that, with regard to the timing of more radical measures, there would always be a risk of confrontation with the trade unions, but that it seemed to me it would be better to accept the risk over the coming few months than wait until the autumn when the unions could cause the maximum disruption. I said that I now regretted that we had not brought forward more radical proposals when the bill was introduced. This left us with two possibilities: we could amend the existing bill or announce in the consultative document which we were planning to issue that further legislation would be introduced. The CBI went away in no doubt about my feelings.

  The second meeting that day was with the private sector steel producers. There was a sharp contrast between their outlook and that of the CBI. They complained that the private steel companies had been dragged into a dispute not of their making and in which they would be the only real victims. As a result of the strike they were losing about £10 million a week. The ISTC had effectively torn up all its procedural agreements with the private companies and instructed their employees to strike. It was clear that there was no real grievance on the part of private sector steel workers: in the Duport Steels case, when the Court of Appeal had granted its injunction to stop secondary action, there had been a complete return to work before the Lords reversed the decision and the private sector strike resumed. The threat of losing union cards was the decisive factor in persuading private sector workers to join the strike. In these circumstances it is not surprising that the private sector steel companies wanted immediate legislation to outlaw secondary picketing. And there was nothing I was able to offer them except sympathy.

  In answer to a letter from a leading industrialist urging ‘caution’, I replied setting out my views:

  Insofar as we do not effectively change the law we would be positively confirming what Lord Diplock said [in Duport Steels Limited and others v. Sirs and others]. We would be indicating that we are not prepared to protect the person who through no fault of his own has suffered damage at the hands of another. We should be telling the law-abiding citizen that we prefer to strengthen the powers of those who inflict injury rather than to help those who suffer from it.

  … You refer to moderate Trade Unionists. I have countless letters from them pleading with me to strengthen their hand against the militants, telling me that is why they voted for us and that now this Government by failing to take effective action has let them down.

  If we flinch from this task now, when we have public and massive Trade Union opinion with us, they are not likely to have much faith in us to do it next winter.

  I finished by quoting Shakespeare’s Measure for Measure:

  Our doubts are traitors,

  And make us lose the good we oft might win,

  By fearing to attempt.

  I returned to the task of toughening up the law. Ministers now agreed to restore the law to what it had been understood to be before the MacShane judgement, adding further tests relating to the dispute to be applied by the Courts. There would not, however, be a total ban on secondary action. There followed a short period for consultation and the new clause was introduced into the Employment Bill at the Report Stage in the House of Commons on 17 April 1980, limiting immunity for secondary action which broke or interfered with commercial contracts. Immunity would only exist when the action was taken — by employees of suppliers or customers of the employer in dispute — with the ‘sole or principal purpose’ of furthering the primary dispute and when the action was reasonably likely to succeed. Of great significance for the future was the fact that we announced the publication of a green paper on trade union immunities, which would appear later in the year and would look at the whole issue from a wider perspective.

  In fact, the 1980 Act did not directly affect the outcome of the steel strike. The one action open to us which could have done so would have been to accelerate the introduction of Clause 14 of the Employment Bill, which made secondary picketing unlawful. I was strongly attracted by this option. My wish to pursue it had been greatly increased by the mass picketing which had taken place at the private sector steel firm of Hadfields on Thursday 14 February. Keith Joseph telephoned me at Chequers the following Sunday morning to discuss what had happened. We had no doubt that it constituted a grave breach of the criminal law. The question was whether the use of the civil law, and in particular Clause 14, would make matters better or worse.

  I telephoned Willie Whitelaw, the Home Secretary, about the public order situation and suggested that we could introduce a one-clause bill on picketing the following week. I also spoke to Michael Havers, the Attorney-General. It was clear to me that the police would need to stop large numbers of pickets arriving at their destination if picketing was to be effectively controlled and the threat of intimidation removed. The civil law, though, could not play any part in that. There was even an argument that a change in the civil law introduced directly in response to violence would make it more difficult to bring pressure on people to respect and obey the criminal law. However, I wanted all of the possibilities to be examined urgently.

  After discussion with ministers on Monday (18 February) it was decided not to accelerate the clause relating to secondary picketing. But instead the Attorney-General would restate the next day in the House of Commons the criminal law as it related to picketing. Jim Prior would also write a public letter to Len Murray, the TUC General Secretary, drawing attention to the breach of all the traditionally accepted and understood codes for picketing. In these ways we sought to keep up the pressure.

  THE 1980 STEEL STRIKE

  The debate about trade union reform, both inside and outside government, was conducted under the shadow of industrial conflict: in particular, the issues of secondary action and immunities became inextricably entangled with the 1980 steel strike. But that strike also challenged our economic strategy directly; and it is unlikely, once the strike had begun, that our economic policies would have survived if we had suffered defeat.

  The steel industry, like the motor vehicle industry, was suffering the after-effects of overambitious policies of state intervention. It was Ted Heath’s Government, of which I had been a member, which had set BSC on course for huge investment in expanded capacity in the years before that first oil shock which cut so many such ambitions down to size. The following Labour Government had made some closures but, by setting up a review under Lord Beswick in 1974–5, it had largely sought to buy time. The greater the delay in taking remedial action, however, the less chance there was to make proper use of the most up-to-date plant and this, in turn, worsened the position of BSC as a whole, clouding the prospect for steelmen’s jobs and increasing the burden on the taxpayer, who had to fund huge losses.

  One of my first decisions about the nationalized industries was to agree to the closure of the Shotton steel works in North Wales. Measures aimed at providing new job opportunities in the area would be announced, but I knew that the closure would have a devastating effect on the steelmen and their families. A delegation from Shotton had come to see me when I was on a visit to Wales as Leader of the Opposition. I felt desperately sorry for them. They had done all that was exp
ected. But it was not — and could not be — enough.

  BSC exemplified not only the disadvantages of state ownership and intervention, but also the way that British trade unionism dragged down our industrial performance. A good example of what was wrong was to be found at the Hunterston ore terminal on the Clyde. Here BSC had built the largest deep-water jetty in Europe. It had been opened in June 1979, but could not be used until November because of a manning dispute between the Transport and General Workers’ Union (TGWU) and the ISTC. For five months bulk ore carriers had to be diverted to the Continent, where their cargo was transferred to smaller vessels for shipment to Terminus Quay, Glasgow, and from there finally sent on to Ravenscraig.

  As the end of 1979 approached, external factors over which we had no control made BSC’s problems rapidly worsen. There was huge international overcapacity in steel as the world headed deeper into recession. Steel industries almost everywhere were facing losses and closures. But the fundamental problems of BSC were home-grown. It took BSC nearly twice as many man-hours to produce a tonne of steel as its major European competitors. We had reached the absurd position that the value added by BSC was if anything a little less than the wage bill. Over the five years to 1979–80 more than £3 billion of public money had gone into BSC, which amounted to £221 for every family in the country. Yet still the losses accumulated. Keith Joseph and I were prepared to continue for the present to fund BSC’s investment and redundancy programme; what we were not prepared to do was to fund losses which arose from excessive wage costs, unearned by higher productivity.