by Benn, Tony
‘Can I ask a procedural question?’ I said. ‘Are you going to decide things bit by bit ad referendum at the end; or are we going to have to reach a final decision today?’
Jim replied that he would be dealing with that in his summing-up. Then Peter Shore said, ‘Are we going to be discussing a paper from Shirley which has just come round?’
Jim said, ‘Well, I should never have yielded but I did to a woman. She said she would do a one-page paper but in fact it is longer than that.’
Denis opened today’s discussion, which lasted throughout the whole morning. He said there had been a general feeling yesterday in the Cabinet that had led to a rejection of the alternative strategy and the siege economy, and therefore we would have to seek agreement with the Fund. We only had £2 billion left next week and if we failed to agree with the Fund, it would be a disaster. Then much more drastic measures would have to be taken, and there would be higher unemployment. The question was: what adjustments should we make and would they satisfy the Fund and meet criticism at home and abroad?
He said the PSBR must be cut below the forecast of £10.56 billion because otherwise we would either have to print money or we would have to have higher interest rates. Denis said, ‘I now recommend that we go for a £500 million sale of Burmah shares; for a net reduction of £1 billion in the PSBR in 1977–78, mainly by cuts, with another £1.5 billion reduction in 1978–79. Unemployment would rise by 30,000 by the end of 1977 and by 110,000 by the end of 1978; but these would be offset by micro measures of a kind that Albert Booth has suggested. Anything less will not restore confidence even if the IMF accept it.’
Jim Callaghan then said, ‘I think the time has come for me to give my view. I read the Hansard on the Tuesday debate in the House and I noticed the speeches by Heffer, Maudling, Oonagh McDonald, Enoch Powell, and Eric Ogden, which were very interesting and well informed. I must admit, I am not sure about what to do, but I think the time has come to make my position clear.
‘I want to look at it from a political and economic angle. It is very hard to jduge what will happen. These measures could have an adverse effect on the PLP and the unions but the public may take a different view. The Chief Whip sent me a minute to say that there is an absolute need that, whatever we do, we must avoid any legislation following from this package because it is not possible to rely upon the Parliamentary Party support to carry it through. But Denis’s proposals do need legislation and the Cabinet had better face it. The PSBR approach alone is not enough and my view, therefore, is as follows.
‘Denis has fought very hard and I must tell the Cabinet that there is no agreement with the IMF yet. I must also tell you very confidentially that the Managing Director of the IMF, Johannes Witteveen, came to London yesterday and I had a long meeting with him. I read him Article 12 of GATT, which provides for exemptions; it amused me yesterday, when I was told by Tony Benn that we had never put the possibility of import controls to the IMF. So I read it to him and he was very unyielding and he wants £2 billion of real cuts. Schmidt was going to phone me this morning but it was an abortive call. But I had a word with President Ford yesterday on the telephone and he said that if the Fund came through he would try to help with the safety net. He said he felt sure that it would be acceptable to the Congress.’
Then Jim read out – because Prime Ministers like to show how well they get on with Presidents – the last few words of his exchange with Ford which ran something like this:
Jim: Sorry to bother you, Gerry.
Ford: Well, don’t worry, Jim, I expect you’re busy.
Jim: Well, it’s just a question of which of us remains in office longer.
Ford: Well, I sincerely hope you succeed. When will the Cabinet decide?
Jim: By 1 pm.
Ford: You might be out of office first . . .
An almost exact reproduction, of course, of the telephone call on 23 August 1931 in which the Prime Minister announced that he had had a call on the phone from our Ambassador in Washington. That stuck in my mind as I listened to Jim.
Denis said, ‘Congressman Henry Reuss will help.’
The Prime Minister continued, ‘What I said to Ford is this. I would like to propose a three-legged stool: a cut of £1–1.5 billion in the PSBR; a safety net; import deposits on the same basis as Italy. I might be able to sell it.’ Ford said their attitude was to be firm but fair.
Jim then added, ‘I have also told Schmidt this, but if we can’t sell it then we have a completely different perspective. I support this policy because: first, it will allow lower interest rates; second, the uprating of benefits will be reduced in a way that will be sensible; third, we will be reducing tax at the margins: fourth, we will perhaps be dealing with indirect taxation; fifth, our industrial strategy will be strengthened. But we do put our lives to the test and our life as a government could come to an end. We must all understand that if we reject this, our overseas friends and critics will bring the life of this government to an end and the tremors will shake us.’
Then Michael Foot spoke for the first time this week. He began very quietly by saying he was grateful to the Prime Minister, ‘But I must tell you that your proposals are not satisfactory. £2 billion cuts and all the consequences that will flow from that, are inconceivable. The whole position has been changed by unemployment rising to 1.75 million in the forecasts and we would be accepting an increase in that. As to pay arrangements, the Party believes in egalitarian approaches to pay and you can’t unscramble that. If you tried to deal with benefits by statute, it would destroy TUC support. The legislation would not be passed and we would be in a position where, if the Government was defeated, Labour candidates would be fighting an Election in favour of cuts in social benefits. The Party and public opinion can’t be divided in that sense.’
He said he recoiled in horror from the unemployment effects and the cuts in benefits. ‘If we followed this course we would forfeit our agreement and our association with the unions and would be ground to death. We must connect what we do to our own beliefs. We may not get the loan but we have better prospects than a course that would be a disaster for the Government. We need more time; we want to sustain the Government; or, if forced into Opposition, sustain ourselves in unity rather than be split into snarling groups.’
Crosland said that the Prime Minister’s statement was a very grave one. He had thrown his judgement in with the Chancellor and this was a completely new factor. He thought it was wrong economically and socially, destructive of what he had believed in all his life. Also it was politically wrong. He doubted the judgement of the Cabinet and what was proposed was wrong. ‘But the new factor is your view, Prime Minister. What would be the consequence of rejecting the Prime Minister? The unity of the Party depends upon sustaining the Prime Minister and the effect on sterling of rejecting the Prime Minister would be to destroy our capacity. Therefore I support the Prime Minister and the Chancellor.’
Then I spoke. ‘Yesterday, Prime Minister, one crisis plan was put to the Cabinet and was rejected. Today another crisis plan – the true nature of which is now advancing on us – is before us; and it is based on the fact that we throw more people on the dole, and we then cut the dole but give tax remissions for people who are better off.
‘This plan is based on two things: on Treasury forecasts that have been systematically wrong and on a monetarist theory that we don’t, for one moment, accept ourselves and are only having foisted on us by others. Denis tells us now that if it is worse than we think it is going to be, we’ll ease it up later. But it is already much worse than we thought it was going to be in July and the Treasury remedy is to increase the cuts. I therefore don’t believe that we will ease up.
‘Second, we are told that the trade union movement will welcome the cuts in benefit in order to help to reduce the pay differential for their workers. But they won’t do anything of the kind. They will say, “If you bust your side of the Social Contract, we’ll bust our side.” And what they will say is let’
s go for big wage claims because that way we can keep the benefits up and we can reflate the economy to correct the deflation that the Government has imposed upon us.
‘Then there will be only two weapons left in our armoury. One is monetary policy, where you don’t have to bother with what the trade unions say, Mrs Thatcher’s view, because you turn off the taps of money and leave them without any power; or a statutory pay policy. Those are the only two things left. There is an eerie parallel with 1931.’
Jim interrupted and said, ‘There is no such parallel. I don’t accept it. I have been reading the minutes you have been circulating, every one of them, and I don’t accept it.’
‘I am very sorry but if I am in the Cabinet I must say what I think and I think there is a parallel with 1931 because then, too, the loan hinged upon cutting the benefits.’
Jim interrupted again and said, ‘Well, I lived through it. You didn’t.’
‘Well, my dad was in that Cabinet. They voted for the cuts in benefits, and I won’t accept them and I make that absolutely clear.’
Michael Foot made one final point. ‘We have had a discussion. Only a majority is for this view, it is not unanimous, and the Cabinet minutes always say, “The Cabinet noted with approval the summing-up of the Prime Minister.” Well, we don’t all approve of the summing-up of the Prime Minister.’
Jim said, ‘My summing-up will say that a majority of the Cabinet agrees and therefore surely you could “note with approval that a majority of the Cabinet agrees”.’
Michael came back to the point I had made at the very beginning and said, ‘Is it clear that the Cabinet can suspend its final judgement until the very end of this whole business when we know the quantum, we know the response, we know the allocation, we know whether we can get import deposits; we know the whole acceptability?’
‘Yes,’ said Jim, ‘I agree with that.’
With that the Cabinet adjourned at 1.15.
The foregoing diary was actually dictated in my room at the Department of Energy directly afterwards. Frances came in and wanted to know what happened so she sat while I dictated it. It is the moment of defeat and we have to recognise it. She said the Titanic was going down.
At 4.15 I went over to the House and thought it would be nice to have a word with Joe Ashton. Now he is a Whip I’m able to be a bit more candid with him. I told him, not in great detail, that the forecasts on unemployment and inflation were very high, that in fact the Government was going to go for cuts and deflation and was attacking benefits.
He said the truth was that the Party was absolutely punch-drunk now on anxiety and had been conditioned to what was likely to happen. In effect he was telling me to relax and not to get steamed up. It had all happened before. Eric Heffer had written an article today also saying that whatever happens, the Goverment had to be sustained.
At 5.30 I saw Michael Foot, who was distressed about this morning’s Cabinet, and hoped he would have an opportunity of a word with Jack Jones, whom he hadn’t actually seen for two or three weeks.
I’m thinking hard about how to handle the situation. It is most important not to get it wrong and go out on a limb but at the same time to try to bring the Movement in.
Wednesday 8 December
I got the report on the Windscale incident. On 10 October, nearly two months ago, there was a leak of high-activity waste material at Windscale which I was not told about. I wrote on Peter Shore’s report that it was inexcusable and I would make a parliamentary statement tomorrow.
Monday 13 December
At 2.30 the two Nuclear Inspectors came about the Windscale episode. It was horrifying that neither of them had actually been up to Windscale to have a look, even though 100 gallons a day is seeping out. I was totally shaken and they were acutely embarrassed.
Went into the House, which was pretty full because of the Devolution debate, and I played it very low key. Just as I was leaving, Nicholas Ridley, Conservative MP for Cirencester and Tewkesbury, raised a question about the surveillance of trade unionists by the secret services, which must have severely embarrassed the Front Bench.
Wednesday 15 December
Today I had a report to the effect that some tritium had been found on the beach at Windscale a year ago which had not been explained. There didn’t appear to be any link with the recent silo seepage but now they have discovered that there could be a connection and so this raises the question of how long the leak has been going on. Was it reaching the beach?
I asked for all the details and tonight I had a note in my box that a man had inhaled some plutonium a year ago at the radio-chemical centre at Windscale and was now being watched. Now that I have demanded that all nuclear incidents be reported to me, I realise I shall be absolutely swamped by them. I have to find a way of revealing them without causing a scare but in view of the fact that tomorrow morning Peter is going to try to get a Cabinet view on Windscale, I’m hoping I can use some of the information to good effect.
Friday 17 December
There was an article by Peter Jenkins in the Guardian saying Jim Callaghan should sack me and get Joan Maynard, Lena Jeger, and Judith Hart removed from the Executive at next year’s Conference.
Saturday 18 December
John Cunningham came to see me. He is desperately worried about Windscale because the plant is in his constituency.
Sunday 26 December
Caroline gave each of us a copy of the Communist Manifesto in our stockings, published in English in Russia, and she gave Josh a book called Marx for Beginners and gave Hilary Isaac Deutscher’s three-volume biography of Trotsky. I read the Communist Manifesto yesterday, never having read it before, and I found that, without having read any Communist text, I had come to Marx’s view. It is some confession to make in a diary but the analysis of feudal society, the role of the Church and religion, the class struggle, the impact of technology in destroying the professions, the cash society, the identification of monopoly and the internationalisation of trade and commerce, all these things had been set out absolutely clearly by 1848 by Marx and Engels. It is a most astonishing thing and I feel so ignorant that at the age of fifty-one as a socialist politician in Britain I should never have read that basic text before and I am shy to admit it.
There is no doubt that in the years up to 19681 was just a career politician and in 1968 I began thinking about technology and participation and all that; it wasn’t particularly socialist and my Fabian tract of 1970 was almost anti-socialist, corporatist in character with a democratic theme – management and labour working together. Up to 1973,1 shifted to the left and analysed the Left. Then in 1974 at the Department of Industry I learned it all again by struggle and by seeing it and thinking about it, and I have been driven further and further towards a real socialist position, not a Marxist position particularly; in reading about the Levellers and our own heritage I realise that so much of British socialism goes back quite independently into our history. But, except for the fact that the Communist Manifesto wasn’t written with an understanding of British history and British society, it is a most amazing summary of the impact of the Industrial Revolution – Marx was writing within seventy years of Adam Smith. So the Industrial Revolution gave rise to capitalism, socialism and trade unionism at about one and the same time.
I record this now while I am reading all the basic texts in order to try to understand what is going on.
Tuesday 28 December
It has been a very remarkable year really in the aftermath of the Referendum when the Party was in a terrible state of depression and the Government appeared to be going forward with its own right-wing policy unchallenged.
I must think about Europe. My concerns at the moment are how the Party should react to the Common Market and I think we should call for major reforms in the Treaty of Rome committing us to a democratic socialist association of states which will bring about a fundamental and irreversible shift in the balance of wealth and power in favour of the working people of Europe and their f
amilies. And it should be open to all countries and aim at dismantling all the federal parts so that it becomes an open association with none of the present centralisation and bureaucracy.
Next year I also want to try to restate the case for parliamentary democracy and democracy against capitalism in the very strongest way possible, to show why it is that the Labour Party is committed to democracy and free speech.
I say little of the family in this diary. Caroline is terribly busy. She has got two or three major projects on all the time and is highly respected and regarded by all the people in the educational world. Stephen has just had three months in America working with Senator Eagleton and has to finish his thesis, which is a big strain for him, particularly coming back to England after the glamour of Washington. Hilary is well established with Rosalind and his job with ASTMS will last as long as he wants it. Melissa has three years at LSE and Josh is kicking around until he goes to his polytechnic next year.
I’m very richly blessed with an extremely happy family life and could not be more content. I’ve had as much happiness and comfort and sustenance in my fifty-one years as any man could expect to have in two or three lifetimes, so even if things go wrong and I lose my seat – as I might well do in the next General Election – I have plenty to remember and a role to perform even if it isn’t necessarily in the House of Commons.
Sunday 16 January 1977
Amazement of amazement, the Sunday Times had two leading articles today, one saying that the motorcycle co-operative at Meriden must be saved, and the other singling me out for favourable mention for my open-government policy at the Department of Energy.
The background to this is that I had called in the Nuclear Inspectorate to ask them questions about the fast breeder, like ‘What would happen if a fast breeder blew up?’ They had answered, Well 10,000 (or whatever) would be killed, and I had stopped the discussion and said, ‘I really cannot be told this in private, and know it privately; do you mind if I put the questions in writing to you and publish the answers?’ So the answers were published this week.
