Even at this early stage, personal relations between Mrs Thatcher and Kohl were not particularly cordial. John Coles remembered them as ‘always very poor’.16 Mrs Thatcher found Kohl boring and long-winded. She considered him intellectually inferior to her and to his predecessor, Helmut Schmidt.17 With his great girth, ponderous manner and unglamorous looks, Kohl was not her type of man. Besides, being very much a child of the home front in the Second World War, she had a prejudice against his nationality which something in his demeanour brought out. Once she took the present author aside, as if to share a confidence. ‘You know the trouble with Helmut Kohl?’ she asked, and did not pause for an answer before revealing, ‘– He’s a German.’18 But nothing in the official records at this time suggests any problem serious enough to inhibit friendly exchanges between allies. Notes scribbled by Mrs Thatcher for an informal speech of thanks for her late October visit say things like ‘Touched us most deeply’, ‘Spirit of humanity’, ‘Pulse of freedom’, ‘full of goodwill’ and ‘Thank you’ with the parenthesis – as if she needed to remind herself – ‘(warm and friendly)’.19 ‘It might sound unfashionable nowadays,’ Kohl later wrote, ‘but it is a fact: the Federal Government was deeply grateful to Mrs Thatcher for her visit to Berlin. It was a gesture of friendship and solidarity with the Germans.’20
By early 1983, the West’s struggle with the Soviet Union over the deployment of American INF missiles was coming to a head. With no breakthrough in arms control talks visible, NATO had agreed to deploy these weapons on European soil to counter the SS-20 missiles that the Soviets had already put into the European theatre (see Volume I, Chapter 20). Despite considerable resistance from the left and the ‘peace movement’ across Europe, the American missiles were due to arrive later that year. Successful deployment promised to hand the West a significant victory in the Cold War. Mrs Thatcher was determined to keep the plan on course. The strength of neutralism in Germany alarmed her. The Campaign for Nuclear Disarmament (CND), with covert Soviet backing, stirred up such feelings across Europe and generated extreme nervousness in Western capitals. Even in Britain, there had been a growth of anti-nuclear feeling which she found worrying. Refusal to accept the missiles on German soil, a policy by now actively advocated by the opposition SPD, would probably be fatal to the whole enterprise. She duly arranged for Kohl to pay a visit to Chequers on 4 February 1983.21 There she told him of the ‘unimaginably damaging consequences’ if the SPD were to succeed, and assured him that she ‘wished to do all we could presentationally to help Chancellor Kohl at the present time’.22 She and Kohl agreed that it was unlikely that the Soviets would accept President Reagan’s ‘zero option’, which would have removed all INF missiles from Europe. Therefore the planned deployment would have to go ahead. Mrs Thatcher expressed her perennial anxiety that Russia would try to throw the British and French independent nuclear deterrents into the negotiations (she also feared an American tendency to do the same), and Kohl supported her, loyally saying that, by guarding their own security, France and Britain were guarding Germany’s. The two discussed a date for deployment, looking at it purely politically. At this stage, Mrs Thatcher was doing everything possible to keep her election-date options open (her last possible poll date was not until May 1984), but she confided in Kohl that she proposed to tell Vice-President Bush, whom she was shortly to see, that she favoured November 1983, implying an election in or before October. INF deployment was not her only electoral concern. ‘It would be impossible for her to go into the British Election with the European Budget problem unsolved,’* she told Kohl.23 He agreed, but, reflecting his own European approach, told her that he wanted the British government to be able ‘to go into its Election with its European colours flying high’.24
At a press conference, Kohl and Mrs Thatcher spoke of their commitment to INF deployment. It was an opportunity for Mrs Thatcher to explain the nature of her commitment to peace: ‘We really are a true peace movement ourselves and we are the true disarmers, in that we stand for all-sided disarmament, but on a basis of balance.’ The two presented complete harmony. ‘You can rely on the Germans,’25 Kohl declared. Whatever their inner thoughts, the two leaders had become close allies.
As she prepared for the next election, Mrs Thatcher sought help from another close ally, her friend Ronald Reagan. Although the US administration tried to avoid public comment, the prospect of the Labour Party taking power horrified them. When Denis Healey, Shadow Foreign Secretary, visited Washington in March 1983, the US Embassy in London urged that he be given ‘a clear warning on where and how Labor’s prospective policies harm American and Western interests’.26 As Richard Perle, then US Assistant Secretary for Defense, recalled, ‘Michael Foot’s† election would have been a very serious blow to us.’27
In early 1983, an opportunity for the administration to help Mrs Thatcher – and thus hinder Foot – arose. In Britain, as in other INF-deployment countries, there was growing public concern that, in the event of conflict, there was nothing to stop the Americans deciding unilaterally to launch their missiles from British soil. Pressure grew for the weapons to be fitted with a ‘dual key’ requiring physical activation from both Britain and the US. With the Americans, who still owned the missiles, vociferously opposed, Mrs Thatcher saw no need for a key. She knew that, since 1952, the Truman–Churchill agreement had provided the British Prime Minister with a veto over the use of the US nuclear weapons on British soil.‡ But, because this agreement remained shrouded in secrecy, in public she could offer only the limp assertion that the use of such weapons ‘would be a matter for joint decision’ by the American and British governments.28
The Americans believed that the less said about these matters the better. Even repetition of the ‘joint decision’ formula set their teeth on edge. Theoretically, the existence of any veto weakened the deterrent effect of deployed missiles because it made it less likely that they would ever be launched. More important, most other European countries to which missiles were to be deployed would not have such a veto. If Britain’s position became public knowledge, Washington feared similar demands from far less reliable allies. To Mrs Thatcher, engaged in a battle for public opinion over deployment, these arguments were unpersuasive. In mid-April, she despatched the British Ambassador in Washington, Sir Oliver Wright, to seek Reagan’s help. ‘Mrs Thatcher will be asking for your approval in saying more openly that she has a veto over the use of those weapons,’ Judge Clark, the National Security Advisor, warned Reagan.29 Expert opinion in Washington was deeply opposed. ‘So far we have resisted British requests to acknowledge the secret agreement and have insisted they not go public,’ Clark told the President. ‘When Sir Oliver delivers this latest request, you will want to say that we feel the agreement should be kept secret, but will review Mrs Thatcher’s request and respond to it.’30
Advocates for the status quo swiftly realized the game was up. ‘We were all worried that anything Margaret Thatcher asked for, Ronald Reagan would want us to give her,’ recalled Ron Lehman of the NSC staff.31 Sure enough, Clark recorded that the President wished to ‘support the Prime Minister as much as he possibly can’.32* Reagan authorized Mrs Thatcher to tell Parliament that ‘no nuclear weapon would be fired or launched from British territory without the agreement of the British Prime Minister’.33 Trying to close the stable door after the mare had all but disappeared from view, the Americans insisted that the President would not personally confirm this arrangement, although other US government spokesmen would be authorized to do so.† Reagan thus ‘gave Mrs Thatcher the assurance that she needed’.34 In her memoirs, Mrs Thatcher merely notes that she made sure the existing position concerning missile launches was satisfactory and she ‘cleared personally with President Reagan the precise formula we should use to describe it’.35 This significantly downplays her achievement. She had persuaded the President to overrule official caution and overturn forty years of precedent at a particularly sensitive moment. Not only had she asserted a principle central to Bri
tain’s national interest, but she had gained valuable ammunition for the election campaign to come.
In domestic politics, following victory in the Falklands, the question of the election date quickly came to colour all decisions. Mrs Thatcher’s natural inclination was always to press on with reform, but its timing carried electoral risks. Despite the gradual improvement in Britain’s economic and financial situation in 1982, the problems of public spending remained almost as severe as ever. In January 1982, total unemployment had risen above 3 million for the first time.36 At the beginning of July, the Financial Times reported sluggish economic growth: the consensus forecast was for growth of just over 1 per cent for the year (down from an expected 1.5 per cent) and 2 per cent for 1983.37 On 15 July, armed with the latest growth figures, Geoffrey Howe warned the Cabinet that the progress of recovery was ‘hesitant and patchy’.38 Leon Brittan, the Chief Secretary to the Treasury,* said that, ‘contrary to all we stand for’, public expenditure had risen from 41 per cent of GDP in 1979 to 44.5 per cent: borrowing and spending must come down. Mrs Thatcher wanted tight control of spending, not least because ‘The next Budget is the last in which tax reduction can be made and take effect before the next election.’ This could not be done by increasing the deficit: ‘We can’t go the US way.† We must make room for personal taxation cuts; I know of no better way.’39 Against the prime ministerial and Treasury view, the critics counter-attacked. Jim Prior* said that ‘The Chancellor does not pay enough attention to unemployment.’ Michael Heseltine† spoke fiercely: unemployment would be the ‘crucial issue’ at the next election – ‘We are stretching the credibility of the party in many parts of the UK.’40 He wanted more help for selected industries and faster privatization. Unlike the previous summer, the Cabinet did not fail outright to agree a strategy, but scepticism was strong.
Over the spring and summer of 1982, the ‘Think Tank’ (the Central Policy Review Staff) had set to work on the problem of high spending on a projection of very low growth. It scrutinized the main areas of public spending – education, social security, health and defence – and proposed radically different ways of running them that would permit major cuts. By now under the directorship of John Sparrow,‡ a merchant banker who had advised Mrs Thatcher on City and economic matters, the CPRS was considered to have shed its Heathite origins and embraced a more Thatcherite ethos. Its report was commissioned by Geoffrey Howe to take forward the Treasury’s concerns. It proposed such dramatic changes as an end to the state funding of higher education (to be replaced by student loans), the possibility of education vouchers for schools, the de-indexing of all social security payments, so that in future they would rise less than inflation, and the replacement of the National Health Service with a system of private health insurance. It was, Sparrow recalled, ‘only a brief for an argument’,41 but naturally, given its contents, that argument soon exploded.
After Mrs Thatcher had received the Think Tank paper, her principal private secretary, Robin Butler, asked her permission to circulate it to Cabinet colleagues. ‘She didn’t give a clear answer,’ he recalled,42 but he circulated it anyway. It appeared, along with the normal Cabinet papers, in ministers’ boxes on 7 September, for discussion at Cabinet two days later. When the Cabinet met, its first gathering since the summer break, there was a storm of protest. Even Cecil Parkinson, who supported the thrust of reform, warned that ‘If we are going to think the unthinkable, do so privately and outside Gov’t machines.’43 Ministers insisted that the discussion of the CPRS report should not be minuted. Peter Walker* said that it was ‘ludicrous to discuss at 24 hours’ notice’, and that such things were ‘for party matters, not Whitehall’. Mrs Thatcher hit back (as abbreviated by Armstrong): ‘Are you saying not in Cab.? That is astonishing.’ She did not seek any decisions, she said, other than that the ideas in the report should be ‘pursued’: ‘We must not duck them.’44 Walker said: ‘I regret that the CPRS paper was circulated. I have no doubt that it will leak.’ Just to make sure that his prediction came true, he leaked it.45 The main contents of the CPRS paper appeared in the Economist on 18 September 1982.
There was outrage. The government, it was claimed, was trying to abolish the welfare state. Mrs Thatcher was belatedly furious at the decision to circulate, though she had effectively acquiesced in it, and had defended in Cabinet the need for a cross-Whitehall debate about the report’s contents. She was terrified by the possible electoral consequences. ‘I was horrified by this paper,’ she wrote in her memoirs.46 This was not so. Although the report’s suggestions were certainly not her own private thoughts, still less a secret plan, they did reflect her direction of travel. Nothing about them upset her, except for the political embarrassment they caused.
The fiasco had two consequences. The first was the end of the Think Tank. Its constant problem was that, as John Redwood,† who later ran the No. 10 Policy Unit, put it, it did ‘good work to no good effect’.47 The CPRS was attached by the rules and by Whitehall geography to the Cabinet Office, rather than to the Prime Minister. It was on the wrong side of her green-baize door. It was structurally incapable of working fast to a political agenda.
Mrs Thatcher herself resented the idea that the CPRS did not work for her. She felt outgunned by the firepower of the big government departments. In June, well before the leak, Mrs Thatcher had told a ‘flabbergasted’ John Sparrow, whom she had appointed as director as recently as April, that she wanted to wind it up.48 Sparrow talked her out of it, but then she began to argue that the CPRS should become part of her office instead. Sparrow objected to this, and Robert Armstrong wrote to her in support of his view that the CPRS ‘could be diminished if it became visibly part of the Prime Minister’s office’. ‘Perhaps I could add’, he went on smoothly, ‘that the Cabinet Office, including the CPRS, is very much your Department.’49 Mrs Thatcher was not falling for that: ‘and yet its influence is diminished if it is my department!’, she scrawled, throwing back Armstrong’s own argument in his face.
By now she had overcome some of her early resistance to employing political advisers in government, and so the role of the Policy Unit, working exclusively for her, grew. Under Ferdinand Mount,* who replaced John Hoskyns as director of the Policy Unit during the Falklands War, the unit became more capable of giving form to her often rather inchoate ideas and projecting them across Whitehall. In Mount’s view, the CPRS report was a ‘total disaster politically’ because it attempted to present a complete plan, ‘an absurd list of unthought-out though dramatic ideas’.50 The unit could act with a cunning, flexibility and speed which were denied to the Think Tank. Instead of Hoskyns’s strategic approach with which Mrs Thatcher had always felt uneasy, Mount saw Mrs Thatcher as needing a ‘peg’ for a suggestion: ‘If we could catch her enthusiasm she would immediately run with it and haul in the relevant minister and carpet him. He would glare at us.’ It was a matter of enlisting Mrs Thatcher’s ‘angry will’.51 On each issue – local government reform, education, family policy and so on – the unit would get into the detail of policy, developing it along Thatcherite lines. It would send her crisp, clear memos designed to push the issues forward. These generally went to her alone, rather than floating round Whitehall, and they usually avoided the grand ideological sweep which, if leaked, could cause such mayhem. According to Tim Flesher,† one of her private secretaries at the time, the Policy Unit was successful because ‘they were the only ones working flat out for her.’52 So the disaster of the Think Tank leak ultimately improved Mrs Thatcher’s ability to prevail. She reprieved the Think Tank for the time being, but abolished it after the 1983 election.
Another aspect of the debate about advice to the Prime Minister was Mrs Thatcher’s desire, in order to avoid another disaster like the Argentine invasion of the Falklands, for independent policy work on foreign affairs and security – areas which were outside the Policy Unit’s remit. In August 1982, she canvassed the idea of a full, separate foreign affairs and security policy unit. She wanted Sir Anthony Parson
s,* the hero of British diplomacy at the United Nations during the Falklands War, to head it. This caused the sucking of bureaucratic teeth. Robert Armstrong warned her that the presence of so senior a man as Parsons would ‘bring us into the problems of appearing to set up a separate centre of activity in foreign affairs … competing with the FCO’.53 Francis Pym, the Foreign Secretary, was beside himself at the idea. He feared, Armstrong reported, that it would be ‘very damaging to the morale of the diplomatic service (already bruised)’ and that it ‘would be seen as a “slap in the face” for himself’.54 There would be consequences for policy too: ‘We should thus (it is feared) drift inexorably … to a situation like that which prevailed (and was so damaging) in the United States when Kissinger and Brzezinski were at the White House.’55 Mrs Thatcher maintained her position – ‘I have made a firm decision and every day I realise how necessary it is to have a unit here,’56 but she agreed to see Pym about it. Robin Butler prepared the ground by explaining to Pym’s office how a similar arrangement with her economic adviser, Alan Walters,† often worked as a force for harmony rather than conflict: ‘On submissions from the Treasury and the Bank, he [Walters] is often able to reassure the PM about their merits as a result of his earlier involvement [at meetings with them] … he has contributed significantly to increasing the PM’s confidence in what the Treasury and the Bank are doing.’57
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