In her second term, Mrs Thatcher came to realize that the only way she could really affect the future of the BBC was by using the blunt instrument of the licence fee. The government had renewal of the fee in its power and the right to set its amount, and could therefore exercise leverage when these came up. In December 1984, she was secretly visited by Ian McIntyre,* the controller of Radio 3, the BBC’s classical music station, a conservative-minded critic of his own organization. He had sent her a paper, full of criticisms of the BBC’s ‘poor leadership’ which she had marked enthusiastically. ‘One of the strengths of the BBC in the days of Reith’, McIntyre concluded,
was its ability to put a stamp on those who worked for it. Today it is the liberal consensus which has put its stamp on the BBC. Its prophets are the Galbraiths† and Dahrendorfs,‡ its holy writings the Guardian and the Observer, its political outlook (which it is not supposed to have) social democratic. Contemptuous of politicians and patronising towards its audience, it appears increasingly to see itself as a state within a state.168
Mrs Thatcher underlined the last phrase three times. She itched to overthrow the state within a state. McIntyre recommended that she seize her chance and increase the licence fee for only two years, setting conditions which would force the BBC to ‘do less better’. At the same time, she should set up a committee of inquiry into the ‘objectives, organisation, management and scope of the BBC’.169*
Mrs Thatcher more or less followed McIntyre’s advice, though she reluctantly accepted the Home Secretary Leon Brittan’s recommendation not to go ‘head on’,170 but to narrow the inquiry to future financing of the BBC, because of the political dangers of inquiring into journalistic standards. She told Brittan that the value of such an inquiry depended on who was chosen to run it: ‘she suggested that Sir Woodrow Wyatt might be a good candidate.’171 Brittan went away to think about this, and wrote back, arguing that Professor Alan Peacock,† a leading free-market economist, should chair the inquiry and that he and colleagues agreed it should confine itself to the question of introducing advertising and sponsorship to the BBC.172 ‘Not strong enough’, wrote Mrs Thatcher beside Peacock’s name, and she refused to agree to Brittan’s proposal: ‘No – the terms of reference are far too limited. Perhaps I might be consulted!?’ She later told Brittan that Professor Peacock did not know enough ‘to prevent the wool being pulled over his eyes’,173 but then gave in. She did succeed, however, in keeping the terms wide enough to include all aspects of the future financing of the BBC. In pushing for change in the financing, Mrs Thatcher was strongly backed by her own Policy Unit. Peter Warry wrote to her predicting that technology would ‘undermine the justification for the licence by the 1990s’: cable, DBS (direct broadcasting by satellite) and home computers would ‘convert the television into a piece of household equipment, rather than an outlet solely for the BBC and ITV’.174‡
When Peacock reported in June 1986, he recommended, as the Home Office had hoped, that the BBC should not take advertising. This declaration, Douglas Hurd (then the Home Secretary) later wrote, came ‘to my great relief’.175 Peacock also pointed out that technological change, with its multiplicity of channels, would eventually create a genuinely competitive broadcasting market. He was interested in the idea of ‘pay-per-view’. The long-term consequences of Peacock were radical. The cosy system of the regional ITV franchises would be opened up to competitive tender. His recommendations provided the framework for reform of television as a whole, rather than just the BBC. Mrs Thatcher was to wrestle with all of this in her third term. But the short-term consequences were that her assault on the BBC was foiled, as she had suspected it would be when she had questioned Peacock’s appointment in the first place. ‘She thought it could have come out stronger,’ recalled Brian Griffiths,176 the head of her Policy Unit, who advised Mrs Thatcher on broadcasting as well as economic policy. The licence fee was secure, and was indexed to the Retail Price Index from 1 April 1988.*
Instead, attention switched to the personnel at the top of the organization, and one or two symbolic battles about programmes. At the end of August 1986, Stuart Young, the chairman of the BBC, died of cancer, aged only fifty-two. An accountant, and the brother of David Young, he had been Mrs Thatcher’s appointment† to shake up the organization, but the BBC barons had proved too much for him. Mrs Thatcher now had the chance to put in a chairman who could make a difference. At the same time, two particular programmes were making the BBC vulnerable to her attack.
The case of a Panorama programme, ‘Maggie’s Militant Tendency’, had been running since it was broadcast in January 1984. It had alleged that three Conservative MPs – Neil Hamilton, Harvey Proctor‡ and Gerald Howarth – had taken part in far-right activities. It evidence was thin, or worse. The programme did not prove the existence of any entryist organization in the Conservative Party like Militant in Labour. It also played tricks with film. For example, it showed a shot of Howarth wearing a steam-engine driver’s uniform at a railway enthusiasts’ rally and juxtaposed the picture with the claim that he had attended a fascist meeting in Italy, visually implying that the uniform was a fascist one. Hamilton and Howarth sued, and the BBC executives, led by the director-general, Alasdair Milne,* assured the governors that the case was ‘fire-proof’. Right up until it became clear that the case would come to court, late in 1986, they maintained this position, relying on the hope that the MPs, who had no private means, would not be able to afford it. Forced by the acting chairman, Lord Barnett,† to recognize that the programme would not stand up to legal scrutiny, they capitulated at the last moment. Their victims eventually received roughly a million pounds in libel damages.‡
The other programme was the BBC’s Nine O’Clock News on the night of the US raid on Libya. This had outraged Mrs Thatcher and Tebbit by what they saw as its readiness to accept Libyan government propaganda about the civilian casualties caused by the American bombs and its refusal to give airtime to the American and British positions. Live presentation from the reporter, Kate Adie, in Tripoli, had caused them particular disquiet. Unlike his predecessors as party chairman, who had preferred a more peaceful life, Tebbit had long since decided that it was a good idea to harry the BBC for bias and inaccuracy. In the case of ‘Maggie’s Militant Tendency’, he had bombarded them with fifty-five complaints about the programme.177 When it came to the Libyan coverage, he got Central Office to prepare a long, detailed dossier about mistakes and distortions in what had been broadcast and submitted the findings to an anonymous independent, ‘academic’ lawyer, who was actually the famous legal fixer and Labour-appointed peer Lord Goodman,178 for a detached critique. Goodman found mainly in Tebbit’s favour. On 30 October, Tebbit submitted his report to Barnett. ‘You may conclude’, he suggested, that the BBC coverage of the raid was ‘a mixture of news, views, speculation, error and uncritical carriage of Libyan propaganda which does serious damage to the reputation of the BBC’.179
In trying to appoint Young’s successor, Mrs Thatcher had almost no friends at the BBC to help her spy out the lie of the land. A rare exception, however, was Patricia Hodgson,* whom Mrs Thatcher had met in the 1970s when Hodgson ran the Bow Group. Mrs Thatcher took what Hodgson considered a motherly/sisterly interest in her career and used to invite her to tea or dinner every year.180 Hodgson’s own politics were Conservative, and she was upset by the way Milne and his executives had behaved over ‘Maggie’s Militant Tendency’, which she regarded as indefensible. She thought the BBC had been over-politicized by the left. But her view of the organization was old-fashioned, public-service Reithian, rather than free-market. This was the side of the BBC tradition with which Mrs Thatcher had the most sympathy. When Patricia Hodgson was appointed secretary to the BBC in 1985, she told the panel that she knew Mrs Thatcher. Its members made her promise that her friendly meetings with the Prime Minister would cease. ‘Don’t be silly,’ Hodgson replied, ‘I can use this to the BBC’s advantage,’ but the selectors were adamant.181 ‘I’m going to Chequers
shortly,’ said Hodgson. ‘I’ll tell her that I can’t come again.’ From then on, Hodgson kept her word about not meeting Mrs Thatcher, but since part of her job was liaison with government, and since she attended the same north London church as Brian Griffiths she was able to discuss relevant matters with him, knowing that her comments would get back to Mrs Thatcher.
After Stuart Young died, Patricia Hodgson discovered from Griffiths that Mrs Thatcher’s candidates for the chairmanship included Lord King of British Airways, Woodrow Wyatt (earlier proposed by her for what became the Peacock report) and the right-wing former leader of the electricians’ union, Frank Chapple. Hodgson thought the list poor and was frightened that Mrs Thatcher would choose King, who would then have a confrontation with with the BBC journalists. She ‘drew up a job spec for the chairmanship and gave it to Brian. I thought the chairman should understand the journalism.’182 Griffiths thought King unsuitable for the same reason, and came up with the idea of Marmaduke ‘Dukie’ Hussey.* Hussey had been the managing director of Times Newspapers during the papers’ shut-down, and had continued to work for the company after it was bought by Rupert Murdoch. He was well connected, being married to a lady-in-waiting to the Queen and brother-in-law to William Waldegrave, who also recommended him to Mrs Thatcher.183† He had the necessary business toughness, establishment links and knowledge of journalism to fit the description that Patricia Hodgson had devised. Mrs Thatcher appointed him. It was not considered important that he barely watched television. According to John Birt,‡ whom Hussey was soon to bring in, first as deputy director-general, to help transform the BBC, Hussey was ‘a good intelligence gatherer, one for mood and flavour, not precision. He had a great deal of courage. His own views and convictions chimed with Mrs Thatcher’s. But he was an old soldier and he had strong views on public service.’184 If the BBC under Hussey was to be Thatcherized, it would be in Reithian form, not according to the principles of market purity.
This combination of circumstances, at last favourable to Mrs Thatcher’s hopes for the BBC, actually made Tebbit’s attack on the Corporation over Libya begin to seem dangerous. Brian Griffiths wrote to her warning that a broadside from Tebbit might, at the last minute, unite the BBC governors ‘to rally round the flag of resisting outside political interference’.185§ This would be terrible, because they were just gearing up to sack Milne over ‘Maggie’s Militant Tendency’, and should not be deflected. Tebbit, recalled Griffiths, was ‘so confrontational that he was becoming counter-productive’.186 There was also the possibility of an internal government row, because Tebbit, angered by the BBC’s brush-off reply to his first letter, planned to send a second one. Douglas Hurd, as Home Secretary, was responsible for BBC matters and did not feel easy about another Cabinet minister, albeit acting in a party capacity, getting into a serious fight with the Corporation. Labour hoped to exploit differences here. Nigel Wicks wrote to Mrs Thatcher: ‘I see a danger of some elements of this episode repeating the Westland troubles. A colleague with an obsession, doing things difficult to reconcile with collective responsibility. And all this at a time when things are going so well for the Government.’187 Mrs Thatcher agreed. At her instruction, Stephen Sherbourne asked Dobbs to convey to Tebbit her wish to drop the second letter, or at least clear it with the A-Team.188 In reality, Tebbit could hardly drop it at this late stage without a story breaking that he had been rebuked, so he did not. But after he had sent the second letter, he allowed the story to go away. As he put it, ‘Eventually, the affair blew over.’189 On balance, he was surely right to think that his fierceness against the BBC had helped force it to change its ways.
In January, Hussey, assisted by Patricia Hodgson, sacked Alasdair Milne and put in a sober accountant, Michael Checkland,* as the new director-general, with a brief to get the BBC’s affairs in good order. Birt, who had made his name in the independent sector, was brought in as Checkland’s deputy to sort out the programmes, especially those connected with news and current affairs. Mrs Thatcher felt well pleased. A few months after Hussey’s appointment, Patricia Hodgson met Mrs Thatcher at a public function. ‘Dukie is proving a great success,’ said Hodgson. ‘He’s not frightened of BBC barons or journalists.’ ‘Of course he isn’t,’ said Mrs Thatcher, rather as if she alone had thought of the appointment. ‘He lost his leg in the war.’190†
For all of Mrs Thatcher’s earlier difficulties, Nigel Wicks had been right to speak in November of ‘things … going so well for the Government’. The first seeds of this remarkable recovery in public esteem had been sown in Nigel Lawson’s March Budget. The growth rate was up to 3.75 per cent, and the inflation rate was down to 3.4 per cent. After years of struggle, the PSBR was now modest, at 1.5 per cent of GDP. Lawson wished to hold it to 1.75 per cent in 1986–7 and was aware that oil revenues would fall, so he did not have great scope. He believed, however, not least for electoral reasons, that the government must cut taxes further. The politically extraordinary fact was that the ‘tax-cutting’ Tories had not cut the basic rate since Geoffrey Howe had brought it down to 30 per cent in his first Budget in 1979. Lawson’s preferred, more targeted method of cutting income tax had been to raise the thresholds above inflation to take more of the lowest earners out of tax.
Now, at the last minute, he changed his mind. He wanted tax cuts to have a wider impact. He did not have much room for manoeuvre, however, and he worried that a 1 per cent cut, the only amount he could really afford, would be considered derisory. He feared that 29 per cent would just look silly, set against the round figure of 30 per cent. Lawson credited his special adviser, Peter Cropper,* with seeing that this could be turned to advantage: ‘A reduction to 29 per cent’, Cropper wrote to Lawson, ‘would be seen as an unqualified commitment to cutting the burden of taxation. It would be ludicrous to stop with a basic rate of 29 per cent for more than a year or two: people will see that.’191 Lawson, famous for inventing the Medium-Term Financial Strategy, now invented what might be described as a Medium-Term Tax Strategy. Announcing the one-penny cut in his Budget, he reminded the Commons that this was the first cut since 1979: ‘So long as this Government remain in office, it will not be the last.’192 He revived the aim, first declared by Howe, of a basic rate of 25 per cent, making it clear that it would be necessary for voters to re-elect a Conservative government to achieve this. In all of this, although she warmly supported the one-penny cut, and needed some persuading by Lawson about the promise of tax cuts to come,193 Mrs Thatcher was little more than an observer of the process, so weakened was she by Westland. In her memoirs, she devotes only six lines – all of them favourable – to the 1986 Budget.194
As a result of the tax cut, Labour was in an awkward political spot. The party decided to abstain in the Commons vote, but some on the left rebelled and voted against. The Tories were starting once again to ‘weaponize’ tax issues politically, and Kinnock’s Labour Party, trying rather uncertainly to modernize, found it hard to respond in a united way. By the autumn party conference season, the question of tax and the state of the economy would take on electoral focus. Lawson’s 1986 Budget set the right political framework.
The work of the A-Team brought political benefit. It ensured that the programme of the government was now considered as a whole. For the 1986 party conference, Tebbit and Dobbs decided to obtain from every departmental minister his legislative and policy plans for the next three years, and persuade them to include them in their platform speeches. They stitched these together under a slogan of ‘THE NEXT MOVE FORWARD’. The phrase was designed both to emphasize the team work involved and to leave behind the tension and divisions of the early part of the year. In all probability, it would be the last conference before the general election; it was certainly planned and presented as if it were.
As usual, the Conservative conference was preceded first by that of the Liberals and then by Labour’s. Both conferences voted in favour of unilateral nuclear disarmament. In the case of the Liberals, this split the party from its leadership (which
had opposed the unilateralist motion) and from its more robust SDP partners in the Alliance. In the case of Labour, Neil Kinnock’s strong unilateralism undid much of the modernizing work of the previous twelve months. In a television interview, he said a Britain without nuclear weapons would also refuse to be under the protection of the American nuclear umbrella, because this would be ‘immoral’. The conference also voted to renationalize British Telecom and British Gas, which was about to be privatized, to remove the right for a secret ballot before a strike and to get rid of the right to buy a council house. Although the red rose, suggested by Kinnock’s up-and-coming adviser Peter Mandelson,* replaced the red flag as the conference symbol, the party seemed politically rather redder than the previous year, when Kinnock had trounced Militant. It promised punitive taxes on the rich, and David Blunkett, the rising star of the left, proudly proclaimed that Labour’s plans could not be paid for without increasing the standard rate of income tax as well.
When Mrs Thatcher came to Bournemouth for her party’s conference on 6 October, she promptly tripped on a manhole cover and sprained her ankle quite badly. She was unwontedly cheerful, however, about the political opportunity now presenting itself after an extremely testing year. There was nothing she liked better than finding a clear dividing line between the Conservatives and the opposition parties. Now she had it. In her setpiece speech on the last day, she began by teasing Labour. ‘The rose I am wearing is the rose of England.’195 She trumpeted popular capitalism and the morality of choice. She boasted of having the lowest inflation rate for twenty years, the lowest basic rate of income tax for forty years and the lowest number of strikes for fifty years. She continued with the theme of caring, rushing her audience through hospitals she had visited all over the country, and announcing a new commitment to the quality of education. She put her strongest powder and shot into defence, emphasizing the ‘utmost gravity’ of the Labour decision the previous week: ‘Exposed to the threat of nuclear blackmail, there would be no option but surrender.’ A Labour Britain ‘would be the greatest gain for the Soviet Union in forty years’. She reminded her audience of the leading Labour politicians in the past – Gaitskell, Bevan – who had opposed unilateral nuclear disarmament – in order to contrast them with Neil Kinnock. Labour’s traditional patriotic voters could not be at home in his party. ‘I believe the interests of Britain can now only be served by a third Conservative victory.’ She even made a point of praising Norman Tebbit as chairman.
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