Margaret Thatcher: The Authorized Biography, Volume 2
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In the years that followed, the US Ambassador in London, Charlie Price, became increasingly worried by Kinnock’s unilateralist position, and increasingly partisan in supporting Mrs Thatcher. According to Roz Ridgway, of the State Department, ‘Price wouldn’t talk to Kinnock. And we kept saying, “You’re the Ambassador to the United Kingdom, not the Ambassador to Mrs Thatcher.” ’18 Discussions with Labour were left to the career diplomat Raymond Seitz,* Streator’s successor at the Embassy. As a good professional, Seitz was eager to keep channels open, but was in no doubt about the threat a Labour government was seen to pose to US interests, not only among Republicans, but in the bureaucracy:
The State Department, the Pentagon and the CIA were all concerned about the possibility that the security arrangements with Britain would unravel … Our entire defence posture in Europe rested on the British Isles. If Kinnock had won … the result would have been catastrophic for the relationship not to mention for the Alliance.19
The Embassy even had a plan to influence the debate in the run-up to the election.20 Informing Reagan that Kinnock would probably seek to meet him in the new year, Price told the President that he and colleagues ‘were pulling out all the stops to assure that the full implications of Labor’s defense policies are widely understood’. He recommended that Reagan see Kinnock ‘in the hope that your persuasive powers can have some influence on him’.21
Against advice from colleagues, including the Shadow Foreign Secretary, Denis Healey, who thought there was nothing to be gained, Kinnock asked for a meeting with Reagan. His request was somewhat reluctantly granted by the White House, and the meeting was arranged for 27 March, the day before Mrs Thatcher was due to land in Moscow. Frank Carlucci, now National Security Advisor, explained to the President that the timing was designed by Kinnock ‘to show that he, like Thatcher, is an important player in international affairs’.22
In preparation for the encounter, Kinnock shifted his defence policy a bit, declaring that a Labour government would accept cruise missiles on British soil, so long as progress continued to be made at the Geneva arms control talks (which aimed to remove these missiles altogether). At a lunch which Price finally decided to give him, Kinnock emphasized that ‘Britain would remain a loyal ally under a Labor government … A call on the President, Kinnock said, is important symbolically to still the anti-American elements within his party.’23 No one expected a meeting of minds. ‘While Kinnock will want to accentuate the positive,’ Carlucci told Reagan, ‘our objectives are different: we want to make it clear that Labor’s defense policies would adversely affect our common security interests and severely strain US–UK relations.’24 Before the meeting, the President was warned by his advisers, ‘Be careful what you say to Kinnock because he is going to use anything you say to show that you’re supportive of his point.’25 On the other hand, he should bear in mind that Kinnock might be the next prime minister. ‘Well,’ said Reagan simply, ‘I want Margaret to win.’26
In the Oval Office, Kinnock was accompanied by Denis Healey, Charles Clarke and the British Ambassador, Sir Antony Acland; Reagan by George Shultz, Caspar Weinberger and a host of aides. The meeting seemed, in the minds of the Labour contingent, to pass off peacefully. Kinnock picked up on Reagan’s unThatcherite dislike of nuclear weapons, and briefed the press accordingly: ‘The President stated unequivocally that he wanted to see … the elimination of all nuclear weapons, which he described in his own words as “immoral and uncivilised” … Both I and Denis Healey stated that we shared this desire.’27*
The White House did not like this. In its view, Kinnock was misrepresenting the meeting, suggesting agreement where there was none. Marlin Fitzwater, the White House press secretary, decided that it could not stand. ‘I agonised over it,’ Fitzwater recalled. ‘I knew it would be a big story and me slapping down Kinnock. But I could see no option.’28 He duly called a press briefing of his own. The President had told Kinnock, Fitzwater insisted, that ‘we disagree with Labor’s defense policy’. It would have ‘a strong effect on NATO, on East/West relations and would undercut our negotiating position at Geneva’.29 Reagan had concluded by saying, ‘We must be prepared, unlike before World War Two. We must not let that happen again.’ Fitzwater added that the meeting had gone on for ‘slightly less than 20 minutes’, not the twenty-eight minutes logged by the Kinnock party. The implication was that the President and Kinnock had not found enough to talk about to justify even the paltry twenty minutes originally allocated. A story (which was accurate) also began to seep out that Reagan had failed to recognize Healey and had greeted him with the words ‘Nice to see you again, Mr Ambassador.’*
The press leapt at Fitzwater’s briefing. ‘Charade in the Oval Office’ said the Observer.30 ‘Reagan takes his revenge on Kinnock’ said the Mail.31 Even the Guardian used the word ‘debacle’.32 The contrast with Mrs Thatcher’s headlines coming out of Moscow was extreme. Her exciting encounters with Gorbachev, her reception by huge and enthusiastic crowds, her glamorous outfits, confirmed her already well-established role as a global superstar. The visit also helped position her as a figure of hope as well as strength, an attractive woman as well as the Iron Lady. Kinnock, by contrast, was left looking like a pipsqueak.
Although Kinnock himself did not want a public row about the Reagan meeting, Healey, once back in London, accused the White House of trying ‘to help Mrs Thatcher in her election battles’.33 In Kinnock’s view, not expressed at the time, ‘The thing was set up, not by Reagan, but by his staff.’34
Kinnock’s suspicion was not ill founded. The official US record of the meeting does not support everything that Fitzwater said.† Provoked, perhaps, by Kinnock’s original account, the White House seems to have decided to put out a version of events closer to the harsh briefing notes its staff had given to Reagan before the meeting than to what he actually said. In Acland’s view, however, the White House was accurate in conveying Reagan’s ‘rather frosty’ attitude: ‘I think that the Americans wanted to short-change Kinnock to show disapproval … it was clear both before and at the meeting that there was no meeting of minds.’35 Reagan’s own diary confirmed this impression: ‘It was a short meeting but I managed to get in a lick or two about how counter-productive “Labors” [sic] defense policy was in our dealings with the Soviets.’36
Kinnock and his office would have been even more outraged – and with justification – if they had known the full story of what had gone on. Charles Powell recalled: ‘There was the famous meeting with Kinnock that I’m afraid we rather sabotaged.’ The whole thing, Powell confessed, ‘was a bit of a fix. We wanted to diminish the impact of the visit. Charlie Price read our signals and arranged that they would get only 20 minutes and that the whole thing would be really rather perfunctory. I’m ashamed to admit it now, but it is true.’37
Powell did not discuss this with Mrs Thatcher, who obviously was best kept out of it. Price supported Powell’s case about collusion: ‘There was, you could say, a certain amount of manoeuvring on the part of the British to see that the visit was brief.’38 The fact was that the Reagan–Thatcher bond was unbreakable, and Kinnock had been foolish to imagine that he could make any impression on it. Kinnock’s boyhood hero, the Welsh Labour politician Aneurin Bevan,* had famously warned that a unilateralist Labour Party would go ‘naked into the conference chamber’. Kinnock had walked naked into the Oval Office.
By this time, Mrs Thatcher was increasingly prepared for a contest. On 17 March, Nigel Lawson had presented his fourth Budget. There was still no date for the election, but this was unmistakably an election Budget. The Chancellor gave himself a glowing report on a year of good revenues and healthy trends despite the collapse of the oil price, known as the ‘Third Oil Shock’. The inflation rate was now only 3.5 per cent. There had been the largest six-monthly fall in unemployment since 1973 (though it was still well over 3 million). Growth in manufacturing productivity, which had been the lowest in the G7 in the 1970s, was now the highest. Britain was enjoying
the longest period of steady growth since the war and a PSBR which had reached, in advance of his own best expectations, what Lawson judged was its ‘appropriate destination’39 of only 1 per cent of GDP. What he called ‘genuine popular capitalism’ was spreading so successfully that 8.5 million people now owned shares – almost three times more than in 1979.
Lawson then translated all this good news more directly into measures which individual voters would notice. He announced that there would be no increase, not even indexing, to excise duties on alcohol and tobacco. This was a way of making the Retail Price Index suggest a better picture for inflation than was actually the case, and was a good, comprehensible electoral bribe. As foreshadowed in his Budget the previous year, and in his party conference speech, he cut income tax by a further two pence, to twenty-seven pence. He also reaffirmed the aim of bringing it down to 25 per cent in the near future. The income tax reduction, he said, was ‘a cut which the Labour Party is pledged to reverse, if it is given the chance, which it will not be’.40
According to Nigel Lawson himself, backbenchers considered this Budget to be ‘a good election Budget but not blatantly so’.41 He was also pleased with the Financial Times headline – ‘Lawson Opts for Prudence in Last Budget Before Election’ – ‘Not bad for a package which took two pence off the basic rate’.42 His Budget was not, in reality, very prudent at all. Commentators were already beginning to notice, in his managing down of the sterling exchange rate and his increasingly casual approach to monetary targets, the seeds of much inflationary trouble to come. In retrospect, Lawson considered that the content of his Budget had been right but admitted that ‘I was insufficiently cautious in my language: I did get carried away.’43 But this was not something which would damage the party’s immediate electoral prospects: quite the reverse. Because Lawson was such a master of his subject, it was often assumed that he was an ‘unpolitical Chancellor’. This was not the case: his background and interests were as much political as economic. No one worked harder to calculate how to win the election.
Naturally, Mrs Thatcher raised no objection to any of this. ‘The Sun is marvellous,’ she told Woodrow Wyatt. ‘It was the best on the Budget with its headline, “Look What a Lot You Got”.’44 She continued to feel confidence in her Chancellor. He was, thought Charles Powell, ‘in pretty good odour’.45 She admired most of his stewardship of the economy and valued his policy suggestions for the election manifesto. When he went to see her at Chequers to discuss the Budget plans at the beginning of February, he asked her directly whether she wanted him to continue as Chancellor after the election. ‘Yes; of course I do,’ she replied.46
There was only one fly in the ointment. At the beginning of the year, the A-Team considered the report from the policy group which Lawson chaired, ‘Managing the Economy’.47* Brian Griffiths sent her a note advising that all its recommendations were desirable, ‘with the exception of joining the ERM’.48 ‘This report’, he went on, ‘advocates a major change in tactics. It reaffirms that public expenditure needs to be controlled, but says nothing about the PSBR or the money supply. It does not even mention the MTFS. In its place it advocates a binding commitment to joining the ERM after the election.’ This would be dangerous as an election policy, said Griffiths, leading to ‘very damaging speculation’ in the markets: ‘Having won the election, there will be plenty of time to re-examine the case for ERM membership.’ Mrs Thatcher accepted this counsel, and neither she nor Lawson pushed the argument further at this stage. But she had clocked what he and Geoffrey Howe – who was also involved in the scheme – were up to.
She had some reason to feel ganged up against. The policy group report on foreign affairs, Europe and defence, which had arrived on her desk at the same time as the economic one, also mentioned the ERM. In a section marked ‘Liabilities’ in its conclusions, it lamented ‘our absence from the ERM of the EMS, which businessmen regret, and which is said to cloud our European credentials’.49 One unnamed person who thought it had this clouding effect was Howe. The almost complete absence of Howe from any election plans was a mark of how far he and Mrs Thatcher had drifted apart.*
Despite the improvement in Tory fortunes in the last quarter of 1986, agreement had not really been reached about how the election campaign – whenever it came – should be run. Tebbit and Michael Dobbs at Conservative Central Office were not at one with Mrs Thatcher, nor with those who were close to her on these matters – David Young and (behind the curtain) Tim Bell. In the new year, the first of a series of ‘war councils’ was held at Alistair McAlpine’s house, 17 Great College Street, three minutes’ walk from Parliament. The mere fact of the meetings was secret, since if the press had known of them election speculation would have got out of hand. Mrs Thatcher was smuggled into Great College Street, with Sherbourne, to meet Tebbit, Michael Dobbs and others from Central Office.50 Before the meeting, she had done her best to exclude Dobbs. ‘She couldn’t bear him,’ Tim Bell recalled; ‘she didn’t think he was very good.’51 But Sherbourne had pushed for his inclusion, insisting that Tebbit could not be expected to deal with all the Central Office questions alone.52 Mrs Thatcher had reluctantly agreed, but henceforth ensured Dobbs was not present at any of the ‘war councils’ she attended. There was no row at the meeting, and there was no real issue of ideological difference, or even of deep division about campaign strategy. It was less a matter of what Mrs Thatcher wanted than of whom she wanted. Particularly in relation to elections, which made her intensely anxious, she had to have people about her whom she had known for a long time and liked and trusted.
Since the Chequers meeting of April the previous year (see Chapter 15) – if not before – she had regarded Dobbs as the agent of Tebbit’s supposed challenge to her leadership. She punished him, rather than directly confronting his principal. ‘Saatchis had lent Michael to Norman, and I was none too happy about that,’ she recalled,53 as if Tebbit, Dobbs and Saatchis were all part of a plan to supplant or at least succeed her. In this she was not discouraged by Tim Bell, who regarded Dobbs as his opponent in his feud with Saatchis, or by Lord Young, who was seeking a bigger role.* For all his volatility, which made people like Cecil Parkinson uneasy about him and Tebbit turn against him, Bell did have a real gift for dealing with Mrs Thatcher. Parkinson himself recalled:
Tim amused her. He was also one of the very few people who could hint at the truth to her. He could say something like: ‘The public think you are very bossy,’ and he would know how to balance it by adding, ‘But they think you’re a great leader.’ As a result, she did listen to him.54
In Bell’s view, the great problem with the ‘That Bloody Woman’ presentation at Chequers the previous year had been that it had ‘made Margaret feel she was being told, “You’re the least important person in the Conservative Party” ’.55 His own approach, learnt from Gordon Reece, was the opposite. He saw it as his job to make her happy, to ‘deliver the things she liked’.56 Mrs Thatcher herself never quite understood – or possibly she affected not to understand – the problem of Bell versus Saatchis. As Parkinson put it, ‘she thought Tim was Saatchis.’57 She recalled, when writing her memoirs, ‘I remember, I had not much confidence in Saatchis. I said to them, “Look, I’ve never dealt with you before; I’ve always dealt with Tim Bell. Tim is a consultant to you and therefore I want to deal with him.” They found that very difficult, so I didn’t pursue it …’58 It was true that she did not pursue it further with Saatchis, but neither did she give it up. The ‘parallel operation’ which had begun early in 1986 never stopped. Mrs Thatcher approached the election campaign without ever deciding between her official and her unofficial advisers, or ever properly informing the former about the latter.
The other important figure influencing Mrs Thatcher was Alistair McAlpine, who was by now her longest and closest associate in the party set-up – ‘the only person’, according to Tim Bell, ‘whom she always used to see alone’ (because he told her confidential things about money).59 His value to Mrs Thatcher wa
s immense, as a generous host and a skilled treasurer who could bring in big businessmen and their large contributions to party funds, and also as a friend, who was not seeking anything from her in terms of extra office, power or access. Over the years, McAlpine had succeeded in seeing off the party chairmen – Thorneycroft and Gummer – who sidelined him, and had never lost his place in Mrs Thatcher’s affections. Close to Tim Bell and Gordon Reece, he felt some resentment against Tebbit, who wished to exclude them, and him. As Richard Ryder put it, ‘Cromwellian Tebbit didn’t grasp the scale of Cavalier McAlpine’s influence.’60 In a wily, low-key way, McAlpine knew how to talk people up or down with Mrs Thatcher.* It was he who, once Tebbit became chairman, had spread stories about his ambitions. ‘In so many words, he mentioned that Norman was doing his best but was rather losing the plot, campaign underpowered, never the same after Brighton.’61 In Ryder’s well-informed view, it was McAlpine who worked Bell back into Mrs Thatcher’s company, and proposed David Young as the effective replacement for Tebbit. Young’s diaries are full of glowing accounts of dinners and champagne with McAlpine. More than anyone, McAlpine opened Mrs Thatcher’s door for him. More than anyone, McAlpine made Tebbit seem to Mrs Thatcher both threatening and churlish. As Mrs Thatcher’s chief fund-raiser, he also had the power to pay for additional opinion research without the Chairman necessarily authorizing it.
On 15 March, David Young rang Mrs Thatcher at Chequers. By his own contemporary account,† he told her: ‘Prime Minister, I’d just like you to know that I’m concerned about things at Central Office. I don’t really think we are prepared … I would like to talk to you about ways in which I would help you and the campaign.’62 He also told her that the latest news on unemployment (a drop, seasonally adjusted, of 44,000) represented ‘the best unemployment figures since records were first kept’.63*