Much of the press comment on the budget was fiercely critical. Even before the 364 economists published their anathema, words like ‘disastrous’, ‘perverse’ and ‘economically illiterate’ were common currency. The majority of Tory MPs were said to be ‘bewildered and uneasy’.59 The smack of unpopular measures, however, was just what those who feared that the Government had lost its way were looking for. The Daily Telegraph hailed the budget as ‘bold, harsh and courageous’; The Times, rather more hesitantly, agreed.60 ‘Her enemies in the Cabinet and elsewhere began to realise that if she and Geoffrey could do what they had done, then they were far tougher and stronger than people had thought.’61 Speaking to the Conservative Central Council in Cardiff at the end of the month, Mrs Thatcher dramatically reaffirmed, in characteristically personal terms, her determination to hold the moral high ground. ‘I do not greatly care what people say about me… This is the road I am resolved to follow.This is the path I must go.’62 She won a standing ovation. Boldness was its own reward.
She had flattened the wets and she could always trounce Michael Foot in the House of Commons, puncturing his windy outrage with reminders of his own record laced with helpful quotations from Callaghan and Healey. Within weeks of the budget, however, two new developments occurred which were harder to deal with. First, at the end of March the Labour party finally split. The pro-European right led by Roy Jenkins (recently returned from Brussels) and three former Cabinet Ministers (Shirley Williams, David Owen and Bill Rodgers) sealed their disillusion with the leftward direction of the party and resigned to form a new Social Democratic Party (SDP), which immediately linked up with the Liberals and began to register high levels of support in the opinion polls. In July, at the new party’s first electoral test, Jenkins came within 2,000 votes of capturing the safe Labour seat of Warrington. The SDP’s direct challenge was to Labour; but the huge appeal of the new Alliance sent a warning to worried Tories of the danger of abandoning the middle ground. One Conservative MP crossed the floor to join the SDP, and all summer there were rumours that others might follow.
Second, beginning in April in Brixton, then spreading in July to other rundown areas of Liverpool, Birmingham and other cities, there was a frightening explosion of riots and looting on a scale not seen in Britain since Victorian times. This was precisely the sort of civil disorder that Prior and Gilmour had predicted if the Government was not seen to show more concern about unemployment. The riots seemed to confirm the conventional analysis that a level of 2.5 million unemployed was not politically sustainable, and increased the pressure from worried backbenchers for a change of policy.
Mrs Thatcher reacted characteristically to both challenges. She despised the SDP defectors for running away instead of fighting their corner in the Labour party. There was no room in her conviction politics for centre parties. In her memoirs she called them ‘retread socialists who… only developed second thoughts about socialism when their ministerial salaries stopped in 1979’.63 There was enough truth in this to make it an effective argument. Though the Alliance undoubtedly represented an unpredictable electoral danger to the Government, tapping a deep well of public distaste for both the ‘extremes’ of militant Labour and Thatcherite Conservatism, it lacked a clear political identity; while clarity was Mrs Thatcher’s principal asset. The SDP was just another gang of wets.
She was shaken by the riots, on two levels. First, she was genuinely shocked at the violence and destruction of property. Her famous exclamation, on seeing the extent of the damage, ‘Oh, those poor shopkeepers!’, was a heartfelt cry of identification with the victims.64 She felt no sympathy whatever with the rioters, or interest in what might drive a normally quiescent population to rebel. She was determined to treat the episode as a purely law-and-order matter, though she did allow Whitelaw, as Home Secretary, to appoint a liberal judge to inquire into strained relations between the local black population and the police.
The second wave of disturbances, which started in Liverpool on 3 July and spread over the next three weeks to Manchester, Birmingham, Blackburn, Bradford, Leeds, Derby, Leicester and Wolverhampton, involving young whites as well as blacks, was much more serious, since it could be interpreted not simply as an outbreak of local tension but as a political challenge to the Government. Now she was alarmed at a different level. One colleague observed that ‘the Prime Minister’s nerve seemed momentarily to falter’.65 On television she appeared unusually nervous and succeeded only in displaying the limitations of her law-and-order response. Two days later she visited Brixton police station and spent the night in the operations room at Scotland Yard to demonstrate her support for the police. She returned to Downing Street to impress on Willie Whitelaw the urgency of arming them with the latest American anti-riot equipment.
Back in the Commons she blamed the permissive society – and its godfather, Roy Jenkins. ‘A large part of the problem we are having now has come from a weakening of authority in many aspects of life over many, many years. This has to be corrected.’66 Prompted by a friendly backbencher, she condemned Jenkins’ dictum that ‘a permissive society is a civilised society’ as ‘something that most of us would totally reject. Society must have rules if it is to continue to be civilised.’67
In truth, Mrs Thatcher was very lucky. The riots that summer died down as suddenly as they had erupted, dissolved in a warm glow of patriotic sentiment surrounding the ‘fairytale’ wedding of the Prince of Wales to Lady Diana Spencer on 29 July. There was a further outbreak in September 1985. But there was no political violence directed against the Government until the anti-poll-tax demonstrations of 1990, which did help to destroy her. In 1981 she contrived to transform a potentially devastating crisis for her Government into a vindication of her own analysis of society. At the same time police forces were supplied with the most modern anti-riot technology: shields, truncheons, vehicles, rubber bullets and water cannon. This armoury was to prove as critical as the building up of coal stocks in the Government’s confrontation with the miners in 1984 – 5.
Mrs Thatcher was worried that summer. One of her staff was concerned at her ‘physical and mental exhaustion’;68 and David Wood in The Times suggested that the Iron Lady was ‘showing signs of metal fatigue’. Nicholas Henderson, visiting London from Washington at the beginning of July, found the Prime Minister ‘characteristically resilient, though worried by events in Ireland and the falling pound’. Even American Republicans, Henderson reflected, who once looked to Mrs Thatcher as ‘a beacon of the true faith’ now saw her as an awful warning, ‘a spectre that haunts them’.Yet he was still ‘impressed by her vitality and will’. Things might yet come right, he concluded. It was bound to take time. ‘It is not, therefore, the moment to lose faith in her.’69
Some who had hitherto supported her, however, were losing faith, or patience. Several senior Conservatives, including the party chairman Peter Thorneycroft, were beginning to call for a change of direction; and in July the revolt reached the Cabinet. The one concession the wets had managed to wring from their defeat in March was a promise that the Cabinet should never again have the budget sprung on them without advance warning, but should be allowed to discuss broad economic strategy in advance. Mrs Thatcher agreed reluctantly as a sop to Geoffrey Howe, who felt that Prior and Gilmour had ‘some justification’ for feeling excluded from ‘a secretive monetarist clique’; he believed that, given a more collegiate style, he could persuade them that there was no alternative to his policy.70 Howe’s faith in his power of advocacy did him credit; but Mrs Thatcher’s political sense was more acute. The first test of the new openness demonstrated exactly why she had been right to fear it.
Howe and Leon Brittan produced a paper proposing a further package of spending cuts for 1982 – 3.They were supported by Keith Joseph but by virtually no one else. Practically the whole of the rest of the Cabinet rebelled. Most seriously, from Mrs Thatcher’s point of view, two of her original handful of ‘true believers’, John Biffen and John Nott, defected. But Biff
en, though a monetarist by long conviction, was always sceptical by temperament and had been making damp noises for some time. It was Nott’s desertion which most upset the Prime Minister. Hitherto she had seen him as her next Chancellor. Now she felt that he had been infected by ‘the big-spending culture’ of the Ministry of Defence.71 The defection of Nott and Biffen left the Prime Minister and Chancellor dangerously isolated.
At this potential crisis of her premiership Willie Whitelaw’s position was crucial. As Home Secretary he had borne the full impact of the summer riots; he did not believe they had nothing to do with Government policies. Now, if ever, was the moment when he might have exerted his influence, without disloyalty, on the side of an easing of policy. In fact he stayed true, vainly urging loyalty on the rest of the Cabinet. With his protection, Mrs Thatcher was able to close the meeting without conceding any ground, promising that the discussion would be resumed in the autumn.
But that Cabinet never met again. The July revolt convinced her that she must assert herself or lose control of the Government. After two years she could legitimately drop some of those she had felt obliged to include in 1979. So in September – after the summer holidays but before the party conference – she struck. Yet once again she showed caution in her choice of victims, picking off only those of the wets – Gilmour, Soames and Education Minister Mark Carlisle – who had least following in the party. Gilmour went with the most style, marching out of Downing Street to announce that throwing a few men overboard would not help when the ship was steering ‘full steam ahead for the rocks’.72 Soames’ outrage could be heard across Horse Guards’ Parade. Carlisle was probably less surprised to be sacked than he had been to be appointed in the first place. But Mrs Thatcher wanted his job for Keith Joseph, who specifically requested Education when he earned his release from the Department of Industry.
Paradoxically, the biggest casualty of the reshuffle was Jim Prior, who remained in the Cabinet. He was clearly earmarked for a move, since Mrs Thatcher was determined on another measure of trade-union reform. Over the summer Downing Street let it be known that he was going to be offered Northern Ireland. Prior in turn told the press he would refuse. But Mrs Thatcher called his bluff. When it came to the point he could not refuse the poisoned chalice of Northern Ireland without appearing cowardly. In his memoirs he confessed ruefully that he had been outmanoeuvred. ‘That is probably why she was Prime Minister and I was certainly never likely to be.’73 More than the sacking of Gilmour and Soames, it was her trumping of Prior that showed the surviving wets who was boss.
Meanwhile, she used the vacancies she had created to shift the balance of the Cabinet to the right. In a wide-ranging reshuffle, three new entries were particularly significant. Nigel Lawson went to the Department of Energy, to give new impetus to the privatisation of gas and ensure that the Government was ready the next time the miners threatened to strike; Norman Tebbit took over at Employment; and Cecil Parkinson, to general amazement, was plucked from a junior post in the Department of Trade to replace Thorneycroft as party chairman, with the additional job of Paymaster-General. In addition Patrick Jenkin moved to Industry and Norman Fowler began what turned out to be a six-year stint at the DHSS. David Howell moved from Energy to replace Fowler at Transport, while Mrs Thatcher picked Janet Young, the only other woman she ever appointed to the Cabinet, to take Soames’ place as Leader of the Lords.
For the first time she had a Cabinet of whom perhaps nine or ten – out of twenty-two – were ‘true believers’. Yet the autumn brought very little respite. The party conference gathered in Blackpool in an atmosphere of crisis, fuelled by the worst opinion-poll ratings of any Government since the war, a stock market crash, another rise in interest rates (back to 16 per cent) and a powerful intervention by Ted Heath, lending his voice to the chorus calling for a national recovery package to tackle unemployment. Heath was coolly received and was effectively answered by Howe, who quoted back Heath’s own 1970 pledge to put the conquest of inflation first, ‘for only then can our broader strategy succeed’. ‘If it was true then,’ Howe argued, ‘when inflation was half as high, it is twice as true today.’74 Howe won a standing ovation.
Two days later Mrs Thatcher’s own speech was unusually conciliatory. Yet she gave no ground where it mattered. She repeated that she would not print money to buy illusory jobs at the cost of further inflation. ‘That is not obstinacy,’ she insisted. ‘It is sheer common sense. The tough measures that this Government have had to introduce are the very minimum needed for us to win through. I will not change just to court popularity.’75 If her delivery was gentler than the previous year, she made it plain that the Lady was still not for turning. She too got her usual rapturous reception. Not for the first or last time, the party faithful at conference backed her against the parliamentary doubters.
The same slight softening of tone was detectable when the Commons returned at the end of October. Labour immediately tabled a confidence motion. Mrs Thatcher had no difficulty demolishing Foot’s emotional demands for a full-scale Keynesian reflation. ‘His recipe is to spend more, borrow more, tax less and turn a blind eye to the consequences. He wants all that,’ she mocked, ‘and he wants a reduction in interest rates!’ But she also met her Tory critics by taking credit, for the first time, for the fact that public spending had not fallen, but was actually some £3 billion higher than the Government’s initial plans. ‘To accuse us of being inflexible is absolute poppycock,’ she declared. ‘We have increased public spending, but not to profligate levels.’ As a result, she concluded, ‘I believe that underneath the surface and beginning to break through is a spirit of enterprise which has lain dormant in this country for too long.’76
Still the Government’s position in the country remained precarious, as the Alliance bandwagon gathered a heady momentum. First the Liberals won North-West Croydon, the Government’s first by-election loss. Then, a month later, Shirley Williams swept aside a Tory majority of 18,000 to win the well-heeled Lancashire seat of Crosby for the SDP. This was a landslide of a wholly different order, suggesting that no Tory seat was safe. December’s Gallup poll gave the Alliance 50 per cent, with Labour and the Conservatives equal on 23 per cent. The Government’s approval rating was down to 18 per cent and Mrs Thatcher’s to 25 per cent: she was now the most unpopular Prime Minister since polling began. Admittedly Michael Foot was even more unpopular; but with a credible third force for the first time offering a serious alternative to the Labour/ Conservative duopoly, it would take more than just a normal swing back to the Government to secure Mrs Thatcher’s re-election.
In fact the end of 1981 was the nadir of her popularity. Despite unemployment hitting three million in January, there were some shoots of economic recovery – output was rising, inflation continued to fall and interest rates fell back again – and the polls responded. ‘We are through the worst,’ she claimed in an end-of-year message.77 By the spring the Alliance had slipped back and the three parties were roughly level-pegging at 30 – 33 per cent each. This is the basis for the claim that the Government was already on the way back before the Falklands war changed everything. Clearly it is true up to a point. Alliance support had hit a peak in December which it could never have sustained; but it gained a fresh boost with Roy Jenkins’ stunning victory at Glasgow, Hillhead, in March 1982 – just a week before the Argentine invasion of the Falklands. There is no reason to think that the Alliance was about to fade away. Three-party politics introduced an unpredictability into election forecasting which makes it impossible to say that the Tories, without the Falklands, could not have won a second term. But it is most likely that no party would have won a majority in 1983 or 1984. Mrs Thatcher’s popularity may indeed have touched bottom at the end of 1981. The economy may have been beginning to recover. But her Government was still desperately beleaguered when events in the South Atlantic turned the whole landscape of British politics upside down.
13
Salvation in the South Atlantic
Falklands or Malvinas?
THE Argentine invasion of the Falkland Islands on 2 April 1982 was by far the greatest crisis Mrs Thatcher ever faced. After nearly three years of mounting unemployment, a record level of bankruptcies and unprecedented public disorder, she was already the most unpopular Prime Minister in living memory, with a huge mountain to climb if she was to have any hope of being re-elected. If nothing else, however, she had taught the public to see her as the Iron Lady: she presented herself above all as a champion of strong defence, a resolute defender of British interests and British pride. Failure to prevent the seizure of British territory by a tinpot South American junta could easily have been the end of her. Instead, over the following ten weeks, she turned potential national humiliation to her advantage and emerged with an improbable military triumph which defined her premiership and set her on a pedestal of electoral invincibility from which she was not toppled for another eight years.
Yet it was a deeply ironic triumph, since it should not have been necessary at all but for serious errors by her own Government in the previous two years. Mrs Thatcher snatched victory out of a disaster caused by her own failure, for which she might easily have been arraigned before Parliament for culpable negligence. Not only that, but the result of her military recovery was to land Britain indefinitely with precisely the expensive and burdensome commitment which successive Governments had quite properly been trying to offload. By any rational calculation of political results the Falklands war was a counterproductive folly. Yet it was a heroic folly, the sort of folly of which myths are made, and, instead of finishing her, it was the making of her.
The Iron Lady Page 24
