Britain under Thatcher

Anthony Seldon, Daniel Collings

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317882916
• Edition: 1
• Topic: Storia
• Subtopic: Storia mondiale

This concise, accessible, and balanced historical analysis of the Thatcher years and their consequences analyzes many controversial aspects of Margaret Thatcher's premiership, including the Falklands War, the miner's strike, bitter relations with Europe and the ill-fated poll tax. Books in this Seminar Studies in History series bridge the gap between textbook and specialist survey and consists of a brief "Introduction" and/or "Background" to the subject followed by a substantial and authoritative section of "Analysis" focusing on the main themes and issues. There is a succinct "Assessment" of the subject, a generous selection of "Documents" and a detailed bibliography.

PART ONE: INTRODUCTION

1 THE ROAD TO 1979

DOI: 10.4324/9781315840451-1

When Margaret Hilda Roberts was born on 13 October 1925, Stanley Baldwin was the Conservative Prime Minister. Her parents had both been born when Conservative premiers were in power. She went to Oxford when the great Conservative war leader, Winston Churchill, was Prime Minister, and the year she married Denis Thatcher, 1951, saw Churchill return to defeat Labour and usher in thirteen years of Tory rule. She became an MP in 1959, representing Finchley, when another long-serving Conservative, Harold Macmillan, was premier, and under him, and later the aristocratic Tory Prime Minister, Alec Douglas-Home (1963–64), became a junior government minister. She was truly a product of the Conservative century, while her own subsequent political career helped ensure that the Tory domination of the century would continue over its last two decades.

MRS THATCHER'S POLITICAL RISE

Mrs Thatcher’s promotion through the party was swift. Her diligence, single-mindedness, intelligence and immense capacity for hard work, as well as her indisputable loyalty, made her an inevitable candidate for senior office, overcoming whatever obstacles might have been posed by her gender and her lack of public school education and membership of ‘old boy’ networks. Appointed to ‘shadow’ the education area when the Labour Prime Minister Harold Wilson was in power, she became Education Secretary after the June 1970 general election.

The new Conservative Prime Minister, Edward Heath, left her a largely free hand [20 p. 447] and she became a capable if occasionally controversial Education Secretary, most notably by abolishing free school milk to all primary children aged over seven, which resulted in her first serious attack from media and public as ‘Thatcher, the milk snatcher’. What tends to be forgotten is that she agreed this cut only to save the Open University. Some elements of her later ideological stances could be detected at this time, notably a suspicion of civil servants for being ‘socialist’ [29 p. 166] and the doubts she raised about parts of the 1972 Industrial Expansion Act, which made too many concessions to socialism for her liking. But she also battled with Cabinet to increase the education budget, and gave little indication, other than her acute tenacity and an impatience with waste and incompetence, of her future quality and outlook.

CHALLENGE FOR THE PARTY LEADERSHIP (FEBRUARY 1975)

The loss of the February 1974 election, and Heath’s failure to adopt new ideas in opposition, proved decisive turning points for Mrs Thatcher. Granted more time to think by being relieved of office, Mrs Thatcher threw herself into a ferment of intellectual analysis. What, she asked herself, had gone wrong with government: why was it so incapable, as proved by the administrations of both Wilson and Heath, of running an efficient economy, keeping down inflation, and standing up to trade unions? Key in this process of analysis was the new office or ‘think tank’, the Centre for Policy Studies (CPS) that was founded in 1974. Mrs Thatcher and Keith Joseph played an important role in the early activities of the CPS, and to Heath’s annoyance, Mrs Thatcher became its vice chairman that June. Joseph had been another high-spending minister under Heath during 1970–74 (as Health and Social Security Secretary) but travelled his own ‘road to Damascus’ very shortly after the February 1974 election defeat. He later spoke about scales being removed from his eyes to allow him at last to see the truth, which was all about ‘escaping the chrysalis of socialism’ [70 p. 16].

Joseph was very important to Mrs Thatcher’s own political development, as she later was fulsomely to acknowledge, although the first roots for what was to become Thatcherism probably date back to her earlier associations with the Institute of Economic Affairs (IEA), a right-wing think tank. Joseph helped her to see the limitations of the Keynesian social democratic, consensus-style thinking which had characterised government policy since 1945 [62 p. 152], and which had been pursued by both Labour and Conservative governments. The size of the state sector as a result had risen inexorably year on year, giving great power to civil servants, but choking, he argued, the private sector and individual freedom. In the place of ‘consensus’ policies, Joseph was attracted to an alternative set of policy prescriptions, dating back to the classical economists of the nineteenth century and earlier, but championed more recently by thinkers like F. A. Hayek and economists like Milton Friedman, by international bodies like The Mont Pelerin Society (founded 1947) and in Britain by the Institute of Economic Affairs (IEA, founded 1957).

The new thinking – not all of which saw the light of day at this time – saw big government as the problem, not (as socialists believe) the solution. At its heart was a commitment to monetarism_ the view that the sole cause of inflation was the willingness of government to create an excessive money supply. It rejected the notion that wage increases were the ultimate cause of inflation and hence that incomes policies – unpopular and often politically disastrous for their creators – were necessary or effective to control it.

Excessive trade union power was seen as an important cause of Britain’s industrial decline relative to its rivals. Dropping incomes policy would make it possible to reform the trade unions since union acquiescence in economic policy would cease to be necessary, and so the balance of power in industry could be switched back from unions to management – a prospect that generated support for monetarism among Conservatives and others who had no interest in, or understanding of, economic theory.

The final component of the new thinking was a general attack on public expenditure and the huge state sector, which made up over 20% of the British economy in 1979. By controlling public spending while the economy grew, taxes could be cut and profits and incentives to enterprise restored. Inefficient state monopolies in the nationalised industries would be sold into the private sector and opened up to private sector disciplines, reducing state subsidies and possibly even generating tax revenue. The welfare state would be subject to reform to increase incentives to work and remove (or reduce) dependency, helping to contain public spending. What Keith Joseph called the ‘ratchet effect’ of socialism would be checked and then reversed.

All this was radical stuff, and complete anathema to Heath and other traditional Tories. It appealed to neither the traditional moderate, ‘One Nation’ Tories, nor indeed to the traditional ‘old’ right wing, which had strong upper-class roots and which hankered after a vision of Britain as head of a great empire run by all-knowing Tories. But it was the loss of the second election, in October 1974, and Heath’s continuing aloofness from his backbenchers, rather than an ideological reaction against his consensual brand of ‘One Nation’ Conservatism that finally sealed Heath’s fate. After that second election defeat a leadership election became almost inevitable.

When Joseph decided that he himself was unsuitable to challenge Heath for the leadership, and when Edward Du Cann, Chairman of the ‘1922 Committee’ of Conservative backbenchers, ruled himself out for personal reasons, Joseph’s protégé, Mrs Thatcher, took up the cudgels and announced that she would take on Heath.

Mrs Thatcher’s position in the leadership stakes, and her self-esteem, were bolstered by her commanding performance in the House during the debates on the Finance Bill during the winter of 1974–75. Her campaign platform, however, proved to be cautious in terms of specific policies, although she was not afraid of making her distinctive Tory first principles clear. However, little emphasis was placed on these principles, as many Tory MPs and commentators doubted she would act on her rhetoric. Her platform was thus perceived as cautious with a stress on the new consultative style of leadership that she promised.

The first round of the leadership election in February 1975 saw her achieve the votes of 130 Tory MPs as against Heath’s 119, a clear indication that the Parliamentary party wanted a change of leader, but not necessarily that they wanted Mrs Thatcher. The ultra-safe Old Wykehamist, chairman of the party, and key establishment figure of William Whitelaw was her most senior challenger in the second round. She won with 146 votes, less because of approval (or even much understanding) of her new political creed and more due to a rejection of the past (Whitelaw was a ‘One Nation’ Tory, and very closely identified with Heath) and the highly skilful management of her campaign by the Tory MP Airey Neave. As the commentator Peter Riddell wrote: ‘Mrs Thatcher became leader of the Conservative Party in February 1975 principally because she was not Edward Heath, not because of a widespread commitment to her views. She was the only senior candidate willing to challenge Mr Heath at a time when the majority of Tory MPs wanted a change’ [66 p. 21].

PREPARING FOR POWER (1975–79)

Mrs Thatcher had become the first ever woman to lead the Tory Party, and to the surprise of many had won by a comfortable margin. But she had far from won over the party to her thinking. The struggle for the intellectual hegemony of the party was to be aptly dubbed in the early years of her government as a struggle between the ‘dries’, the allegedly hard-nosed figures like Mrs Thatcher and Keith Joseph who thought that uncompromising measures were necessary before Britain recovered its economic position, not to mention moral fibre, and the ‘wets’ or ‘One Nation’ Tories, who preferred the Keynesian-style policies of Macmillan, Home and Heath, and who were not prepared to institute tough measures if it meant unemployment or social disadvantage rising to unacceptably high levels.

The balance in Mrs Thatcher’s ‘Shadow Cabinet’ was undoubtedly ‘wet’. Only two key Heath figures left the Shadow Cabinet, Robert Carr and Peter Walker, and the body remained unashamedly full of ‘Heathites’. Very few were subscribers to the new thinking, Keith Joseph, Geoffrey Howe, Angus Maude and John Biffen being prominent among this minority. The heavyweights – Whitelaw, Ian Gilmour, Lord Carrington, Francis Pym, Jim Prior – were almost all wets. She came under attack, from outside her Shadow Cabinet, from Peter Walker, for putting too much belief in monetarist economics in 1976, and from insiders such as Gilmour, who disliked her attempt to implant, as they saw it, unwelcome strands of ‘alien’ thinking into traditional Tory Party philosophy. Heath attacked her too, with increasing bitterness, but over time he lost credibility and came to be seen as a bad loser.

Mrs Thatcher thus had to move stealthily, coaxing and cajoling her Shadow Cabinet behind her. The 1976 policy statement The Right Approach was followed in 1977 by The Right Approach to the Economy’, committing the party to a more free enterprise line than many ‘wets’ would have liked, but refusing to rule out an incomes policy and falling short of the thoroughgoing capitalism and anti-trade unionism the more ardent ‘dries’ and free enterprise think tanks like the CPS and IEA were advocating.

While the Tories hounded the Labour government of James Callaghan, who succeeded Wilson as Prime Minister in April 1976, their task became easier both due to Callaghan’s loss of a parliamentary majority, and to internal Labour divisions over economic policy and devolution. Policy groups and discussions had been taking place in earnest during 1976 and 1977, although Mrs Thatcher was anxious to avoid what she considered to be Heath’s mistake during his own period as opposition leader (1965–70) of producing too many detailed policies. By mid-1978, a draft manifesto was written in the likely event of an autumn election, which polls showed, after dreadful showings in 1976 and 1977, that Labour had a chance of winning. But, to general surprise, Callaghan decided to delay the election until the following year, eventually being forced to call it when he lost a Commons vote of confidence at the end of March 1979.

THE 1979 ELECTION

The Conservatives’ 1979 manifesto, uninspiringly entitled The Conservative Manifesto 1979, was, as Mrs Thatcher wished, high on general principle, but light on specific commitments. There was, for example, no specific pledge to ‘privatise’ (i.e. return to private ownership) any of the large number of nationalised industries. The manifesto did, however, promise to reduce government spending, to toughen rules governing trade unions, and to control the money supply (monetarism). The delay in calling the general election until after the winter proved to be a fatal procrastination for Labour. The trade unions rebelled against the Labour government’s attempt to hold down wages with their incomes policy, and high-profile strikes during the ‘winter of discontent’, for example by lorry drivers, hospital porters and grave diggers, gave the impression of a government, and a country, out of control.

The delay in the date of the election until 3 May gave the Conservatives a chance to revise their draft manifesto, notably by a toughening of passages on trade unions in reaction to the ‘winter of discontent’. The loss of government authority, a theme of the whole 1970s, but underlined by the events of the previous winter, had played largely into Mrs Thatcher’s hands. She could portray the Tories as the party of law and order, offering Britain a new start after a prolonged period of chaos amounting almost to anarchy. ‘Popular capitalism’ was dangled before the electorate with promises of sharp cuts in income tax and the prospect of tenants being able to buy their own council houses, the latter a proposal put to, and rejected by, Callaghan. Furthermore, building on the highly effective ‘Labour isn’t working’ poster, devised by the advertising agency Saatchi and Saatchi and which first appeared in the summer of 1978, the Tories continued to strike at one of Labour’s most sacred promises, to be the party to protect the working class [Doc. 1].

In the election, the Conservatives won 339 seats to Labour’s 269, with the Tories’ percentage of the vote compared to October 1974 rising from 35.8 per cent to 43.9 per cent, the largest swing of votes away from the other main party between 1945 and 1997. Mrs Thatcher won with an overall majority of 43. Yet, as studies showed [38 p. 340], the election result was better explained by a discredited government losing the election rather than a challenger winning it on the back of a popular fresh set of policies. As Mrs Thatcher had found after she became party leader in February 1975, winning was only the beginning of her struggles: she still had much left to prove, and many ‘enemies’ to outwit.

PART TWO: ANALYSIS

2 ESTABLISHING HEGEMONY

DOI: 10.4324/9781315840451-2

APPOINTING A GOVERNMENT (1979)

At 2.45 pm on 4 May 1979 Margaret Thatcher was called to Buckingham Palace to be asked by the Queen to form a government. By 11 pm that evening the new Prime Minister had finalised the composition of her first Cabinet: within 48 hours the ministers of state and junior ministers had been decided and with it the final composition of the team that would launch her premiership.

Four years of hard work as opposition leader, against first Harold Wilson and from April 1976 James Callaghan, had paved the way for this hour. The period had been formative, honing both her free market view on policy and also her unequivocal views of leadership. By 1979 she seemed to be ready to force her own ideas on the party, stating in a celebrated interview for The Observer that ‘it must be a conviction government. As PM I could not waste time having any internal arguments’ [6 25.2.79].

However, her bold claim fell short of the reality of much of her first administration (1979–83). Although, despite press speculation [1 5.5.79], Heath himself was not appointed, a broad spectrum of party opinion was represented in the 1979 Cabinet. Her Cabinet was largely a replica of the Shadow Cabinet that she led into the 1979 election, with a large proportion of the personnel transferred, even if they did not all hold the same posts.

The Cabinet thus contained a strong representation of Heathites, such as Lord Carrington (Foreign Secretary), Jim Prior (Employment), Francis Pym (Defence), Ian Gilmour (Lord Privy Seal), Michael Heseltine (Environment), Norman St. John Stevas (Arts) and Mark Carlisle (Education). Of particular significance was the appointment of Peter Walker as Minister of Agriculture as Walker was a very close friend of Heath and had not been included in her Shadow Cabinet. Mrs Thatcher explains Walker’s appointment in her memoirs: ‘His membership of the Cabinet demonstrated that I was prepared to include every strand of Conservative opinion in the new Government, [on the other hand,] his post [demonstrated] that I was not prepared to put the central economic strategy at risk’ [28 p. 28].

Her point about the ‘central economic strategy’ is indicative. While only a minority of the Cabinet shared Mrs Thatcher’s own free market ideas, this minority was strategically placed to ensure that she and her acolytes retained control of what she considered most important: economic policy.

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