Margaret Thatcher: The Autobiography (34 page)

I can say little in favour of either of Harold Wilson’s terms as Prime Minister. Doubtless he had principles, but they were so obscured by artful dodging that it was difficult for friends and opponents alike to decide what they might be. Yet I had always liked him personally; I had appreciated his sense of humour, and was aware of his many kindnesses. He was a master of Commons repartee, and I usually scored nothing better than a draw against him in the House. This would continue to be the case with his successor, Jim Callaghan. He adopted in the House a manner that appeared avuncular, was in fact patronizing and made it hard for me to advance serious criticism of government policy without appearing to nag. In a larger sense, Mr Callaghan in those years was a sort of moderate disguise for his left-wing party and its trade union backers. As a result, he articulated views and attitudes – on education, family policy, law and order etc. – which were never embodied in government policy. Tactically brilliant, he was strategically unsuccessful – until eventually in the Winter of Discontent the entire house of cards that was Labour moderation collapsed.

Meanwhile, the state of the economy was worsening. In February 1976 the Government had announced spending cuts of £1,600 million for 1977/78 and £3,000 million for 1978/79 (in today’s terms the equivalent of £6,000 million and £11,500 million). Impressive though this might sound, it amounted to no more than a modest cut in large planned increases. In December 1975 the International Monetary Fund had granted an application for stand-by credit to tide over Britain’s finances. Even so, in March there was a full-scale sterling crisis. The pound came under heavy pressure yet again in June, and more international stand-by credit had to be obtained, repayable in six months, failing which Britain agreed to apply again to the IMF. Inflation was falling by then, but large negative interest rates, combined with the failure to make real cuts in public spending and borrowing, prevented the Government from getting to grips with its underlying financial and economic problems. The new sterling crisis in September, which would lead to the humiliating abdication of control over our economy to the IMF, was the final result of an entirely justified loss of confidence by international markets in the Labour Government’s handling of the economy.

It might be expected that all of this would make an Opposition’s life easier, no matter how bad it was for the country. But that was not so.

We were expected to support the Labour Government’s hesitant and belated moves to apply financial discipline. That was fair enough. But we were also under a more general pressure to be ‘responsible’ in dealing
with the Labour Government’s self-contrived tribulations. However commendable, this inevitably cramped my attacking style.

All in all, the regular Party politics of 1976 were frustrating and inconclusive.

The Right Approach
, which we published on the eve of the 1976 Conference, gave a persuasive account of the new Conservatism. Indeed, it still reads well and, stylistically at least, ranks with
Change is Our Ally
as one of the best-written documents produced by the post-war Conservative Party. The credit for this must go to Chris Patten and Angus Maude who, with Keith Joseph, Geoffrey Howe and Jim Prior, drafted it.

It was helped by the fact that a truce had been reached in the internal arguments about where we all stood on incomes policy. A speech by Geoffrey Howe to the Bow Group (a Conservative ginger group) in May 1976 provided an agreed ‘line to take’ which was broadly followed in
The Right Approach.
The document pointed out that prices and incomes policies did not offer a long-term solution to inflation, while noting that it would be unwise ‘flatly and permanently’ to reject the idea, and nodding favourably in the direction of the West German system of ‘concerted action’. It was a fudge – but temporarily palatable.

But it was the fact that
The Right Approach
concentrated on the big general arguments, restating what differentiated our approach from that of socialism, that made it the success it was. It received a good press, not least because I and my colleagues put in considerable effort to explain it to the editors beforehand.

The success of
The Right Approach
illustrates an important paradox about the whole of this period. For a variety of reasons, we were not a particularly successful Opposition in the ordinary sense of the word. Differences kept on emerging between us. We were usually unsuccessful in the House of Commons. We found it difficult to capitalize on the Government’s mistakes. Yet on the higher plane of belief, conviction and philosophy we were extremely effective. We were winning the battle of ideas which was the necessary preliminary not just to winning the election but to winning enduring popular support for the change of direction we wanted to make. Keith Joseph’s speeches continued to put over the powerful themes he developed in the CPS. In March he delivered a speech in Harrow which took head-on the Government’s claim that high public expenditure was necessary for high levels of employment. In fact, as Keith pointed out:

I wrote the introduction to the published version of Keith’s Stockton Lecture, entitled
Monetarism is Not Enough
, which appeared a few months later. Since monetarism was far from accepted by most members of the Shadow Cabinet, this title was a deliberately bold way of expressing an important truth. It was ‘not enough’ to exert monetary control alone; if we also failed to cut public expenditure and public borrowing, the whole burden of disinflation would then be placed on the wealth-creating private sector.

Alfred Sherman, who had assisted Keith with his Stockton Lecture, helped me draft the speech I made to the Zurich Economic Society on Monday 14 March 1977. Although delivered in Switzerland, it was aimed very much at the domestic audience. Alfred and I worked particularly hard on the text, which took an optimistic view of Britain’s future, arguing that:

There was a growing crisis of confidence in Labour, and the polls showed us more than ten points ahead. By-election victories at Walsall North and Workington with big swings to us would shortly confirm the picture. It was at this juncture that talk of a coalition began again among those Conservatives determined at all costs to snatch defeat for me from the jaws of victory.

Harold Macmillan went on television to call for a ‘Government of National Unity’. Nor, it seemed, was there much doubt in his mind about who should be called back to lead it. I thought that I had better go and
talk to him to see what he really thought, and it was arranged that we should meet in Maurice Macmillan’s house in Catherine Place. I arrived early and waited upstairs in the sitting room. I heard Maurice’s father arrive and say to him: ‘Has the call come?’ Maurice said: ‘No, not quite.’ He had to make do with me. Our meeting was pleasantly inconclusive, with Macmillan urging me not to be too critical of the Government at a time of crisis. And the only call was that eventually made to the IMF.

I now decided to make some changes of my own. Reggie Maudling’s performance as Shadow Foreign Secretary had long been a source of embarrassment. He did not agree with my approach to either the economy or foreign affairs; he was increasingly unwilling to disguise his differences with me; and he was laid back. But when I told him that he had to go, he summoned up enough energy to be quite rude.

I also wanted to move Michael Heseltine out of Industry and replace him with John Biffen. When not overreacting, Michael was an effective scourge of the Government, and he was certainly passionately interested in his brief at Industry. The trouble was that his outlook was completely different from anything recognizably Conservative. For example, in January 1976 he made a speech criticizing Labour ministers for failing to meet sufficiently often ‘to agree and develop an industrial strategy for this nation’. His real criticism seemed to be that the Labour Party intervened in industry and picked losers whereas he would intervene and pick winners. The notion that the state did not and could not know who
would
win or lose, and that in intervening to back its own judgement with taxpayers’ money it was impoverishing the economy as a whole, seemed never to have occurred to him. Again, however, when I asked Michael to leave Industry and go to Environment, he said that he preferred not to. I sent my PPS, John Stanley, who knew him well, off to negotiate, and Michael reluctantly agreed to make way for John Biffen on the understanding that he would not have to be Secretary of State for the Environment once we were in power. That settled, the rest of the changes could now go ahead. I asked John Davies to take over from Reggie on Foreign Affairs, where until illness tragically struck him down, he worked hard and effectively.

It was important to have an energetic and effective front-bench team because there seemed a growing likelihood that we might soon be asked to become a government. On Wednesday 15 December Denis Healey introduced a further mini-budget. He announced deep cuts in public spending and borrowing, and targets for the money supply (though
expressed in terms of domestic credit expansion), as part of the deal agreed with the IMF. It was, in fact, a monetarist approach of the sort which Keith Joseph and I believed in, and it outflanked on the right those members of my own Shadow Cabinet who were still clinging to the outdated nostrums of Keynesian demand management. True to the tactic of not opposing measures necessary to deal with the crisis, we abstained in the vote on the measures. The IMF-imposed package was a turning point, for under the new financial discipline the economy began to recover. In party political terms this was a mixed blessing. On the one hand, discontent with the Government’s economic stewardship would diminish and support was likely to swing back towards Labour. On the other, we could now argue that socialism as an economic doctrine was totally discredited and that even the socialists were having to accept that reality was Conservative.

The political uncertainty made everyone jittery. The Government no longer had an overall majority. No one knew how members of the smaller parties might vote on any particular issue. It was frustrating enough even for those of us who were kept informed of the changing parliamentary arithmetic by the whips. But it was all but incomprehensible to Conservative supporters in the country, who could not understand why we were unable to inflict a fatal defeat and bring about a general election. In fact, on Tuesday 22 February 1977 the Government was defeated on a guillotine on the Scotland and Wales Bill. The end of any immediate hope of achieving devolution in Scotland and Wales caused the Scottish and Welsh Nationalists to withdraw their support from the Government. A new parliamentary crisis – one in which the Government had ceased to have even a working majority – was upon us.

Ted had originally committed the Conservatives to devolution at the Scottish Party Conference in May 1968, following a surge in support for the Scottish Nationalist Party (SNP) – a short-lived surge, as it turned out. Ted’s ‘Perth Declaration’ came as a shock to most Conservatives, including those in Scotland. I was never happy with the policy and there was little enthusiasm for it among English Tories generally.

After the general election, Ted became convinced that the Party should offer devolution to Scotland as a way of winning back lost support and appointed Alick Buchanan-Smith as Shadow Scottish Secretary with a brief to do so. Anxieties about the way in which the Party had been bounced into the new policy had never been far below the surface.

This was the situation I inherited as Leader. Ted had impaled the Party on an extremely painful hook from which it would be my unenviable task to set it free. As an instinctive Unionist, I disliked the devolution commitment. But I realized that so much capital had by now been invested in it that I could not change the policy immediately. Had I done so, there would have been resignations which I simply could not afford. For the moment I would have to live with the commitment.

The Government’s White Paper which proposed directly elected Assemblies for both Scotland and Wales was published in November 1975. But the Shadow Cabinet was deeply divided as to how to deal with it.

The arguments continued in 1976. I now began to harden our opposition. In November, when the Bill was published, I had dinner with a constitutional lawyer, Professor Yardley of Birmingham, to discuss its details. I also saw a good deal of the constitutional scholar Nevil Johnson. The more I heard and the more closely I read the Bill, the more dangerous it appeared to the Union. It was a prescription for bureaucracy and wrangling, and the idea that it would appease those Scots who wanted independence was becoming ever more absurd. Moreover, a private poll conducted for the Party in November 1976 confirmed my suspicion of the electoral arguments for devolution. Scottish opinion was highly fragmented: the Government’s devolution plans had only 22 per cent support – less than our own (26 per cent), and less even than ‘no change’ (23 per cent). Only 14 per cent favoured independence. A far-reaching constitutional change required much more public support than that.

In November/December 1976, with the Bill about to come before the House for Second Reading, there were four long discussions in Shadow Cabinet about whether or not to impose a three-line whip against it. Our position could be fudged no longer. In addition to the overwhelming majority of our backbenchers, most Shadow ministers were by now opposed to devolution, at least on any lines similar to those contained in the White Paper. But there was a rooted belief among its supporters that devolution was the only way of heading off independence, and even some of those who disliked it intensely were wary of appearing to be anti-Scottish or of being seen to overrule the Scottish Tory leaders. In the end, in a marathon meeting ending in the early hours of Thursday 2 December we decided – with a significant dissenting minority including Alick Buchanan-Smith – that we would oppose the Bill on a three-line whip.