Margaret Thatcher: The Autobiography (46 page)

At that first informal Cabinet we began the painful but necessary process of shrinking down the public sector. We imposed an immediate freeze on all civil service recruitment, though this would later be modified and specific targets for reduction set. We started a review of the controls imposed by central on local government, though here, too, we would in due course be forced down the path of applying still tougher, financial controls, as the inability or refusal of councils to run services efficiently became increasingly apparent.

Pay and prices were an immediate concern. Professor Hugh Clegg’s Commission on Pay Comparability had been appointed by the Labour Government as a respectable means of bribing public sector workers not to strike with postdated cheques due to be presented after the election. The Clegg Commission was a major headache, and the pain became steadily more acute as the cheques fell due.

As regards pay bargaining in the nationalized industries, we decided that the responsible ministers should stand back from the process as far as possible. Our strategy would be to apply the necessary financial discipline and then let the management and unions directly involved make their own decisions.

There would also have to be a fundamental overhaul of the way in which prices were controlled by such interventionist measures as the Price Commission, government pressure, and subsidy. We were under no illusion: price rises were a symptom of underlying inflation, not a cause of it. Inflation was a monetary phenomenon which it would require monetary discipline to curb. Artificially holding down increases merely reduced investment and undermined profits – both already far too low for the country’s economic health – while spreading a ‘cost plus’ mentality through British industry.

At both Cabinets, I concluded by emphasizing the need for collective responsibility and confidentiality between ministers. I said I had no intention of keeping a diary of Cabinet discussions and I hoped that others would follow my example. Inconvenient as that may be for the authors of memoirs, it is the only satisfactory rule for government.

On the following day Members of Parliament assembled to take the oath. But Thursday was a day of more than ceremonial importance (indeed there was one ceremony which somehow got lost in the rush – Denis’s birthday). It was on that day that Helmut Schmidt, the West
German Federal Chancellor, arrived in London on an official visit originally arranged with the Labour Government – the first head of a foreign government to visit me as Prime Minister.

I had met Herr Schmidt in Opposition and had soon developed the highest regard for him. He had a profound understanding of the international economy on which – although he considered himself a socialist – we were to find ourselves in close agreement. In fact, he understood a good deal better than some British Conservatives the importance of financial orthodoxy – the need to control the money supply and to restrain public spending and borrowing so as to allow room for the private sector to grow. But he had to be told straight away that although Britain wanted to play a vigorous and influential role in the European Community, we could not do so until the problem of our grossly unfair budgetary contribution had been resolved. I saw no reason to conceal our views behind a diplomatic smokescreen so I used every occasion to get the message across.

On Saturday I flew to Scotland to address the Scottish Conservative Conference, something I always enjoyed. Life is not easy for Scottish Tories. Unlike English Conservatives, they are used to being a minority party, with the Scottish media heavily slanted against them. But these circumstances gave Scottish Conservatives a degree of enthusiasm and a fighting spirit which I admired, and which also guaranteed a warmhearted and receptive audience. Some leading Scottish Tories, a small minority, still hankered after a kind of devolved government, but the rest of us were deeply suspicious of what that might mean to the future of the Union. While reaffirming our decision to repeal Labour’s Scotland Act, I indicated that we would initiate all-party talks ‘aimed at bringing government closer to the people’. In the event we did so by rolling back the state rather than by creating new institutions of government.

My main message to the Conference was a deliberately sombre one, intended for Britain as a whole. That same day an inflation figure of 10.1 per cent had been published. It would rise further. I noted:

As our economic and political difficulties accumulated in the months ahead, no one could claim that they had not been warned.

We arrived back at RAF Northolt and drove to Chequers where I spent my first weekend as Prime Minister. I do not think anyone has stayed long at Chequers without falling in love with it. From the time of its first Prime Ministerial occupant, David Lloyd George, it has been assumed that the holders of that office would not necessarily have their own country estates. For that reason, Lord Lee’s gift to the nation of his country house for the use and relaxation of Prime Ministers marks as much a new era as did the Reform Bills.

Chequers is an Elizabethan house, but has been substantially rebuilt over the years. The centre of the house is the great hall, once a courtyard, enclosed at the end of the last century, where in winter a log fire burns, giving a slight tang of woodsmoke through every room.

Thanks to the generosity of Walter Annenberg, US Ambassador to Britain from 1969–74, Chequers has a covered swimming pool. But in the years I was there it was only used in the summer. Early on I learned that it cost £5,000 a year to heat. By saving this money we had more which could be spent on the perpetual round of necessary repairs to the house.

The group which gathered for Sunday lunch just ten days after our election victory was fairly typical of a Chequers weekend. My family were there, Denis, Carol, Mark. Keith Joseph, Geoffrey and Elspeth Howe, the Pyms and Quintin Hailsham represented, as it were, the Government team. Peter Thorneycroft and Alistair McAlpine were present from Central Office. David Wolfson, Bryan Cartledge (my private secretary) with their wives, and our friends, Sir John and Lady Tilney, completed the party.

We were still in a mood to celebrate our election victory. We were away from the formality of No. 10. We had completed the initial task of getting the Government on the road. We still had that spirit of camaraderie which the inevitable disputes and disagreements of government were bound to sap. The meal was a light-hearted and convivial one. It was perhaps an instance of what a critic was later to call ‘bourgeois triumphalism.’

But we were aware that there was a long road ahead. As my father used to say:

At 7 p.m. that evening Denis and I returned to London to begin my second full week as Prime Minister. Work was already piling up, with boxes coming to and from Chequers. I recall once hearing Harold Macmillan tell an eager group of young MPs, none more eager than Margaret Thatcher, that Prime Ministers (not having a department of their own) have plenty of spare time for reading. He recommended Disraeli and Trollope. I have sometimes wondered if he was joking.

Domestic politics in the first six months until the end of 1979

T
O TURN FROM THE EUPHORIA
of election victory to the problems of the British economy was to confront the morning after the night before. Inflation was speeding up; public sector pay was out of control; public spending projections were rising as revenue projections fell; and our domestic problems were aggravated by a rise in oil prices that was driving the world into recession.

The temptation in these circumstances was to retreat to a defensive redoubt: not to cut income tax when revenues were already threatening to fall; not to remove price controls when inflation was already accelerating; not to cut industrial subsidies in the teeth of a rising recession; and not to constrain the public sector when the private sector seemed too weak to create new jobs. And, indeed, these adverse economic conditions did slow down the rate at which we could hope to regenerate Britain. But I believed that was all the more reason to redouble our efforts. We were running up the ‘Down’ escalator, and we would have to run a great deal faster if we were ever to get to the top.

Our first opportunity to demonstrate to both friends and opponents that we would not be deterred by the difficulties was the Queen’s Speech. The first Loyal Address of a new government sets the tone for its whole term of office. If the opportunity to set a radical new course is not taken, it will almost certainly never recur. I was determined to send out a clear signal of change.

By the end of the debates on the Address it was evident that the House of Commons could expect a heavy programme, designed to reverse
socialism, extend choice and widen property ownership. There would be legislation to restrict the activities of Labour’s National Enterprise Board and to begin the process of returning state-owned businesses and assets to the private sector. We would give council tenants the right to buy their homes at large discounts, with the possibility of 100 per cent mortgages. There would be partial deregulation of new private sector renting. (Decades of restrictive controls had steadily reduced the opportunities for those who wished to rent accommodation and thereby retarded labour mobility and economic progress.) We would repeal Labour’s Community Land Act – this attempt to nationalize the gains accruing from development had created a shortage of land and pushed up prices. We removed the obligation on local authorities to replace grammar schools and announced the introduction of the Assisted Places Scheme, enabling talented children from poorer backgrounds to go to private schools. We would, finally, curb what were often the corrupt and wasteful activities of local government direct labour organizations (usually socialist controlled).

When I spoke in the Queen’s Speech debate, two points attracted particular attention: the abolition of price controls and the promise of trade union reform. Most people expected that we would keep price controls in some form, at least temporarily. After all, the regulation of prices, wages and dividends had been one of the means by which, throughout most of the western world, governments sought to extend their powers and influence and to alleviate the inflationary effects of their own financially irresponsible policies.

I was also keen to use my speech in the debate to put an authoritative stamp on our trade union reforms. Jim Prior’s preferred strategy was one of consultation with the trade unions before introducing the limited reforms of trade union law which we had proposed in Opposition. But it was vital to show that there would be no back-tracking from the clear mandate we had received to make fundamental changes. Initially, we proposed three reforms in the Queen’s Speech. First, the right to picket – which had been so seriously abused in the strikes of the previous winter and for many years before – would be strictly limited to those in dispute with their employer at their own place of work. Second, we were committed to changing the law on the closed shop, which at that time covered some five million workers. Those who lost their jobs for refusing to join a union must in future be entitled to proper compensation. Third, public funds would be made available to finance
postal ballots for union elections and other important union decisions: we wanted to discourage votes by show of hands and the sharp practice, rigging and intimidation which had become associated with ‘trade union democracy’.

In retrospect it seems extraordinary that such a relatively modest programme was represented by most trade union leaders and the Labour Party as an outright attack on trade unionism. In fact, as time went by, it became increasingly clear to the trade union leaders and to the Labour Party that not only did we have huge public support for our policies, but that the majority of trade unionists supported them too, because their families were being damaged by strikes which many of them had not voted for. We were the ones in touch with the popular mood.

This was my first important parliamentary performance as Prime Minister, and I emerged unscathed. But it is Questions to the Prime Minister every Tuesday and Thursday which are the real test of your authority in the House, your standing with your party, your grip of policy and of the facts to justify it. No head of government anywhere in the world has to face this sort of regular pressure; no head of government, as I would sometimes remind those at summits, is as accountable as the British Prime Minister.

I always briefed myself very carefully for Questions and I would go through all the likely issues which might come up without any notice. This is because the questions on the Order Paper only ask about the Prime Minister’s official engagements for that day. The real question is the supplementary whose subject matter may vary from some local hospital to a great international issue or to the crime statistics. Each department was, naturally, expected to provide the facts and a possible reply on points which might arise. It was a good test of the alertness and efficiency of the Cabinet minister in charge of a department whether information arrived late – or arrived at all; whether it was accurate or wrong, comprehensible or riddled with jargon. On occasion the results, judged by these criteria, were not altogether reassuring. Little by little I came to feel more confident about these noisy ritual confrontations, and as I did so my performance became more effective. Sometimes I even enjoyed them.