Margaret Thatcher: The Autobiography (72 page)

I made Nigel Lawson Chancellor of the Exchequer – an enormous and to most people unexpected promotion. Whatever quarrels we were to have later, if it comes to drawing up a list of Conservative – even Thatcherite – revolutionaries I would never deny Nigel a leading place on it. He is imaginative, fearless and – on paper at least – eloquently persuasive. His mind is quick and he makes decisions easily. His first budget speech shows what good reading economics can make and I doubt whether any other Financial Secretary to the Treasury could have come up with the inspired clarity of the Medium Term Financial Strategy, which guided our economic policy until Nigel himself turned his back on it in later years. As Chancellor, Nigel’s tax reforms had the same quality about them – a simplicity which makes everyone ask why no one thought to do this before.

But what to do with Geoffrey Howe? The time had come to move Geoffrey on. Four gruelling years in the Treasury was enough and it seems a kind of psychological law that Chancellors naturally incline towards the Foreign Office. Partly this is simply because that is the next logical step. But it is also because international finance is nowadays so important that Chancellors have to take a keen interest in the IMF, the G7 and the European Community and so the longing to tread the world stage naturally takes hold of them. I had doubts about Geoffrey’s suitability for the Foreign Office. And, in retrospect, I was right. He fell under the spell of the Foreign Office where compromise and negotiation were ends in themselves. This magnified his faults and smothered his virtues. In his new department he fell into the habits which the Foreign Office seems to cultivate – a reluctance to subordinate diplomatic tactics to the national interest and an insatiable appetite for nuances and conditions which can blur the clearest vision. To the extent that Geoffrey did have a cause to guide him in foreign affairs it was one on which the two of us were far apart, though I did not give this much thought at the time. For Geoffrey harboured an almost romantic longing for Britain to become part of some grandiose European consensus. I never heard him define this misty Europeanism, even in the last turbulent days of my Premiership, but it was for him a touchstone of high-mindedness and civilized values. It was to bring us all no end of trouble.

My first choice for the job of Foreign Secretary had been Cecil Parkinson. He and I agreed on economic and domestic policy. Neither of us had
the slightest doubt that Britain’s interests must come first in foreign policy. He had served in the Falklands War Cabinet. He had just masterminded the most technically proficient general election campaign I have known. He seemed to me right for this most senior job.

However, in the early evening on election day, after I had returned from my own constituency, Cecil visited me in Downing Street and told me that he had been having an affair with his former secretary, Sara Keays. I did not immediately decide that it was an insuperable obstacle to his becoming Foreign Secretary. But the following day, shortly before Cecil was due for lunch at No. 10, I received a personal letter from Sara Keays’s father. It revealed that she was pregnant with Cecil’s child. When Cecil arrived I showed him the letter. It must have been one of the worst moments of his life.

It was immediately obvious that I could not send Cecil to the Foreign Office with such a cloud hanging over him. I urged him to discuss the personal questions with his family. Meanwhile I decided to make him Secretary of State for the newly combined Departments of Trade and Industry. It was a job I knew he would do well – and it was a less sensitive post than Foreign Secretary would have been.

In September I appointed John Gummer to succeed Cecil as Party Chairman (I would have appointed a new Chairman sooner or later in any case). John had been a Vice-Chairman of the Party under Ted Heath and so knew Central Office well. He is also a gifted speaker and writer. Unfortunately, John Gummer was not a born administrator and when we ran into political trouble he did not carry the weight to help us get out of it.

An appointment that strengthened the Party, however, was that of John Wakeham who became Chief Whip. John would probably not dissent from his reputation as a ‘fixer’. He was on the right of the Party, a highly competent accountant, who had tried to make sense for me of British Leyland’s elliptical accounts. He had a manner which exuded self-confidence, a good deal of which was deserved. These talents made him a highly effective party manager.

Within months I had to make further important changes. At the beginning of October Cecil Parkinson, with the agreement of Sara Keays, issued a statement to the press revealing their affair and the fact that she was pregnant. I wanted if possible to keep Cecil. At first, it seemed that I might succeed. There was no great pressure from within the Party for him to go. The Party Conference took place the week after Cecil’s statement
and his ministerial speech was well received. However, very late on Thursday evening, as I was completing my own speech for the following day, the Press Office at No. 10 rang my hotel suite. Sara Keays had given an interview to
The Times
and the story dominated Friday’s front page. I called a meeting immediately, with Willie Whitelaw, John Gummer and Cecil himself. It was clear that the story was not going to die down and, though I asked Cecil to hold back from resigning that evening, we all knew that he would have to go.

Early next morning Cecil came in to see me and said that he and Ann had decided that he should resign. There was only one problem. He had a public engagement to open the new Blackpool Heliport and to unveil a commemorative plaque. Clearly, it was impossible for him to go ahead with this. Denis stepped into the breach and unveiled the plaque, which poignantly had Cecil’s name on it.

Thankfully, this did not mean the end of Cecil’s political career. But he had to endure four years in the political wilderness and lost whatever chance he might have had of climbing to the very top of the political ladder.

In everything but the short term, Cecil’s resignation weakened the Government. He had proved an effective minister and, though he was only at the DTI a short time, had made a big impact. It was Cecil who took the difficult but correct decision to introduce legislation to exclude the Stock Exchange from the operation of the Restrictive Trade Practices Act and so to terminate the court case which had been brought against it by the Director-General of Fair Trading. In return the Stock Exchange made a commitment to dismantle long-standing restrictions on trading and the process was begun that led to the Financial Services Act (1986) and the ‘Big Bang’ in October of that year. These reforms allowed the City to adapt to the highly competitive international markets in which it now operates and have been crucial to its continued success.

I asked Norman Tebbit to move from Employment to take over the DTI and shifted Tom King from Transport as Norman’s replacement. This enabled me to bring Nick Ridley into the Cabinet, as Transport Secretary. Nick’s arrival in Cabinet was a silver lining to the cloud that hung over us following Cecil’s departure. Like Keith Joseph, Nick was someone who wanted office in order to do what he believed was right. Although in my experience there are few politicians for whom doing the right thing is of no importance, there are fewer still for whom it is the only consideration. Nick and Keith were among them. At Transport Nick
pressed ahead with privatization and deregulation. And in the later years of the Government he was someone I could rely upon for complete loyalty and honest dealing. Indeed, it was an excess of honesty that ultimately brought him down.

Such was the team on which the success of the Government’s second term depended. I hoped that they would share the zeal and enthusiasm of their captain.

I spent most of August on holiday in Switzerland, getting over an awkward and painful eye operation that I had had at the beginning of the month. By the time I returned to England I felt fully recovered, which was all to the good since I had to make several important foreign visits in September, not least to the United States.

After visiting Canada I flew to Washington for a meeting with President Reagan. Overall, the President’s domestic political position was strong. In spite of the difficulties which the US budget deficit was causing, the American economy was in remarkably good shape. It was growing faster with markedly less inflation than when he came into office and there was widespread appreciation of this. As he himself used to say: ‘Now that it is working, how come they don’t call it Reaganomics any more?’ The President had also set his imprint on East-West relations. The Soviets were now definitely on the defensive in international relations. And they were in the dock as a result of the shooting down of a South Korean Airliner. In Central America the Government of El Salvador, which the United States had been backing against communist insurgency, was looking stronger. Perhaps only in the Middle East had the Administration’s policy not proved even a qualified success. Arab-Israeli peace talks were unlikely to be resumed and there was a growing danger of the US and its allies becoming irrevocably sucked into the turbulent politics of the Lebanon. The President had yet to announce whether he would stand for a second term, but I thought and hoped that he would and it looked as if he would win.

Our discussion that morning and over the lunch which followed covered a wide canvas. I raised the question of the US resuming the supply of arms to Argentina, telling him that a decision to do this would simply not be understood in Britain. The President said that he was aware of that, but there would be great pressure for the resumption of arms supplies if a civilian regime were established in Buenos Aires.

I also took the opportunity to explain our opposition to the inclusion of the British and French independent nuclear deterrents in the arms
talks between the United States and the Soviet Union. The Soviet insistence on the inclusion of our deterrents was simply a device to divert attention from the American proposal for deep reductions in strategic nuclear weapons. From the point of view of Britain, our deterrent constituted an irreducible minimum, but it was only 2.5 per cent of the Soviet strategic arsenal. I repeated what I had told the Senate Foreign Relations Committee that morning: the inclusion of the British deterrent would logically mean that the United States could not have parity with the Soviet Union. Would that really be acceptable to the United States? Or if, say, the French decided to increase their nuclear weapons, would the United States really be prepared to cut its own by an equivalent amount? The President seemed to take my point, which I found reassuring. I for my part was able to reassure him as regards the timetable for deployment of Cruise and Pershing missiles in Europe.

However, our discussion turned on the strategy we should pursue towards the Soviet Union generally over the years ahead. I had been giving a good deal of thought to this matter and had discussed it with the experts at a Chequers seminar. I began by saying that we had to make the most accurate assessment of the Soviet system and the Soviet leadership so as to establish a realistic relationship: whatever we thought of them, we all had to live on the same planet. I congratulated the President on his speech to the UN General Assembly after the shooting down of the Korean Airliner and said how right he was to insist that despite this outrage the arms control negotiations in Geneva should continue. The President agreed that now was not the time to isolate ourselves from the Soviet Union. When the USSR failed to prevent NATO’s INF deployment they might start to negotiate seriously. Like me, he had clearly been considering the way in which we should deal with the Soviets once that happened.

The President argued that there were two points on which we had to form a judgement. First, the Russians seemed paranoid about their own security: did they really feel threatened by the West or were they merely trying to keep the offensive edge? The second question related to the control of Soviet power itself. He had always assumed that in the Soviet Union the Politburo controlled the military. But did the fact that the first public comments on the Korean Airliner incident had come from the military indicate that the Politburo was now dominated by the generals? As regards negotiation with the Soviets, we should never forget that the main reason why they were at the negotiating table in Geneva at all was
the build-up of American defences. They would never be influenced by sweet reason. However, if they saw that the United States had the will and the determination to build up its defences as far as necessary, the Soviet attitude might change because they knew they could not keep up the pace. He believed that the Russians were now close to the limit in their expenditure on defence. The United States, on the other hand, had the capacity to double its military output. The task was to convince Moscow that the only way it could remain equal was by negotiations because they could not afford to compete in weaponry for very much longer. The President recalled a cartoon which had Mr Brezhnev saying to a Russian general, ‘I liked the arms race better when we were the only ones in it.’

Now that the Soviet system has crumbled along the lines he envisaged, his words seem prophetic. It may be that one reason why President Reagan and I made such a good team was that, although we shared the same analysis of the way the world worked, we were very different people. He had an accurate grasp of the strategic picture but left the tactical detail to others. I was conscious that we must manage our relations with the communists on a day-to-day basis in such a way that events never got out of control. This was why, throughout my discussion with the President, I kept on coming back to the need to consider precisely how we should deal with the Soviets when they faced up to reality and returned to the negotiating table in a more reasonable frame of mind.

Unexpectedly, the autumn of 1983 turned out to be a testing time for Anglo-US relations. This was because we adopted different attitudes towards crises in the Lebanon and in Grenada.

These events took place against the background of great strategic decisions for the West. November 1983 was the time we had agreed for the deployment of intermediate-range missiles in Britain and West Germany: I had to ensure that nothing interfered with it. Doing so depended to a large degree on demonstrating that the United States could indeed be relied upon as a trustworthy ally.