11
Rejoice? 1979–90
GENDER
In 1975 the Conservative Party elected a woman as its leader. Women had, of course, been eligible as parliamentary candidates since 1918; there had been equal suffrage since 1928; and women had long played an active part in local government. Before the Second World War, however, a woman as a parliamentary candidate remained an oddity: less than one in twenty of all candidates, and with an even smaller chance of being elected. Most women stood as Liberal or Labour. Yet the Conservative triumph in 1931 produced the record number of 15 women MPs, because 13 out of 16 Conservative women candidates were elected. Since women candidates were less likely than men to be selected by their party in safe seats, the landslide helped them here; conversely in 1945, 21 out of the 24 women MPs were Labour. From 1950 to 1979 the number of women standing for the two major parties fluctuated around forty for Labour and thirty for the Conservatives – in a good year. But in a poor year like 1966 the number of women the two parties put up between them (51) was even smaller than in the 1930s, though the fact that in 1966 just over half (26) were elected was some compensation.
Still, Margaret Thatcher was one of only 7 women, as against 246 men, sitting on the Conservative benches in the 1966 parliament. She had got there through remarkable determination. The daughter of a grocer in the Lincolnshire town of Grantham, Margaret Roberts had gone from grammar school to Somerville College, Oxford, to read chemistry at the end of the Second World War. Resisting the egalitarian political tide of that era, she was more impressed by the polemic against planning and the welfare state in F. A. Hayek’s The Road to Serfdom (1944). The truly formative political influence upon her remained that of her father, with his homely adages about thrift and hard work which had bridged his own evolution from Methodism and Liberalism to a locally influential role as a Conservative alderman. Marrying Denis Thatcher, a businessman who prospered through a family paint company which took him into oil at a propitious moment, was literally the making of Mrs Thatcher. It gave her not only the name under which she achieved fame, and a supportive spouse who enabled her to combine having children (twins) with pursuing her career, but also enough money to make all of this possible. Nonetheless, she was justly perceived as the grocer’s daughter rather than the millionaire’s wife.
That Margaret Thatcher proved to be an unusual woman should have come as no surprise. She had to make her way in a man’s world. She did so conscious of the fact that clubbable Tory grandees dismissed her as ‘that woman’, as much through social as sexist condescension. Eventually she was able to turn this situation in her own favour, by projecting a populist appeal to the thwarted subaltern class of Conservative loyalists who recognized her as one of their own. In this respect gender drew the sting from some of the status disabilities which faced an outsider; whereas Heath had found trouble in being accepted into the club, Thatcher at least knew that she never could be and was thus spared the trouble. The remaking of the Conservative Party was to be part of her political achievement, finally undermining the long ascendancy of a traditional elite, part of whose traditionalism rested on assumptions about appropriate gender roles.
Under the prevailing circumstances, it took extraordinary luck to bring Thatcher to power. Admittedly, she was bound to be given a front-bench role after 1966: not only because of her incisive mind, or her capacity for hard work, but because her party had so few alternative options in finding at least one presentable woman. The Conservatives had never had a woman politician of the stature of Barbara Castle, self-evidently one of the inner core of the Wilson Government; and Shirley Williams, five years Thatcher’s junior, was currently more often mentioned as a potential prime minister. If Thatcher entered Heath’s cabinet as the ‘token woman’, however, within a year or two she emerged as a formidable minister, capable of fighting for her own department both in the cabinet and outside. What transformed her career was a combination of Heath’s bad luck, or bad management, and her own facility in escaping from the wreckage.
That Heath himself would have to go was apparent after October 1974, except to himself. That the former Health minister Sir Keith Joseph might make a challenge for the leadership briefly seemed possible; in opposition he had stepped into Powell’s shoes as the right-wing standard-bearer but, like Powell, found his newly voiced views repudiated as extremist. Temperamentally unfitted to lead, Joseph found his métier as, if not quite the first, the foremost Thatcherite. That White-law, the loyal Heathite, ultimately would prevail in a leadership election – the system allowed for several ballots – was generally assumed. But what happened in February 1975 was that Thatcher boldly stood against Heath and polled more votes; by which time the momentum behind her candidacy was enough to give her a convincing victory over Whitelaw when he was eventually free to come forward in the second ballot.
Rather to their surprise, therefore, Conservative MPs chose a woman, and one of whom they generally knew rather little. There was soon talk of the party having been ‘hijacked’, once unmistakable signs emerged that the new leader had embarked on the course charted by Joseph, whose damascene revelation of the real meaning of Conservatism had been prominently proclaimed in a series of speeches. Thatcher differed from him, however, in being a fully fledged political animal: never risking an exposition of doctrinaire economic liberalism when she could instead, like Adam Smith before her, appeal to the sort of prudent, domestic, bill-paying, debt-avoiding, book-balancing maxims which it was folly to ignore in a great kingdom. Thatcher’s own twist was to invoke the supreme common sense of the housewife, a role in which this highly professional career woman could cast herself without any apparent sense of incongruity.
Thatcher was a political opportunist in the best sense: always quick to seize the opportunities which came her way and exploit them. When the Russians pejoratively dubbed her the Iron Lady, she took it as a compliment. She turned her lonely eminence as a woman into a unique asset. She exploited her femininity, teasing and coaxing favourite colleagues, teasing and upbraiding others, larded with a forthrightness which many of them had never before encountered. She carried a capacious handbag, from which pertinent documents could instantly be retrieved; the fact that it became a personal trademark was not only a boon to cartoonists but an indication of her own nose for public relations. She made no secret of her strong convictions, which she contrasted with the weakness implied by consensus. She had no time for socialism but could respect the old-fashioned socialist convictions of a parliamentary opponent like Michael Foot; her real contempt was reserved for those Conservatives whom she called ‘wet’.
Yet Thatcher also prided herself on proceeding with womanly caution, ruminating that, while her predecessor might have lost three elections, she would only be given the chance to lose one. She learnt from her failings as leader of the Opposition: if her voice gave an opening for sexist categorization as shrill, she took lessons to lower its pitch; if her fussy clothes stereotyped her as a suburban matron, she took advice on ‘power dressing’ to create a strong, simple image. As prime minister she came to radiate authority; but before 1979 Conservative Party managers were worried whether Britain was ready for a woman at the top. For a couple of years she ran well behind Callaghan and her own party in the opinion polls, and, luckily for her, it took the winter of discontent to put her ahead.
There is more than one paradox in the fact that the first woman prime minister did so little for other women, and that, under a woman, the Conservative Party relinquished a sixty-year electoral advantage among women. While this ‘gender gap’ cannot be precisely quantified in the era before opinion sampling, its long-standing nature is consistent with the demonstrable fact that in every general election from 1945 to 1979 women were more likely than men to vote Conservative. So were older people; but the fact that there were more women among the old does not explain this advantage, just exaggerates it. In 1955, while only 47 per cent of men voted Conservative, 55 per cent of women did so. The gender gap can thus plausibly be considered the reason for the Conservative electoral ascendancy in the 1950s; but not for that in the 1980s. For the gap fairly steadily narrowed from 8 per cent to only 2 or 3 per cent in the 1970s. Furthermore, in Thatcher’s great electoral triumphs of 1983 and 1987, women were, for the first time, no more likely to vote Conservative than men. This can be read in more ways than one, of course: as demonstrating the disappearance of male prejudice against a woman leader, or as showing that women now voted ‘just like men’.
The political gender gap was surely closing because the social and economic gender gaps had been closing too, giving men and women a much more closely comparable experience of life and work. During the first half of the twentieth century women’s employment had shown little proportionate increase, despite two world wars; indeed, the slump in the 1930s had produced a substantial fall. In 1951 women comprised 31 per cent of the workforce, barely more than in 1911. This proportion had passed 35 per cent by 1970; but the sharp increase was to come over the next twenty years. Since women workers generally provided services of one kind or another, the economic explanation lies in the long-term growth in the service sector as a whole. From the time of the Second World War, a range of secretarial, clerical and sales positions replaced domestic service as the major source of employment for women. So a structural change in the economy saw traditionally male jobs displaced by conventionally female jobs.
The net result was a significant change in the composition of the British labour force. In 1975 total employment in metals and mechanical engineering – the largest industrial classification – was 4.2 million, compared to 1.5 million in banking, insurance and finance. By 1990 both figures were around 2.7 million, and were dwarfed by the 4.8 million employees classified under wholesale, retail, hotels and catering. Moreover the dramatic shift which took place in this period was further accentuated by the onset of high unemployment, which naturally hit the declining manufacturing sector much harder than the buoyant service sector. In 1990 the statistics for the total labour force, counting everyone available for work, showed that 43 per cent were women; but women workers were now more likely than men actually to have jobs – especially part-time jobs. Two women worked part-time for every three full-time; and whereas there were now a million fewer full-time jobs than in 1979, there were a million more part-time jobs. The net effect was that, by 1990, 11 million women were actually in employment, as against 11.7 million men – fast approaching statistical parity.
Parity of status and earnings, of course, was another matter. The statutory requirement for equal pay, passed in 1970 and implemented in 1975, was hardly a final victory; but this battle was made easier to fight, case by case, once the Sex Discrimination Act (1975) had established the Equal Opportunities Commission to monitor fair treatment. In 1970 women’s average weekly earnings were, as they had long been, almost exactly half those of men in both manual and non-manual occupations; within ten years they rose to about 60 per cent. The rise in pay was associated with a rise in the number of women trade unionists to nearly 4 million in 1979, a rate of increase over the previous ten years twice as fast as for men. But further improvement was small after 1980; allowing for the fact that men worked longer hours, female pay rates seemed to be stuck at about two-thirds of the male average. Since an overt gender-based differential was now illegal, the reason lay in covert discrimination between gender-related skills and qualifications.
Professional qualifications for women usually depended on access to higher education, where a gender gap long remained entrenched. The proportion of full-time university students who were women had reached 28 per cent in the 1920s and actually declined by 3 or 4 per cent during the next thirty years. Until the Robbins era, a boy remained twice as likely as a girl to gain a university place within any social class. Conversely, in the subsequent expansion, while the number of men admitted by universities more than doubled in twenty years, the number of women quadrupled, with over 40 per cent of admissions by 1980, and rising. It was only in the 1980s that Oxford and Cambridge became fully coeducational, when the last male colleges agreed to admit women too – overwhelmingly from the same social and educational background as the male students, as it turned out.
The erosion of the gender bias in higher education showed that girls from professional families were at last getting the same treatment as their brothers. It is hardly surprising that women graduates should have gone on to demand the same treatment in society, and become prominent in feminist pressure-group activity, which notably revived in the 1960s. It did so, moreover, within a cultural context prominently shaped by articulate women.
The role of unacknowledged legislators, claimed for poets by Shelley, was exemplified by a striking cohort of women novelists, many of them graduates. Iris Murdoch was already a fine role model, successfully pursuing an academic career at Oxford as a philosopher during the years which saw the publication of thought-provoking novels like The Bell (1958) and A Severed Head (1961). By the time of her prize-winning books The Black Prince (1973) and The Sacred and Profane Love Machine (1974), she was perhaps the most respected English novelist of her generation.1 Twenty years younger, Margaret Drabble made her mark very young, initially with A Summer Birdcage (1962), The Garrick Year (1964) and The Millstone (1966), showing confident Oxbridge scholarship girls from the north making their own terms as young women who expected doors to open for them (rather than be opened by men). In their own right they now entered a sophisticated metropolitan world, of which people like the Denhams, in Jerusalem the Golden (1967), had long been been privileged denizens. Her sister, A. S. Byatt, like Murdoch, laid the foundations of a career as both an academic and a creative writer: an experience later to be distilled in her major novel Possession (1990). Angela Carter established her name with the publication of The Magic Toyshop (1967), with a girl’s sensibility memorably informing its mysteriously unfolding themes. Fay Weldon was to disclose a hard-hitting feminist agenda in a string of novels like Down Among the Women (1971), Remember Me (1976) and The Life and Loves of a She-Devil (1984), which inimitably spiced realism with surrealism.
Women’s liberation became the cry in the 1960s. Inspired partly by developments in the USA, and with a fearless champion in Germaine Greer, whose book The Female Eunuch (1970) became a best-seller, ‘women’s lib’ meant claiming privileges which had long been enjoyed by men. Sexual liberty was certainly one of these, and since heterosexual activity required male partners, this was an area where male resistance was least likely to be encountered. Symbolic bra-burning had its innocent ripple-effect in a freedom of dress, especially among young women, which became part of the image of the ‘swinging sixties’. Yet some of the protagonists of women’s lib soon came to question the easy assumption that sexual inequalities could simply be willed away, least of all by such existential gestures.
Over the next twenty years, feminism was sometimes appropriated by militantly prescriptive campaigns, in which sexual warfare was the continuation of gender politics by other means. In a less sectarian spirit, recognition of the deep-seated nature of gender differences, requiring mutual understanding between men and women, became part of a feminist agenda. This spoke to fundamental problems, which were not susceptible to simple solutions like equal pay legislation. Women earned less in employment partly because roles traditionally associated with men – whether displaying physical prowess or exerting authority over others – remained generally more highly esteemed, whereas tasks requiring traditional female skills – from manual dexterity to sympathetic personal relations – were often less well rewarded. Moreover, at all levels of education, women seeking employment in better-paid jobs, with better prospects, found themselves not only competing against men but doing so under conventions which, having been instituted by men, implicitly favoured them. Highly qualified women still encountered barriers, both visible and invisible, leading some to speak of a ‘glass ceiling’ which effectively kept women out of the top jobs, or of a ‘golden pathway’ to promotion, informally signposted for and by men. In politics pressure-group methods had some effect in rectifying this situation. By 1992, the number of women standing for parliament easily set new records, not only overall and in the aggregate number elected (60 MPs), but also for each of the parties individually, with 144 Liberal Democrat, 138 Labour and 59 Conservative female candidates, over twice as many as in 1979, and clearly set to increase further.
Not only in the House but in the home, historic assumptions about gender roles increasingly came into question. Changes in patterns of employment were challenging the stereotyped distinction between the breadwinner and the housewife, living as a married couple, with a well-understood division of labour within the household. One official adaptation to new norms came with Nigel Lawson’s reform of personal taxation, heralded in 1988, so that a man was no longer required to be responsible for his wife’s tax return. More important, if more difficult to chart, were informal changes in everyday behaviour, like responsibility for household chores and child-rearing when both partners were holding down jobs. The ‘new man’ could certainly be seen (and sometimes made sure he was seen) taking his share of traditionally female tasks. This happened not only in trendy professional enclaves – Mark Boxer had long since caricatured Camden Town in his strip cartoon Life and Times in NW1 – but increasingly throughout the country, not least in areas of high male unemployment. It became perfectly normal for men to push prams or change babies, shop in supermarkets or even cook the dinner – especially, perhaps, for guests. Indications are that the brunt of everyday chores continued to fall on women. In 1984 nine out of ten married women still coped alone with the washing and ironing; seven out of ten with household cleaning; five out of ten with shopping (though only one out of sixteen with domestic repairs). Such patterns increased the stress on women in responding to the dual pressures of their homes and careers.
The institution of marriage was in the process of redefinition. The average age of first marriage, after falling steadily for sixty years, started to rise again after 1970; by 1990 most brides in first marriages were over twenty-five and grooms over twenty-seven, levels not seen since the inter-war years. In those days, of course, it had been scandalous to ‘live in sin’, whereas fifty years later it was not unusual for couples to cohabit, often as a prelude to subsequent marriage. An increasing number of unmarried couples made a deliberate choice to have children. This was the main reason for a rise in the illegitimacy rate, which had crept up from a historic low of around 3 per cent of all births before the First World War to around 5 per cent after the Second. It was after 1960 that it began rising sharply, to about 10 per cent in the 1970s, and soaring to 25 per cent of all births by 1988. By then, admittedly, 70 per cent of births outside marriage were registered in the joint names of the father and mother, suggesting stable two-parent relationships. Undeniably, however, the trend towards illegitimacy also signalled an increase in the number of women bringing up children on their own, as did the increasing prevalence of divorce, since the ex-wife was usually the custodian of young children.
Before the Second World War, there had been roughly one divorce decree for every hundred marriages annually; after it, more like one for every ten, fewer in the 1950s but rising in the 1960s. The Divorce Law Reform Act of 1969, which replaced the concept of a matrimonial offence (usually adultery) with that of the breakdown of a marriage, was a response to rising pressure for easier divorce. Within a couple of years the number of divorces doubled, and during the 1980s there were over 160,000 decrees a year, not far short of half the number of marriages taking place. Divorce usually meant a drop in the standard of living of all concerned, for the obvious reason that two households needed support instead of one: a problem accentuated if either partner established a second family. Ex-wives caring for dependent children generally found their income worst hit. For them divorce remained literally a poor option. But at least it was now conceivable for them to escape from the trap of a failed marriage, especially since legislative changes in the early 1970s established a spouse’s equal right to the property of a marriage and effectively gave wives tenure of the matrimonial home. Thus, especially in an era of fast-appreciating house prices, divorced men were more likely to lose their prime capital asset: a neat reversal of Victorian presumptions about real property. To say that divorce simply became easier is a misnomer; and whether it produced happier marriages, by dissolving more of the unhappy ones, is hard to know. Still, with increasing longevity, it took the higher divorce rates of the 1980s to get the average duration of marriage back to what it had been in the 1820s.
THATCHERISM
There is something in the view that Thatcherism, like Bevanism, had to be invented by others to legitimate an essentially personal leadership style. The term came into use in the early 1980s, pejoratively introduced by the journal Marxism Today, but given favourable connotations by Nigel Lawson, formerly a high-powered financial journalist and now an increasingly influential minister in formulating economic strategy. His definition was a mixture of free markets, monetary control, privatization and cuts in both spending and taxes – combined with a populist revival of the ‘Victorian values’ of self-help and nationalism. The part played by Powell in preparing the ground for Thatcherism is apparent. So is the proselytizing activity on behalf of Hayekian economic liberalism, undertaken over many years by the Institute of Economic Affairs; and Keith Joseph played an important role in founding the Centre for Policy Studies in 1974, bringing a monetarist approach into the mainstream of Conservative policy-making. Thatcher’s own indispensable achievement was to mobilize sufficient support to make Thatcherism the agenda of government.
Certainly Thatcher was an inconsistent ideologue. She was to disappoint the principled exponents of Thatcherism in her own cabinet when general doctrines about government non-interference clashed with her restless incapacity to refrain from interfering – because she felt she knew best. Though some of her ministers understandably saw her as upholding the tenets of nineteenth-century liberalism, its cosmopolitan outlook was literally foreign to her; when it came to nationalism, she was an old-fashioned Tory. She freely invoked the name of Churchill, while turning her back on many of the guiding principles in domestic policy adopted by his two Governments. Her convictions were temperamental rather than ideological. She made up policy as she went along and used off-the-cuff public utterances to bounce her colleagues into accepting initiatives that had not been previously agreed.
The Thatcher Government had a comfortable majority of over 40 in the 1979 parliament. The Conservatives had polled 44 per cent of the national vote to Labour’s 37 per cent; the Liberals, on 14 per cent, had declined since 1974 but still saved 11 seats. The Conservatives had only half as many seats as Labour in either Wales or Scotland (despite picking up a few seats in the wake of the Nationalist subsidence). Moreover, much the same was true of the north of England, where there were 107 Labour MPs to 53 Conservatives. Here was a Government representing the prosperous south of England rather than the regions prone to high unemployment in manufacturing industry. This gave it some degree of electoral insulation in pursuing policies which, it was generally accepted, were likely to increase unemployment, at least in the short term.
Thatcher did not feel strong enough to exclude the leading ‘wets’, like Sir Ian Gilmour, Peter Walker and Francis Pym, from her cabinet. Whitelaw was in another category. First as Home Secretary and later as Lord President, he served Thatcher as he had served Heath before her, with impeccable loyalty and honest advice which was all the more important in sustaining her since it came from someone who was, at the very least, suspected of being damp. Heath himself was half-heartedly offered the Washington embassy, which he promptly refused, preferring to skulk (some said sulk) on the backbenches. But another of his former confidantes, Lord Carrington (sixth baron), was made Foreign Secretary. Such appointments helped defuse trouble in the party; by the time Heath spoke up against Thatcher, she was fîrmly in the saddle:. The heavyweight support for Thatcherism in the cabinet initially came from Sir Geoffrey Howe, a dour but able lawyer who became Chancellor of the Exchequer; and, of course, from Joseph, who became Secretary of State for Industry. Committed Thatcherites like Nigel Lawson, Norman Tebbit, Cecil Parkinson and Nicholas Ridley had to bide their time in junior ministerial posts, before being shuffled into the cabinet, generally in place of ejected ‘wets’.
In making appointments, administrative as well as ministerial, Thatcher became notorious for demanding whether the candidate was ‘one of us’. She wanted to be served by people who believed in the mission of her Government, and she was initially suspicious of civil servants who had spent the best years of their lives in patching up the post-war consensus. She was to turn 10 Downing Street into a fortress, staffed by loyalists on whom she could implicitly rely. Professor Alan Walters, an unwavering monetarist, became a trusted economic adviser; Charles Powell became an indispensable private secretary from 1984. Bernard Ingham – an ex-socialist, like a number of born-again Thatcherites – was throughout her premiership a uniquely influential press secretary, with a carefully maintained, blunt-speaking Yorkshire mien which translated policy issues and personal conflicts into a populist idiom. Ministers learned to dread a personally hostile, or insufficiently supportive, press briefing from Downing Street, as an early warning of the withdrawal of prime-ministerial favour. Through carefully cultivated links with the popular press, Thatcherite propaganda reached a down-market constituency, traditionally Labour. The fact that Rupert Murdoch’s Sun, Ingham’s favoured tabloid, was a latter-day reincarnation of the TUC’s own Daily Herald, combined with the fact that by 1979 its circulation of 4 million put it ahead of its Labour rival, the Daily Mirror, heralded a new epoch. In that Thatcherite dawn, it was bliss when the Sun came out for the Tories.
Despite Thatcher’s suspicion of the Heathite Jim Prior as a ‘wet’, intent on industrial appeasement, he was given the Department of Employment, charged with implementing trade-union reform. The winter of discontent had served to harden public attitudes but had come too late in the day to upset Prior’s plan of walking softly. This was a boon for the Government since the Prior Employment Act found widespread public support in 1980 for its minimal programme of outlawing ‘secondary’ picketing (not at the place of work), and requiring a high level of workers’ approval for a closed shop. Once this had been passed successfully, there was scope for further legislation to tighten its provisions, especially after Prior, increasingly isolated in the cabinet, was replaced by the uncompromising Tebbit, impatient to wield the big stick against the unions. The Tebbit Act in 1982 was a frontal attack on the closed shop and further restricted the scope of industrial action, while making unions legally liable for infringements. Incremental legislation over the next few years went on to require membership ballots, not only in the regular election of union officials and in sanctioning the existence of political funds, but also before any strike action. This highly effective fabian process avoided Heath’s error of trying to do everything at once, while ultimately tying down the trade unions with a thousand silken cords.
A steady rise in unemployment also weakened the unions. During the 1980s their membership was to fall by 3 million, with half of this loss concentrated in the two years 1981–3. But at the outset the Thatcher Government was wary about which battles it would fight. The Conservatives had given a campaign pledge to honour whatever pay increases were recommended by the commission on public-sector pay, set up under Labour. This fuelled a pay explosion in 1979–80. The most significant confrontation the Thatcher Government faced – or refused to face, until it was ready – was with the the NUM, which bulked large in Tory demonology for supposedly bringing down Heath. Conscious of the political stakes here, Thatcher backed away from a conflict in the coal industry in 1981, preferring to buy off trouble for the moment. One way or another, until 1984 there was continuous improvement in the strike record. Again, the basic reason was unemployment.
The foundation of the Government’s economic policy was the Medium-Term Financial Strategy (MTFS), adopted by Howe as Chancellor but drafted by Lawson as Financial Secretary to the Treasury. It sought to apply a monetarist approach to the problem of managing the economy, making the control of inflation the prime target. Once inflation was under control, it was argued, employment would look after itself, aided by reforms on the supply side of the economy that would liberate private enterprise from a dead weight of state intervention and onerous taxation. This was, as Conservative policy statements had proclaimed, the ‘right approach’ to the problem and, in adopting it, the Government needed determination. The secret of success lay in teaching the markets, not least the labour market, that financial discipline would be maintained, come what may. If only a set amount of money was available, inflation would thereby be contained, and inflationary wage settlements would simply lead to particular groups of workers pricing themselves out of jobs, or particular employers pricing themselves out of business. Some fall in output, or rise in unemployment, had to be envisaged as part of a learning process; but a couple of years after the money supply had been cut back, inflation would duly fall.
This simple theory was less easy to apply in practice. Immediate cuts in income tax were pushed through in the 1979 Budget as an earnest of the Government’s commitment to fostering supply-side incentives. Basic rate came down from 33 to 30 per cent; the top rate from 83 to 60 per cent. To pay for this, Value Added Tax (VAT) was raised from 8 per cent to a full rate of 15 per cent. Here was the promised shift from direct to indirect taxes; here was a regressive redistribution of the tax burden, skewed in favour of the better-off; here too was an immediate stimulus to inflation, helping push the RPI up towards 20 per cent. But this was a Government unafraid to make things worse in order to make them better. The strategy remained that of squeezing inflation out of the economy by monetary means. Targets were announced for restricting the growth of the money supply (£M3) to progressively lower levels. Yet the Government had simultaneously robbed itself of the traditional battery of techniques for influencing the domestic money supply because, in pursuit of free markets, it had abolished exchange controls. It was left with the blunt instrument of interest rates.
Base rate went up as high as 17 per cent in the first year but £M3 still wildly overshot its range; much the same happened in the next year. If the targets were to be reached, interest rates would presumably have to go higher still. Yet they had already cut a swathe through British industry and, on the back of the oil boom, had at one point pushed up the parity of sterling to US$2.50 and 5 DM – further reinforcing the difficulties of exporters. Even dogmatic monetarists, like Lawson and Walters, sensed that enough was enough, and turned on £M3 as being the wrong target (though it continued to be published in different guises). What the Government opted for instead was a fiscal squeeze, which was consistent with its own emphasis on rolling back the public sector and cutting the Budget deficit.
Conservative policy was to control and reduce public spending by imposing cash limits, rather than planning the volume of services; thus if inflation proved higher than expected this would reduce services (admittedly in a rather arbitrary way) rather than increase expenditure. Public spending as a whole was in deficit by 5 per cent of GDP in 1979–80, rising to 6 per cent the next year. This rise may have upset the plan for real cuts but it was consistent with the structure of public spending in a slump, since the main reason was the increase in social-security payments due to high unemployment. While other types of social expenditure had peaked in the mid-1970s, the social-security bill continued to rise as a proportion of GDP. In the mid-1980s it absorbed 12 per cent of GDP, compared with 8 per cent a decade earlier. Hence the paradox that, for seven years under Thatcher, public expenditure continued to take a bigger share of national income than it had in 1979.
Howe responded in his 1981 budget, not only by cutting deeper on the spending side but also by putting up a whole range of taxes (except income tax, of course), in a determined effort to reduce the deficit by 2 per cent of GDP, which he succeeded in doing. The remarkable thing is that he set out to do this in the middle of the deepest slump for fifty years. It was an unmistakable rebuff to Keynesianism – except in one respect: its reliance on fiscal rather than monetary policy. Monetarism had thus become a mask for deflationary policies which abandoned the priority given to employment in post-war economic management. But as a means of tackling inflation, Howe’s methods were vindicated. The fact that the £M3 targets were nominally met by 1983 was beside the point; this relied as much on continually revising the targets upward, regardless of the hypothetical effect upon inflation, as on bringing £M3 itself down to the levels originally projected. Yet inflation did fall steadily from 18 per cent in 1980 to 4.5 per cent in 1983.
The real reason was the impact of the slump itself. By the autumn of 1981 unemployment was 2.8 million, double the level in May 1979; and in the winter of 1982–3 it reached 3.3 million. There was an actual decline in the numbers in employment in each of these years; by 1983 over 2 million jobs had been lost. Most of the jobs lost were in manufacturing industry; most of them were full-time; most of them were held by men; most of them were in unionized plants; most of them were in the traditional industrial areas. Together these probabilities reinforced long-standing geographical and social differences, of which the most striking was between north and south. North, in this sense, stood for Scotland and Wales as well as the industrial north of England; and south mainly for the south-east of the country, a sort of greater Greater London which was spared the worst of the recession.
Measured from peak to peak of the economic cycle, growth was only 0.6 per cent in 1980–83, barely a quarter of what had been normal since the Second World War. In 1980 the economy shrank by a full 2 per cent, an even bigger contraction than in 1974; and 1981 was hardly better. This was the moment when the Thatcher Government showed its mettle. Predictions of a U-turn had been frequent. ‘You turn if you want to,’ Thatcher had told the Conservative Party conference in October 1980. ‘The lady’s not for turning.’ After the Howe budget in March 1981, they knew that she meant it. Riots in deprived inner-city areas like Brixton in London and Toxteth in Liverpool likewise did not shake her. In September 1981 her cabinet reshuffle brought Thatcherites like Lawson, Parkinson and Tebbit into key positions, exiled Prior to Northern Ireland, and sacked two grandees among the wets. Gilmour went without fuss, whereas Soames, Churchill’s son-in-law, struck Thatcher as taking the news like ‘being dismissed by his housemaid’.
The Government was at a crisis point; but so was the Opposition. Since losing office, the Labour Party had swung sharply to the left. This was shown not so much in the election of Foot as leader – he narrowly defeated Healey in November 1980 – but in Benn’s renewed prominence as the champion of an ascendant left-wing coalition. This enlisted sufficient union support to carry the conference for a programme including a unilateralist defence policy, withdrawal from the European Community, and changes in the party’s own constitution, making deselection of Labour MPs much easier. Conversely, with the emergence of a ‘Gang of Three’ – joint action by Shirley Williams, David Owen and William Rodgers to rally the social democratic wing – an actual split in the party became conceivable. Jenkins had floated the idea of a centre party in his televised Dimbleby Lecture in 1979, to a cool reception; but by the time he finished his stint with the European Community in January 1981, the left had inadvertently recruited him an army of potential followers. At a special conference of the Labour Party at Wembley, the left carried the day for its measures to entrench the influence of the unions. Conversely, the cry of ‘one member, one vote’ became the breaking point for the Gang of Three – or Four as it now became, as cooperation with Jenkins in establishing a new party became the strategy.
The formation of the Social Democratic Party (SDP) in 1981 was an attempt, as Jenkins put it, to ‘break the mould’ of British politics. It therefore needed electoral reform; but to get this it needed to make a breakthrough under the existing system – one reason for the pact which it made with the Liberal Party. Altogether, this was a tall order; only the ideological polarization of the major parties made it conceivable. The Thatcher Government seemed hell-bent on its monetarist experiment, despite record unemployment; the Labour Party seemed to be in thrall to the unions and, with the new electoral college in place, Benn came within a whisker of displacing Healey as deputy leader. During 1981, then, the SDP swept all before it. Fifteen Labour MPs had defected to it by the summer, and more were to come; in July Jenkins fought a by-election in Warrington and gave Labour a nasty jolt; in November Shirley Williams took the previously safe seat of Crosby from the Conservatives; and in its aftermath Gallup put the SDP-Liberal Alliance on 50 per cent nationally, with both other parties on 23 per cent. Clearly such a level of support was a bubble inflated by media hype, as opponents were not slow to allege; but in April 1982 the Alliance still had a lead of 6 points over the Conservatives and 8 points over Labour.
What decisively transformed the Government’s position was not an economic upturn but a turn-up which nobody had thought was on the cards: a war in the South Atlantic. It caused Thatcher to lose her equanimity and her Foreign Secretary, but it enabled her to win the next general election at a time of her own choosing. Carrington’s was a sad loss. He had presided over the Foreign Office with aplomb, persuading the prime minister to accept unpalatable decisions, not only over Europe, where the level of UK payments was a constant source of friction, but notably over Rhodesia. As leader of the opposition Thatcher had seemed sympathetic to the Rhodesia lobby in her own party, which supported Smith’s new ploy – really a response to South African pressure – of seeking accommodation. He clearly hoped to divide the black nationalist forces and thereby marginalize their most forceful leader, Robert Mugabe. In power, however, Carrington prevailed upon Thatcher to accept a settlement which isolated Smith and paved the way for Mugabe to win power under black majority rule, as the leader of a legally independent Zimbabwe in 1980.
The Foreign Office found more difficulty in getting its own way, however, when it tried to engineer another piece of adroit appeasement, this time over the Falkland Islands. Long claimed by Argentina, these were an expensive ex-imperial commitment, harbouring a small, stubborn population of sheep-farmers. If their way of life was no longer economically viable, it was difficult to see why the British taxpayer should underwrite them indefinitely – or so a thoroughgoing economic liberal might argue. Nicholas Ridley, as Minister of State at the Foreign Office, had thus argued the case for a concession on sovereignty, combined with a leaseback agreement; but this was a solution which the small but vocal Falklands lobby in the House of Commons made impracticable. Faute de mieux, a continuing British commitment remained – though this was hardly signalled to Argentina by the Thatcher Government’s withdrawal of the regular protection vessel as part of its defence cuts. Carrington had warned that this was unwise; Thatcher had sided against him. Nonetheless, when General Galtieri’s military junta invaded the Falklands at the beginning of April 1982, paradoxically, the crisis was the making of Thatcher as a national leader, almost in the same way that Narvik had made Churchill or Suez Macmillan.
The Government was on the spot. Carrington accepted responsibility and resigned; and Pym was drafted as a stop-gap Foreign Secretary. Thatcher seized on the mood of shock and dismay which swept an emergency sitting of the House of Commons – Foot was unexpectedly hot for resistance – and announced a full-scale military expedition to retake the islands. Pym’s efforts to find a peaceful settlement, brokered by the USA, were to prove as unavailing as Selwyn Lloyd’s in 1956, and for the same reason: that the prime minister had a different agenda. One difference from Suez was that neither opposition party opposed the Venture; indeed Owen, capitalizing on the fact that the islands had been effectively defended during his tenure as Foreign Secretary, now assumed a high profile, goading the Government to retrieve the situation. Of course, Galtieri and his regime had few apologists; in that sense he was the ideal enemy. An armada was massed to send British troops halfway round the world – as though Britain’s defences were not already fully stretched – in a response which amazed most foreigners as quite disproportionate to the original injury.
Assuming that the expedition was worthwhile, Thatcher proved a courageous leader. In particular, she was ready to face the risk that Argentine missiles might score devastating hits on crucial vessels, like the troopship Canberra, which were vulnerably exposed. In fact it was the sinking of the Argentine cruiser Belgrano at the beginning of May, well clear of the Falklands, that caused the major loss of life. It was at this point that the Sun blazoned its front page with the headline: ‘GOTCHA’. Within days, the loss of HMS Sheffield brought home the perilous nature of the whole enterprise; but once British troops had landed, the military operation was brought to an efficient conclusion with relatively light casualties. Thatcher drew her war cabinet, including Pym, Whitelaw and Parkinson, around her in pursuing her objectives with unflinching single-mindedness. She did not dwell on the financial costs of the war at a time of government cuts – the contingency fund proved elastic here – nor on how Britain would defend the Falklands in the future. For her the recapture of British territory was its own justification, even territory as bleak as glacial South Georgia, which, prior to the main assault, had been first to be retaken by the British forces. When the news was announced before the cameras in Downing Street, the prime minister swept aside questions with the simple injunction: ‘Rejoice!’
Thatcherite triumphalism was born in the Falklands war: a style of politics which, for good or ill, depended on taking the Iron Lady at her own valuation. With victory achieved by the end of June 1982, Thatcher declared: ‘We have ceased to be a nation in retreat. We have instead a newfound confidence – born in the economic battles at home and tested and found true 8,000 miles away.’ It was this link which was crucial in vindicating her own leadership, with the war as a metaphor for eventual victory on the economic front, confounding the faint hearts. After the Falklands the prime minister’s faith in her ability to triumph against the odds was shared by a wider section of the public. During eight weeks of crisis, her own approval rating in the opinion polls shot up, as did approval of the Government’s record; by July 1982 the Conservatives stood nearly 20 points clear of either Labour or the Alliance. From this point onward, Thatcher had the ability to win a second term.
The improving economic news was thus assured of a more favourable electoral reception. The recession had bottomed out in 1981; growth was resumed in 1982 and approached 4 per cent by 1983. True, unemployment stood at 3.2 million in January 1983 but there was a seasonal fall below the psychologically important level of 3 million by June. Figures of such magnitude would surely have been sufficient to condemn any other post-war government; the political achievement of Thatcherism was to refocus the economic argument. The Government’s record in reducing inflation was thus crucial. This was what it had promised, this was what it had delivered – how, or at what cost, or how permanently, became academic questions. Moreover this story looked better because mortgage payments were included in the RPI. This had exaggerated its rise somewhat at the peak of interest rates in 1980–81, but by 1983 mortgage rates had fallen by 4 per cent, mainly in the months before the election, which in turn brought the RPI under 5 per cent. For owner-occupiers who had kept their jobs, there was some comfort by 1983. Since unemployment had stabilized at 12–13 Per cent, this implied that 87 per cent were in work. It was the rise in unemployment, now apparently contained, which seems to have inspired widespread fears among the majority. But the unemployed themselves were, as in the 1930s, a minority interest, concentrated in parts of the country which voted Labour anyway.
What finally secured Thatcher’s position in the 1983 general election was the stance of the Labour Party. Foot, for all his literary gifts and parliamentary experience, did not look like an effective prime minister. Labour’s copious manifesto – ‘the longest suicide note in history’, according to one shadow minister – not only called for the restoration of the trade unions to their former position: it proposed Britain’s withdrawal from the EEC and from the Nato defence policy. Healey’s social-democratic wing of the party were cowed into an embarrassed acquiescence. This was the opportunity for the Alliance, which went into the campaign in May at only 17 per cent in the polls. Jenkins, labouring under the title of ‘prime-minister designate’, fought a lack-lustre campaign, but Steel’s refusal to break ranks was vindicated when the polls, day by day, showed the Alliance closing the gap with Labour. In fact, in the national vote it ended up 2 per cent behind Labour, which, at under 28 per cent, had its worst showing since 1918. The gap between the two forces in seats, of course, was much wider: 209 Labour MPs as against 23 for the Alliance. The breakthrough which the SDP needed had not occurred, leaving it with Jenkins, Owen and four other MPs; instead the effect was to augment the number of Liberal MPs to 17. The logic of fusion between the two wings of the Alliance was, however, resisted by Owen, who now succeeded Jenkins as leader of the SDP.
The disarray of the Opposition was a bonus for the Conservatives. With only 42 per cent of the vote, they managed to return nearly 400 MPs and increase their working majority to around 150. In Greater London they now had twice as many seats as Labour; in the rest of the south of England, 168 MPs to only 5 Liberals and 3 Labour. Here the advance of the Alliance had succeeded brilliantly in displacing the Labour Party as challenger, but almost completely failed to unsettle the Conservative Party as incumbent. Thatcher’s mastery of the field was shown in her ministerial changes. At last free to rid herself of Pym, she found herself unable to replace him at the Foreign Office with the victorious chairman of the Conservative Party, Parkinson, because of a looming sex scandal, which was to blight but not end his career. Instead, Howe became Foreign Secretary, and Lawson had the gratification of moving into his inheritance as Chancellor of the Exchequer. Ridley too was promoted, entering the cabinet as Transport Secretary.
This looked a thoroughly Thatcherite cabinet. Its only prominent ‘wet’ member was now Peter Walker, but in his new role as Energy Secretary he was at one with the prime minister. While it would be unfair to accuse the Government of courting a collision with the miners, it had taken purposeful steps to be ready for one, along lines sketched by Ridley as early as 1978. The lessons of Saltley had sunk home in ensuring, not only that coal stocks should be at a high level during a miners’ strike, but that they should be accessible, and alternative energy sources secured. The new laws on secondary picketing also reduced the efficacy of the tactics which the NUM had used during the last two coal strikes. The hero of Saltley, Arthur Scargill, was now president of the NUM; his uncompromising class-war rhetoric made him a worthy successor to Galtieri as a Tory hate-figure. From 1983 he confronted a new chairman of the NCB, Ian McGregor, a tough-minded Scottish-American industrialist who had just spent three years cutting back excess capacity in the British Steel Corporation; his brief was to do the same for the coal industry.
These were the ingredients for a major confrontation. In April 1984 Scargill called for industrial action over pit closures and miners went on strike throughout the country. Technically, however, this was not a national strike, since Scargill refused to call the national ballot which would then have been necessary; instead he relied on each area of the NUM to make it effective. This flawed approach, betraying some lack of confidence in his members, proved damaging since the Nottinghamshire miners, least at risk and least militant, went on working. Moreover Scargill discovered that mass picketing, notably by his own Yorkshire miners, had limited effects in stopping the coal moving, though it provoked violent clashes with the police that made for vivid televised images. There remained much public sympathy for the miners, despite Scargill; and the NCB under McGregor showed little finesse in public relations. But McGregor was not really in charge; despite denials, Walker was in fact determining strategy, reinforced by the resolve of the prime minister to ‘see off this further challenge.
The coal strike lasted a year; more days were lost than in any dispute since 1926. There was little prospect of a negotiated settlement between Scargill and Thatcher, both intent on complete victory, cost what it might. The costs on the Government side were seen in a setback to economic recovery; on the miners’ side, the families of men on strike bore the main suffering, and with impressive fortitude and resilience. But privation drove increasing numbers of miners back to work at the beginning of 1985 and the strike petered out. Scargill remained unrepentant, citing an acceleration of pit closures as testimony to his own foresight. The NUM lost half its membership.
The humbling of the miners, with their reputation as the shock troops of the labour movement, was shortly to be complemented by the equally forthright defeat of the newspaper printers, whose tight hold over Fleet Street had made them a byword for restrictive practices. When Murdoch, intent on asserting his ‘right to manage’, installed new computerized technology for Times Newspapers at a vast, fortified, new plant at Wapping, in the old docklands, he was able to invoke the cover of the law in a final confrontation with the old print unions. Neither of these bitter industrial disputes was over pay. The coal strike had; the greater political resonance but the Wapping dispute had the wider economic significance, by overcoming union resistance to changes in working practices. At Wapping the print unions were brutally stripped of the power to resist; many other unions lost the will to resist. Their readiness to negotiate productivity deals, at the expense of job losses, was one reason why those who kept their jobs were fewer but more efficient, and still relatively well paid. Here too Thatcher could rejoice in her battle honours.
VALUES
‘Economics are the method,’ said Thatcher in 1981; ‘the object is to change the heart and soul.’ Thatcherism was both more and less than a programme of economic liberalism, intent on maximizing the freedom of choice of the individual. Thatcher was never tempted by the thoroughgoing libertarian position which enjoined laissez-faire in matters of moral, personal and sexual conduct. The ‘permissive society’ was reviled, along with a liberal elite whom it was the mission of Thatcherite populism to dispossess. Tebbit caught this nicely in 1990 in a diatribe against ‘the insufferable, smug, sanctimonious, naive, guilt-ridden, wet, pink orthodoxy of that sunset home of that third-rate decade, the 1960s’. Even at the height of her power as prime minister, Thatcher’s public posture was still that of an outsider, appealing to public opinion over the heads of her own cabinet. She would voice popular discontent as though an unspecified ‘they’ ought to do something about it; she would openly applaud pro-hanging speeches at Conservative Party conferences, to the embarrassment of her own Home Secretary. Thatcher’s politics of moral populism, practised with a success unmatched since Gladstone, helped give her Government its authentic streak of radicalism – yet its project of economic liberalism was to be tempered, perhaps hampered, by her conservative instincts.
Thatcher saw no inconsistency in preaching a crusade for economic modernization which relied upon a return to ‘Victorian values’. These were selectively interpreted, with particular attention to restoring a distinction between the deserving and undeserving poor. Thatcher was often branded as a class warrior, for obvious reasons. She was viscerally against the unions; yet she was confident that she spoke for an influential section of the working class and she challenged the stereotypes of the old class system. Her undying quarrel with the Tory wets’ is focused in her memoirs by a revealing image of ‘the false squire’, with all his outward show of John Bull, but in fact pursuing the politics of calculation and accommodation. ‘Noblesse oblige’ and ‘One Nation’ were other code words for this supposedly Disraelian tradition, which had been much invoked under Churchill, Eden and Macmillan. Indeed the aged Macmillan, ennobled as the first Earl of Stockton in 1984, hobbled into the House of Lords to deliver a characteristically memorable and oblique rebuke to Thatcherism, evoking the fine qualities which the miners had revealed on the Somme. Yet the unspoken premise of this kind of Tory paternalism was that the Establishment, not only in Church and state but society too, was naturally Tory – something that could no longer be taken for granted.
When Anglican bishops persisted in drawing attention to the plight of the poor in deprived cities like Liverpool, it certainly showed that the Church of England had ceased to be the Tory Party at prayer. Archbishop Runcie, a mild enough man, displeased Thatcher with the insufficiently martial tone of the Falklands commemoration service. The Church became linked with the BBC and the universities as part of a deeply suspect liberal establishment. The epithet ‘chattering classes’ nicely described the articulate impotence of middle-class liberalism. In the 1987 election the Conservatives were supported by only one in three voters with a university education.
The disaffection between the Government and the traditional professions, long the backbone of Conservatism, was mutual and self-reinforcing. Highly paid lawyers found their own restrictive practices challenged by the Government’s radical agenda. Doctors were upset by sweeping, market-driven reforms in the NHS. Higher civil servants, schooled in a mandarin tradition, had to master a new managerial jargon and sometimes found that, under the ‘Next Steps’ programme, their jobs were hived off to semi-autonomous agencies. Professors groaned under the double affliction of a reduction in university funding and an increase in paperwork, much of it replicating business-style schemes of appraisal – of colleagues, of research output and of teaching quality. The ‘caring professions’ were the butt of Thatcherite scorn for institutionalizing ‘compassion’ as a welfare bureaucracy, to their own career benefit. To some extent this was the widening of an existing fissure between the self-interest of those employed in the public sector, vulnerable to spending cuts, and those making a living in the market sector who were increasingly resentful of high taxes. It sharpened a clash of cultures in ways well caught by David Lodge’s Nice Work (1988), as much a novel about the dichotomy between ‘two nations’ as Disraeli’s Sybil.
Thatcher spoke up for small businesses. Her own loyalty to the ethic of the corner shop made her sympathetic to the parallel growth of the service sector and of self-employment. Between 1979 and 1990 there was no net increase in employment in the UK, but the number who were self-employed went up by 1.5 million, from 8 per cent to 15 per cent of all employed persons. There had already been signs of a consumer rebellion against standardized marketing; the Campaign for Real Ale (CamRA) had focused the sentiment that small is beautiful on the pub, forging a highly effective alliance with small independent brewers to promote traditional (or ‘live’) English bitter ale, threatened by the mass production of pasteurized beer. This campaign had been so successful that the big brewers responded by reviving their own traditional ales (though lager was more profitable for them). Corner-shop bakeries showed the same trajectory. A taste for real ale hardly betokened Thatcherite politics – in fact the increased consumption of lager was associated with the rise of self-employed skilled workers – but both were working with the grain of economic change. The growing number of estate agents who were Conservative activists was often remarked.
The proper scope of public and private provision became a key issue. Whereas previous Conservative governments had tolerated the public sector, this one dismembered it. Privatization had not been a major theme in 1979 but it became the most dynamic policy of Thatcher’s period in office, and the one with which her name was linked worldwide. Part of the state holding in BP (British Petroleum) shares had been sold off by Healey after the IMF crisis, straightforwardly to raise revenue and plug the budget deficit. This remained one motive for privatization but it was subsumed in an ideological drive towards ‘popular capitalism’. Truly public ownership, it was suggested, meant putting shares in the hands of the public. The new Government accordingly sold more BP shares, as well as two nationalized companies, British Aerospace and Cable & Wireless. What raised the stakes was Lawson’s period as Secretary of State for Energy, 1981–3, during which he launched the privatization of Britoil (the former BNOC) for a billion pounds. Success bred success, and well-publicized flotations of cut-price shares on an increasingly buoyant market became a common pattern. By 1990, BP had gone for a total of £6 billion, British Gas for nearly £7 billion, British Telecom for nearly £5 billion. These were the giants, but Rolls-Royce, British Steel, British Airways, the airports and the water companies were also among the concerns privatized. The result was to cut the share of the public corporations in the economy by more than half: reducing employment in them from 8 million to 3 million, and cutting their contribution to GDP from over 10 per cent to under 5.
In so far as privatization replaced public with private monopolies, it simply mirrored the original nationalization process, and stored up a similar likelihood of disappointing hopes for transformative change. Radical Thatcherites, like Lawson and Ridley, were conscious of this problem. Yet the introduction of real competition was difficult to achieve, partly because some services were natural monopolies, partly because fragmented ownership would reduce profitability, and partly because it might leave some operations vulnerable to bigger foreign competitors. Such arguments were deployed by the powerful chairmen of British Gas and British Airways to keep their empires intact under privatization, knowing that the Government did not want to spoil the market price of the assets. The Government in the end cared more about instituting private ownership than breaking up monopoly. It did, however, impose new mechanisms for public regulation, arguing that these would be more effective if the Government were at arm’s length, with its defence of the customer facilitated by the fact that it was no longer the proprietor. Targets were thus specified for reducing prices, year by year, below the rate of inflation, policed by regulatory authorities with Newspeak names like Ofgas and Oftel.
Privatization undoubtedly made share ownership more accessible than before. During the 1980s the number of shareholders in the UK showed a threefold increase, to a total of 9 million. Yet the proportion of all shares in the hands of individuals (rather than institutional investors) fell by a third in the same period, to around 20 per cent. The fact is that these new shareholdings were puny in economic terms. Their importance to the individuals holding them was another matter; and this may not have been financial so much as psychological, helping to inculcate more favourable attitudes towards business. If not popular capitalism in a full sense, privatization temporarily made capitalism more popular. But the greatest coup for privatization was in sustaining the older Conservative conception of a ‘property-owning democracy’. The policy of giving council tenants the right to buy their own homes, at prices discounted according to their length of tenure, was implemented in 1980 by Michael Heseltine, as Secretary of State for the Environment. It caught on fast, with the political bonus that it embarrassed Labour councils which initially resisted. By 1987 1 million dwellings had been transferred from the public sector to owner occupation.
Owner-occupiers had long been recognized as a uniquely favourable constituency for the Conservatives. When their number became a majority of all households after 1970 it spelt danger for Labour. What privatization did was to help push owner-occupation up from 55 per cent of the market in 1980 to 67 per cent by 1990, by bringing it within reach of upwardly mobile skilled workers (C2s). At the outset finance was guaranteed by local councils; but the building societies soon saw their opportunity in advancing the vast majority of mortgage loans – thus returning to their artisan origins in an authentic triumph of Victorian values. Among skilled workers, traditionally a key element in the labour movement with their craft-union tradition, the Conservatives were to have a 7 per cent lead over Labour in the 1987 general election. On council estates, a freshly painted front door and a copy of the Sun in the letter-box was a signal of Thatcher’s achievement in remaking the Conservative Party. It became a coalition of strong bargainers in all classes.
Owner-occupiers were championed by the prime minister, albeit at the expense of free-market principles. As Chancellor, Lawson considered himself the true Thatcherite with his radical agenda of tax reform. It rested on the doctrine of tax neutrality, meaning that the state should raise revenue in ways that did not distort the free play of market forces between equally legitimate economic activities. His aim was to devise a rational structure of incentives for wealth creators by removing historic anomalies which had crept into the tax system. But be soon discovered that his plans fell foul of Thatcher’s solicitude for the owner-occupier and that she vetoed any attempt to reform the system of tax relief on mortgage-interest payments which, to the tax-reforming Chancellor, stood out as an expensive state subsidy, costing £7 billion by 1987, almost twice the UK public housing budget.
Moreover, the political salience of mortgage-interest rates was to become increasingly apparent in a nation of owner-occupiers. A demonstrable relationship between voting intentions and interest rates emerged in the 1980s. It meant that any rise in interest rates sent Government popularity plummeting – in much the same way that any rise in unemployment had done in an earlier period. This was a major change in electoral behaviour.
Public-service broadcasting was obviously unaccustomed to the market climate in which the BBC found itself operating in the 1980s. It was open to Government pressure, not only through appointments to its board, but also because of its continual need to renegotiate the level of the licence fee. Economic liberals, of course, argued ideally for a free market in broadcasting, commercially financed. The Peacock Report in 1986, however, produced a sophisticated ‘second-best’ defence of public regulation as serving the consumer interest, and recommended against introducing advertising on the BBC. The main new commercial opportunity came through the development of satellite television, which required heavy initial investment before it became viable. The result here was that the first company to be licensed, BSB, was cavalierly pre-empted by Murdoch’s Sky Television, which managed to get on the air first. Truly dished, BSB settled for a merger as BSkyB in 1990.
Rather than a major extension of cable facilities, Britain was distinguished by a faster spread of video than in either the USA or Europe; by 1990 one family in three had video. Moreover, three times out of four it was used to record programmes from the BBC or ITV networks. Since Channel 4, as a second commercial-television channel, had been on the air since 1982, terrestrial television output was evenly balanced between alternative popular and minority channels, one of each run by the BBC. In fact Channel 4, acting like a publisher rather than as a production company, was often closer to the BBC in general ethos and output, and was notably successful in commissioning British films made for television.
It was, above all, through television that Britain projected its image in the world. Not only did the quality of British television win widespread international recognition, which could be considered a tribute to its public-service tradition: the export of a relatively large proportion of programmes displayed an entrepreneurial ability to sell these cultural products, thus passing the test of the competitive market too.
The surrealistic extension of the conventions of television comedy in Monty Python’s Flying Circus achieved a worldwide impact, reinforced by subsequent films from this team. Their Life of Brian (1979) showed a naive land misunderstood hero who ended up being crucified two thousand years ago; its concluding song, sung from the cross, ‘Always Look on the Bright Side of Life’, was calculated to affront its audiences and make them laugh. They did so, in varying proportions. John Cleese subsequently recaptured and domesticated the animal spirits which had run wild in Monty Python, in the widely exported television series Fawlty Towers. Here the comedy lay in the tension between the tight, polite, English conventions observed in a small hotel and the suppressed hysteria welling up in its choleric proprietor. Cleese took similar themes into the cinema, first with Clockwise (1986), scripted by the novelist and playwright Michael Frayn, chronicling the disintegrating dignity of an obsessive headmaster, and in the portrayal of an inhibited English barrister falling in love in A Fish Called Wanda (1988). There were some compromises here to reach an international audience but also welcome signs of life in the hard-pressed British film industry.
The distinctive British forte lay not in blockbuster movies, where Hollywood was unrivalled, but in a sector where the line between the big and the small screen was often transgressed, on the production side by films made for television and on the consumption side by the spread of video. The adaptations for television of Evelyn Waugh’s Brideshead Revisited (1981) and Paul Scott’s Raj Quartet of novels, set in the last days of British India, as The Jewel in the Crown (1982), acquired a cachet as much-discussed series. Such prestige productions, with an afterlife on video, could creditably stand alongside the filmed adaptations that were successively made from E. M. Forster’s oeuvre. David Lean’s A Passage to India (1984), his last film, showed the possibilities for a big-production treatment, memorable for Peggy Ashcroft’s performance as Mrs Moore. Subsequent adaptations by Ismail Merchant and James Ivory worked meticulously to a smaller scale – though, following A Room with a View (1986) and Maurice (1987), their more ambitious Howards End (1992), with Anthony Hopkins and Emma Thompson nicely matched, was to become a major box-office success. These were fine productions by any standards, delicately translating many of the nuances of the original books on to the screen with a control of pace and sureness of touch which evocatively reconstituted the period settings.
Yet the very success of the Merchant-Ivory films, like that of the English-cottage-garden fabrics of the Laura Ashley label, could readily be bracketed by critics of a ‘heritage industry’, fostering backward-looking (and often factitious) perceptions of Britain. It is true that the tide of architectural conservation had turned since the 1960s, when fine old buildings were still being demolished in favour of urban motorways and tower blocks. By the time of his death in 1984, John Betjeman’s lifelong defence of Victoriana no longer seemed merely quaint; as Poet Laureate from 1972 he not only found wide appreciation for his unpretentiously accessible and often witty verse, but used his position to campaign for the preservation of threatened buildings, such as the Victorian gothic St Pancras Station. Not only were ancient monuments more zealously protected: schemes for the conservation and renovation of whole neighbourhoods, rather than comprehensive redevelopment, were now the fashionable idiom, even during the property boom of the late 1980s.
Now that tourism had become big business, was the country reduced to trading in nostalgia? The National Trust, founded in 1895 primarily to conserve the countryside, became the custodian of an increasing number of historic houses, with record-breaking numbers of visitors from home and abroad. But though foreign tourists often came to see historical sites, many also appreciated the vitality of the performing arts. In Scotland, the Edinburgh Festival had become a major draw every summer, attracting international recognition for the high calibre of the programme of music and drama which it mounted over a period of several weeks. It had famously generated a ‘fringe’ for aspiring visiting productions, commemorated in the title of the irreverent revue Beyond the Fringe (1960), which first made the names of Jonathan Miller, Alan Bennett, Dudley Moore and Peter Cook. In England, the six-week season of promenade concerts at the Albert Hall, sponsored by the BBC, was simply the most conspicuous part of a wide annual repertoire of classical music, available not only in London with its four major orchestras, but in cities like Birmingham where there was greater readiness to introduce modern composers.
The role of the Arts Council in disbursing public money had been important in generating a more vital climate for the arts in post-war Britain. The reopening of the Covent Garden Opera House was given a high priority and its running costs remained a major burden on the Arts Council budget. Criticized as elitist both from the egalitarian left and from the populist right, this policy nonetheless succeeded in helping British opera and ballet achieve a level of international status unprecedented in earlier generations. Building on established tradition, the Royal Shakespeare Theatre, based at Stratford-on-Avon, was eventually complemented by the opening of the National Theatre in London, initially using the Old Vic, which had long been home to Shakespearian productions. As the first director of the National, and the first actor to gain a peerage, Laurence Olivier crowned a long and uniquely distinguished career, with Kenneth Tynan as literary director giving an innovative twist to the selection of plays. Productions from both the RSC and the National subsequently had long runs in the West End, or on Broadway – for example, Peter Shaffer’s Amadeus (1979; filmed, 1984) – thus helping sustain a reputation for the London stage unrivalled in the English-speaking world.
Not until 1976 did the National Theatre acquire its own new building, on the South Bank, now a fine central site for the arts, looking across the Thames, upstream to Big Ben and downstream to St Paul’s. The external severity of Denys Lasdun’s chunky design, softened only by the wood-grain mouldings on the concrete façades, enclosed an airy functional interior, creating spacious amenities on several levels for audiences in either large auditorium, one with a traditional proscenium, the other with an open stage. Very much a building of its own time, it contrasted nicely with another period piece on the South Bank site: the Royal Festival Hall, with its sweeping lines and bold use of glass, designed by the London County Council’s architects’ department under Robert Matthew and Leslie Martin for the Festival of Britain in 1951. Held one hundred years after the Great Exhibition, the Festival of Britain symbolized an aspiration, not least on the part of the young team who planned it, for Britain’s creative and aesthetic regeneration -high hopes of which the present cluster of public buildings on the South Bank stands as a gloriously post-Victorian affirmation.
The one symbol of Britain which commanded instant international recognition and media attention remained the monarchy. It had, of course, acquired its late-twentieth-century glamour partly through astute media promotion, with a relaxation of television coverage over the years so that tantalizing glimpses of domesticity conveyed more personal and informal impressions of the whole royal family, now replete with four children of marriageable age. Charles, Prince of Wales, broke new ground for royalty in gaining a good honours degree at Cambridge and was not deterred from expressing his concern on a range of environmental issues, from architecture to the social plight of the inner cities. In 1981, at the age of thirty-three, he married Lady Diana Spencer; she was just twenty, virtually uneducated, in a casual upper-class way, and apparently a virgin (an important consideration in the making of this match, or mismatch). Their wedding went round the world as a television spectacular, to be repeated when Prince Andrew married in 1986. The birth of their respective children helped to domesticate fairy-tale romance as ongoing soap opera, enhancing a happy, if increasingly cloying, impression. Once the media had got so close, however, the successive onset of marital breakdown, culminating in separation or divorce for all of the Queen’s three married children by 1992, was equally over-exposed. This hardly represented values which their great-great-great-grandmother would have acknowledged.
Victorian values, indeed, proved as elusive as a salvation for Britain as they were elastic in definition. If British culture, as some argued, had proved resistant to the entrepreneurial spirit for generations, a change of heart and soul might well need more than a few years to accomplish. Perhaps that is what Thatcher meant by saying in 1990: ‘Thatcherism is not for a decade. It is for centuries.’ Thatcher’s electoral successes did not create a Thatcherite electorate, with 58 per cent voting against her in 1983 and 1987 alike. Moreover, survey evidence in the late 1980s suggests that only one in five respondents – considerably fewer than a decade before – agreed with the proposition that if people were poor, their own lack of effort was to blame. The National Health Service remained popular, and people told pollsters that they preferred increased welfare spending to tax cuts – though tax cuts seem to have proved a stronger motive in the solitude of the polling booth.
All told, it is easier to show that Thatcherism had notable successes in modifying the immediate behaviour of the British people at a particular stage in the economic cycle, than to point to a fundamental transformation of attitudes. The years of recession had left plenty of room for a strong recovery in the 1980s, if only a recovery of an essentially cyclical kind. Talk of ending a century of decline often meant reversing a decade of decline – a worthwhile but less heroic undertaking, and one that need not be mistaken for either an economic miracle or a historical watershed.
BOOM AND BUST
Nowhere was Thatcher more warmly received than in the USA. Just as Heath’s had been the least pro-American, and most pro-European, Government since the Second World War, Thatcher’s was quite the reverse. An idealized USA was held up by Thatcherites as a model of a society based on the free market, minimal government, anti-Communism, the mighty dollar and Almighty God. After Ronald Reagan was elected President in 1980, Thatcher found a real ally, with her trenchant expositions of their common outlook complemented by his benignly bemused concurrence. This was indeed a special relationship, which helped to inflate Thatcher’s international standing. As her Foreign Secretary, Sir Geoffrey Howe was put, and kept, very much in the shade. Thatcher knew that covert US support had been vital during the Falklands war. For all of this she was thankful and she showed it in her unwavering public support for the USA. This tallied with her convictions in facilitating the deployment of the mobile Cruise missiles at two bases in England – despite long-running protests organized by CND – in exchange for a promise of Trident missiles to update the British nuclear force. The real test came when the President’s thinking and Thatcher’s diverged.
The Strategic Defence Initiative (SDI) purported to give the USA a high-technology defence system against Soviet nuclear attack, thus cancelling the premise of mutually assured destruction (MAD) which was assumed to have secured both sides from the threat of attack. To Reagan, ‘star wars’ opened the possibility of a world freed of all nuclear weapons, and he was accordingly set on going ahead. To Gorbachov, the new Soviet leader, the SDI was destabilizing to the nuclear balance, and its abandonment by the USA a prerequisite of peace. Thatcher agreed with neither. Nor did she accept that, because the SDI was appallingly expensive and technically unproven, it was therefore not worthwhile to pursue it. Instead she considered that even an inefficient SDI still tipped the nuclear odds against the Soviet Union – and that any effort it made to develop its own equally costly system would bring the Soviet economy to its knees. In the short term, therefore, Thatcher was horrified by the outcome of the Reykjavik summit in 1986, when Reagan had been on the point of accepting a phased reduction of all strategic missiles, the ‘zero option’, in return for not implementing the SDI. One implication was that the Trident missiles destined for the UK would also go. Much to Thatcher’s relief, such an agreement proved abortive, and a hastily arranged visit to Washington gave her the reassurance she needed.
Not that Thatcher was personally hostile to Gorbachov. An invitation for him to visit Chequers, while the ailing Chernenko was still Soviet leader in 1984, had paid off handsomely; Gorbachov proved to be a man she could do business with, as Thatcher readily told the press. During the Gorbachov era, Thatcher welcomed reform but the Iron Lady did not belie her sobriquet. She braved Soviet disapproval to voice strong support for the struggle by the Solidarity movement in Poland, even if this made her into an unlikely champion of trade-union methods. A reciprocal enthusiasm for Thatcherism was displayed in eastern Europe, at least temporarily, as the Communist regimes crumbled. When the Berlin wall came down at the end of 1989, she could claim a part in bringing the cold war to an end – fit reason to rejoice.
The personal fortitude which the public had glimpsed in her during the Falklands campaign was put to a severe test during the Conservative Party conference in October 1984, when an IRA bomb exploded in Thatcher’s Brighton hotel, severely injuring the Tebbits in an adjacent room and killing the wife of the chief whip. Thatcher’s insistence that the conference debates continue as planned next day, with an undaunted speech from herself, showed that her image as the Iron Lady had stuck with her for good reason. It was an important part of her appeal, at home as well as abroad. Defence policy became one of the Conservatives’ big electoral assets; correspondingly, the unilateralist stance of the Labour Party in two general elections was fundamental to its lack of credibility.
Since January 1983 Michael Heseltine, a forceful minister with a charismatic hold over the Conservative Party conference, had assumed a high profile as Secretary of State for Defence. In 1981, thirsting for cuts, the Government had accepted the findings of a major defence review; it proposed scrapping a number of naval surface vessels, which within months played a key role in retaking the Falklands. The review was then scrapped instead. But defence procurement continued to pose acute problems, as shown by Heseltine’s difficulties over the Westland helicopter company, based at Yeovil. What made the Westland crisis so explosive by December 1985 was the way it triggered two other issues. One was the EC dimension, since Heseltine wanted to explore European alternatives to a projected US takeover of Westland; but the real dynamite lay in Thatcher’s relations with her cabinet colleagues.
The new Secretary of State for Industry, Leon Brittan, was a rising star in the cabinet, clearly ‘one of us’. It was hardly surprising that his free-market outlook made him ready to approve the US takeover; Thadcher supported him, regarding talk of a European option as a waste of time and as sheer anti-Americanism. Heseltine insisted that he was being denied proper discussion in cabinet. In an attempt to counter him, Brittan’s department was drawn into leaking sensitive material to the press, seemingly with the connivance of Downing Street. Hesel-tine’s resignation in January 1986 – striding out of 10 Downing Street in front of the television cameras – did nothing to quell damaging speculation. Moreover the trail led back towards the prime minister, whose apparent duplicity suddenly made her position very shaky. She was much assisted at this point by Brittan’s resignation – pained but, above all, discreet. (Thatcher was later to appoint him one of the two British members of the European Commission: the least she could do for him.) In the event, then, Thatcher survived, aided in the House by the Opposition’s failure to press the issue effectively. The whole episode, however, especially the sacrifice of Brittan, gave her colleagues uneasy thoughts about her concept of loyalty; and it set up Heseltine as a backbench critic, nursing his grievance while biding his time.
The curious uncertainty of the Government’s standing was revealed by its vulnerability in by-elections. The Alliance showed that it had staying power by unexpectedly winning Portsmouth South in June 1984 and in the next summer all three parties were neck and neck in the polls, a position which Westland helped to prolong. Not until June 1986 did the economic boom float the Conservatives out of third place nationally, and not until the end of the year did Gallup put them ahead again. By May 1987, when an election was called, the Conservatives were ten points clear – but with the Alliance rather than Labour in second place.
When Foot stepped down in 1983, the Labour leadership passed from an old unilateralist to a young unilateralist. Neil Kinnock, just turned forty, won acceptance from the left partly because he was untainted by ministerial office under Wilson and Callaghan. It also meant, of course, that he lacked front-bench experience. He came out of the Welsh Bevan-ite tradition; all his emotions and rhetoric tugged him to the left, his current thinking on a viable electoral strategy for Labour drew him to the centre. His ringing denunciation of the hard-left Militant Tendency at the Labour Party conference in October 1985 was an open step; but privately he knew that Labour was still hobbled by its unilateralist stance. The Conservatives’ credentials on defence were also enhanced by disputes within the Alliance, where Owen had used his position as leader of the SDP to make support of Trident into a matter of faith. Like the Conservatives, he insisted that the independence secured by a British deterrent (albeit one supplied by the USA) was the overriding issue, whereas the majority position in the Alliance had always been that British commitment to Nato was the crux.
It was in this context that the Opposition’s disarray over defence became so damaging. The strong showing for the Alliance was actually less threatening to the Conservatives than it seemed; it simply meant that there would be fierce competition for second place throughout Tory-held southern England. The Labour Party certainly fought a much more effective campaign in 1987 than four years previously. A party political broadcast, entitled Kinnock, enlisted the talents of Hugh Hudson, whose film Chariots of Fire (1981) had given a thrilling depiction of Britons striving for medals at the 1924 Olympics – skills which were enlisted, sixty years on, to suggest Kinnock’s golden potential. The campaign showed how much Labour Party managers had learned under Thatcherism: how to market their product in a way that appealed to customers who were ready to shop around, irrespective of brand loyalty.
Yet Labour policy had changed little, as Conservatives kept pointing out. As for the Alliance, the handicap of a dual leadership – Steel for the Liberals, Owen for the SDP – was brought home by the fact that they plainly spoke in different tones: Owen essentially as a candid friend of the Government, Steel as an opposition critic. Jenkins and Williams plainly sided with Steel rather than their increasingly isolated SDP colleague. A post-election split thus emerged between, on the one side, the bulk of the SDP, who wanted a merger with the Liberals, and, on the other, the rump of independent Owenites who clung to the title SDP; and the subsequent formation of the Liberal Democrats was to bear these disabling scars.
What is surprising in hindsight is that the Conservatives were ever worried about the election result. Yet a week before polling day, a rogue poll was enough to provoke ‘a ding-dong row’ (Thatcher’s own description) between herself and the party chairman, Tebbit. Their relations never fully recovered from ‘wobbly Thursday’; and it is significant that such a committed Thatcherite was arraigned, in effect, for not building the campaign more around the prime minister herself. Certainly she took the election verdict as a personal endorsement. Compared with 1983, the Conservative vote was steady on 42 per cent, Labour up three points to 31 per cent – just like 1931 – with the Alliance fading to 23 per cent. The Conservatives had 376 seats, still leaving them a parliamentary majority in three figures, while Labour gained 20 seats to give them 229 MPs, with 22 for the Alliance. This was again a victory achieved in the south of England, where Labour retained only three seats outside Greater London – and this time a new post-war low of 23 out of 84 London constituencies. In Scotland, by contrast, Labour now had 50 seats to the Conservatives’ 10, and in Wales Labour had 24, the Conservatives only 8. Rather than One Nation, there were now at least three.
The state of the economy was, of course, fundamental. Conservatives boasted that British productivity now showed the best record in Europe. In the small print, this claim applied only to gains in productivity. Since the manufacturing base had contracted faster than in other countries during the 1980s, shedding a couple of million of the presumably less efficient workers, higher output per head was indeed achieved with the leaner and fitter workforce that remained. The real test was to consolidate these gains once unemployment began to subside.
The headline figures for the registered unemployed reached a peak of 3.4 million in January 1986 and thereafter showed a steady fall to 1.6 million in June 1990. The changes which the Government introduced in counting unemployment not only exercised the Opposition, who cried fraud, but obscured the true trend. Measured on a standard basis, OECD figures showed British unemployment at its peak as early as 1983, at over 12 per cent of the labour force, two points above the EEC average, with a fall to 6 per cent by 1990, a couple of points under the European average. Two conclusions are clear: that, however unemployment in the UK was measured, its best year in the 1980s was worse than its worst year in the 1970s, and that it went through a more volatile cycle, both up and down, than in comparable countries. The good news lay in the strength of the recovery. Measured from peak to peak, economic growth was 3.7 per cent in the five years 1984–8 – beating the previous records in 1961–4 and 1969–73.
The Lawson boom thus takes its place in history alongside Maudling’s ‘dash for growth’ and the Barber boom. In each case a strong pattern of cyclical recovery was further fuelled by an injection of consumer demand which left the economy overheated. The difference, in the case of the Lawson boom, was that this could hardly be attributed to an excess of Keynesian zeal. Lawson thought of himself as a principled monetarist, though some were left puzzled as to what the Chancellor’s principles actually were. Certainly the old target of £M3 was defunct, as Lawson’s Mansion House speech in 1985 finally acknowledged. The problem was what to put in its place. By 1985 he saw the real alternative to £M3 in the discipline of a fixed parity for sterling, much like the old gold standard. This was his argument for joining the European Exchange Rate Mechanism (ERM); by locking sterling into this system, he hoped to lock the UK into a permanently lower rate of inflation, which remained the essential objective.
If the UK were ever to join the ERM, this was surely the moment. Labour had spurned it when it was established in 1979, but the experience of the early 1980s, when sterling exhibited the volatility of a petrocurrency, brought home the need of British export industries for stable exchange rates. But whenever Lawson broached his proposal to the prime minister he found it vetoed, or at least stalled. The logic of Thatcher’s argument against the ERM – maintaining that it would impair the Government’s freedom of action on economic policy – was that in the last analysis she preferred to retain the option of devaluation. In practice she often flinched from rises in interest rates even though they were indispensable in running a tight monetary policy – because of the effect on the politically sensitive mortgage rate. This was not the immediate problem since base rate moved generally downward, albeit in irregular steps, from 14 per cent at the beginning of 1985 to under 8 per cent in the spring of 1988. Mortgage rates followed, a step or two behind.
However, signs of a lack of trust between 10 and 11 Downing Street became increasingly apparent. The prime minister preferred to rely on the advice of Professor Walters, an unabashed opponent of the ERM. Lawson, who liked to play his cards close to his chest, resorted to his own informal exchange-rate mechanism. It became common knowledge that the pound was in fact shadowing the German mark at a parity of 3 DM, though Thatcher subsequently purported to have no knowledge of this. Government unity showed signs of cracking in March 1988, when Thatcher’s statement in the Commons that there was ‘no way in which one can buck the market’ was taken as challenging Lawson’s exchange-rate policy. The prime minister backed down, for the moment.
Yet an extraordinary public euphoria persisted for more than a year in the afterglow of Thatcher’s third election victory. Combined with the private conflict in Downing Street, this helps to explain two steps which, in hindsight, were widely regarded as blunders: the 1988 Budget and the poll tax. Because the prime minister and her ‘brilliant Chancellor’, as she publicly called him, were jointly credited with achieving an economic miracle, they were inseparably yoked together, despite their deadlock on the twin issues of the ERM and monetary policy. There was, however, one major area of agreement between them: that tax cuts were a good thing. Lawson was therefore unconstrained in introducing his great tax-cutting Budget in March 1988. The basic rate of income tax, which had already been brought down to 29 per cent in 1986, and to 27 per cent in 1987, was now cut to 25 per cent. Further, the top rate of income tax was cut from 60 to 40 per cent.
The Conservatives had thus fulfilled their pledges to cut income taxes. The overall burden of taxation in the UK actually increased during the 1980s, as in most comparable countries, but its distribution certainly altered, with an increase in indirect taxes financing a cut in personal taxes. This in turn had powerful redistributive effects; while the poor got relatively poorer, the rich got absolutely richer, before as well as after tax.1 Not only were the tax gains very considerable for high earners, many of these were simultaneously benefiting from big pay rises, notably in recently privatized companies. The conspicuous affluence of ‘yuppies’ in the City had solid fiscal arithmetic behind it. Lawson’s guiding axiom was that, through creating such incentives, he was priming the engine that would in turn create future wealth. Indeed in 1988 he claimed success on all fronts simultaneously – prices and interest rates down, employment and growth up, and a Budget surplus despite his tax cuts.
The sincerity of Lawson’s convictions need not be doubted, since a cynical Chancellor would have introduced a giveaway budget before rather than after an election. The inflationary effects of the boost in consumer demand, however, soon showed through; the rate of inflation rose from 4 per cent at the beginning of 1988 to over 10 per cent in the autumn of 1990. As in the Barber boom, there was an explosion of house prices. As in Maudling’s dash for growth, the balance of payments rapidly deteriorated. One reason why consumer goods were sucked in is that the slump of the early 1980s had destroyed so much manufacturing capacity at home; a quick increase in production was now impossible. It was oil which had hitherto cushioned the balance of payments. In 1985 the oil surplus peaked at £8 billion; a sharp price fall then cut this in half. This did not matter in the short term since the balance of payments was still (just) in balance in 1986. But by 1989 the total deficit had opened up to a record of £20 billion, or 4.4 per cent of GDP – as bad as 1974.
Lawson affected unconcern, saying that it was for the private sector to cope with a deficit of its own making. If only because of its implications for the exchange rate, such a view was unsustainable, the more so since a parallel deficit in the Budget soon appeared. Again, this had been masked by windfall gains, since the proceeds of privatization were counted against expenditure. No less than £13 billion of the Budget surplus of £14.5 billion which Lawson realized in 1988–9 came from the sale of public assets, which was not to be repeated on this scale. As these problems mounted, confidence ebbed, and the Government uneasily woke up from its dream. Interest rates were steadily jacked up from 7.5 per cent in the springtime of 1988 to 15 per cent in the far from contented winter of 1989–90.
If the 1988 Budget was the product of Lawson’s hubris, Thatcher’s nemesis came with the poll tax. There had long been a Conservative commitment to reform local government finance, by replacing household rates; it took Thatcher to declare this the flagship of her legislative programme after 1987. Hence the scheme for a flat-rate ‘community charge’, to be paid personally by every adult inhabitant, not Just property-owners. The aim was to restrain the free-spending policies that were associated with Labour councils, an area in which Conservatives felt impotent.1 Thatcher’s defiant response was to mobilize the power of central Government against her enemies. The (Labour-controlled) Greater London Council was thus abolished in 1985, while rate-capping measures, restricting the level of local expenditure, hobbled other councils.
The poll tax promised a more radical solution: that was its charm for Ridley as the minister responsible for implementing it. It would strip Labour of its ability to milk local property-owners by making each and every voter bear a full share of the costs incurred by prodigal spending. Thus democratic accountability would remove the need for rate-capping. Here was the biggest alteration in local government finance since the reforms of the late 1920s, implemented by Chamberlain only when he had secured Treasury support. By contrast, Thatcher and Ridley pressed on with their plan without squaring Lawson, who mocked the idea.
Had the transition to a poll tax been sweetened by the Chancellor from his overflowing coffers in 1988, it need not have been an electoral disaster. Instead, radical change came, in Scotland in 1989, elsewhere in 1990, when the boom had already gone sour, leaving more losers than gainers. The fact that the only conspicuous gainers were again the wealthy excited real anger, even among some Conservatives. Moreover, the great principle of local accountability was thrown over when Thatcher decided she needed rate-capping as well as the poll tax. Worst of all, not only did Labour councils exploit the confusion to increase spending regardless, the voters apparently held the Government accountable. By the spring of 1990 opinion polls put the Conservatives at under 30 per cent, more than twenty points behind Labour. A by-election in Mid-Staffordshire gave Labour its biggest victory in years.
It was not, however, the poll tax which triggered Thatcher’s downfall. True, the anniversary of her ten years as prime minister, in May 1989, had produced a curiously cool response, and she had to face a token backbench opponent for the party leadership in December. But she could have soldiered on with a united cabinet at her back. This she did not have by 1990, and the reason was not the poll tax but Europe. Britain’s relations with the European Community formed the submerged reef on which the Thatcher Government foundered in successive ministerial crises. It had played a part in the resignation of Heseltine, who was now widely seen as a real challenger for the leadership. It was the reason why Ridley, perhaps Thatcher’s staunchest supporter, had to resign in June 1990, after making xenophobic remarks about the Germans. Finally and fatally, European policy was behind the resignations of Lawson and Howe.
With Whitelaw’s retirement, following a stroke in 1988, Howe was Thatcher’s most senior colleague, yet she treated him with scant respect, for which she paid dearly in the end. As Foreign Secretary, he wanted to improve relations with the EC; he had prevailed on Thatcher to sign the Single European Act in 1985, which committed Britain to the principle of closer integration. When Thatcher still refused to consider joining the ERM in 1989, claiming in Wilsonian style that the time was not ripe, Howe was prepared to join forces with Lawson in putting pressure on her. Together they confronted her before the Madrid summit of EC leaders, threatening resignation. For the moment she held them off; indeed she was able to take her revenge on Howe by moving him out of the Foreign Office in July, in favour of the more compliant figure of John Major – a startling promotion. Howe consoled himself meanwhile with the rather empty title of deputy prime minister.
Lawson was generally disturbed by what he saw as the prime minister’s increasingly truculent chauvinism, pandering to tabloid prejudices; but he was more immediately upset by the subversive role of Walters as her personal economic adviser, especially his declared scorn for the ERM. Since this had become public, and Thatcher refused to part with Walters, Lawson felt he had no alternative but to resign in November 1989. Thatcher professed to find this incomprehensible. Unabashed, she again filled the gap with Major, most of whose ministerial experience had been at the Treasury. Douglas Hurd, an old Heathite, became Foreign Secretary, leaving this a far-from-Thatcherite cabinet. It was Major who now secured the prime minister’s consent for entry to the ERM. This was certainly no panacea; from the outset, the weakened state of the economy made it an uphill struggle to maintain the parity of sterling. Like Britain’s entry to the EC in the first place, here was an object lesson in the importance of doing the right thing at the right moment.
Almost exactly a year after Lawson’s resignation came Howe’s, which Thatcher recognized as almost exactly a rerun, right down to her professed incomprehension about the reasons for the coincidence. Again it was commitment to European integration which was at issue. This time Thatcher’s carefully coached acquiescence could not hold under questioning in the Commons on 30 October 1990 – ‘No, no, no!’ Howe decided to go. The incident came within a couple of weeks of the Conservatives’ loss of a by-election in the safe seat of Eastbourne – not to Labour, of course, but to the supposedly defunct Liberal Democrats, whom the poll tax had put back in business as a third party. Talk of a serious challenge for the leadership – Heseltine’s was the obvious name – was rife among worried Conservative MPs. What made this certain was Howe’s resignation speech, its subfusc delivery a perfect foil to its deadly impact, as he spoke of wrestling with a conflict of loyalties, ‘for perhaps too long’. When Heseltine declared his candidature, he was supported by both Howe and Lawson.
That Thatcher’s leadership was now caught in a spiral of disintegration was apparent – except to her campaign managers, who felt they need not actively canvass support. Yet in the first ballot she polled only 204 to Heseltine’s 152. True, under the revised rules, she fell a scant handful of votes short of being declared outright winner; but for a sitting prime minister, who had led the party through three successive parliaments, such calculations were beside the point, if two out of five Tory MPs had withdrawn their confidence. Her decision to resign followed because only her withdrawal could ensure Heseltine’s defeat.
But by whom? Again Major slipped into the vacant role. He had hardly been groomed for the succession, but a series of temporary favourites had stumbled – or been pushed – and Major, a mere Chief Secretary to the Treasury sixteen months previously, took the final step in a dizzy ascent. Facing not only Heseltine but the old Etonian Hurd in the second ballot, Major found his humble origins an asset in projecting himself as the candidate who would keep the Government safe for Thatcherism, which was enough to give him the votes he needed. Thus in November 1990, the Conservative Party, awed at the thought of what it had done, gave Thatcher a fine send-off, with some pangs of guilt that her eleven and a half years as prime minister had ended in this way.
It is not true that Margaret Thatcher did untold harm, if only because the chattering classes constantly told each other about the harm she was doing. Yet the fruits of her reforms were accepted by many long-standing opponents. Though their hearts might have bled for the miners, they did not propose to put the unions back in the saddle; though they might have been scornful of privatization, they did not propose to go back to a regime of nationalized industries and council houses. The post-Thatcher Labour Party bore a closer resemblance to the SDP of ten years previously than partisans of either cared to acknowledge.
Thatcher achieved her victories at a terrible cost, usually borne by others. By any test, from statistical surveys of relative incomes to the striking reappearance of beggars on the street, Britain became a more unequal society. Moreover, in carrying out her grand design, Thatcher relied on rough-and-ready improvisation far more often than she liked to think. The main plank of her 1979 programme, monetarism, was soon splintered; yet the fact that its chief object was realized provided Thatcherites with sufficient justification for such departures from plan. As Lawson put it in his Mansion House speech of 1985: ‘The inflation rate is judge and jury.’ When Thatcher left office, the rise in the RPI had again hit double figures. Unemployment, on the other hand, was below 2 million. Just as, with the onset of a cyclical recession, inflation was subsequently to fall again, so unemployment was to rise. Some trade-off between the the two was plainly not unique to the Keynesian policies which Thatcherism claimed to have superseded. Asked what she had changed, Maragaret Thatcher once assured an interviewer that she had ‘changed everything’. In her memoirs she was to strike a different note: ‘In politics there are no final victories.’