No Such Thing As Society

by Andy McSmith

  The third party had been enduring such a dire time that there was a serious question mark over its long-term survival. In 1987, the Liberal-SDP Alliance, under the joint leadership of David Owen and David Steel, had fallen victim, again, to a disproportionate election system that allotted them only 22 MPs – 17 Liberals and 5 for the SDP – on 23 per cent of the vote. Most members of both parties thought it was time to end the Alliance and merge, which they duly voted to do; but a minority, including David Owen, refused to be bound by the result and insisted on maintaining a separate SDP. The two parties went into direct competition, replacing the old electoral pact with something resembling a suicide pact. The Alliance’s greatest strength had been its capacity to win parliamentary by-elections, but they were not able to do this when they fought each other. In the by-election in Richmond, Yorkshire, in February 1989, the candidates of the SDP and Democrats (as the merged Alliance was briefly called before they became the Liberal Democrats in October 1989) took a combined total of nearly 28,500 votes, but because they were divided the winner, with just over 19,500, was the twenty-seven-year-old Conservative, William Hague. In the election to the European Parliament, in June 1989, the Green Party came third, with nearly 2.3mn votes, 1.3m more than the Democrats. By now, the Democrats’ new leader, Paddy Ashdown, was in despair. He wrote in his diary: ‘I can’t snap out of the depression. We seem to be on the edge of oblivion. I don’t think I have ever been so miserable in my entire life.’1 The SDP’s final humiliation was a by-election in Bootle in May 1990, in which they came sixth, behind Labour, the Conservatives, the Liberal Democrats, the Greens and Screaming Lord Sutch of the Monster Raving Loony Party. The party then wound itself up, leaving the field to Paddy Ashdown, who began the long, slow task of rebuilding the Lib Dems as a credible third party.

  Their travails greatly amused Thatcher’s speechwriters, and soon she had the Conservative Party faithful roaring with laughter as she declared:

  Politics is a serious business, and one should not lower the tone unduly. [Here the official transcript records ‘laughter’.] So I will say only this of the Liberal Democrat symbol and of the party it symbolises. This is an ex-parrot. [Loud laughter and applause.] It is not merely stunned. It has ceased to be, expired and gone to meet its maker. [Laughter and applause.] It is a parrot no more. [Laughter.] It has rung down the curtain and joined the choir invisible. [Laughter.] This is a late parrot.2

  It was surely Margaret Thatcher’s funniest moment. A week later, others could laugh, too, because the parrot she had pronounced dead revived and gave her a nasty peck. There was a by-election in Eastbourne on 18 October 1990, which the Conservatives had every reason to be confident of winning. It was not just that they had won this very middle-class seat in 1987 with a majority of nearly 17,000, but this was Ian Gow’s old seat, and it was confidently expected that the awful circumstances of his assassination would bring out the Conservative vote. To general astonishment, the Lib Dems won comfortably, with a 20 per cent swing. The Conservatives had thought that the worst was behind them, but as Parliament reassembled after the long summer break, they realized that could yet lose the next general election.

  Thatcher might have survived the domestic disaster of the poll tax had her attitude to the world beyond Britain’s shores not looked so inward. Her views on race belonged to a different decade, as she demonstrated time and again in her indulgence of the apartheid system. Though she had once been keen enough to see British athletes boycott the Moscow Olympics, she resolutely refused to see a case for sanctions against white-dominated South Africa. ‘Sanctions only work by causing unemployment and starvation and misery,’3 was her fixed view. She did, however, see a need for apartheid to reform itself, and when at last South Africa had a reforming political leader in President F.W. de Klerk, she hailed him as the new Gorbachev. The great symbolic event of February 1990 was the release of Nelson Mandela after more than twenty-seven years in prison, which did not mean that the apartheid system had been dismantled, but was a sign that the end was near. Thatcher had scheduled a press conference on the steps of Downing Street to mark Mandela’s release, but was so shocked to learn that as he emerged from prison he said that the ANC should not disarm while apartheid continued to exist that she cancelled her appearance.4 She wrote to President George Bush Sr and other world leaders suggesting that the ban on new investment in South Africa be lifted without delay. When the twelve EU foreign ministers met, ten days later, no one supported her. Even George Bush rang to say that he could not support her either because of opposition from the US Congress.

  The collapse of communism in Eastern Europe ought to have reinforced Mrs Thatcher’s stature on the world stage because no democratically elected leader had been more staunchly anti-Communist than the one the Russians called the Iron Lady. To listen to her acolytes it was as if she and Ronald Reagan had brought down the whole system, yet she was curiously diminished by the loss of a convenient enemy. ‘Too often the democratic peaceful nations let slip their guard because they assumed that the danger had gone, assumed that the future would be one of peace and progress,’5 she told the Young Conservatives’ conference on the eve of Mandela’s release. She was not to be lulled into thinking that tearing down the Berlin Wall meant that the Communist danger had passed, as she demonstrated when she told an astonished House of Commons that Neil Kinnock was a ‘crypto Communist’.6 He burst out laughing.

  By the spring of 1990, it was obvious that the East German people wanted to share western prosperity, and the West German government, led by Helmut Kohl, was determined to see through reunification, despite the immense cost. This prospect revived all Thatcher’s wartime prejudices. She lectured the Germans on why the future of their country was not a matter for them alone; they must take into account ‘the sensitivities and interests of others in Europe as well’ because, as she explained to the Board of Deputies of British Jews, ‘it is understandable that, for some, bitter memories of the past should colour their view of the present and the future’.7 Her fears were echoed in Poland, whose borders had been shoved westwards at Germany’s expense in 1945. The West Germans had never recognized the Oder-Neisse line (the Polish-German border drawn after the Second World War), which had been an academic question while East Germany was in the way, but not anymore. No one leant the Poles a more sympathetic ear than Margaret Thatcher, and on 23 March 1990, as East Germany held its first free election in fifty-eight years, she gave an interview to Der Spiegel in which she claimed: ‘I’ve heard Helmut say, “No, I guarantee nothing, I do not recognize the present borders.” I heard it myself after the dinner in Strasbourg.’ As soon as this was reported to Chancellor Kohl, he ordered his press spokesman to deny that he had ever said any such thing. The Sunday Times accused her of ‘consummate folly to give the Germans the impression that the British government is, at best, grudging in its support for the reunification of the two parts of their nation and, at worst, hostile’.8 Even the normally chauvinist Daily Express weighed in two days later: ‘Surely, forty-five years after the end of World War Two . . . we can accept this momentous event with something more imaginative and generous than public foreboding?’9 When Helmut Kohl arrived on a visit at the end of the week, a slightly chastened Mrs Thatcher told him: ‘I do not think that it will come as a great surprise to anyone that I am not always the world’s greatest diplomat and thank goodness for that!’10

  Indeed, her diplomatic style did not come as a surprise to Germany’s leaders. They had been on the receiving end of it for more than ten years. Mrs Thatcher had set the tone of her relations with Britain’s EU partners at the start of her term in office when she launched a highly publicized campaign to claim back what she called ‘our’ money from the EU. Membership had become annually more expensive for the UK, whose net contribution to the EU was £800m in 1978, and threatened to be £1 billion in 1979, until she embarked on a ferocious campaign to have it reduced. It took four years to reach a satisfactory agreement. While Thatcher was undoubtedly just
ified in doing battle on behalf of British taxpayers, her diplomatic style shocked some of the Europeans. In May 1980, EEC Commissioner Christopher Tugendhat was told by a German official that her manner had hurt Helmut Schmidt, the chancellor, ‘in his male pride’. ‘If things are to be put right between our two countries, she must find a way of making it up to him,’11 he added.

  In the middle of the decade, Thatcher seemed to settle down and recognize that there were benefits to EU membership. She believed in free trade and, late in 1985, after only a relatively minor fracas with the Germans, she signed the Single European Act, believing it would accelerate progress towards a single market, although it contained the phrase ‘Economic and Monetary Union’, which clearly committed the signatories to work towards abolishing their separate currencies, sublimating them in what is now known as the euro. She seems to have believed that this objective lay so far in the future that it could be ignored, but in the second half of the 1980s it became clear that the German and French governments, and the president of the Commission Jacques Delors, meant business. Two new sets of initials entered political discourse. There was the EMS, or European Monetary System, and the ERM, the Exchange Rate Mechanism. The EMS was relatively uncontroversial; the UK had joined that when Jim Callaghan was prime minister. The ERM was the new element. EU states that joined it were required to limit currency fluctuations within the system. Since the Deutschemark (DM) was the strongest currency in the system, it was against the DM that others measured their performance; if the value of a currency slipped too many pfennigs below the DM, the government concerned had to raise interest rates until its currency was back within the accepted limits; conversely, the government had to lower interest rates if its currency rose too far.

  This appalled Margaret Thatcher. There were rational reasons for not wanting to tie sterling to the DM because of the structural difference between the British and German economies, but there was also a powerful irrational reason. Thatcher’s teenage years were the war years; she married a much older man partly because the generation who might have been her boyfriends went off to fight. This was behind what Nigel Lawson bluntly described as her ‘saloon bar xenophobia’.12 That the Germans were urging other EU nations to merge their currencies with the DM exacerbated her hostility to the whole project, until she believed that Europe, to quote Sir Geoffrey Howe, was ‘a continent that is positively teeming with ill-intentioned people, scheming, in her words, to extinguish democracy’.13 Nicholas Ridley, who was loyal to her to the end, recorded sitting beside Mrs Thatcher in Strasbourg as she addressed the European Parliament. ‘You could feel the waves of hostility emanating from her,’ he wrote. Ridley, of course, blamed the Europeans. ‘Her forthrightness and her tenacity were alien to Latin politicians . . . Deep down they resented her because she was so utterly unmanoeuvrable.’14

  Ridley, who had been moved from running local government to the job of secretary of state for trade and industry, had his own thoughts on the Europeans, which he confided one day in July 1990 to Dominic Lawson, editor of the Spectator. Having seemingly forgotten that he was giving a taped interview to a journalist, rather than chatting with the son of a colleague (Nigel), he opined that the proposed single European currency was ‘a German racket designed to take over the whole of Europe’ and that the French were ‘poodles’. ‘You might just as well give in to Adolf Hitler,’ he continued.15 It was no surprise to the elder Lawson that Ridley felt free to make these comments, since Ridley ‘had many times heard Margaret utter precisely the same sentiments in private – as, indeed, had I’.16 However, when they became public there was a predictable scandal and Mrs Thatcher had to find a new trade secretary, and lost one of the last reliable supporters she had in the cabinet.

  Her isolation in the cabinet arose from the fact that Howe and Lawson, the two most important of her ministers, were Thatcherite in domestic economic policy only. Neither shared her aversion to Germany; both believed that sterling should join the ERM, and both were men of great intellectual confidence who were not going to accept that Thatcher or her favourite adviser, Sir Alan Walters, knew better. Of the two, she had more respect for Lawson, because Howe’s sheep-like manner made him easy to underestimate, whereas Lawson had a manner that left others in no doubt of his superior intellect. On meeting him, Max Hastings noted that ‘where some ministers flattered editors, the Chancellor’s courtesy could not mask his amazement that so callow a figure as myself had by some reckless misdeal of fate been elevated to the chair of the Telegraph’.17 Lawson had tried to persuade Thatcher that joining the ERM would discourage runs on the pound in 1985, when a sudden rise in the value of the dollar had forced him to put up interest rates. She consulted Alan Walters, who told her that, on the contrary, ERM membership would actually make currency speculation at sterling’s expense more likely. Since Lawson was not proposing to enter the ERM straightaway, that seemed to settle the matter.

  However, on a Friday in November 1987, Thatcher granted an interview to journalists from the Financial Times, who asked her why it was Treasury policy to fix sterling at a parity of 3DM to the pound. They produced charts demonstrating that when Lawson had raised interest rates in August, it was because the pound was falling below 3DM, and when he had cut interest rates twice in quick succession after the stock market crash in October, it was because the pound was getting ahead of the DM. She was not expecting the question and flatly denied it was happening. She has maintained ever since that Lawson had secretly changed government policy to bounce her into agreeing to join the ERM. ‘How could I ever trust him again?’18 she demanded. But he claimed: ‘It was always an implausible insult to her formidable intelligence to suggest that she could possibly have been unaware of it, even if I had wished to keep her in the dark, which, of course, I did not.’19 Whichever version is true, relations between the prime minister and the chancellor never recovered.

  The issue came back in dramatic fashion in June 1989 during the run-up to a summit of the EU nations in Madrid, to which European Commissioner Jacques Delors had submitted a paper setting out a programme for merging all the EU’s currencies, into what was later called the euro. Thatcher and Lawson were united in opposing monetary union, but Lawson continued to believe that sterling would benefit from joining the ERM and thought that the UK would be better placed to oppose monetary union from inside rather than out. In that month’s elections to the European Parliament, the Conservative Party had campaigned on a slogan that: ‘If you don’t vote Conservative next Thursday, you’ll live on a diet of Brussels’. The reaction was not the one they expected: 5.3m votes were cast for the Conservatives, and 6.1m for Labour, making it the first national election that the Conservatives had lost since 1974. The result convinced Sir Geoffrey Howe, who had just become Britain’s longest-serving foreign secretary for more than seventy years, that Thatcher’s antagonism to the EU was bad policy and bad politics. He persuaded Lawson to join him in presenting a common front over the more immediate question of membership of the ERM. Thatcher reluctantly agreed to see Howe and Lawson together in her office on 20 June and agreed to ponder what they had said. Once they were out of sight, she turned to Alan Walters, who came up with a counter-proposal, which she forwarded to her two ministers without revealing its authorship. They insisted on seeing her again and, with even more reluctance, she agreed. Early on Sunday morning, 25 June, the day they were due to fly out to Madrid, the two ministers presented her with a bald ultimatum: either she agree a date by which the UK would join the ERM, or they would both resign. She blamed Sir Geoffrey Howe for this ‘nasty little meeting’, as she called it, and became convinced that ‘this quiet, gentle, but deeply ambitious man – with whom my relations had become progressively worse as my exasperation at his insatiable appetite for compromise led me sometimes to lash out at him in front of others – was now out to make trouble for me’.20 She was so angry that she refused to speak to Howe on the flight to Madrid. Once there, she followed the course suggested by Alan Walters, laying down c
onditions for Britain’s entry to the ERM without any mention of a date, but she did clearly utter the words: ‘I can reaffirm today the United Kingdom’s intention to join the ERM.’ That was good enough to satisfy Howe, who called it ‘as close to the outcome for which Nigel and I had been pressing as we might have hoped’,21 but in Thatcher’s mind, it was game, set and match to her. She could not resist rubbing it in by standing at the door as ministers arrived for the following Thursday’s cabinet meeting, so that she could whisper gloatingly to Howe and to Lawson ‘no date’.

  She took her revenge a month later, on 24 July 1989, as the Commons was about to rise for the summer break, when she called an unsuspecting Howe to Downing Street and told him he was being removed from the Foreign Office. She offered him the alternative jobs of home secretary or leader of the House of Commons, with the chairmanship of a clutch of cabinet committees. He went away, shell-shocked, and later in the day agreed to be leader of the Commons provided the job came with the title of deputy prime minister. Despite the title, once the news was out, everyone knew that Howe had been demoted, especially since Thatcher’s press secretary Bernard Ingham briefed lobby journalists that the title of deputy prime minister had ‘no constitutional significance’.22 It also emerged that Howe might lose his grace-and-favour residence at Chevening to his young successor, John Major. According to the Sun on 26 July, he was reduced to nothing but a flat in the Old Kent Road. When Howe made his first Commons appearance in his new capacity, the Conservative benches erupted in cheering, which ought to have warned Thatcher to take care.