Marching to the Fault Line

by David Hencke

  Sir Keith was given a major role by Thatcher in the writing of the Conservative manifesto for the 1979 election. But the manifesto itself was a tepid affair with no hint of the radical revolution on the way. It reflected Thatcher’s still weak position among the party’s grandees and what were to be known as the ‘wets’: the Tories who followed Heath in backing the postwar consensus, like James Prior and Peter Walker.

  While promising crackdowns on picketing, the closed shop and unofficial strikes, the manifesto said that a ‘strong and responsible trade union movement could play a big part in our economic recovery.’ Its only reference to the coal industry was: ‘We believe that a competitive and efficient coal industry has an important role in meeting energy demand, together with a proper contribution from nuclear power. All energy developments raise important environmental issues, and we shall ensure the fullest public participation in major new decisions.’

  The manifesto ended with a passage that seemed designed to avoid frightening the horses – the Labour and Liberal Democrat voters who might be tempted, because of the winter of discontent, to vote Tory. ‘We make no lavish promises. The repeated disappointment of rising expectations has led to a marked loss of faith in politicians’ promises. Too much has gone wrong in Britain for us to hope to put it all right in a year or so. Many things will simply have to wait until the economy has been revived and we are once again creating the wealth on which so much else depends.’

  Thatcher’s first Cabinet reflected this moderation. Sir Keith got the Industry job so that he could start his work on bringing forward industries for privatization. But Heathite James Prior became Employment Secretary with responsibility for bringing in new trade union legislation. Other prominent wets in the Cabinet included Lord Carrington at the Foreign Office, Sir Geoffrey Howe as Chancellor, Francis Pym at Defence, Willie Whitelaw at the Home Office, Peter Walker at Agriculture, and Sir Ian Gilmour as Lord Privy Seal. The ‘drys’, the out-and-out Thatcherites, were few: they included John Biffen, Chief Secretary to the Treasury, Lord Young, minister without portfolio, and David Howell, the Energy Secretary.

  Howell’s immediate preoccupation was nuclear power. A memo from him to a Cabinet committee chaired by Thatcher on 23 October 1979 proposed a programme of new nuclear power stations, which, he told his colleagues, would have the advantage of removing a substantial proportion of electricity production from the danger of disruption by industrial action by miners or transport workers.2 But that would only be a long-term solution. In the short term there were to be other plans.

  Meanwhile at the Department of Industry Sir Keith was about to meet Ian MacGregor, who had been approached by the government to take over British Steel. MacGregor, already sixty-seven in 1979, was not sure who recommended him. He thought it could have been Jim Prior, whose son, David, worked alongside him at the US investment bank Lazard Frères in New York, or the Tory donor and biscuit king Sir Hector Laing. Perhaps, he thought, the idea came from Sir Keith himself.3 The appointment in 1980 was highly controversial and led to a row in the Commons when it was revealed that the deal included paying Lazards some £875,000 compensation for the loss of his services, an astronomical sum in the early 1980s.4

  MacGregor, though Scottish born, was seen as a highly controversial American figure. He had been appointed by Jim Callaghan in the previous Labour government as a part-time director of the ailing state giant British Leyland and became embroiled in a dispute with a shop steward whom the media dubbed ‘Red Robbo’. He was no diplomat and sometimes rather crass in his dealings with people. He had a high opinion of himself and very strong views about streamlining loss-making companies by sacking staff; he was intolerant of anything smacking of organized labour. He seemed to represent everything that Thatcher stood for and admired.

  His tenure at British Steel would deliver everything that Thatcher and Joseph wanted. When the Tories inherited the nationalized industry in 1979 it employed 166,000 staff and produced 14m tons of steel annually at a loss of £1.8 billion. MacGregor was remorseless in closing loss-making plants and creating large-scale redundancies. Most of the redundancies were voluntary but were made against a background of huge increases in unemployment, and they damaged many traditional steelworking communities. By 1983, there were only 71,000 staff, with losses cut to £256m.

  The big trade union in the steel industry was the Iron and Steel Trades Confederation (ISTC), which did not have 100 per cent membership in the plants, and was led by the very moderate Bill Sirs. At the time of MacGregor’s appointment the union was recovering from a thirteen-week strike which had got nowhere, and MacGregor went over the heads of the union by holding a ballot of the workforce, who agreed to his modernization plan, even though many were to lose their jobs.

  Despite such industrial victories, the Thatcher government was by 1981 deeply unpopular. The opposition should have been making great headway, and would have done had Labour not been locked in internecine struggle. Unemployment was heading rapidly towards three million, inflation was rising (hitting 15 per cent that year) and the doubling of VAT had put even more upward pressure on prices following Geoffrey Howe’s 1979 Budget. A statement from 364 distinguished economists said that Thatcher’s new government had got everything wrong. At the beginning of 1981 it would have been an even bet to say Thatcher’s experiment would not survive. But that year was to be the turning point. It is the key to how the Tories, against all odds in those dark winter days at the dawn of 1981, were to lay the ground for their fight against the miners.

  David Howell, the Energy Secretary, finally admitted, after prevaricating throughout the life of the government, that the coal industry must face cuts. Despite high and rising unemployment, it must have seemed to the government that Ian MacGregor’s success in forcing steelworkers to accept job losses and plant closures was a good omen for the coal industry. But at the NCB, instead of the brash US-trained MacGregor, the Chairman was a moderate figure with no love for making redundancies, Sir Derek Ezra. Howell’s objective was to force Ezra’s hand by cutting the cash limits within which the NCB had to operate. This left Sir Derek no option but to propose closures.

  The number of closures, never officially published at the time, was to be twenty-three collieries; but the NUM’s President, Joe Gormley, raised fury among his members by overestimating the total, talking of forty to fifty closures. The government in February 1981 had calculated that the union would hesitate to organize a walk-out, following the failed steelworkers’ strike. But the NUM was not the ISTC and the collective memories of victory against the Heath government in the 1970s were embedded in the coal mining communities. Instead the NUM executive gave the NCB a week to withdraw the cuts and get the government to hand over extra cash. Joe Gormley warned some of the most militant miners in South Wales that they should not walk out without a strike ballot because the NCB could go to the courts and claim damages. But nobody listened. Within days, without a ballot or conference vote, half the miners were on strike, some of them in traditionally moderate areas such as Nottinghamshire and the West Midlands.

  Ministers were genuinely shocked, particularly as they found coal stocks were low in the middle of winter, and they were in no position to fight the miners’ demands. So they backed off. In February a hastily arranged meeting between Joe Gormley, some members of the NUM executive, the NCB and David Howell led to withdrawal of the plans and a promise to put any future plans for pit closures through a normal colliery review procedure. Thatcher let it be known, using the Parliamentary press lobby, that she had no wish to have a fight with the miners. It was nothing less than a Tory U-turn.

  Kevin Barron, then a Yorkshire NUM militant, who was to campaign for Arthur Scargill to be the new NUM President, remembers the astonishment and the cheers in his local miners’ club as they saw the announcement on television that the government had backed down in the face of unilateral and illegal action by the NUM. ‘I couldn’t believe what I was seeing on the TV screens,’ he said.

  His
view was probably the dominant one among the miners but other, more sceptical leaders of the union were suspicious of what it might mean for the future. Mick McGahey, the Communist Vice-President of the NUM, saw it for what it was, a body swerve. Like many left-wing miners’ leaders, McGahey had a great sense of history, and he compared it to the infamous Red Friday in 1925 when the government appeared to back down from a fight with the miners, only to regroup once it had gained a breathing space to take on the industry, and defeat it in the 1926 general strike. He guessed, correctly, that the need to back down in 1981 helped convince both Thatcher and Joseph that they must ultimately take on the miners and defeat them.

  But first there had to be two other big changes that would help Thatcher gain the upper hand in dealing with the dispute. The first was outside her control but it was very helpful. On 26 March the Labour Party split when what became known as the ‘Gang of Four’ – former Labour Cabinet ministers Roy Jenkins, Shirley Williams, David Owen and Bill Rodgers – left to form the Social Democratic Party. The schism had been a long time coming, as under the leadership of Michael Foot Labour had become much more left-wing in response to the Thatcher government. Bitterness, backbiting and general viciousness between more right-wing members like the Manifesto Group and the left led by Tony Benn had become intolerable.

  For Thatcher a divided opposition was a golden opportunity, and instead of trimming her policies, as many of the wet members of her Cabinet hoped, she took the opportunity to expand and entrench her allies, strengthening her wing of the Cabinet in a September reshuffle. There had already been a reshuffle in January which saw Pym removed from Defence and Leon Brittan brought into the Cabinet as Chief Secretary to the Treasury; the losers were clearly the wets, but this was the first major declaration of intent. Now three ministers disappeared: Sir Ian Gilmour, Lord Soames and Mark Carlisle. Others were demoted or moved from key posts, notably Jim Prior, who left his key post at Employment to go into semi-exile in Northern Ireland. He was replaced by the tougher Thatcherite Norman Tebbit. Nigel Lawson replaced David Howell at Energy and John Biffen took over Industry from Sir Keith Joseph, who went to Education.

  With a new, reinvigorated team, Thatcher prepared for a potential miners’ strike. A secret Cabinet committee was set up to organize how this would be done, and Peter Gregson, a Cabinet Office official with responsibility for industry, was asked to chair it. The Cabinet Office has confirmed that the committee code-named MISC57 was set up for this purpose but has refused to release its contents under the Freedom of Information Act. What is known is that Gregson was to become a trusted aide of the PM whose advice was freely given and sought during the dispute that was to follow.

  Gregson is said by fellow civil servants Ivor Manley, Deputy Secretary at the Department of Energy at the time, and Andrew Turnbull, Thatcher’s private secretary at Number Ten (who went on to be Cabinet Secretary under Tony Blair), to have been a devoted and professional civil servant who lived for his job. He was not married. He lived in South East London and worked long hours on any task that he was given. He was a tactician, able to see what was needed and give ministers valuable options when they needed them. Under instructions from Thatcher, Sir Keith Joseph, Nigel Lawson and Leon Brittan, he did a thorough job in helping the government prepare for an expected confrontation.

  Ministers and civil servants put together a three-pronged approach. First, a decision was made to ensure that the government would never be caught out again with a shortfall of coal. More money was allowed (the opposite of the government cuts imposed on the NCB to encourage the first pit closures) to stockpile coal in advance of any action. There was also co-ordination over the delivery of supplies, with the Central Electricity Generating Board brought into the discussion to ensure that power stations would not be deprived of coal. The figures for coal stocks speak for themselves. In 1981 there were 39.34m tonnes; in 1984 at the time of the strike the figure had risen to 48.7m tonnes.

  The same committee also examined the prospect of expanding dual oil- and coal-fired power stations to ensure security of supply, even though oil was more expensive and the cost of converting power stations was enormous.

  The second prong was the need for tough policing. The government was acutely aware of how the young miners’ leader Arthur Scargill, then a rising star in Yorkshire, had helped break the government during the picketing over Saltley coke depot. So preparations were drawn up for the revival of the Scotland Yard National Reporting Centre (NRC), with talks with the Association of Chief Police Officers (ACPO), which was to be critical during the strike. The aim was swift and effective co-ordination of police forces to handle any flying pickets, a tactic that was to prove invaluable.

  The crucial role of the NRC is revealed in a draft of a document prepared by ACPO for release during the strike. The draft was the subject of much dispute inside the Home Office because it threatened to disclose too much. Released under FOI, it shows that in 1982 the Home Office secretly revised the confidential circular governing the operation of the NRC so that it could be much more proactive in policing emergencies.

  Originally set up after the first miners’ strike in 1972, the NRC was designed to enable swift action, so that independent police forces could call on aid and support from each other if disputes or disturbances got out of hand. It had already been used to monitor industrial action by the miners in 1974 and was activated in 1980 to handle a dispute by prison officers, successfully allowing the police to deal with the transfer of over 1,068 prisoners. In 1981 Sir George Terry, President of the ACPO, proposed strengthening its role, and this was implemented without ‘normal lengthy consultation process’ in 1982, after the handling of the Brixton and Toxteth race riots showed that police manpower co-ordination should be strengthened. In effect, it allowed the Home Secretary to direct operations, on the grounds that ‘Her Majesty’s Government may decide that certain objectives have overriding priority because they should be secured in the national interest.’ It was to be used with brutal efficiency during the present dispute, since the wording allowed Thatcher to demand that every step necessary to defeat the miners should be implemented.

  Finally there was a strengthening of anti-strike laws, begun by Jim Prior and carried on by Norman Tebbit. This would give the government enormous powers to handle secondary picketing. In the event, the new laws were not used as much during the dispute as the government had expected. Scargill’s decision to refuse a ballot and the internal divisions inside the NUM in 1984 made it unnecessary to apply the full force of new laws, not all of which were in place at the time of the dispute.

  Still, none of this was going to be any use to them if the Conservatives lost the next general election. It was not until March 1982 that the tide changed for Thatcher, and the change was not of her making. On 19 March 1982 Argentina seized South Georgia, followed swiftly by the Falkland Islands themselves. The action proved a huge test for the Thatcher government which could have gone dreadfully wrong. She could have been blamed for sending the wrong signals the previous year by withdrawing Britain’s last patrol vessel in the South Atlantic, HMS Endurance, and would certainly have suffered politically if military action did not produce swift results.

  But her luck held. Thatcher took the extremely risky decision to reclaim the Falklands by sending a task force of military ships to the South Atlantic. During the resulting war the British lost a destroyer, HMS Sheffield, and British forces made a controversial decision to sink the Argentine Navy’s pride, the battleship Belgrano. Britain retook the islands on 14 June. It all transformed Thatcher’s fortunes. From being one of the most unpopular prime ministers in history, she became a plucky war heroine who had risked all to restore British pride.

  The retaking of the Falklands, added to Labour’s internal troubles, paved the way for a landslide political victory for the Tories the following year, and the scene was set for a triumphant Thatcher to dominate politics for the next decade.

  For the coal miners the transformation of
her position was bad news. Thatcher had discovered that taking risks paid off. It looks certain that by the autumn of 1982 the government had decided they must act over the coal mining industry. Certainly Scargill thought a dispute was inevitable once the NUM obtained a leaked report that had been prepared for the Monopolies and Mergers Commission, which clearly showed that between seventy-five and ninety-five pits had been earmarked for closure over the next ten years. The famous pit closure list became a matter of dispute between the union, the NCB and the government, which, of course, denied that it was a plan. The list was crucial to setting the scene for the strike, in making miners believe their industry was next for the Thatcherite chop.

  The government also moved in other ways in 1982 to prepare the ground. They decided to ask Ian MacGregor, after his success at the British Steel Corporation, to take over the chairmanship of the NCB. With Sir Derek Ezra standing down and his deputy, Sir Norman Siddall, not keen to take up the reins, the idea was first put to MacGregor by Nigel Lawson, the Energy Secretary, at the Garrick Club in November. MacGregor claims to have been reluctant, telling Thatcher before Christmas that ‘my advice is to get someone younger on whom you can depend.’5

  Perhaps he did say that. But he was also busy negotiating a fresh deal for large sums of cash to be paid to his US company, Lazards, in compensation for the loss of his services. Lawson despatched his Deputy Secretary Ivor Manley to see MacGregor. Manley recalls: ‘I just thought he was asking for far too much money and we shouldn’t go ahead and pay him all this. I can’t remember the sums but it was a lot of money.’ The Inland Revenue had also raised private doubts about the huge cost of the deal and whether it broke British tax rules by paying cash to a US firm. But Lawson was insistent, ordering Manley to continue the talks and give MacGregor what he wanted.