Brian Waiden interviewed me for Weekend World on Sunday 6 January. I used the occasion to say that we would be introducing a new clause in the Employment Bill to rectify the problem left by the MacShane judgement. I made it clear that we did not intend to remove the immunity enjoyed by trade unions as regards action intended to cause people to break their employment contracts, but would concentrate on the immunity relating to action designed to cause employers to break their commercial contracts. I also drew attention to the way in which trade union immunities had combined with nationalized monopolies to give huge power to the trade unions in these industries. We needed to restrict the immunities and to break the monopolies by introducing competition.
All my instincts told me that we would have strong public support for further action to restrict union power, and the evidence supported me. An opinion survey in The Times on 21 January 1980 asked people the question: ‘Do you think sympathy strikes and blacking are legitimate weapons to use in an industrial dispute, or should the new law restrict their use?’ Seventy-one per cent of those who replied — and 62 per cent of trade unionists who did so — said that a new law should indeed restrict their use.
It would, though, be difficult to go further without support from business leaders. On the morning of Tuesday 5 February I had two meetings with industrialists. The first was with the CBI. Some of them said that the present bill, as drafted, went as far as possible. On hearing this I did not conceal my frustration. I said that, with regard to the timing of more radical measures, there would always be a risk of confrontation with the trade unions, but that it seemed to me it would be better to accept the risk over the coming few months than wait until the autumn when the unions could cause the maximum disruption. I said that I now regretted that we had not brought forward more radical proposals when the bill was introduced. This left us with two possibilities: we could amend the existing bill or announce in the consultative document which we were planning to issue that further legislation would be introduced. The CBI went away in no doubt about my feelings.
The second meeting that day was with the private sector steel producers. There was a sharp contrast between their outlook and that of the CBI. They complained that the private steel companies had been dragged into a dispute not of their making and in which they would be the only real victims. As a result of the strike they were losing about £10 million a week. The ISTC had effectively torn up all its procedural agreements with the private companies and instructed their employees to strike. It was clear that there was no real grievance on the part of private sector steel workers: in the Duport Steels case, when the Court of Appeal had granted its injunction to stop secondary action, there had been a complete return to work before the Lords reversed the decision and the private sector strike resumed. The threat of losing union cards was the decisive factor in persuading private sector workers to join the strike. In these circumstances it is not surprising that the private sector steel companies wanted immediate legislation to outlaw secondary picketing. And there was nothing I was able to offer them except sympathy.
In answer to a letter from a leading industrialist urging ‘caution’, I replied setting out my views:
Insofar as we do not effectively change the law we would be positively confirming what Lord Diplock said [in Duport Steels Limited and others v. Sirs and others]. We would be indicating that we are not prepared to protect the person who through no fault of his own has suffered damage at the hands of another. We should be telling the law-abiding citizen that we prefer to strengthen the powers of those who inflict injury rather than to help those who suffer from it.
…You refer to moderate Trade Unionists. I have countless letters from them pleading with me to strengthen their hand against the militants, telling me that is why they voted for us and that now this Government by failing to take effective action has let them down.
If we flinch from this task now, when we have public and massive Trade Union opinion with us, they are not likely to have much faith in us to do it next winter.
I finished by quoting Shakespeare’s Measure for Measure:
Our doubts are traitors,
And make us lose the good we oft might win,
By fearing to attempt.
I returned to the task of toughening up the law. Ministers now agreed to restore the law to what it had been understood to be before the MacShane judgement, adding further tests relating to the dispute to be applied by the Courts. There would not, however, be a total ban on secondary action. There followed a short period for consultation and the new clause was introduced into the Employment Bill at the Report Stage in the House of Commons on 17 April 1980, limiting immunity for secondary action which broke or interfered with commercial contracts. Immunity would only exist when the action was taken — by employees of suppliers or customers of the employer in dispute — with the ‘sole or principal purpose’ of furthering the primary dispute and when the action was reasonably likely to succeed. Of great significance for the future was the fact that we announced the publication of a green paper on trade union immunities, which would appear later in the year and would look at the whole issue from a wider perspective.
In fact, the 1980 Act did not directly affect the outcome of the steel strike. The one action open to us which could have done so would have been to accelerate the introduction of Clause 14 of the Employment Bill, which made secondary picketing unlawful. I was strongly attracted by this option. My wish to pursue it had been greatly increased by the mass picketing which had taken place at the private sector steel firm of Hadfields on Thursday 14 February. Keith Joseph telephoned me at Chequers the following Sunday morning to discuss what had happened. We had no doubt that it constituted a grave breach of the criminal law. The question was whether the use of the civil law, and in particular Clause 14, would make matters better or worse.
I telephoned Willie Whitelaw, the Home Secretary, about the public order situation and suggested that we could introduce a one-clause bill on picketing the following week. I also spoke to Michael Havers, the Attorney-General. It was clear to me that the police would need to stop large numbers of pickets arriving at their destination if picketing was to be effectively controlled and the threat of intimidation removed. The civil law, though, could not play any part in that. There was even an argument that a change in the civil law introduced directly in response to violence would make it more difficult to bring pressure on people to respect and obey the criminal law. However, I wanted all of the possibilities to be examined urgently.
After discussion with ministers on Monday (18 February) it was decided not to accelerate the clause relating to secondary picketing. But instead the Attorney-General would restate the next day in the House of Commons the criminal law as it related to picketing. Jim Prior would also write a public letter to Len Murray, the TUC General Secretary, drawing attention to the breach of all the traditionally accepted and understood codes for picketing. In these ways we sought to keep up the pressure.
THE 1980 STEEL STRIKE
The debate about trade union reform, both inside and outside government, was conducted under the shadow of industrial conflict: in particular, the issues of secondary action and immunities became inextricably entangled with the 1980 steel strike. But that strike also challenged our economic strategy directly; and it is unlikely, once the strike had begun, that our economic policies would have survived if we had suffered defeat.
The steel industry, like the motor vehicle industry, was suffering the after-effects of overambitious policies of state intervention. It was Ted Heath’s Government, of which I had been a member, which had set BSC on course for huge investment in expanded capacity in the years before that first oil shock which cut so many such ambitions down to size. The following Labour Government had made some closures but, by setting up a review under Lord Beswick in 1974–5, it had largely sought to buy time. The greater the delay in taking remedial action, however, the less chance there was to make proper use of the most up-to-date pl
ant and this, in turn, worsened the position of BSC as a whole, clouding the prospect for steelmen’s jobs and increasing the burden on the taxpayer, who had to fund huge losses.
One of my first decisions about the nationalized industries was to agree to the closure of the Shotton steel works in North Wales. Measures aimed at providing new job opportunities in the area would be announced, but I knew that the closure would have a devastating effect on the steelmen and their families. A delegation from Shotton had come to see me when I was on a visit to Wales as Leader of the Opposition. I felt desperately sorry for them. They had done all that was expected. But it was not — and could not be — enough.
BSC exemplified not only the disadvantages of state ownership and intervention, but also the way that British trade unionism dragged down our industrial performance. A good example of what was wrong was to be found at the Hunterston ore terminal on the Clyde. Here BSC had built the largest deep-water jetty in Europe. It had been opened in June 1979, but could not be used until November because of a manning dispute between the Transport and General Workers’ Union (TGWU) and the ISTC. For five months bulk ore carriers had to be diverted to the Continent, where their cargo was transferred to smaller vessels for shipment to Terminus Quay, Glasgow, and from there finally sent on to Ravenscraig.
As the end of 1979 approached, external factors over which we had no control made BSC’s problems rapidly worsen. There was huge international overcapacity in steel as the world headed deeper into recession. Steel industries almost everywhere were facing losses and closures. But the fundamental problems of BSC were home-grown. It took BSC nearly twice as many man-hours to produce a tonne of steel as its major European competitors. We had reached the absurd position that the value added by BSC was if anything a little less than the wage bill. Over the five years to 1979–80 more than £3 billion of public money had gone into BSC, which amounted to £221 for every family in the country. Yet still the losses accumulated. Keith Joseph and I were prepared to continue for the present to fund BSC’s investment and redundancy programme; what we were not prepared to do was to fund losses which arose from excessive wage costs, unearned by higher productivity.
If we were serious about turning BSC round — with all the closures, job losses, and challenges to restrictive practices that would involve — we faced the risk of a very damaging steel strike. There was only one worse alternative: to allow the present situation to continue.
BSC’s cash limit for 1980–81 was first set in June 1979: the aim was for it to break even by March 1980. This objective had, in fact, been set by the previous Labour Government. But by 29 November 1979 BSC had announced a £146 million half-year loss and abandoned its break-even target for March, putting it back a further twelve months. The crisis was fast approaching.
On 6 December Keith Joseph let me know what the implications were. BSC could not afford any general wage increase from 1 January other than the consolidation of certain additional increases agreed the previous year — amounting to 2 per cent. Any further increase would be dependent on local negotiations and conditional on the equivalent improvements in productivity. The Corporation had told the unions the week before that 5 million tonnes of surplus capacity, over and above the closure of iron- and steel-making at Corby and Shotton, would have to be shut down. Already Bill Sirs was threatening a strike. I agreed with Keith that we must back the Corporation in its stand. We also agreed that BSC must win the support of public opinion and bring home to the unions the harm which a strike would do to their own members.
As the strike loomed, there was much disquiet about whether the management of BSC had properly prepared its ground for it. The figures used to justify the management’s position were questioned, even by Nicholas Edwards, the Secretary of State for Wales. He might have been right. But I said that we must not attempt to substitute our judgement as politicians for that of the industry. It was up to the management of BSC — at last — to manage.
On 10 December the BSC Board confirmed that 52,000 steel jobs would have to go. The business prospects for BSC were still worsening. Indeed, when we looked at their figures for future steel demand we thought that they were, if anything, slightly optimistic. But again, there was no intention to set our judgement against that of the Board and management. Even before the strike, we had been searching for a successor to the present Chairman, Sir Charles Villiers, whose contract was due shortly to come to an end. We had already received seven or eight firm refusals from suitable candidates and it was clear that fear of government interference was one of the main deterrents.
It was difficult to be sure about the outcome of the strike. BSC, the private steel producers and the steel users all had healthy levels of stocks. The fact that the steel users and stockholders were effectively given three weeks’ notice of the strike allowed them to build up stockpiles. Moreover, because of the depressed state of industry many steel-using companies were operating well below capacity. But, on the other hand, there would be serious problems for the users of tin plate, and possibly for the car industry, and the situation could, of course, rapidly worsen if dockers and transport workers took effective action to stop steel moving around the country and to halt imports. However, BSC and its workforce would suffer most. Its current prices were already above those of our European competitors and the domestic market for steel was likely to be lost permanently to foreign steel companies which could ensure a reliable supply in the future.
From the end of December I chaired regular meetings of a small group of ministers and officials to monitor the steel situation and decide what action needed to be taken. It was a frustrating and anxious time. The details of the BSC offer were not well understood either by the steel workers or by the public. BSC did little to explain its position. It would not put out broadsheets or buy newspaper space, on the ground that such actions might be seen as provocative. The hope was that other pressures could be brought to bear on the ISTC and the National Union of Boilermakers (NUB). Moreover, in a misguided attempt to canvass support for various pay offers which they had made, BSC allowed a bewildering array of different figures to gain currency, pleasing no one: to the general public the figures always seemed to be increasing, while to the unions they never seemed sufficient.
For its part, the ISTC was more conscious of pay settlements to other groups of workers — the ‘going rate’ — than it was of the bleak commercial realities of the industry in which its members worked. On 28 November Ford workers had voted to accept a 21.5 per cent wage increase. On 5 December coal miners had accepted a 20 per cent settlement — and been publicly praised for their moderation. All this undoubtedly added to the strength of feeling among the steelmen. On 7 January Len Murray and Bill Sirs asked for a settlement of 8 per cent plus 5 per cent ‘on account’ for the local productivity deals. BSC offered 8 per cent plus 4 per cent in advance for a limited period. The next day negotiations collapsed. The General and Municipal Workers’ Union (GMWU) joined the strike; on the following day the craftsmen struck, and although on 10 February the craft union leaders accepted a separate settlement of 10 per cent plus 4 per cent, later that week its members rejected the offer. In the meantime, on 16 January, the ISTC had spread the strike to the private steel sector, where the uncertain legal position and the violent mass picketing added to our difficulties.
It became clear to me fairly early on, however, that the steel strike was not going to bring British industry to a halt. At my strategy meeting on 18 January the figures showed that the strike had so far had little effect on industrial production, which had fallen about 2 per cent the previous week and was perhaps marginally lower by the time we met. Even if private steel production were suspended altogether, there would be enough stocks to support normal manufacturing for another four to six weeks, with problems in some particular areas within two to three weeks. As we had foreseen, it was in the specialist area of food canning that the greatest difficulty might arise.
It was against this background that I met first t
he unions at their request and then the management of BSC on Monday 21 January at No. 10. The union leaders had seen Keith Joseph and Jim Prior the previous Saturday. One difficulty we had was that the unions might have drawn the wrong impression from widely reported remarks made by Jim, criticizing the BSC management. I had been angry to read this. But, when a week later I was asked about it by Robin Day on Panorama, my reply was sweetly dismissive: ‘we all make mistakes now and then. I think it was a mistake, and Jim Prior was very, very sorry indeed for it, and very apologetic. But you don’t just sack a chap for one mistake.’
In my discussion with Mr Sirs and Mr Smith (the leaders respectively of the ISTC and NUB), I said that the Government was not going to intervene in the dispute. I did not know enough about the steel industry to become involved in the negotiations though, of course, I was keen to hear their views. The unions wanted the Government to bring pressure on BSC to make an increased offer. They wanted some ‘new money’, but I pointed out that there is no such thing: money for the steel industry could only come from other industries which were making a profit. The real issue, I said, was productivity where — although Bill Sirs disputed the figures — it was generally accepted that BSC’s performance lagged far behind. Luxemburg had reduced its steel workforce from 24,000 to 16,000 and substantially increased its productivity, with the result that it was now exporting railway lines to the UK. When I had heard this the previous autumn I had been cut to the quick, and I told him so.
The Downing Street Years, 1979-1990 Page 14