The Downing Street Years, 1979-1990

by Margaret Thatcher

  We would make unlawful what were called ‘union labour only’ requirements in contracts, which discriminated against companies not operating a closed shop.

  Henceforth, employers would be able to dismiss those taking part in a strike or other industrial action without having to run the risk of claims for unfair dismissal, provided that all of those taking part in the strike were dismissed.

  The definition of a lawful trade dispute was to be further restricted in a number of ways, closing loopholes in Jim Prior’s legislation to limit immunities in case of secondary action.

  By far the most important of Norman’s proposals related to the immunity currently extended to trade union funds. By virtue of Section 14 of Labour’s Trade Union and Labour Relations Act, 1974, trade unions enjoyed virtually unlimited immunity from actions for damages, even if industrial action was not taken in contemplation or furtherance of a trade dispute. They could not be sued for their unlawful acts or for unlawful acts done on their behalf by their officials. This breadth of immunity was quite indefensible. As long as unions were able to shelter behind it they had no incentive to ensure that industrial action was restricted to legitimate trade disputes and that it was lawful in other ways. Norman therefore proposed that this immunity should be reduced to that enjoyed by individuals under our 1980 legislation.[41] Both of these immunities would be restricted further by our proposals on ‘union labour only’ requirements and changes to tighten the definition of a trade dispute, which removed the immunity for disputes not mainly about pay and conditions and for disputes between trade unions.

  The unions were bound to put up fierce opposition to moves which would expose them to contempt proceedings and payment of damages. Undoubtedly, they would claim that we were seeking to prevent their defending their members’ interests. So it was vital for us to explain the fairness of our proposals, and to emphasize that trade unions would only be at risk if they acted in ways which were unlawful for everybody else. We believed that the general public would see this as reasonable. We proposed also to set limits on the damages which could be awarded against a trade union, though of course there would be no limit on the fines which a court could impose for contempt — a most important qualification.

  There was at first some opposition in Cabinet to Norman’s proposals, not all of which came from predictable quarters. But most of us were full of admiration for his boldness. He went away to consider some of the points made in discussion, but the package agreed by Cabinet in November was more or less on the lines he wanted. Norman announced our intentions to the House of Commons later that month. The bill was introduced the following February and the act’s main provisions finally came into force on 1 December 1982.

  Far from being unpopular, these proposals were soon being criticized in some quarters on the grounds that they did not go far enough. The SDP were trying to out-flank us by urging greater use of mandatory secret ballots. Many of our own supporters wanted to see action to stop the abuses connected with the ‘political levy’, a substantial sum extracted from trade unionists largely for the benefit of the Labour Party. There was continuing pressure to do something to prevent strikes in essential services — pressure which always increased when there was a threat of public sector strikes, as happened frequently during 1982. But it would not have been practical to deal with all of these issues at once in a single bill: each raised complicated questions and we could not afford to make mistakes in this vital area. I was convinced that the giant step being taken by Norman on the immunity of trade union funds was sufficient for the moment. I was glad, however, that the atmosphere had changed and that the dangers of trade union power were now so much more widely understood. We were winning that battle too.

  Norman and I had further discussions in the summer of 1982. In September he came forward with a paper containing his thoughts for new industrial relations legislation which would be formally submitted to ‘E’ Committee, with a view to inclusion in the manifesto. Norman had already announced that we would undertake consultations with interested parties on legislation that would require trade unions to use secret ballots for the election of their leaders. There was strong support in both Houses for mandatory secret ballots before industrial action. But we were divided on this.

  Ministers now discussed what should be the priorities for the forthcoming consultative green paper. We agreed to concentrate on ballots for the election of trade union leaders, mandatory strike ballots, and the political levy. Norman had reservations about the use of compulsory ballots before strikes. We had previously concluded that these should be voluntary. Moreover, there were doubts whether or not the use of ballots would actually reduce the frequency and length of strikes. But I was very aware of the great advantages of linking trade union reform to the unassailable principle of democracy, and I was keen to see that the proposals on strike ballots were expressed in a positive way in the green paper.

  We published the green paper under the title Democracy in Trade Unions, in January 1983. Ministers discussed in April where we should go from there. We had no difficulty deciding in favour of proposals relating to trade union elections and strike ballots. Two other issues proved much more difficult: the prevention of strikes in essential services and the political levy.

  Public sector strikes and consequent disruption to the lives of the general public had been a feature of life in post-war Britain. Nineteen eighty-two was a particularly difficult year. There were two rail disputes. There was also a long and distressing strike in the National Health Service over pay, which began when ancillary workers took action in May and ended in mid-December. And industrial action in the water industry intensified interest in the whole question of how to deal with the disruption of essential services. But the practical difficulties of tackling the problem were immense. How should one define an ‘essential service’? How much would it cost the taxpayer in extra pay to secure ‘no strike’ agreements? What should be the penalty for failure to observe a ‘no strike’ agreement?

  The political levy was a second difficult subject. It was paid by trade unionists into political funds held by their unions, the principal use of which was, as I have noted, in fact to support the Labour Party. Payment was on the basis of ‘contracting out’: that is, trade unionists contributed automatically unless they specified otherwise. On the face of it, it would have been fairer to base the system on a principle of ‘contracting in’ and some argued for the change. But ‘contracting in’ would have wreaked havoc with the Labour Party’s finances because of its heavy dependence on the unions. Had we introduced such a measure, there would undoubtedly have been pressure to change the system by which some companies donated to political parties, from which, of course, the Conservative Party heavily benefited. I never believed that the cases were parallel: after all, trade unionists in a closed shop could find it very difficult to avoid paying the political levy, especially when the employer had an agreement with the union to just ‘check off’ the levy from the employee. By contrast, shareholders who did not approve of company donations to a political party could either hold the Board to account for their decisions or simply sell their shares. But the funding of political parties was a sensitive topic. If we brought forward radical proposals on the eve of a general election, we would be accused both of attempting to crush the Labour Party financially and of unfairness on the matter of corporate donations.

  On Tuesday 10 May I held a meeting of ministers at which we decided our manifesto commitment. On essential services, the introduction of strike ballots would clearly help reduce the risk of strikes in these areas. But we would also consult further about the need for industrial relations in specified essential services to be governed by adequate procedure agreements, breach of which would deprive industrial action of immunity. On the question of the political levy, we had evidence from the consultations on the green paper that there was widespread disquiet about the operation of the system and we proposed to consult with the TUC to see what action they were prepared
to take, failing which we would act ourselves. These were matters to which we would have to return after the election. But we had made substantial progress in reducing the overbearing power of trade unions — much more than the fainthearted had ever believed possible. And far from proving a political incubus it was one of our strongest appeals to the voters.

  POLICY WORK

  For all sorts of reasons it is much easier to prepare for an election when you are in government than in Opposition. You have more information available about forthcoming events and more power to shape them. But parties in government have disadvantages as well, and you face two risks in particular. First, ministers can get out of the habit of thinking politically and become cocooned in their departments. Having to face, as I did, rigorous cross-questioning from an often hostile House of Commons twice a week, there was little danger that I, personally, would succumb to this: but others might. The second risk is that having implemented its manifesto, a government may run out of ideas. It is part of the job of ministers to see that this does not happen in their own areas of responsibility, and the job of the prime minister to prevent it happening to the government as a whole.

  One of the main obstacles to the kind of forward thinking which all governments should do is the unauthorized disclosure of information by disaffected ministers or civil servants. A particularly serious problem arose in the last half of the 1979–83 Parliament. In March 1982 Geoffrey Howe asked officials to undertake an examination of long-term public expenditure up to and including 1990 and its implications for levels of taxation: their report was presented to me on 28 July. Spending ministers were inclined to think that this was just another exercise to soften them up for cuts in public expenditure. But in fact it was intended to get us all to examine how the long-term momentum for the expansion of the state and public spending might be curbed and reversed. As it turned out the paper was excessively gloomy and its most likely scenario underestimated very substantially the economic growth rate for the 1980s. To make matters worse, the CPRS prepared its own paper to accompany the Treasury paper, which contained a number of very radical options that had never been seriously considered by ministers or by me. These included, for example, sweeping changes in the financing of the National Health Service and extensions of the use of charging. I was horrified by this paper. As soon as I saw it, I pointed out that it would almost certainly be leaked and give a totally false impression. That is exactly what happened.

  When the papers were discussed at Cabinet in early September, they made no great impact on our thinking. Our main conclusions could have been reached without any such exercise: that there should be no major new expenditure commitments pending further consideration, and that we should generally examine the scope for changing policies in ways which would bring public spending under proper control. My separate meetings with Keith Joseph on education and Norman Fowler on Health and Social Security confirmed that neither of them felt in any way attracted to the particular proposals which had been put forward, many of which were neither desirable nor practicable. But that failed to stop the media frenzy. A fairly full account of the CPRS paper duly appeared in the Economist. The Observer developed the story. The Economist later gave a blow-by-blow account of discussions at Cabinet. The Observer and then The Times revealed still more information. Of course, the Opposition had a field day. We were to be plagued by talk of secret proposals and hidden manifestos up to polling day and beyond. It was all the greatest nonsense.

  There were two lessons from this incident which I never forgot. The first was that we had political opponents about us who would stop at nothing to distort and thereby prevent our forward thinking on policy. The second lesson was of equal importance: it was unacceptable for highly controversial proposals to come before Cabinet without the prior knowledge and approval of the ministers responsible. This raised acutely what role there could be for the CPRS.

  In earlier days, the CPRS had been a valuable source of sound long-range analysis and practical advice. But it had become a freelance ‘Ministry of Bright Ideas’, some of which were sound, some not, many remote from the Government’s philosophy. Moreover, as I have noted earlier, a government with a clear sense of direction does not need advice from first principles. Now, as this incident had shown, the CPRS could become a positive embarrassment. That was why, shortly after the election, I was to dissolve the ‘Think-Tank’, and ask two of its members to join the in-house Policy Unit which worked more closely with me.

  Ferdy Mount was now head of my Policy Unit. I had long been a great admirer of Ferdy’s witty and thoughtful articles even when, as over the Falklands, I did not agree with his views; and I was delighted when in April 1982 he agreed to succeed John Hoskyns. Ferdy was particularly interested in all that goes under the heading of social policy — education, criminal justice, housing, the family and so on, to which, in the wake of the 1981 urban riots, I was increasingly turning my attention. In late May he prepared for me a paper which contained the outline of an approach to ‘renewing the values of society’:

  This Government came to power asserting that it is the exercise of responsibility which teaches self-discipline. But in the early stages of life it is the experience of authority, when exerted fairly and consistently by adults, which teaches young people how to exercise responsibility themselves. We have to learn to take orders before we learn how to give them. This two-way relationship between obedience and responsibility is what makes a free, self-governing society. And in the breakdown of that relationship we can trace the origins of so much that has gone wrong with Britain.

  If we can rebuild this relationship, we might begin to restore also respect for law and order, respect for property, and respect for teachers and parents. But the rebuilding itself has to be a two-way business. On the one hand, we need to restore effective authority to teachers and parents. On the other hand, we need to offer young people a taste of responsibility and a useful role in society.

  At this stage it was the themes rather than the particular measures which needed to be worked out, and Ferdy and I discussed what these should be. In education, for example, we wanted to increase parent power, widen the variety within the state sector and see whether we could come up with workable proposals for education vouchers. We were concerned about the lack of knowledge displayed by many children about our country and society, and our history and culture. Of course, these and other topics — like all the really great issues — were never going to be amenable to instant action. But both Ferdy and I were convinced that at the heart of the Conservative mission is something more than economics — however important economics might be: there is a commitment to strengthen, or at least not undermine, the traditional virtues which enable people to live fulfilling lives without being a threat or a burden to others. This was the beginning of many of the themes and ideas which would dominate my third term of office.

  Indeed, as early as June 1982 I set up an ad hoc group of ministers to see how this ambitious programme could be developed, comprising Keith Joseph, Willie Whitelaw, Geoffrey Howe, Norman Tebbit, Michael Heseltine, Norman Fowler and Neil Macfarlane (as Sports minister). I invited Janet Young to join us in October. The group was officially — though rather misleadingly — known as the Family Policy Group’; the first meeting was held in July 1982 and detailed work was now commissioned. All sorts of questions came within its remit, including the reform of the taxation of husband and wife, education vouchers, reducing crime and the widening of home ownership through increased discounts for the sale of council houses.

  It is never easy to make the transition from policy-making in government to writing a party manifesto. In 1982 I used a special exercise to ease the problem. In September I wrote to Cabinet ministers requesting them to prepare a ‘Five-Year Forward Look’ for their departments. These papers were to summarize what had been achieved, what was under way and what still needed to be done. I received most of these papers just before Christmas and looked through them over the holiday. As someone
once said of British Rail food, there was a considerable variation in quality. Relatively little new could be said on Treasury matters because the strategy was clear and the real test was to follow through the policies we already had. Similarly, as regards the Health Service the main priority at that stage was to defend our record and explain what had been achieved, rather than embark on politically difficult new initiatives.

  By contrast, in both housing and local government there was more room for new thinking. The ‘Right to Buy’ had proved a huge success, but the wider we could extend home ownership in this way the more difficult it would be for Labour to oppose it. In employment, we were preparing for the introduction of the Youth Training Scheme and discussing the next step in trade union reform which would eventually result in the 1984 Employment Act.

  In education, Keith Joseph had begun what would be a long process of reform. Falling school rolls had allowed us to increase to record levels public spending per pupil and to achieve the best ever pupil-teacher ratios. But extra resources only permit improved standards: they do not ensure them. So Keith was pressing for changes in teacher training. He was issuing new guidelines for the school curriculum. Keith and I were also anxious to do something more to increase parents’ power to choose by seriously investigating the possibilities of vouchers or at least a combination of ‘open enrolment’ and ‘per capita funding’, that is a kind of voucher applying just to the state sector.

  There was a new momentum for fresh thinking at No. 10 and ministers had taken stock of their policies. By the end of 1982, although I was still not expecting an early general election, I felt that the Government was moving, as it should, into the run-up for the next campaign. There were plenty of possibilities for mishap, but our general political position was strong and the economic prospect was improving. Indeed, well before the end of the year I had authorized the setting-up of party policy groups to consider these and other proposals for the manifesto. Speculation about the date of the election soon began.