There was, of course, a basic inconsistency in Heath’s approach. On the one hand, he refused to heed the advice of those who thought he should give in to the miners, arguing that it would be madness to sacrifice the counter-inflationary rigour of Stage Three. Yet on the other, he refused to listen to advisers like Hurd and Waldegrave who urged him to whip up national outrage at the selfishness of the miners’ leaders, preferring the rhetoric of compromise and consensus. As even his sympathetic biographer puts it, ‘Heath’s words signalled that he did not have the stomach for a fight.’ For all his talk of radical modernization, he remained at heart a One Nation politician: although he earnestly wanted change, he shrank from the confrontation necessary to bring it about.17
Even close aides found it hard to work out Heath’s strategy. On 2 December, he had recalled Willie Whitelaw – then by far the government’s most popular minister – from Northern Ireland, making him Secretary of State for Employment with special responsibility for fighting inflation. Given Whitelaw’s reputation as the supreme negotiator, the press saw it as a stroke of genius. In fact, Whitelaw was shattered by his experience in Belfast and out of touch with what was going on in London. ‘I was totally exhausted,’ he said later. ‘I was emotionally affected by all I had been involved with in Ireland. I was not mentally conditioned for home politics.’ Above all, though, his chief never gave him a clear sense of direction. After just a few days, Whitelaw discovered that Heath had been holding strategy meetings behind his back with his civil servants – another sign of the Prime Minister’s increasing isolation. He immediately rang Downing Street in sheer frustration. ‘Tell me what you want me to do with this department,’ he begged. ‘Do you want me to settle, or do you want war?’ But from Heath, he remembered, there came ‘no reply of any clarity’.18
Working almost as a freelance mediator between Heath and the miners, Whitelaw briefly came tantalizingly close to finding a way forward. On 20 December, after an IRA bomb scare had forced him and the miners’ leaders to take temporary refuge in an Italian restaurant, where they reassured themselves with bottles of beer, Gormley suggested that the miners might be a special case after all, because unlike other workers they not only had to change and wait for the lift at the start of each shift, but had to scrub themselves clean of coal dust afterwards. If the government could justify extra pay for ‘waiting and bathing time’, Gormley hinted, then a deal might be possible. Whitelaw seemed interested, and Gormley thought they had a real chance of a breakthrough. The next day, however, he made the mistake of mentioning it to Harold Wilson, who immediately complained that he was ‘pulling the Tory Government’s irons out of the fire for them’, and rushed to the Commons to unveil the idea as his own. This was clever but supremely cynical politics from Wilson, making it much more difficult for the government to accept the deal while ensuring that Labour would get the credit if they did. Gormley and Whitelaw were furious: years later, the miners’ leader wrote that he ‘would never forgive Harold Wilson’ for sabotaging the last chance for peace.19
But the truth is that ‘waiting and bathing’ never offered a realistic solution. Over Christmas, the Pay Board examined the idea and found that it would justify much less extra pay than Gormley thought. In any case, since neither Heath nor the NUM militants were prepared to blink first, any compromise was distinctly unlikely. Heath seemed determined to stick to ‘a fairly hard line, making it clear that the three-day week was all the miners’ fault’, recorded Ronald McIntosh after an NEDC meeting on 21 December. At lunch, McIntosh took Heath aside and implored him to ‘reach an accommodation’ for the good of the country, giving the miners concessions in return for a TUC statement ‘on the need to control wage inflation’. But since such a statement would have been worthless, Heath treated the idea with barely concealed contempt. ‘I felt tired and unutterably depressed,’ McIntosh recorded afterwards. He thought Heath was behaving ‘irresponsibly’ because the miners were bound ‘to get a settlement outside Phase 3 in the end’ – a classic case of Whitehall defeatism. ‘It is a dreadful thing to sit and watch a country slide into chaos, through the obstinacy of a few individuals,’ he wrote. ‘I am sure that the three-day week will bring greater chaos more quickly than ministers realise. It will also cause great bitterness and will mean that we face the tremendous problems which the oil crisis will bring as a deeply divided country.’20
This was more than the apocalyptic pessimism of some gentlemen’s-club reactionary. The director general of the NEDC had the ear of some of Whitehall’s most influential economic experts, and what they were telling him was deeply disturbing. At a meeting on 6 December, the head of British Rail, Richard Marsh, confided that ‘we faced the most dangerous situation we have had since the 1930s’. Two weeks later, the Permanent Secretary to the Treasury, Sir Douglas Allen – a man with almost unparalleled clout in Whitehall – was even more pessimistic. ‘He took a very gloomy line about the future,’ McIntosh noted after they had talked for more than an hour, ‘and said that the Treasury predicted GDP would fall next year. This would lead to high unemployment (perhaps a million at the end of 1974) and hence a drop in the standard of living. He talked about the possibility of our moving into a siege economy with rationing on the wartime model.’21
This might sound absurdly alarmist, yet to those in the know, the return of rationing and the advent of a new dark age, an era of recession and austerity on a scale that might eclipse even the Great Depression, seemed a strong possibility. ‘We are heading for a major slump,’ the deputy chairman of Rio Tinto-Zinc, one of Britain’s biggest conglomerates, told Tony Benn at lunch on 29 November. ‘We shall have to have direction of labour and wartime rationing.’ A few weeks later, the Guardian’s Peter Jenkins warned that Treasury sources were predicting ‘nil growth’ in 1974 at best, and ‘a 5 per cent recession’ at worst, as well as ‘a 15–20 per cent rate of inflation and a balance of payments deficit in the region of £4,000 millions this year’. At almost exactly the same time, Labour’s Shadow Chancellor, Denis Healey, told his colleagues that Britain faced an ‘economic holocaust’. Meanwhile, the historian A. J. P. Taylor was sending a series of increasingly gloomy letters to his Hungarian wife Éva. He was ‘terrified’ by the ‘approaching hurricane’, he wrote, predicting shortages of oil and coal, the absence of heat and light, and millions thrown out of work. ‘I have been expecting the collapse of capitalism all my life,’ he remarked with gallows humour. ‘Now that it comes I am rather annoyed.’22
At the root of the economic panic was the collapse of the Barber boom. Even without the oil shock, the government’s dash for growth would probably have ended in tears. But the crisis had come at precisely the worst possible time: after months of reckless monetary expansion, surging world commodity prices and terrible trade figures, the economy was trembling on the brink of disaster. ‘The country is now facing the gravest economic crisis since the end of the war,’ Anthony Barber told his Cabinet colleagues on 12 December, in a secret report of unparalleled pessimism. With oil and coal supplies running out and overall production bound to fall in 1974, the only way to ‘make some impact on a worsening balance of payments situation’ and to ‘restore confidence in sterling’ was to ‘take immediate steps to reduce demand’. The Chancellor admitted that his proposals would ‘bear very heavily on certain programmes’, but they had no choice: new orders must be postponed or cancelled, subsidies must be slashed, and in the long run the government might have to cut spending by as much as £3 billion. The plans for Concorde, one of the last major prestige projects left over from the 1960s, must be scaled back; the plan for a new London airport at Maplin Sands must be delayed. But the situation was so desperate, Barber admitted, that ‘even with the most severe measures, the impact on the forecast balance of payments deficit would only be marginal. It would be necessary to borrow abroad for some considerable time before a turn around could be achieved.’ There was no disguising the underlying message. The dream of economic expansion lay in ruins. The good times w
ere over.23
Barber revealed the extent of the crisis to the Commons on 17 December. ‘Over the past week or so, many have described the situation which we as a nation now face as by far the gravest since the end of the war,’ he began ominously. ‘They do not exaggerate. The duty of the Government is to take whatever action the national interest requires, however severe.’ So his Christmas present to the nation was an emergency mini-budget, slashing public expenditure by some £1,200 million (roughly 4 per cent), the biggest spending cut in modern history. There were cuts of £178 million in defence and £182 million in the education budget, destroying Margaret Thatcher’s ambitious plans for nursery schools and university expansion. There were stringent new controls on hire-purchase credit, bank lending was subject to a ‘corset’ to prevent the money supply growing too quickly, and holders of Barclaycard and Access cards were compelled to pay back at least 15 per cent of their balance a month. ‘It was a swing of the axe that was meant to hurt,’ one reporter wrote the next day. But this was more than the usual stop-go economics to which the country had become accustomed over the previous twenty years. It was the death knell for an era of economic optimism, the end of a consensus based on ever-growing public spending and ambitious Whitehall-driven empire-building. The Barber boom had been a last attempt to reaffirm growth as the motor of social and economic change, with the government cast as a masterful driver steering the welfare state towards the sunlit uplands of wealth and security. But now the wheels had fallen off, and the driver found himself lost in a forbidding global landscape he no longer recognized. For the welfare state, for the post-war consensus and for Heath himself, it would be never glad confident morning again.24
For millions of children, Christmas in 1973 was as exciting as ever. ‘I’ve only got a few presents!’ wrote the 12-year-old Essex diarist, whose haul included talcum powder, two bottles of nail varnish, a lock-up diary, a nightdress, the board game Cluedo, a Leo Sayer record and a ‘David Cassidy life story book’, as well as £20 to buy clothes. It was a sign of how affluent Britain had become that even her friends gave her ‘lots of presents like bath cubes, bubble bath & bath salts’. Ten or twenty years before, such gifts would have been well beyond the reach of ordinary 12-year-old girls, but now most took them for granted. For some of their parents, too, the economic crisis barely impinged at all. Fortnum & Mason reported booming sales of smoked salmon, caviar, game pies, foie gras and peaches in brandy, while one American correspondent told his readers that the Christmas shopping spree had been ‘as intense as ever’ as ‘Londoners stocked up heavily on turkey, ham, sausage, wine, cake, candy and everything else that goes on the holiday table’.25
Even for families that had deliberately tightened their belts, the festive season was not all doom and gloom. In the charts, Slade’s ‘Merry Xmas Everybody’, conceived by Noddy Holder as a ‘working-class British Christmas song’, ruled unchallenged, cheerfully urging listeners to ‘look to the future now / It’s only just begun’. And the television schedules could hardly have been better designed to distract viewers from the looming prospect of the three-day week, from the Christmas Day specials of The Generation Game, The Mike Yarwood Show and Morecambe and Wise to Boxing Day’s diet of Les Dawson, Ken Dodd, Dick Emery and The Two Ronnies. Escapism was the order of the day: when Downing Street caught sight of the Queen’s proposed Christmas message, in which she expressed ‘deep concern’ at the ‘special difficulties Britain is now facing’, Heath vetoed it outright. Nothing must alarm the nation on Christmas Day, he insisted: even her second draft (‘Christmas is so much a family occasion that you would not wish me to harp on these difficulties’) was too much. In the end, the Queen showed viewers a selection of Princess Anne’s wedding pictures instead.26
Not even the pleasures of Leo Sayer, Bruce Forsyth and Princess Anne, however, could banish the glowering reality of the crisis. The news was unremittingly bad: just seven days before Christmas, the IRA set off a string of car and parcel bombs in Westminster, Pentonville and Hampstead that injured sixty people, many of them women on their way to work. Almost every day brought more bomb scares, and the air seemed heavy with anxiety and suspicion. ‘Bad news all the time,’ recorded the National Theatre’s director Peter Hall on Christmas Eve. ‘An economic slump threatens. The bomb scares go on. The miners continue their go-slow. The trains are in chaos. Meantime, the nation is on a prodigal pre-Christmas spending spree.’ Other diarists were in similarly gloomy form, exacerbated, no doubt, by the fact that many shops had inconveniently run out of toilet paper after a surge of panic buying. ‘The news becomes more depressing every day,’ wrote Kenneth Williams, ‘as we watch democracy simper itself off the bill.’ James Lees-Milne, meanwhile, could barely contain his horror at the flood of bad news. ‘The morale of the British Mr Average has never been lower, his values more debased, his covetousness, greed and lack of self-respect more conspicuous,’ he recorded at the end of the year. Earlier, after Barber’s broadcast on the emergency spending cuts, he had shuddered with horror at the ‘simultaneous news of the Arabs shooting and killing over thirty innocent travellers in Rome airport, the three bombs in London planted by the IRA, the squabbles of the European Community meeting’. Everything was ‘so atrocious and evil’, he thought, ‘that it is a wonder we do not all go raving mad, or commit suicide’.27
In the press the mood could hardly have been grimmer. On 23 December, the Sunday Times predicted massive random power cuts and public ‘chaos’ by the end of January. The next day, Christmas Eve, an extraordinarily sweeping Times leader predicted global shortages of ‘food and raw materials’ and diagnosed ‘a crisis in the culture and values of modern industrial society’. On page three, a full-page government advertisement, headlined in thick black type ‘The Three Day Order’, summarized the emergency provisions that would come into effect on 31 December. On the Continent, where the oil crisis was creating severe economic problems but nothing to rival the political crisis across the Channel, commentators gazed with horror on Britain’s apparent self-immolation. In Europe, wrote one Brussels correspondent, the ‘apparent fecklessness of the British worker and his delight in wringing the once golden goose’s neck is matched in continental eyes by the reluctance of British Management to get to work first [and] roll up its sleeves’. Britain was now admired ‘only for its ability to stagger along on its knees’, especially as the last remnants of Beatlemania had long since blown away. ‘The swinging London of the ’60s has given way to a London as gloomy as the city described by Charles Dickens’, remarked the German magazine Der Spiegel, with ‘the once imperial streets of the capital’ now ‘sparsely lighted like the slummy streets of a former British imperial township’. Most Britons, reported the New York Times, were alarmed less by the prospect of ‘prolonged poverty’ and ‘drastic inflation’ than by fears that ‘the fabric of British society is about to be ripped up’. This kind of reporting infuriated Edward Heath, who gave a splendidly grumpy interview to the American paper in January, insisting that their portrait of Britain in a state of ‘perpetual crisis’ did not ‘bear any relationship to the facts’ – although his claim that, until the end of 1973, Britain had enjoyed ‘a period of very great industrial peace’ strained credulity too far.28
Around the world, Britain was becoming a byword for industrial unrest and economic collapse. One humiliation was particularly painful, although it must have represented sweet revenge for one of the empire’s former subjects. The people of Uganda, Idi Amin wrote to Heath in December 1973, were ‘following with sorrow the alarming economic crisis befalling on Britain’, and were keen to offer their ‘abundant foodstuffs’ to help their old friends in their hour of need. ‘I have decided to contribute 10,000 Ugandan shillings from my savings,’ Amin added, ‘and I am convinced that many Ugandans will donate generously to rescue their innocent friends who are becoming victims of sharp tax increases, tighter credit squeeze and a possible pay squeeze.’ The Foreign Office advised that no reply be sent, so as not to encourage the
African dictator’s ‘delusions of statesmanship’. But five weeks later Amin wrote again to report that his ‘Save Britain Fund’, established to ‘save and assist our former colonial masters from economic catastrophe’, was a great success. The response had been ‘so good’, he added, ‘that today, 21 January 1974, the people of Kigezi district donated one lorry load of vegetables and wheat. I am now requesting you to send an aircraft to collect this donation urgently before it goes bad’. When no reply was forthcoming, Amin tried to send a telegram to the Queen, but to no avail. Eventually the British High Commissioner was detailed to decline the offer as politely as possible. It was a ludicrous moment, and yet it spoke volumes about Britain’s declining position in world affairs. Only eleven years before, Uganda had been a British colony. Now its leader, a man regarded in Britain as a murderous buffoon, was offering to help the mother country through its economic travails. How the mighty had fallen.29
State of Emergency: the Way We Were Page 78