State of Emergency: the Way We Were

by Dominic Sandbrook

  Heath set out his case for re-election in the first Conservative election broadcast, three days into the campaign. The theme was Heath as the man of destiny, the strong leader guiding the nation through stormy waters. At the beginning, supposedly ordinary voters told the camera that he had ‘done all that is expected of a Prime Minister’, and would ‘get England back on its feet’. Then Heath himself told the audience that his quarrel was not with the broad union movement but with ‘a small group of extremists’. It was ‘time to take a firm line’, he said, ‘because only by being firm can we hope to be fair’. This was the theme of the manifesto, too, which was entitled Firm Action for a Fair Britain. Some readers were shocked by the manifesto’s strident rhetoric: not only did it claim that the Opposition had been taken over by ‘a small group of power-hungry trade union leaders’ who were ‘committed to a left-wing programme more dangerous and more extreme than ever before in its history’, it warned that a Labour victory would be a ‘major national disaster’. In fact, even this was only a watered-down version of Nigel Lawson’s original draft, which had claimed that ‘the very fabric of our society is at risk’, only to be rejected by Tory colleagues who thought it was too ‘hard and anti-union’.4

  Beneath the surface of the Conservative campaign, which was spearheaded by Heath at his most presidential, there ran an undercurrent of deep anxiety, even paranoia, about the consequences of defeat. The long months of tension had taken their toll, and on 19 February the Tories’ advertising team overstepped the mark with a particularly embarrassing example of hysterical scaremongering. On screen, pictures of Harold Wilson and James Callaghan dissolved to show the terrifying features of Michael Foot and Tony Benn, while a narrator warned that Labour would confiscate ‘your bank account, your mortgage and your wage packet’. ‘It wouldn’t take much more of a move to the Left,’ the commentary went on, ‘and you could find yourself not even owning your own home.’ On screen, a young couple’s house obligingly vanished. Not surprisingly, Wilson was furious, playing back the tape at his morning press conference to show how low the Tories had sunk. And not unreasonably the Nuffield study later called it ‘a sorry broadcast in its ethical blindness, its clumsy cascade of visual gimmicks, and its abysmal view of the electorate’s intelligence’. Even the Tory high command was embarrassed, and Wilson was only slightly mollified when Lord Carrington offered a formal apology.5

  Oddly, however, the great flaw in the Conservative campaign was that in general it was not strident enough. When Carrington asked Nigel Lawson to redraft the manifesto and produce something ‘more One-Nation’, he was echoing the views of Heath himself, who was determined not to make the election a confrontation between the government and the miners. But this was a very strange position to take, because clearly at one level the election was a contest between the government and the NUM. The result was that apart from its anti-Labour conclusion, the Tory manifesto was a very vague and woolly production indeed, with plenty of bluster about firmness and fairness but no detailed policies or sense of direction. As so often, Heath ended up falling between two stools, trapped between the need to mobilize opinion against the unions on the one hand, and his One Nation instincts on the other. If he wanted a sweeping new mandate, he needed to whip up public outrage against the miners, to emphasize the desperate urgency of the situation, to hammer home the themes of crisis and betrayal. Instead, he talked of fairness and moderation: ideal themes for the Labour leader, perhaps, but surely not the Conservative one. Even his best speech of the campaign – a resounding reassertion of One Nation principles in Manchester’s Free Trade Hall, presenting the Tories as ‘the union for the unemployed and the low paid … for those in poverty and for the hard pressed’ – sounded like the kind of thing Harold Wilson should be saying. It was one of the supreme ironies of Heath’s career that when it mattered most, a politician often caricatured as a callous reactionary could not bring himself to live up to his billing.6

  But while Heath’s campaign was at least slick and confident, his Labour opponents seemed to be in a very feeble state. Not only were senior figures still nursing their wounds after their battle over Europe, but many were deeply unhappy with their own manifesto, which promised the most radical programme since the 1930s. The product of months of infighting, it reflected a leftward tilt at the Labour grass roots and was heavily influenced by the ideas of the economist Stuart Holland, then a great favourite of the Shadow Industry Secretary, Tony Benn. Gone was the talk of science and technology, the rhetoric of ‘planned, purposive growth’, the pledges of dynamic modernization that had marked Labour manifestos in the 1960s. In their place, the new manifesto promised ‘a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families’ as well as ‘greater economic equality in income, wealth and living standards’, and measures ‘to make power in industry genuinely accountable to the workers and the community’. It committed the next Labour government to ‘a fundamental renegotiation of the terms of [EEC] entry’ and a national referendum on British membership. And despite the nation’s parlous economic condition, the manifesto promised a range of new wealth and property taxes, the abolition of Heath’s industrial relations apparatus, and extensive new spending plans for health, education and pensions – even though it was far from clear that there would be enough money to pay for them.7

  Potentially the most radical commitment, though, was the promise to set up compulsory planning agreements with industry and a National Enterprise Board (NEB) to take over firms ‘where a public holding is essential to enable the Government to control prices, stimulate investment, encourage exports, create employment, protect workers and consumers from the activities of irresponsible multi-national companies, and to plan the national economy in the national interest’. These were words that gladdened the hearts of radical Labour activists, but they horrified most businessmen. And more than any other part of the programme, they reflected the ideas of Tony Benn and his intellectual circle. Having ‘reincarnated’ himself (as Michael Foot scathingly put it) from the former Viscount Stansgate into plain Tony, the tribune of the plebs, Benn now believed that only massive state intervention could make Britain both egalitarian and competitive. His diaries brimmed with messianic expectation, and he eagerly looked forward to the ‘great crisis of capitalism’ when a ‘popular front’ including Marxist and far-left groups could take power. ‘I think we would need the Emergency Powers Act and an emergency Industrial Act,’ he noted, ‘which would give the Minister absolute power to deal with the situation.’8

  To all but those on the far left, talk of ‘emergency powers’ was potentially terrifying stuff. Even Benn’s own mentors often shuddered at his radical intransigence. Stuart Holland, the intellectual godfather of the state holding company scheme, wrote later of his horror at Benn’s ‘dogmatic’ and wildly unrealistic vision of a socialist Little England sealed off from the world economy. And on the right, where Benn had once been seen as an amusing, eccentric but ultimately harmless figure, he now loomed as the incarnation of socialist devilry, the Red Menace made flesh. By September 1972, Radio Four’s Today programme had dubbed him ‘the most hated man in Britain’; in the Sunday Express a month later, Michael Cummings portrayed him in full Nazi stormtrooper regalia. The Times accused him of stirring up class warfare; the Sunday Telegraph called him ‘Bolshevik Benn’; even the Observer thought that he was ‘hysterical’. But the more the press demonized him, the more Harold Wilson tried to ignore him, the more Shadow Cabinet colleagues like Denis Healey and Anthony Crosland openly laughed at him, the more Benn knew he was right. Even the history books he read in his spare time fuelled his sense of mission: after working his way through a pile of books on the Levellers, he lamented that ‘the Levellers lost and Cromwell won, and Harold Wilson or Denis Healey is the Cromwell of our day, not me’. And yet as ‘Chairman Tony’ built up support among Labour’s disillusioned grass-roots activists, he seemed to be destined for a much more successful care
er than his radical heroes. In preparation for taking power, he even drafted a plan for the NEB to take over ‘twenty-five of our largest manufacturers’ – a tremendous first step, as he saw it, towards an economy liberated from the multinational corporations, and based on the principles of public ownership and workers’ control.9

  In the City, once the supreme symbol of Heath’s new capitalism, the Labour manifesto felt like a declaration of war. In almost every section of society, complained the Banker, could be heard ‘the pure emotional assertion that the City is no more than a band of robbers, who contribute little to the country whilst making fortunes for themselves’. This was not just confined to the far left: it was ‘probably what most people in Britain believe, either half-heartedly or completely’. How many commuters could be ‘sure that the wives they leave behind each morning do not secretly think so themselves?’ But the Banker’s greatest ire was reserved, not for the BBC scriptwriters, pulp-novel authors and saloon-bar pundits who popularized the idea of the Square Mile as rapacious and corrupt, but for Her Majesty’s Opposition. ‘To people in the City itself,’ it explained, ‘the Labour Party and many other critics appear strictly mad. What on earth can be the national interest in destroying or sniping at one of the few really efficient and competitive sectors of its economy?’ The City could hardly be blamed ‘if it just decided to pack its bag and go somewhere where the sky is blue, the natives friendly and where a man’s money is his own. Just possibly, that is what may happen. Messrs Wilson, Benn et al would then find themselves barking at an empty fortress.’10

  Behind the City’s fury lay not just the predictable self-interest of the wealthy and well connected, but a growing sense of panic about the nation’s economic future. By February 1974, the days when the City had been the go-ahead incarnation of Edward Heath’s new Britain seemed a very distant memory. And for all the gleaming modernity of the new Stock Exchange Tower, images of the Great Depression now loomed larger than exhilarating visions of future prosperity. Since November, the City had been engulfed in a perfect storm, its confidence shattered by a plunging property market, soaring oil prices and the biggest credit squeeze anyone could remember. Nobody doubted that Anthony Barber had been right to put the brakes on: the alternative would have been inflation of South American proportions. But for the so-called ‘secondary’ banks that had lent so much money to developers during the Barber boom, the implications of his credit controls were simply devastating. Not for the first time, and certainly not for the last, many banks had over-extended themselves in the pursuit of profit, blind to the reality that one day boom would turn to bust. But now the great property bubble had burst, and nemesis had caught up with them. ‘We used to go to visit the Governor of the Bank of England every Wednesday,’ the deputy chairman of the Stock Exchange later recalled, ‘and listen to the appalling news of one bank after another closing its doors.’11

  This was no exaggeration. By Christmas, the value of many fringe banks had dropped by as much as a third, and there were genuine fears that the entire structure might topple like a house of cards. And as oil prices mounted, as Britain went on a three-day week, as talks between the government and the miners dragged on, anxiety turned to panic. House prices were plummeting; land values dropped by about half in barely a year; even the markets in vintage cars, in antiques, in works of fine art, burst like popped balloons. Between mid-November and mid-December, the FT30 share index lost a quarter of its value. By 28 January, four days after the NUM executive had voted to hold its national strike ballot, the index had fallen to just 301.6 – a drop of almost half since its peak in May 1972. It was the worst bear market in history. Britain must be prepared, declared the Governor of the Bank of England, for a decade of austerity in order to settle the yawning budget deficit. Even Jim Slater, once the incarnation of buccaneer capitalism, now cut a distinctly gloomy figure. ‘There’s a hurricane blowing through the financial world,’ he told one reporter. ‘You must put your head down and wait for the hurricane to finish blowing.’12

  Ten years earlier, Harold Wilson might have been sympathetic to the City’s plight. But the mood inside the Labour Party was now very different from the technocratic pro-growth ethos of the early 1960s. With its local branches increasingly dominated by the middle-class ‘polyocracy’ and its leadership ageing and passive, Labour had swung further to the left than at any time since the 1930s. Even relatively centrist politicians like the Shadow Chancellor, Denis Healey, now played to the radical gallery. In his reply to Anthony Barber’s austerity measures, Healey had called for ‘increased taxes on luxuries such as fur coats, wines and brandy’ to pay for food subsidies, which, as even he admitted later, was a totally ‘inadequate’ response to the crisis. Now he boasted that he would levy whopping new taxes on ‘food manufacturers and retailers’ and would ‘squeeze the property speculators until the pips squeak’. To Healey this was just good knockabout electioneering stuff. But to the Conservative middle classes it seemed a bone-chilling warning, a sign that the ‘socialists’ were hell-bent on class warfare. The details of Healey’s remarks were lost amid the hysteria; people told one another that he had pledged to squeeze ‘the rich’ until the pips squeaked. Newspaper cartoonists showed Labour’s leaders as beetle-browed Bolsheviks, their hands reaching out to grasp the levers of power and the wealth of the middle classes. In the Express, Cummings drew Wilson and his colleagues as French revolutionaries encouraging Joe Gormley to bring down the guillotine on Ted Heath; in the Mail, Emmwood showed Wilson tucked up in bed beside a very dodgy-looking character in dark glasses. ‘LEFT-WING EXTREMISTS’ reads the sign on the latter’s placard. In case there was any doubt, his pyjamas are patterned with the hammer and sickle.13

  Quite apart from the problem of finding the money to pay for more nationalization, the obvious problem with the Labour manifesto was that not even its own supporters believed in it. Although committed activists loved Tony Benn’s proposals, the great mass of relatively apathetic Labour voters did not. The party’s private polls found that only 37 per cent of Labour supporters wanted to see more public ownership, with 44 per cent against. Only 30 per cent of Labour voters agreed with the nationalization of North Sea Oil, only 26 per cent supported the nationalization of land, and just 12 per cent agreed with the commitments to nationalize the ports, aircraft industries and shipbuilding. The proposed National Enterprise Board, meanwhile, was overwhelmingly unpopular: for all Tony Benn’s passionate salesmanship (or perhaps because of it), only a pitiful 6 per cent of Labour voters and 7 per cent of trade unionists thought it was a good idea. And on top of that, almost none of the party’s senior figures believed in their own commitments. In the Shadow Cabinet, Benn’s NEB scheme was particularly unpopular. ‘Why don’t we nationalise Marks and Spencer to make it as efficient as the Co-op?’ Healey asked sarcastically, while Tony Crosland and Edmund Dell made no secret of their belief that the nationalization programme was total madness (‘half-baked’ and ‘idiotic’ were Crosland’s characteristically trenchant words).* Even left-wingers were uneasy with Benn’s utopian plans. Michael Foot told Benn that ‘the twenty-five companies proposal was crazy’ and asked in disbelief: ‘Do you think we could win the Election? Do you want to win the Election? What are you up to? What are you saying?’ And Jack Jones, the old Communist warrior, warned Benn that the working classes ‘didn’t want airy-fairy stuff. Nationalisation was unpopular; it failed.’ ‘Why don’t you make a speech on pensions instead of all this airy-fairy stuff?’ Jones asked him. But Benn knew what was going on: the TGWU boss had ‘completely abandoned his serious left-wing programme’. Like Foot, like Healey, like Wilson, like all the rest of them, the Emperor Jones was just another right-wing sell-out.14

  In many ways it was a sign of Harold Wilson’s declining authority that he was saddled with a manifesto he patently did not want. But it was also a sign of his growing detachment from domestic politics: his physical and intellectual weariness, his declining ambition, his sheer lack of hunger. In the 1960s he h
ad placed himself at centre stage, hogging the limelight like an American presidential candidate. But now he presented himself as merely part of a team, allowing Callaghan and Healey to dominate the daily press conferences and his latest protégée, Shirley Williams, to become the star of the television broadcasts. They were ‘the wise old firm’, ran the message, ‘who could get on with the unions and get the country back to work’. Meanwhile, the extravagant promises of the manifesto were quietly forgotten. Even the word ‘socialism’ seemed to have disappeared, Wilson using it only twice in his speeches, and then only in the vaguest terms. Although he had clung on to the party leadership with the tenacity of a limpet, he had long since given up being the candidate of change, the modernizer who would lead Britain into a brave new world of progress and equality. Now he was content to play the trusted old family doctor, the voice of reason, the pipe-smoking reincarnation of Stanley Baldwin. Tony Benn was disgusted, recording that ‘all this “national interest”, “working together”, “keep calm and keep cool”, and “a Labour Government will knit the nation” seems absolute rubbish’. But even Labour right-wingers felt a twinge of unease at what seemed a highly disingenuous campaign. David Owen later called it the ‘shabbiest’ campaign he had ever been involved in. And Roy Jenkins, now even more detached than his leader, thought that they deserved to lose, and hoped that they would.15