The Conservative Party Conference at Brighton was always likely to be difficult. The opinion polls showed us falling behind Labour. Above all, the controversy over the Government’s rapidly disintegrating pay policy focused even more attention on our approach, and that was itself threatened with disintegration.
A couple of weeks before the Conference Jim Prior had unwisely made remarks in a radio interview which seemed to offer Conservative backing for the Government’s 5 per cent policy, and not only made clear his support for the principle of a statutory incomes policy but actually revealed that he thought a Conservative Government would be forced to introduce one: ‘I think that may well happen under certain circumstances.’ In my own interviews, I tried to shift the emphasis back towards the link between pay, profits and output and away from norms. Although I made it clear that I was not supporting the Ford strike, I equally blamed the Government’s 5 per cent pay norm for what was happening and said that a statutory policy was not a practical possibility. I was widely interpreted as having called for a return to free collective bargaining, an interpretation I did not seek to deny.
Ted Heath now intervened on the other side. Speaking in the Conference economic debate, while I watched from the platform, he warned of the risks of dogmatism and said of the Government’s 5 per cent policy: ‘It is not yet clear to what extent it has broken down. But if it has broken down, there is nothing here for gloating, nothing for joy. We should grieve for our country.’ Geoffrey Howe made a strong closing speech, handling Ted’s intervention with aplomb and saying that a future Conservative Government would return to ‘realistic, responsible collective bargaining, free from government interference’. But later that evening Ted appeared on television and went further. He warned that ‘free collective bargaining produces massive inflation’, and when asked if the Conservative Party should support the Government’s pay policy at a general election, he replied: ‘If the Prime Minister says he is going to the country and expresses the view that we cannot have another roaring inflation or another free-for-all, I would say I agree with that.’
This was a thinly veiled threat. An open split between the two of us during the general election would cause enormous damage. The question of Ted’s role during an election had long worried the Party, and Peter Thorneycroft had met him quietly to discuss his plans earlier in the year. Humphrey Atkins had also received messages from several MPs close to Ted who told him that he was proving amenable to an approach to help. Arrangements were made to liaise with his office during the campaign. Ted’s intervention had blown all that out of the water.
Moreover, in substance Ted’s view seemed to me entirely misconceived. There was no point in backing a policy which was beyond repair, even if it had been beneficial (which, in anything except the very short term, it was not). Moreover, although opposition to centrally imposed pay policies meant that we would find ourselves with strange bedfellows, including the more extreme trade union militants, the revolt against centralization and egalitarianism was basically healthy. As Conservatives, we should not frown on people being well rewarded for using sharp wits or strong arms to produce what the customer wanted. Of course, when such an approach was described, even by those allegedly on our own side, as being opportunist – and when it was accompanied by open disagreements as now between Shadow ministers like Jim Prior and Keith Joseph – it was difficult to have the analysis taken seriously. But in fact it was an essential part of my political strategy to appeal directly to those who had not traditionally voted Conservative, but who now wanted more opportunities for themselves and their families. So I addressed much of my Conference speech directly to trade unionists.
You want higher wages, better pensions, shorter hours, more government spending, more investment, more – more – more – more. But where is this ‘more’ to come from? There is no more. There can be, but there will not be, unless we all produce it. You can no more separate pay from output than you can separate two blades of a pair of scissors and still have a sharp cutting edge. And here, let me say plainly to trade union leaders, you are often your own worst enemies. Why isn’t there more? Because too often restrictive practices rob you of the one thing you have to sell – your productivity.
Restrictive practices are encrusted like barnacles on our industrial life. They have been there for almost a century. They were designed to protect you from being exploited, but they have become the chief obstacle to your prosperity … I understand your fears. You’re afraid that producing more goods with fewer people will mean fewer jobs, and those fears are naturally stronger at a time of high unemployment. But you’re wrong. The right way to attack unemployment is to produce more goods more cheaply, and then more people can afford to buy them …
We shall do all that a government can to rebuild a free and prosperous Britain. We believe in realistic, responsible, collective bargaining, free from government interference. Labour does not. We believe in encouraging competition, free enterprise, and profits in firms large and small. Labour does not. We believe in making substantial cuts in the tax on your pay packet. Labour does not. We will create conditions in which the value of the money you earn and the money you save can be protected.
Over the next six months this strategy would be successful. But in the short term it was a liability, because the Party was not united on it and because opinion polls suggested that the public wanted us to support the Government against the unions. And not surprisingly we found ourselves at the end of the Conference season five and a half percentage points behind the Labour Party.
The removal of the prospect of an immediate election, after everyone’s nerves had been screwed up to fight one, led to a breakdown in the ordinary disciplines in both parties. In the Labour Party this focused on economics. With us it boiled over on Rhodesia, first at the Party Conference and then in the House of Commons.
But Labour’s time was running out. Jim Callaghan had been dealt a bad hand by history and Harold Wilson in 1976. Like a brilliant poker player, he had employed skill, gamesmanship and simple bluff to spin out his defeat as long as possible on the chance that an ace or two might suddenly appear from up his sleeve. As 1978 became 1979, however, a succession of deuces tumbled forth. On Tuesday 12 December trade unions representing National Health Service and local authority workers rejected the 5 per cent pay limit and announced that they would strike in the New Year. At the end of December the elements conspired to create more trouble, with heavy snow, gales and floods. On Wednesday 3 January the TGWU called the lorry drivers out on strike in pursuit of a 25 per cent pay rise. Some two million workers faced being laid off. Hospital patients, including terminally ill cancer patients, were denied treatment. Gravediggers went on strike in Liverpool. Refuse piled up in Leicester Square. With government compliance, trade union shop stewards dispensed permits to allow lorry drivers to transport ‘essential’ goods across picket lines. In short, Britain ground to a halt. What was more damaging even than this to the Labour Government, however, was that it had handed over the running of the country to local committees of trade unionists.
Would we be able to grasp the opportunities this provided? That might depend in part on an operation which had been proceeding in fits and starts, under conditions of the greatest secrecy, since the summer of 1977 and which went under the umbrella title of ‘Stepping Stones’. It was the brainchild of John Hoskyns, an able ex-soldier who had set up one of the first computer software companies, which he had built up and then sold to concentrate on public affairs. John had been in contact with Keith Joseph at the Centre for Policy Studies for some time before we were introduced. Together with his colleague Norman Strauss, he had a refreshingly if sometimes irritatingly undisguised scorn for the ad hoc nature of political decision-making in general and the decision-making of the Shadow Cabinet in particular. The two of them argued that we could never succeed unless we fitted all our policies into a single strategy in which we worked out in advance the order in which actions had to be taken – hence the ti
tle. The first time I heard all this I was not very impressed. We met over Sunday lunch at Flood Street and the session ended by my remarking on the fact that they had eaten a whole joint of roast beef and I wasn’t sure what I had gained from it all. Alfred Sherman quipped that next time they would bring sandwiches. But under different circumstances, when long-term thinking was concerned, I came to appreciate the depth and quality of John Hoskyns’s analysis.
What rejuvenated the Stepping Stones initiative, after ministerial objection had effectively halted it, was the collapse of the Government’s 5 per cent pay policy that autumn. Immediately after the Labour Conference rejected the policy, Keith Joseph came to see Willie Whitelaw and me, expressing his disappointment that we had not got on further. At various times people had suggested that the only way forward was to shift Jim Prior, but now there was obviously an opportunity to move on without taking such a strong step. Accordingly, I arranged another meeting of the Stepping Stones Steering Group for mid-November.
At this and at a later meeting, however, Jim was still able to block proposals for a vigorous campaign on the union question that winter. Peter Thorneycroft gave him strong support. Peter had never been a friend of Stepping Stones: at one point he actually suggested that every copy of the Stepping Stones report should be recalled to Central Office and burned. Even though Party opinion had begun to shift in my direction, no amount of discussion between Shadow ministers, advisers and MPs would have sufficed to persuade the Shadow Cabinet of the need to think seriously about trade union reform, had it not been for the industrial chaos of the Winter of Discontent.
Even then they would require a lead. This was an area in which we had made little or no advance since 1975. As Shadow Employment spokesman, Jim Prior had been well placed to veto the development of new policy on union reform. Although just before Christmas 1978 we managed to persuade him to accept an extension of our policy of providing state funds for unions voluntarily holding secret ballots – we would offer cash to cover the cost of pre-strike ballots as well as union elections – this really amounted to very little. Indeed, to the average voter our policy on secret ballots would have been hard to distinguish from Labour’s: in November 1978 the Prime Minister was offering to legislate on secret ballots if the unions wanted it.
In December Keith Joseph had tried to reopen the question of benefits paid to strikers’ families. I had agreed to the summoning of a new Policy Group to consider this question, but when it met, Jim Prior’s opposition had prevented any progress.
I spent Christmas and New Year anxiously and reflectively at Scotney, watching the crisis build up. As it had at Christmas 1974, the bad weather discouraged us from our usual walks, and besides I had plenty to do. I read through the various Policy Group papers on union questions and I had brought down a bulging file of briefing from the press and interested outsiders; I spent many hours studying a textbook on industrial relations law and went back to the original Acts of Parliament, reading through the most important legislation since 1906. Every time I turned on the radio or the television the news was worse. I came back to London determined on one thing: the time had come to toughen our policy on union reform.
There was no difficulty in finding a platform. I had agreed before Christmas to be interviewed on Sunday 14 January by Brian Walden on Weekend World; the date was brought forward a week to 7 January. When I came back to London in the New Year, I saw Alfred Sherman, Gordon Reece and a few other close advisers to continue my briefing. The industrial situation was changing so fast that it was becoming more and more difficult to keep up to date, but over the next few weeks having the very latest facts to hand gave me vital advantages.
On Wednesday 3 January Jim Prior intervened to prevent a change in policy. Interviewed by Robin Day on radio, he firmly rejected compulsory strike ballots (‘not something that you can make compulsory in any way’), rejected legislation on strikers’ benefits, and commented on the closed shop: ‘we want to take this quite quietly … it is better in these matters to play a quiet game rather than to shout too much’. Asked what he thought of recent criticism of the trade union leadership by David Howell and Michael Heseltine, he said: ‘I don’t think they are being fair to trade union leaders who at the moment are trying to give good advice to the rank and file, and the rank and file is quite often rejecting it.’
On Weekend World I struck rather a different note. ‘Every power implies responsibility, every liberty a duty. The unions have [had] tremendous power over the years … [And] this is what the debate has got to be about – how unions use their power. I’m a parliamentarian, I am not in Parliament to enable them to have a licence to inflict harm, damage and injury on others and be immune from the law, and if I see it happening, then I’ve got to take action.’
Although I was careful not to commit us firmly to individual measures before they had received proper consideration, I ran through with Brian Walden a shopping list of possible changes, which naturally moved them higher on the agenda than some of my colleagues really wanted. I reaffirmed Jim Prior’s announcement that we would make funds available for secret ballots before strikes as well as for union elections. But I hinted at compulsion if needed, holding out the possibility of legislation to refuse Social Security benefits unless there had been a strike ballot. I also mentioned the possibility of restricting strikes in essential services, announced that we would subject short-term Social Security benefits to taxation and made the case for a right of appeal to the courts for people excluded from a union, who faced losing their jobs where there was a closed shop.
On television the following day Jim Prior replied to my interview. He said that nothing had been agreed between us on Social Security benefits for strikers and that he was against compulsory secret ballots. Thankfully, others reacted more positively. I had broken ranks. People could see that I was going to fight. Offers of support, information and new ideas began to flow into my office.
The strong support that I received for what I said in my Weekend World interview was in marked contrast to the reaction to Jim Callaghan’s remarks on his arrival back three days later from the Guadeloupe summit. His absence from the country at such a critical time had itself been politically damaging, helping to strengthen the impression that the Government was paralysed in the face of the strikes. The press coverage of the summit itself had not helped him; the sight of the Prime Minister sitting with the other leaders in the Caribbean sun, casually dressed, was a dangerous contrast to events at home. But the final disaster was the impression he left with the press when he flew into Heathrow. Although he never did use those precise words – ‘Crisis? What Crisis?’ – the myth faithfully represented his attempt to play down the scale of the problem. His image of unflappability and competence was never restored.
What should be our next move? Parliament was due to return on Monday 15 January. I wrote to the Prime Minister demanding a full statement and a debate on the industrial situation. We had a slot already arranged for a PPB on Wednesday 17 January and work began on a script.
The preparations I made for my speech in the debate were perhaps the most thorough I had ever made for an appearance in the Commons. My original idea had been to make a hard-hitting but essentially conventional speech from the Opposition benches – hammering the Government and demanding that they change course. But at Scotney over the weekend of 13–14 January and on Monday back in London several people urged a different approach. Peter Utley and Peter Thorneycroft sent me suggestions for a speech offering support for the Government if it was prepared to introduce the kind of legislative changes necessary to break the union stranglehold. Ronnie Millar and Chris Patten – working on the PPB script – were urging the same idea.
My own immediate inclination was to avoid offers of co-operation, for several reasons. First, unlike the more coalition-minded of my colleagues, I believed that the job of Oppositions is generally to oppose. We had a fundamentally different approach from that of the Government and our main duty was to explain
it and persuade the country of its merits. Secondly, it was dangerous to make an offer of co-operation without having thought through clearly in advance whether we actually wanted it accepted or not. Probably nothing which went to the heart of the problem would – or indeed could – be accepted by Jim Callaghan’s Government. There was, therefore, a risk that in order to make a credible offer of support, we would have to set our sights too low as regards measures of reform. And if the Government then did accept the offer, we would have thrown away, for the time being at least, the opportunity of forcing it out of office. Moreover, reforms in trade union law alone would not suffice to deal with Britain’s underlying economic problems: that would need a much more comprehensive strategy to which the socialists could never agree.
That evening – Monday 15 January – I called a Steering Committee meeting. Most of my senior colleagues favoured the idea of a conditional offer and by this stage I had come round to the idea myself. Reforms were essential; and if the Government were prepared to introduce the necessary measures, how could we oppose them? By offering help we enhanced our moral authority. I believed – as did most of the supporters of the idea – that the offer should be set at a level which, though abundantly justified by events, would be unlikely to be accepted by the Government. This was a difficult matter to judge in detail: the Labour Party might just be persuaded to agree to the negotiation of no-strike agreements in essential services, the payment by the taxpayer of the cost of secret ballots in trade unions and even a code of practice to end secondary picketing – though the last was doubtful. Equally, I was clear that if the Government did accept, we were honour-bound to keep our side of the bargain. For me, however, there was an additional and very important consideration. By agreeing to offer co-operation with the Government on selected measures, Jim Prior and his supporters would find it impossible to refuse support to those same measures if and when a Conservative Government introduced them.
Margaret Thatcher: The Autobiography Page 31