The odd thing is, looking back, that Conservatives in the sixties, though increasingly and obsessively worried about being out of touch with contemporary trends and fashions, were beginning to lose touch with the instincts and aspirations of ordinary conservative-minded people. This was true on issues as different as trade unions and immigration, law and order and aid to the Third World. But it was also and most directly important as regards management of the economy.
It was not so much inflation, which was zero throughout the winter of 1959–60 and did not reach 5 per cent until the summer of 1961, but rather the balance of payments that was seen as the main economic constraint on growth. And the means adopted to deal with the problems at this time — credit controls, interest rate rises, the search for international credit to sustain the pound, tax rises and, increasingly, prototype incomes policies — became all too familiar over the next fifteen years.
The rethinking that produced first ‘Selsdon Man’ and later Thatcherism was barely in evidence. Enoch Powell at this time was pushing through his ten-year hospital building programme — one of the largest programmes of public spending presided over by Macmillan. Only a handful of backbenchers — including the recently arrived John Biffen — were prepared to argue the case against incomes policy and for monetary control of inflation. Indeed, an unhealthy concern with inflation (as opposed to unemployment) was seen by the powers-that-be as reflecting the interests of declining sectors of British society, such as fixed-income pensioners, rather than the new and exciting ‘young managers’ of Conservative Central Office’s imagination — at least until the fixed-income pensioners handed us a series of by-election defeats like Orpington and Middlesbrough West in the Tory heartland. These, together with the series of scandals from 1962 onwards, marked the end of the complacent period of Macmillanite Conservatism. Ahead of us lay years of defeat, opposition and (eventually) serious rethinking as Conservatives felt their way instinctively out of paternalism and into a new style of Toryism.
Although no really serious trouble in my relations with the Government and with the prevailing orthodoxy in the Conservative Party ever threatened when I was on the backbenches, I was conscious that, for all the plaudits I had received, I was not one of those young Tories who could expect to rise without trace. I had my own beliefs. I was uneasy about the general direction in which we seemed to be going. It would be wrong to suggest anything stronger than that. But for someone who believed in sound finance, the creative potential of free enterprise and social discipline, there was much to be concerned about.
The more I learned about it, the less impressed I was by our management of the economy. I listened with great care to the speeches of the Tory backbencher Nigel Birch, which were highly critical of the Government’s failure to control public spending. The Government’s argument was that increases could be afforded as long as the economy continued to grow. But this in turn edged us towards policies of injecting too much demand and then pulling back sharply when this produced pressures on the balance of payments or sterling. This is precisely what happened in the summer of 1961 when the Chancellor of the Exchequer Selwyn Lloyd introduced a deflationary Budget and our first incomes policy, the ‘pay pause’. Another effect, of course, was to keep taxation higher than would otherwise be necessary. Chancellors of the Exchequer, wary of increases in basic income tax, laid particular importance on checking tax avoidance and evasion, repeatedly extending Inland Revenue powers to do so. Both as a tax lawyer and from my own instinctive dislike of handing more power to bureaucracies, I felt strongly on the matter and helped to write a critical report by the Inns of Court Conservative Society.
I felt even more strongly that the fashionable liberal tendencies in penal policy should be sharply reversed. So I spoke — and voted — in support of a new clause which a group of us wanted to add on to that year’s Criminal Justice Bill which would have introduced birching or caning for young violent offenders. In the prevailing climate of opinion, this was a line which I knew would expose me to ridicule from the self-consciously high-minded and soft-hearted commentators. But my constituents did not see it that way, and nor did a substantial number of us on the right. Although the new clause was entirely predictably defeated, sixty-nine Tory backbenchers voted against the Government and in support of it. It was the biggest Party revolt since we came to power in 1951, and the Whips’ Office were none too pleased. It was also the only occasion in my entire time in the House of Commons when I voted against the Party line.
The summer of 1961 was a more than usually interesting time in politics. I retained my close interest in foreign affairs, which were dominated by the uneasy developing relationship between Kennedy and Khrushchev, the building by the Soviets of the Berlin Wall (which the House was recalled to discuss) and, closer to home, by the beginning of negotiations for Britain to join the Common Market. There was also speculation about a reshuffle. In spite of my slightly blotted copybook, I had some reason to think that I might be a beneficiary of it. I had remained to a modest degree in the public eye, and not just with my speech on corporal punishment. I gave a press conference with Eirene White, the Labour MP for East Flint, on the lack of provision being made for the needs of pre-school children in high-rise flats, a topic of growing concern at this time when so many of these badly designed monstrosities were being erected. But the main reason why I had hopes of benefiting from the reshuffle was very simple. Pat Hornsby-Smith had decided to resign to pursue her business interests, and it was thought politically desirable to keep up the number of women in the Government. I even had more than an inkling of what my future post might be. It leaked out that there were two jobs available — one at Aviation and the other at Pensions. Much as I would have liked it, I could not see them giving Aviation in those days to a young woman.
That said, I did not try to conceal my delight when the telephone rang and I was summoned to see the Prime Minister. Harold Macmillan was camping out in some style at Admiralty House while 10 Downing Street was undergoing extensive refurbishment. I had already developed my own strong impressions of him, not just from speeches in the House and to the 1922 Committee, but also when he came to speak to our New Members’ Dining Club — on which occasion he had strongly recommended Disraeli’s Sybil and Conings by as political reading. But Disraeli’s style was too ornate for my taste, though I can see why it may have appealed to Harold Macmillan. It is now clear to me that Macmillan was a more complex and sensitive figure than he appeared; but appearance did seem to count for a great deal. Certainly, whether it was striking a bargain and cementing a friendship with President Kennedy, or delivering a deliciously humorous put-down to a ranting Khrushchev, Harold Macmillan was a superb representative of Britain abroad.
In both foreign and home policies Macmillan always prided himself on having a sense of history. In his attempts to establish harmony between the two superpowers, as in his fervent belief that Britain’s destiny lay in Europe, he was much affected by the experience of two world wars. Indeed, as he would remind us, he was one of the few surviving members of the House who had fought in the Great War. In his preference for economic expansion over financial soundness and his long-standing belief in the virtues of planning, he was reacting against the deflation and unemployment of the 1930s which he had seen as MP for Stockton-on-Tees. It is said that when he was Chancellor of the Exchequer Treasury officials kept a tally of how many times he mentioned ‘Stockton’ each week. But history’s lessons usually teach us what we want to learn. It was possible to take a very different view of the causes of war and of the historic achievements of capitalism. Things looked different from the perspective of Grantham than from that of Stockton.
INTO OFFICE…
I sorted out my best outfit, this time sapphire blue, to go and see the Prime Minister. The interview was short. Harold Macmillan charmingly greeted me and offered the expected appointment. I enthusiastically accepted. I wanted to begin as soon as possible and asked him how I should arrange things with the
department. Characteristically, he said: ‘Oh well, ring the Permanent Secretary and turn up at about 11 o’clock tomorrow morning, look around and come away. I shouldn’t stay too long.’
So it was the following morning — rather before eleven — that I arrived at the pleasant Georgian house in John Adam Street, just off the Strand, which was at that time the headquarters of the Ministry of Pensions and National Insurance. In a gesture which I much appreciated — and which I myself as a Cabinet minister always emulated — John Boyd-Carpenter, my minister, was there at the front door to meet me and take me up to my new office. John was someone it was easy to like and admire for his personal kindness, grasp of detail and capacity for lucid exposition of a complex case. He was an excellent speaker and debater. All in all, a good model for a novice Parliamentary Secretary to follow. After his promotion to become Chief Secretary to the Treasury in 1962, my new minister was Niall Macpherson, who in turn made way for Richard Wood. I was very lucky in all of them. A Parliamentary Secretary’s job is only as interesting and worthwhile as the senior minister makes it. I felt that they gave me every opportunity. This first day at John Adam Street was more or less a whirl of new faces and unfamiliar issues. There was little time to do more than take my bearings and receive my briefing.
On Friday (my birthday) I was given a prominent place on the platform at the Conservative Party Conference in Brighton. The cameras were once more active when I appeared at the Conference emerging, as it was remarked, from a royal blue car and wearing a royal blue dress and hat. Both my appointment and my appearance were something of a contrast to the general mood of the Conference which, like the limited reshuffle itself that had brought Iain Macleod to the Party Chairmanship, was widely seen as moving the Party in a leftward direction.
Back at the Ministry I was not at all displeased to substitute grind for glamour. The issues dealt with by what was then the Ministry of Pensions and National Insurance and is now the Department of Social Security are more technically complicated than those falling to any other branch of government, with the possible exception of the tax side of the Treasury. It was not just a matter of avoiding being caught out in the House of Commons. If one was to make any serious contribution to the development of policy one had to have mastered both the big principles and the detail. This I now set out to do.
The first step was to re-read the original Beveridge Report in which the philosophy of the post-war system of pensions and benefits was clearly set out. I was already quite well acquainted with its main aspects and I strongly approved of them. At the centre was the concept of a comprehensive ‘social insurance scheme’, which was intended to cover loss of earning power caused by unemployment, sickness or retirement. This would be done by a single system of benefits at subsistence level financed by flat-rate individual contributions. By the side of this there would be a system of National Assistance, financed out of general taxation, to help those who were unable to sustain themselves on National Insurance benefits, either because they had been unable to contribute, or had run out of cover. National Assistance was means tested and had been envisaged as in large part a transitional system, whose scope would diminish as pensions or personal savings rose.
It is easy in retrospect to poke fun at many of Beveridge’s assumptions and predictions. He greatly underestimated the cost of his proposals, though this was partly because the post-war Labour Government introduced full rate old-age pensions immediately, without the twenty-year phasing-in period which Beveridge had envisaged. There were other problems too. The relationship, which in any individual case was always bound to be indirect, between contributions on the one hand and benefits on the other became ever more obscure as pensions were increased and as the proportion of elderly people in the population grew. Far from diminishing, National Assistance and its successors, Supplementary Benefit and Income Support, swelled to become an alarming burden on the taxpayer. Anomalies between the two notionally complementary, but in practice often contradictory, systems became a perpetual headache.
But for all that, Beveridge had sought to guard against the very problems which later governments more or less ignored and which have now returned to plague us, in particular the debilitating effects of welfare dependency and the loss of private and voluntary effort. Whatever the effects in practice, the Beveridge Report’s rhetoric has what would later be considered a Thatcherite ring to it:
…The State should offer security for service and contribution. The State in organizing security should not stifle incentive, opportunity, responsibility; in establishing a national minimum, it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family. [Paragraph 9]… The insured persons should not feel that income for idleness, however caused, can come from a bottomless purse. [Paragraph 22]
…Material progress depends upon technical progress which depends upon investment and ultimately upon savings… It is important that part of the additional resources going to wage-earners and others of limited means should be saved by them instead of being spent forthwith. [Paragraph 376]
Much of our time at the Ministry was taken up both with coping with the effects of and finding remedies to the difficulties which flowed from the gap between Beveridge’s original conception and the way in which the system — and with it public expectations — had developed. So, for example, in those days before inflation took hold and benefits were annually up-rated to cope with it, there were cries of disapproval when National Insurance pensions were increased and National Assistance, which made up your income to a certain level, was not. People also increasingly came to expect something better than a subsistence-level pension to retire upon, but the contribution levels or financing from general taxation which this would require seemed prohibitive. This lay behind John Boyd-Carpenter’s idea of the ‘graduated pensions’ scheme, whereby the payment of higher contributions could secure a somewhat higher pension, and provision was made for the encouragement of private occupational pension schemes. Another constant source of difficulty for which we found no ultimate (affordable) answer was the ‘earnings rule’ whereby pensioners who worked would at a certain level of income lose part or all of their pension payments. As I shall explain, it was the impact of this on pensioner widows which caused me most difficulty and not a little heart-searching.
Three other questions, which were to trouble governments for many years to come, had also already begun to loom. There was the issue of how to ensure decent levels of incomes for elderly pensioners who had not paid in sufficient contributions to be able to claim a full National Insurance pension. There was the continual search for greater ‘selectivity’ (as the jargon had it) in Social Security benefits generally — that is, concentrating them on the most needy rather than on the general broad range of benefit recipients. (In fact, as our current debates on ‘targeting benefits’ — in today’s jargon — shows, this has proved a largely fruitless exercise.) Finally, there was the whole argument about the ‘stigma’ attached to National Assistance and the means test. As I frequently pointed out, this had two sides to it. On the one hand, of course, people living in real poverty ought to be encouraged to take the state help which is on offer. On the other hand, the self-respect of those people I used to refer to as ‘the proud ones’, who were not going to take hand-outs from anyone, was morally admirable and, as can now be seen all too clearly, a check on dependency whose removal could ultimately have devastating social consequences.
Apart from the Beveridge Report and other general briefing from the department, it was the case work — that is the investigation of particular people’s problems raised in letters — which taught me most about the Social Security system. I was not prepared to sign a reply if I did not feel that I properly understood the background. Consequently, a stream of officials came in and out of my modest office to give me the benefit of their matchless knowledge of each topic. I adopted a similar approach to parliamentary questions, which would be shar
ed out between the ministers. I was not content to know the answer or the line to take. I wanted to know why. The weekend before my first appearance at the Despatch Box to answer questions was, I fear, almost as nerve-racking for my Private Secretary as it was for me, since I was all the time on the telephone to him for explanations.
Apart from some peppery exchanges with the civil servants allocated to deal with my Private Member’s Bill, it was at Pensions that I had my first professional dealings with the civil service. The Permanent Secretary of the department in practice wields a good deal more power than a junior minister. It was made clear to me early on that he was answerable only to the ministerial head of the department. The two successive Permanent Secretaries during my time at Pensions, Eric Bowyer and Clifford Jarrett, were representatives of the civil service at its best — clever, conscientious and of complete integrity. But the real experts were likely to be found further down the hierarchy. I quickly discovered that the infallible source of information on pensions was a Deputy Secretary, John Walley. Generally, the calibre of the officials I met impressed me.
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