The Path to Power m-2

by Margaret Thatcher

  The success of the negotiations for British entry and their ratification by Parliament also seemed to have a psychological effect on Ted Heath. His enthusiasm for Europe had already developed into a passion. As the years went by it was to become an obsession — one increasingly shared by the great and the good. The argument became less and less about what was best for Britain and more and more about the importance of being good Europeans.

  There was a mood of euphoria in the Establishment. It reached a peak with the ‘Fanfare for Europe’ celebrations of January 1973, held to mark Britain’s accession to the Common Market. After a gala performance by British and international figures at the Royal Opera House, where among many other performances our former next-door neighbour Sybil Thorndike recited Browning, Denis and I were among hundreds invited to a State Banquet at Lancaster House. I could not help but be reminded of two madrigals sung at one of Ted’s Downing Street dinners a couple of years before: ‘All creatures are merry, merry-minded’ and, more particularly, ‘Late is my rash accounting’.

  The other issue which alienated many Conservative supporters, particularly in the West Midlands, was immigration. As I have suggested, Ted’s and the Government’s line on this was in fact extremely firm. Our Immigration Bill which received its Second Reading in March 1971 proposed a single system of control for Commonwealth citizens and aliens, while giving free entry to ‘patrials’, that is those with a right of abode.[28] Admittedly, the pledge on grants for voluntary repatriation was effectively shelved. But then it is doubtful whether any such system would have had much impact on net immigration.

  The trouble arose when in August 1972 President Idi Amin of Uganda announced the mass expulsion of Asians who had prudently held on to their British passports following independence. In September a full Cabinet was devoted to the Ugandan Asian question. In the back of our minds was the possibility that Asian UK passport holders might also now be expelled from Kenya and Tanzania. My first thoughts when I arrived at Cabinet were that we should hold fast to our manifesto commitment that there should be ‘no further large-scale immigration’. But Ted opened by saying that there was no question of our refusing to admit the expelled British passport holders. The Attorney-General, Peter Rawlinson, explained that we were under an obligation in international law to accept them — regardless of domestic immigration laws. After this there could not be much argument. Later I came to feel that the decision was right on other grounds. There was just no way of evading the humanitarian duty we had — a duty that no one else would accept. I found the Asians who came to my constituency admirable, hard-working people. And this measure really did turn out to be an exception to the rule of strict immigration control, rather than the first step towards its abandonment.

  My instincts, however, had accurately reflected Party feeling. There was deep disquiet about the decision. Enoch Powell spoke strongly against it at that year’s Party Conference. In late November the Government was defeated as a result of a large backbench revolt on new immigration rules. Ted himself had been shaken and was convinced that public opinion would not tolerate a repetition. He set up a small group of ministers to consider legislation to prevent another influx, but when it reported back in December — favouring not a Bill but a ‘declaration’ that Britain would not necessarily accept future expellees in large numbers but would consult internationally — Cabinet was divided and the idea fell. It was one of the few occasions on which the Prime Minister did not get his way.

  The immigration issue itself, as we recognized in discussion in Cabinet after the Commons defeat, had been fuelled by discontent on a whole range of other issues. To understand how this had occurred it is necessary to turn back to economic matters.

  REVERSING COURSE

  January and February 1972 saw three events which together tried the Government’s resolve and found it wanting — the miners’ strike, the financial problems of Upper Clyde Shipbuilders (UCS) and the unemployment total reaching one million. It is always a shock when unemployment reaches a new high figure, especially one as dramatic as a million. Unemployment is what economists call a lagging indicator. Although we did not know it at the time, it had just peaked and was to begin a downward trend. The rise of unemployment in 1971 was in fact the consequence of Roy Jenkins’ tight fiscal and monetary policies of 1969–70. Since monetary policy had already been significantly eased in 1971, largely as a result of financial decontrol, we could have sat tight and waited for it to work through in lower unemployment from 1972 onwards. In fact, Ted never bought this analysis, and he greatly underestimated the stimulating effects of removing credit controls. He felt that emergency fiscal measures were necessary to boost demand and reduce unemployment. And this conviction influenced his decisions across the board. Ironically, because it led to higher inflation whose main effects were suffered under the following Labour Government, and because inflation destroys jobs rather than preserves them, it ultimately led to higher unemployment as well.

  In particular, the approach of the Government to Upper Clyde Shipbuilders flowed from fear of the consequences of higher unemployment. But because it was also seen as caving in to the threats of left-wing militants, it added a new charge against us. When we first discussed the company’s problems in December 1970 the Cabinet gave a fairly robust response. It was agreed that existing Government support for the UCS Group would not be continued, though there was a lifeline: we would continue with credit guarantees so long as the management agreed to close the Clydebank yard and separate out Yarrow Shipbuilders from the rest of the group. Yarrow — an important Royal Navy supplier — seemed salvageable. But by June 1971 the UCS Group was insolvent and its liquidation was announced. There followed a protest strike on Clydeside. In July trade unionists led by militant shop stewards occupied the four UCS shipyards.

  There was further discussion in Cabinet in the autumn of 1971, and the Government allowed itself to be sucked into talks with the trade unions, who it was believed might be able to influence the militant shop stewards behind the occupation. The Economic Committee of the Cabinet had agreed that money should be provided to keep open the yards while the liquidator sought a solution, but only on condition that the unions gave credible undertakings of serious negotiations on new working practices. There was strong criticism of this from some of my colleagues, rightly alert to the danger of seeming to give in on the basis of worthless undertakings. But the money was provided and negotiations went ahead.

  It was the unemployment prospect rather than the prospects for shipbuilding which by now were undisguisedly foremost. In November Ted Heath affirmed in a Party Political Broadcast that the ‘Government is committed completely and absolutely to expanding the economy and bringing unemployment down’. The fateful one million mark was passed on 20 January 1972. On 24 February at Cabinet we heard that the Economic Committee had agreed the previous day to provide £35 million to keep three of the four yards open. John Davies openly admitted to us that the new group had little chance of making its way commercially and that if the general level of unemployment had been lower and the economy reviving faster, he would not have recommended this course. There was tangible unease. It was pointed out that we could expect a rough reception from our supporters for the decision. But Cabinet endorsed it and at the end of February John announced the decision. It was a small but memorably inglorious episode. I discussed it all privately with Jock Bruce-Gardyne, who was scathing about the decision. He regarded it as a critical, unforgivable U-turn. I was deeply troubled.

  But by now we all had other things to worry about. In framing the Industrial Relations Act we had given too much emphasis to achieving the best possible legal framework and not enough to how the attacks on our proposals were to be repelled. The same mentality prevailed as regards the threat which the National Union of Mineworkers (NUM) posed to the Government and the country. We knew, of course, that the miners and the power workers held an almost unbeatable card in pay negotiations, because they could turn off the electricity
supply to industry and people. Industrial action by the power workers in December 1970 had been settled after the setting-up of a Court of Inquiry under Lord Wilberforce which recommended a large increase in February the following year. Within the NUM, however, there was a large militant faction at least as interested in bringing down the Conservative Government as in flexing industrial muscle to increase miners’ earnings. The NUM held a strike ballot in October 1970 and narrowly turned down an offer from the National Coal Board (NCB). Fearing unofficial action, Cabinet authorized the NCB to offer a productivity bonus to be paid in mid-1971. The NUM again turned the offer down, following which Derek Ezra, the NCB Chairman, without consulting ministers, offered to pay the bonus at once and without strings attached to productivity. Cabinet accepted this fait accompli. Perhaps John Davies and other ministers continued to monitor events. If they did I heard nothing about it. Nor does what subsequently happened suggest that any monitoring was accompanied by forward thinking.

  Only in early December 1971 did the issue of miners’ pay surface at Cabinet, and then in what seemed a fairly casual way. The NUM’s annual conference earlier that year had significantly revised the rules which provided for an official strike, so that now only a 55 per cent, as opposed to a two-thirds, majority was required. The NUM ballot, which was still going on, had, it was thought, resulted in a 59 per cent majority vote for strike action. Yet nobody seemed too worried. We were all reassured that coal stocks were in any case high.

  Such complacency proved unwarranted. At the last Cabinet before Christmas Robert Carr confirmed to us that the NUM was indeed calling a national strike to begin on 9 January 1972. There was more trouble over pay in the gas and electricity industries. And we only needed to glance outside to know that winter was closing in, with all that meant for power consumption. But there was no real discussion and we all left for the Christmas break.

  There was still some suggestion over Christmas that the strike might not be solid and would be concentrated in the more militant areas. But two days after it began it was all too clear that the action was total. There was then discussion in Cabinet about whether we should use the ‘cooling off’ provisions of the Industrial Relations Act. But it was said to be difficult to satisfy the legal tests involved — ‘cooling off’ orders would only be granted by the courts if there was a serious prospect that they would facilitate a settlement, which in this case was doubtful. The possibility of using the ballot provisions of the Act remained. But there was no particular reason to think that a ballot forced on the NUM would lead to anything other than a continuation of the strike, and perhaps also a hardening of attitudes. It was an acutely uncomfortable demonstration of the fragility of the principal weapons with which the Act had equipped us. Moreover, important parts of the Act had yet to come into force, and we were also aware that there was a good deal of public sympathy with the miners.

  The pressure on the Government to intervene directly to try to end the dispute now increased. Looking back, and comparing 1972 with the threatened miners’ strike of 1981 and the year-long strike of 1984—85, it is extraordinary how little attention we gave to ‘endurance’ — the period of time we could keep the power stations and the economy running with limited or no coal supplies — and how easily Cabinet was fobbed off by assurances that coal stocks were high, without considering whether those stocks were in the right locations to be usable, i.e. actually at the power stations. The possibility of effective mass picketing, which would prevent oil and coal getting to power stations, was simply not on the agenda. Instead, our response was to discuss the prospects for conciliation by Robert Carr and the use of ‘emergency powers’ which would allow us to conserve power station stocks a few weeks longer by imposing power cuts. There was a great deal of useless talk about ‘keeping public opinion on our side’. But what could public opinion do to end the strike? This was one more thing I learned from the Heath years — and anyway, on the whole public opinion wasn’t on our side. A further lesson from this period — when no fewer than five States of Emergency were called — was that for all the sense of urgency and decision that the phrase ‘emergency powers’ conveys they could not be relied upon to change the basic realities of an industrial dispute.

  The situation steadily worsened. The crunch came on the morning of Thursday 10 February when we were all in Cabinet. A State of Emergency had been declared the previous day. By now Robert Carr was directly involved with the NCB and the NUM in trying to find a way out. But it was John Davies who dropped the bombshell. He told us that picketing had now immobilized a large part of the remaining coal stocks, and that the supplies still available might not even suffice beyond the end of the following week. Thereafter electricity output would fall to as little as 25 per cent of normal supply. Drastic power cuts were inevitable, and large parts of industry would be laid off. The Attorney-General reported that the provisions of the Industrial Relations Act against secondary boycotts, blacking of supplies and the inducement of other workers to take action resulting in the frustration of a commercial contract, would not come into force until 28 February. He thought that most of the picketing which had taken place during the strike was lawful. As regards the criminal law, some arrests had been made but, as he put it, ‘the activities of pickets confronted the police with very difficult and sensitive decisions’.

  This was something of an understatement. The left-wing leader of the Yorkshire miners, Arthur Scargill, who was to organize the politically motivated miners’ strike I faced in 1984–85, was already busy winning his militant’s spurs. In the course of Cabinet a message came through to the Home Secretary, Reggie Maudling, which he read out. The Chief Constable of Birmingham had asked that the West Midlands Gas Board’s Saltley Coke Depot be closed because lorries were being prevented from entering by 7,000 ‘pickets’ who were facing just 500 police.

  There was no disguising that this was a victory for violence. To the Left it came to assume legendary proportions. To large numbers of politicians and commentators it proved that no one could hope to stand up to the miners. Police self-confidence was shattered. From now on many senior policemen put greater emphasis on maintaining ‘order’ than on upholding the law. In practice, that meant failing to uphold the rights of individuals against the rule of the mob — though to be fair the police lacked the equipment as much as the stomach for the action required. For me, what happened at Saltley took on no less significance than it did for the Left. I understood, as they did, that the struggle to bring trade unions properly within the rule of law would be decided not in the debating chamber of the House of Commons, nor even on the hustings, but in and around the pits and factories where intimidation had been allowed to prevail.

  Ted now sounded the retreat. He appointed a Court of Inquiry under the ubiquitous Lord Wilberforce. By now the power crisis had reached such proportions that we sat in Cabinet debating whether we had time to wait for the NUM to ballot its members on ending a strike; a ballot might take over a week to organize. There was therefore no inclination to quibble when Wilberforce recommended a massive pay increase, way beyond the level allowed for in the ‘n—1’ voluntary pay policy already in force.

  But we were stunned when the militant majority on the NUM Executive rejected the court’s recommendation, demanding still more money and a ragbag of other concessions — ‘a list as long as your arm’, in the words of the miners’ President, Joe Gormley.

  Ted summoned us all together on the evening of Friday 18 February to decide what to do. The dispute simply had to be ended quickly. If we had to go an additional mile, so be it. Later that night Ted called the NUM and the NCB to No. 10 and persuaded the union to drop the demand for more money, while conceding the rest. The NUM Executive accepted, and just over a week later so did the miners in a ballot. The dispute was over. But the devastation it had inflicted on the Government and indeed on British politics as a whole lived on.

  The immediate effect was to convince bien pensant opinion that in a country like Britain the
re was simply no alternative to corporatism. The Sunday Times leader of 20 February put the point crisply:

  After the Wilberforce settlement, there is only one course for the Government to adopt if it is to derive any profit from the ruin of its wages policy. It must open formal and serious talks with the Confederation of British Industry and the Trades Union Congress to plot a way forward towards an organized policy for incomes. This will involve all sides of industry, but above all the Government itself, in the liquidation of old nostrums. But far from losing face, the Government would thereby seize the best chance to rebuild its economic policy.

  Such a message found a ready hearing from shocked and bewildered ministers. The combination of the rise in unemployment, the events at Upper Clyde Shipbuilders and the Government’s humiliation by the miners resulted in a fundamental reassessment of policy. I suspect that this took place in Ted’s own mind first, with other ministers and the Cabinet very much second. It was not so much that he jettisoned the whole Selsdon approach, but rather that he abandoned some aspects of it, emphasized others and added a heavy dose of statism which probably appealed to his temperament and his Continental European sympathies. We had always been keen advocates of economic growth: but now we promoted growth at the expense of sound finance. We had always been in favour of industrial and technological modernization: but now we relied on government intervention rather than competition to ensure it. We had always entertained a basic confusion between a ‘monetarist’ and a wage-push theory of inflation: we now ignored the first and swallowed the second to such an extent that we introduced the most comprehensively regulated system of wages and prices that peacetime Britain has known.