In any case, reality soon started to break in. Two days after the announcement of Stage 3 the NUM rejected an NCB offer worth 16.5 per cent in return for a productivity agreement. The Government immediately took charge of the negotiations. (The days of our ‘not intervening’ had long gone.) Ted met the NUM at No. 10. But no progress was made. In early November the NUM began an overtime ban. Maurice Macmillan told us that though an early strike ballot seemed unlikely and, if held, would not give the necessary majority for a strike, an overtime ban would cut production sharply. The general feeling in Cabinet was still that the Government could not afford to acquiesce in a breach of the recently introduced pay code. Instead, we should make a special effort to demonstrate what was possible within it. The miners were not the only ones threatening trouble. The firemen, electricians and engineers were all in differing stages of dispute. It is one of the penalties of pay policy that you have to fight on too many fronts.
Similarly, it is an unavoidable weakness of the planned economy to which we were now rapidly moving that economic plans take little or no account of external events. The argument that all of us used in February 1974 (and some people continued to use long afterwards) to explain the failure of the Heath Government’s economic strategy was that the quadrupling of the oil price resulting from the Arab-Israeli war of 1973 shattered our policy when it was just beginning to work. This is plainly false. Loose monetary policy had already sown the seeds of inflation, which was to surge under the incoming Labour Government. Incomes policy, which does no more than redistribute inflation through time, could do little about this. Whatever limited successes it achieved would, like those of all other incomes policies, have unwound in the form of higher demands and settlements later. Moreover, the level of economic growth, particularly for an economy still unreformed by deregulation, privatization or reductions in trade union power, was far too high to be sustainable. Public expenditure had risen too fast as well, and we were already discussing cuts before the full implications of the oil price rise were known. We had not, in fact, ‘modernized’ British industry as we had boasted — not least because only industry, not Government, can efficiently ‘modernize’ itself. Worse, by fuelling inflation and taking too many decisions out of the hands of managers and wage bargainers we had created precisely the wrong climate for industrial success.
Yet, even ignoring all of this, the basic proposition that the oil price hike was just ‘bad luck’ is fundamentally mistaken. It is the very fact that governments cannot take all relevant circumstances into account that militates against economic planning. And it is because a properly operating market economy adjusts so sensitively to every signal that it avoids those sharp dislocations when cumulative pressures break through.
Admittedly, the threatened oil embargo and oil price rises resulting from the Arab-Israeli war that autumn made things far worse. As the effects of the miners’ industrial action bit deeper, the sense that we were no longer in control of events deepened. Somehow we had to break out. This made a quick general election increasingly attractive. Quite what we would have done if we had been re-elected is, of course, problematic. Perhaps Ted would have liked to go further towards a managed economy. Others would probably have liked to find a way to pay the miners their Danegeld and seek a quieter political life. Keith and I and a large part of the Parliamentary Conservative Party would have wanted to discard the corporatist and statist trappings with which the Government was now surrounded and try to get back to the free market approach from which we had allowed ourselves to be diverted in early 1972.
Indeed, quite apart from our exchanges about the shortcomings of economic policy, Keith and I had also been intensely irritated by the posture the Government took during the Arab-Israeli war. In the hope of securing favourable treatment from the oil-producing states — which were limiting oil supplies to Western nations — the Government refused to condemn the Arab states which had broken the 1967 ceasefire and we applied an arms embargo to both sides, depriving the Israelis of the spare parts they needed. The Government also refused to allow the Americans to use British bases to resupply Israel.
As MP for Finchley, I knew at first hand what the Jewish community in Britain felt about our policies. The early days of the war were particularly bad for Israel — the situation was far worse than in 1967 — and I followed the news hour by hour. There were some difficult discussions in Cabinet with Alec Douglas-Home defending the policy courteously and Ted exercising a rigid determination to control an issue which — as he saw it — would determine the success or failure of our whole economic strategy. Finally, he told us bluntly that he was having a note circulated laying down the public line ministers were expected to take.
REAPING THE WHIRLWIND
At Cabinet on Tuesday 13 November it was all gloom as the crisis accelerated on every front. Tony Barber told us that the October trade figures that day would show another large deficit. There was talk of public expenditure cuts and tax increases. (MLR was in fact raised to a record 13 per cent.) A declaration of yet another State of Emergency would have to be made. Orders would be laid restricting lighting and heating in commercial premises. There was even talk of issuing petrol coupons. What I did not know was that included in the measures were plans to stop electrical heating in schools. In fact I only heard about it on the next day’s radio news. I was furious, partly because it was a politically stupid act and partly because I had not been consulted. I went in to see Tom Boardman, the Industry Minister, and after what the diplomats would describe as frank exchanges had it stopped.
The disagreement over school heating was, however, part of a wider argument which continued up to and beyond the calling of the election. Should we err on the side of stringency or of liberality when it came to deciding on measures to conserve energy? This was not something which could be settled on technical grounds alone; for we could not know how long the miners’ overtime ban would last, when or whether it would escalate into a strike, or how well industry would be able to cope with power shortages. In these circumstances, it was natural to look at least as closely at the political impact. But here too there were large uncertainties. Adopting the most stringent measures would certainly help convince the general public that this was a real emergency provoked by union militancy at a time of grave international economic problems. But there was a risk that people would become angry with the restrictions, particularly any which seemed needlessly petty — such as the decision to close down television broadcasting at 10.30 at night. And then, of course, any subsequent relaxation would be met with the retort that it showed we had overreacted, doubtless for party political reasons, in the first place.
One shrewd move on Ted’s part at the beginning of December was to bring Willie Whitelaw back from Northern Ireland to become Employment Secretary in place of Maurice Macmillan. Willie was both conciliatory and cunning, a combination of qualities which was particularly necessary if some way were to be found out of the struggle with the miners. The Government’s hand was also strengthened by the fact that, perhaps surprisingly, the opinion polls were now showing us with a clear lead over Labour as the public reacted indignantly to the miners’ actions. In these circumstances, all but the most militant trade unionists would be fearful of a confrontation precipitating a general election. Speculation on these lines soon began to grow in the press.
On Thursday 13 December Ted announced the introduction of a three-day working week to conserve energy. He also gave a broadcast that evening. This gave an impression of crisis which polarized opinion in the country. At first industrial output remained more or less the same, itself an indication of the inefficiency and overmanning of so much of British industry. But we did not know this at the time. Nor could we know how long even a three-day week would be sustainable. I found strong support among Conservatives for the measures taken. There was also understanding of the need for the £1.2 billion public spending cuts, which were announced a few days later.
At this stage we believed that we could rely on busines
s leaders. Shortly before Christmas, Denis and I went to a party at a friend’s house in Lamberhurst. There was a power cut and so night lights had been put in jam jars to guide people up the steps. There was a touch of wartime spirit about it all. The businessmen there were of one mind: ‘Stand up to them. Fight it out. See them off. We can’t go on like this.’ It was all very heartening. For the moment.
There still seemed no honourable or satisfactory way out of the dispute itself. Negotiations with the NUM got nowhere. The Government offer of an immediate inquiry into the future of the mining industry and miners’ pay if the NUM went back to work on the basis of the present offer was turned down flat. One possible opportunity was missed when Tony Barber rejected an offer by the TUC, made at the NEDC on 9 January 1974, that they would not use a larger offer to the NUM as an argument in negotiations for other settlements. Tony explained to us the next day that he considered this had been a propaganda exercise rather than a serious offer. Although Cabinet agreed afterwards that we should follow up the offer, and the TUC were invited to No. 10 for several long meetings, the damage had been done: it looked as if we were not interested. We might have done better to accept it and put the TUC on the spot. As it was, the TUC offer undoubtedly put us on the defensive. The incident taught me neither to accept nor to reject any offer until the consequences had been fully weighed.
By candlelight in the flat in Flood Street, Denis and I talked through the predicament in which the Government found itself. It was clear that many mistakes had been made, and that if and when we managed to come through the present crisis, fundamental questions would need to be asked about the Government’s direction. Yet, whatever we might have done differently, there was no doubting that we now faced a struggle which had to be won. The miners, backed in varying degrees by other trade unions and the Labour Party, were flouting the law made by Parliament. The militants were clearly out to bring down the Government and to demonstrate once and for all that Britain could only be governed with the consent of the trade union movement. This was intolerable not just to me as a Conservative Cabinet minister but to millions of others who saw the fundamental liberties of the country under threat. Denis and I, our friends and most of my Party workers, felt that we now had to pick up the gauntlet and that the only way to do that was by calling and winning a general election. From now on, this was what I urged whenever I had the opportunity.
I was, though, surprised and frustrated by Ted Heath’s attitude. He seemed out of touch with reality. He was still more interested in the future of Stage 3 and in the oil crisis than he was in the pressing question of the survival of the Government. Cabinet discussions concentrated on tactics and details, never the fundamental strategy. Such discussions were perhaps taking place in some other forum; but I rather doubt it. Certainly, there was a strange lack of urgency. I suspect it was because Ted was secretly desperate to avoid an election and did not seriously wish to think about the possibility of one. In the end, perhaps — as some of us speculated — because his inner circle was split on the issue, Ted finally did ask some of us in to see him, in several small groups, on Monday 14 January in his study at No. 10.
By this stage we were only days away from the deadline for calling a 7 February election — the best and most likely ‘early’ date. At No. 10 in our group John Davies and I did most of the talking. We both strongly urged Ted to face up to the fact that we could not have the unions flouting the law and the policies of a democratically elected Government in this way. We should have an early election and fight unashamedly on the issue of ‘Who governs Britain?’ Ted said very little. He seemed to have asked us in for form’s sake, rather than anything else. I gathered that he did not agree, though he did not say as much. I went away feeling depressed. I still believe that if he had gone to the country earlier we would have scraped in, because we might have been able to focus the campaign on the issue of trade union power.
On Thursday 24 January Cabinet met twice. Peter Carrington, now both Secretary of State for Energy and Party Chairman, urged some relaxation of the power restrictions. But many of us were worried about any such move, for the reasons I have outlined earlier. The second meeting of the day, held in the evening, took place after the NUM Executive had decided on a strike ballot. This more or less tipped the balance in favour of caution, though there was some minor easing of restrictions. It seemed likely to me that there would be a sufficient vote for a strike, and in this case that a general election campaign would follow.
The following Wednesday, 30 January, with the ballot still pending, an emergency Cabinet was called. Ted told us that the Pay Board’s report on relativities had now been received. The question was whether we should accept the report and set up new machinery to investigate ‘relativities’ claims. The miners had always claimed to be demanding an improvement in their relative pay — hence their rejection of Ted’s ‘unsocial hours’ provision, which applied to all shift workers. The Pay Board report might provide a basis for them to settle within the incomes policy — all the more so because it specifically endorsed the idea that changes in the relative importance of an industry due to ‘external events’ could also be taken into account when deciding pay. The rapidly rising price of oil was just such an ‘external event’.
We felt that the Government had no choice but to set up the relativities machinery. Not to do so — having commissioned the relativities report in the first place — would make it seem as if we were actively trying to prevent a settlement with the miners. And with an election now likely we had to consider public opinion at every step.
But there were important tactical questions as to how we did this. We could demand that the TUC accept the principle of pay policy as a condition. We could require that the miners go back to work and accept the NCB’s existing offer while the Pay Board undertook its inquiry. These were not unreasonable conditions in the circumstances, but they were very unlikely to be acceptable to either the TUC or the NUM.
Ted and a group of ministers had drafted a letter to the TUC and CBI that made the reference conditional on the miners accepting the existing NCB offer and returning to work. The letter invited the TUC and the CBI for talks. I suspect that Ted was less than happy with this tough draft. In his heart of hearts he wanted a settlement and up to the very last moment believed he could achieve it. But by this stage even some of his closest friends in Cabinet wanted to bring matters to a head with the miners. The split within the inner circle of the Government had already been exposed on the issue of an early election: I assumed that the same divisions existed in the group which drafted the letter.
In the end Cabinet watered down the contents of the letter, removing the condition that the miners accept the NCB offer and attaching no strings to the proposal that the TUC meet ministers for talks. The letter was published. When we met again the following day there was a general feeling that the press coverage had been good and that we had regained some of the initiative lost over the TUC offer earlier in the month. But in practice we were committed now to accepting the relativities machinery and any offer that it might come up with. There was no hiding the fact that the miners were likely to win a large increase. If we went ahead and held an election, the prospect was that we would face another Wilberforce immediately afterwards. At the time it made tactical sense. But looking back I have to believe that others were preparing the ground to buy the miners off.
An election became all but certain when, on Tuesday 5 February, we learned that 81 per cent of those voting in the NUM ballot had supported a strike. Election speculation reached fever pitch from which there was no going back. I suspect none of us was surprised when Ted told us at Cabinet two days later that he had decided to go to the country. The general election would take place on Thursday 28 February — that is, as soon as possible.
Willie proposed formally to refer the miners’ claim to the Pay Board for a relativities study. He couched his argument for this course entirely in terms of its giving us something to say during the electio
n in reply to the inevitable question: How will you solve the miners’ dispute if you win? Cabinet then made the fateful decision to agree to Willie’s proposal.
Because of the emergency nature of the election, I had not been involved in the early drafts of even the education section of the manifesto, which was now published within days. There was little new to say, though the record was set out. In any case, the dominant theme of the document — the need for firm and fair government at a time of crisis — was clear and stark. The main new pledge was to change the system whereby Social Security benefits were paid to strikers’ families. Apart from the questions of inflation and trade union power, the mortgage rate of 11 per cent created political difficulties for us. Naturally, I was mainly questioned about education matters, as when Willie Whitelaw and I joined Robin Day on Election Call in the course of the campaign. But in answer to one questioner I set out my strongly held views on a coalition government: ‘I think it’s a false assumption that if you get a government of all the best brains, the best brains will agree what to do. You can get two experts on anything and they will not in fact agree on what the solution is… You have in a coalition government to drop many of your own beliefs.’
This statement was to be unexpectedly relevant to the period after the election when the Conservative leadership, licking its wounds and seeking some new vehicle to carry it back to power, was attracted by the notion of a ‘Government of National Unity’. I might also have added that if you have no beliefs, or if you have already abandoned them, ‘Government of National Unity’ has rather more attractions.
During most of the campaign I was reasonably confident that we would win. Conservative supporters who had been alienated by the U-turns started drifting back to us. Indeed, their very frustrations at what they saw as our past weaknesses made them all the more determined to back us now that we had decided, as they saw it, to stand up to trade union militancy. Harold Wilson set out Labour’s approach in the context of a ‘social contract’ with the unions. Those who longed for a quiet life could be expected to be seduced by that. But I felt that if we could stick to the central issue summed up by the phrase ‘Who governs?’ we would win the argument, and with it the election.
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