A History of Modern Britain

by Andrew Marr

  Having won, Wilson’s reputation soared in a way which today seems hard to explain. All his weaving, double-crossing, opportunism and deceptions were now forgiven, or at any rate forgotten. The press hailed him as a youthful master of his craft, a devastatingly witty speaker, man of the hour. Wilson’s speeches had certainly improved immensely and he was an acknowledged maestro of the put-down and witty aside, essential in an age of open meetings and hecklers. He developed an acid line of attack on the easy targets of Macmillan and then Douglas-Home, and was full of vague but inspiring sounding thoughts such as ‘the Labour movement is a crusade or it is nothing’ and ‘we need men with fire in their belly and humanity in their heart’. Yet his political thinking, as distinct from his political tactics, was stodgily conventional. He thought Britain was badly run and old-fashioned but believed more central planning, preferably by grammar school-educated technocrats like himself, would solve the problem. He was hardly young, an old-looking forty-six, whose image was comfortingly respectable. He harped on about preferring beer to champagne, tinned salmon to smoked salmon, HP sauce to any other sauce, and being a quiet, provincial sort. He seemed prudish about sex, still the Methodist Boy Scout at heart, and in many ways out of kilter with the fashionable, risk-taking, youthful Britain all around him. So why did he seem so good?

  Partly it was a simple matter of class. He might send his children to private schools and live in Hampstead, but Wilson came across as a simple and ordinary man, a breath of fresh air compared to the Old Etonians whose fumbling rule was ending. He was the political equivalent to the men breaking through elsewhere in public life – the tweed-jacketed lecturers of Kingsley Amis novels or David Frost with his nasal vowels on television or Richard Hoggart, the plain-speaking lecturer called at the ‘Lady Chatterley’ trial. He lacked deference. His calm impertinence delighted millions. Here, in a world still run by the old lot, was a clever new man who took it for granted that he was better than the old lot. In Frost’s off-the-cuff summation, it was smart Alec against dull Alec. Of course Wilson was not really any kind of outsider in politics. As an old Whitehall hand who had worked in the Cabinet Office and with Beveridge, who had visited Moscow and Washington for complex trade and business talks, he was formidably experienced by the time he took office, simply a different brand of insider. Yet he turned this to his advantage too. Britain had been going through a time of self-doubt, partly because of the seedy revelations of the Profumo affair and fears of moral decay among the old ruling class, but more importantly because of economic decline. Wilson’s propaganda triumph was to bring the two themes together. The country needed to sweep away privilege and cobwebbed aristocracy, and replace it with ruthless and ‘purposive’ modern planning. Faced with the choice between socialists of the far left variety and the capitalist toffs, Wilson found a third way that would have appealed to Tony Blair thirty years later. It sounded unanswerable, exciting, yet vague. It was science.

  In his speech to Labour’s 1963 conference, the most famous he ever made, Wilson promised a scientific revolution which would require wholesale social change. ‘The Britain that is going to be forged in the white heat of this revolution will be no place for restrictive practices or for outdated methods…those charged with the control of our affairs must be ready to think and speak in the language of our scientific age.’ It was a time, after Sputnik, when the awesome power of Communist Russian science mesmerized and terrified the West. Wilson said he had studied ‘the formidable Soviet challenge in the education of scientists and technologists and above all, in the ruthless application of scientific techniques in Soviet industry’. As a democrat he rejected their methods but ‘we must use all the resources of democratic planning, all the latent and underdeveloped energies and skills of our people, to ensure Britain’s standing in the world.’ If one replaces the archaic fear of Soviet power and replaces it with the contemporary fear of the rising economies of China and India, then Wilson’s rhetoric, with its emphasis on wasted and under-educated skills, is strikingly similar to the language of New Labour in the twenty-first century.

  For Wilson, the real answers were the same ones that the Attlee government had tried. State ownership and state planning would end the inefficiencies of the private system. There would be a huge expansion of university places, new state direction of R&D, even a state-sponsored chemical engineering consortium. He was offering an answer to the stop-go demand management of the Tory years. Instead, Labour would grow the economy through the supply-side reforms of better education and higher investment in science. This was the man who had been in the wartime ministry of mines, plotting the rationalization of the coal industry, who had been President of the Board of Trade in the late forties. It was the vision of an old-fashioned civil service man. But it sidestepped the weary ideological battles inside the Labour Party between right and left, and it sounded modern. From the late seventeenth century, ‘science’ always has done.

  The problem Wilson would soon face was how to achieve a successful planned economy in a capitalist world. For all his abuse of them, the Tories had already set out on the same road. In 1962 suitably modern, scientific British businesses, such as Dunlop and Ferranti, were represented at the table alongside trade union leaders and Whitehall mandarins at the first meeting of the National Economic Development Council, or ‘Neddy’. As Labour would also discover, simply talking and making optimistic forecasts was entirely useless. The Tory industrial experience of the early sixties, from the failed attempts to get voluntary agreements on prices and incomes, to the direction of entire industries in order to combat regional unemployment, were there to be learned from. But the tactical fun of teasing a Tory regime to death meant more to Wilson than carefully studying how to be a success in Downing Street.

  Wilson’s zigzagging through Labour factions had hardly been glorious but it had made him ruthless. He turned this ruthlessness against the Conservatives, making unfair but funny attacks on Douglas-Home’s inability to understand economics except with matchsticks, and his archaic background as a Fourteenth Earl. (Though the Prime Minister famously hit back by mildly replying that he supposed – when you thought about it – he supposed Mr Wilson was the Fourteenth Mr Wilson.) Wilson’s chutzpah and increasingly self-confident style have been ascribed by many people to his political secretary Marcia Williams. Later she would become a byword for clique and scandal but she was a brilliant and loyal if unpredictable player in Wilson’s inner team. She was described by another member of it, the press secretary Joe Haines, as possessing ‘a brilliant political mind – probably better than any other woman of her generation’. She would rant and rail at Wilson and treated him at times like a naughty schoolboy. Many believed she had had an affair with Wilson. ‘Funny fellow, Wilson,’ said Macmillan. ‘Keeps his mistress at Number Ten. Always kept mine in St John’s Wood.’ By another account, she once confronted Mary Wilson and told her she had had sex with her husband several times years before ‘and it wasn’t satisfactory’. She and he always denied this and would set libel lawyers (successfully) on journalists who repeated such stories. Even so, since Wilson’s death some have gone much further, asserting that the Russians had blackmailed him about Marcia, persuading him to work for them. This seems highly unlikely. The Mitrokhin archive seems to clear him. What can safely be said is that she helped build up his morale, challenged his complacency and, until her apparent bullying became intolerable, probably made him a better politician than he would otherwise have been.

  51

  Some Bad News, Minister…

  Labour came to power confronted by economic choices which would torture it in office and come close to destroying it for good when it was finally defeated at the end of the seventies. From the first weekend in October 1964 when Wilson, his Chancellor Jim Callaghan and the other senior ministers picked up their briefing papers, appalling dilemmas stared them in the face. On the face of it, the economy was not doing so badly. Inflation was still low, though rising. Unemployment was relatively low. P
roductivity was respectable, though falling behind Britain’s competitors. Strikes were a problem. Britain’s falling share of world markets was a problem. But these were all issues voters might have expected a fresh, vigorous, forward-looking new government to be able to grip. A darker story was laid bare in the official briefings. Britain under the Tories had been wildly overspending. It was living on borrowed money. Britain’s balance of payments was eyed with increasing worry and suspicion by its creditors, the Americans above all. Longer term, the only solution was for the British economy to become more successful, growing faster without sucking in inflation. Labour had ideas about that – more investment, more planning, a better educated workforce. But this would take time. And there was no time.

  When Callaghan arrived in Downing Street on the Friday evening after the election, his predecessor, the easy-going Tory Chancellor Reggie Maudling, is said to have passed him on the way out, stopped with his coat on his arm and apologized: ‘Sorry to leave such a mess, old cock.’ He wasn’t talking about the furnishings. Callaghan’s Treasury officials presented him with 500 typed pages, arranged into forty-nine sections. They showed that the deficit the Tories had left him was far worse than previously thought, some £800m and that he would have to begin with a programme of savage spending cuts and tax rises. Even then the pound, still a world ‘reserve’ currency, would be under constant pressure. This was bad enough. Labour had been elected promising a more generous welfare system, better pensions, spending on schools and much more. That was immediately in jeopardy. Prized national projects including the supersonic airliner project jointly developed with the French, Concorde, were under threat of being axed. The Governor of the Bank of England, Lord Cromer, regarded by Labour ministers as a Tory reactionary, was quickly insisting that the deflationary squeeze must be tighter still and that other pet Labour projects such as the renationalization of steel must be dropped. He only desisted when Wilson warned him that, in that case, he might have to hold an immediate election on the theme ‘who governs Britain?’ – familiar later on, but in the 1964 context meaning, elected politicians or bankers? It was hardly surprising that the new team felt shocked and somehow betrayed. Callaghan, who had lost his Baptist faith years before, began to pray again.

  Cuts and tax rises apart, there was one other obvious policy choice, which was to devalue the pound and in effect try to start again. Initially devaluation was entirely ruled out by Wilson, Callaghan and Brown who met privately on the Saturday following the 1964 election. They saw it as humiliating for Britain, cruel to poorer nations keeping their money in sterling, and possibly deadly for the Labour Party which was still saddled with the memory of devaluation in 1949. Beyond that, buffeted by the pressures on the pound and the brusque demands to cut and to tax, their only answer was – more planning. As we have seen the Conservatives had already been taken by the idea. Beeching’s brutal reshaping of the railways had been an early example of the new ruthlessness. Meanwhile ‘Neddy’ had begun work three years before Labour came to power. Industrialists and trade unionists were sitting round large tables, creating working groups and setting plans for growth – in exports, personal consumption, government spending, capital investment. Under Maudling, the Tories had also tried voluntary restraint in prices and incomes and a National Plan.

  This was all meant to be French. In the early sixties, Paris was in vogue among the politicians, just as Parisian philosophers, film-makers and singers were in vogue among the beatniks in their black turtlenecks who frequented the coffee bars a mile north of Westminster. France’s system did not use production quotas or targets like the Soviet bloc. Instead ‘indicative planning’ meant the state directing money and materials into particular industries, regions and products, while obliging French banks to invest in new factories and techniques. This had begun in the shattered post-war nation of 1947 under the brandy merchant’s son and father of the EU, Jean Monnet. Fifteen years on, France was connected by new rail and road systems, her town planning seemed radical and effective compared to the mess of British cities, and from jet fighters to cars, engineering to plastics, she appeared more technologically successful than her old adversary. But Britain did not have the crisp centralism of the French political elite, nor the self-confident young technocrats being churned out of the new system of elite education created by President de Gaulle’s post-war revolution, the enarques. Britain had mutually suspicious captains of industry and union barons, plus a few economists and a highly independent, rather anti-manufacturing City. Under the Conservatives cheerful growth figures were duly agreed, and bore absolutely no relation to what then transpired. There were no levers.

  It might have been thought that Labour, preparing for power, would have taken note. Nothing of the sort. George Brown, after swallowing his bitter disappointment at failing to become Labour leader, was soon dreaming of a dramatic new role for himself as knight commander of the British economy. The Tories’ trouble, he told the Labour conference, was that they didn’t really believe in planning, which was why it was not working. Faith was needed, said Brother George. Whether or not it still moved mountains, then faith would at least move factories and output figures. It was the same vague, cheerful, fairies-in-the-garden faith in science and professionalism articulated by the wartime planner Harold Wilson. Yet professionalism, never mind science, was sadly lacking. Brown wanted to run a new ministry which would oversee everything, dominating even the Treasury. Like many Labour people he believed that the Treasury was rigidly conservative and therefore to blame for economic failure. As he later wrote, ‘we were all…expansionists at heart.’ To take on the self-confident Treasury, as well as the Bank of England and by implication the City, might be regarded as rash. To succeed it would certainly need wily and careful preparation. Yet in a hurried, amateurish way the home policy committee of the Labour Party drew up its plans in 1963 to create a new department to run the economy. This would be known variously as the Ministry of Economic Expansion, the Ministry of Production, and eventually the Department of Economic Affairs, or DEA. No single document was ever produced giving details of how the DEA would work; its relationship with the Treasury; or its ultimate powers. The final agreement to go ahead with it was completed by Brown and Wilson late at night in the back of a taxi during the short journey between a London hotel and the Commons. Brown later conceded with uncharacteristic understatement: ‘I think it is a pity that we didn’t produce a “blueprint” setting out precisely what we wanted to achieve.’

  Meanwhile over at the Treasury some of the brightest minds were planning how to frustrate Brown’s intended coup. In scenes which might have come from the post-1980 television satire Yes, Minister, a new dividing line was drawn through the building which left George Brown’s DEA with a scattering of empty rooms and almost no staff. To find out about the economy Brown’s newly appointed private secretary, Tom Caulcott, had virtually to steal the key economic briefing papers and smuggle them to Brown at his home. Many of the key staff Brown had hoped to use in the DEA were hurriedly switched to jobs in Downing Street or the Treasury itself before he could get his hands on them. In this stiff-collared boycott of facts, people and equipment, Caulcott even had to snatch a typewriter. Bullying and hectoring, Brown would eventually get his department up and running. In a blaze of energy he would then write another and more detailed National Plan. Yet without the oversight of taxation and spending controls operated by the Treasury machine his authority was not based on much beyond personality. Increasingly desperate, Brown went charging off round Whitehall on unexpected and often tempestuous personal visits, storming at other ministers. Breaking Whitehall protocol, he insisted on a private phone line that went directly to his desk, avoiding his private office. But the civil service is harder to beat than that. Caulcott simply arranged with the Post Office to have Brown’s phone bugged. And to ensure his private office knew when he was setting off on another personal mission, they had a discreet buzzer attached to his door which would alert them as he left so he
could be followed.

  Unaware, Brown drew together the usual industrialists, trade union leaders and civil servants and hammered out proposals for a British economic miracle, more detailed than the Tory version, but equally lacking in levers. His first move was to create a ‘Declaration of Intent’ committing both sides of industry to voluntary wages and prices controls and within his first year he had a full-blown National Plan, with economic planning councils set up across Britain. One sympathetic biographer called this ‘a huge personal achievement, the result of working immensely long hours, breaking every convention to get his own way and successively bullying and charming and ultimately exhausting those whose support he required’. There was much shouting at officials, much searching for key documents hidden by the Treasury, which had by now taken to calling its would-be rival the Department for Extraordinary Aggression. The trouble was that by the time Brown’s deal-making marathon had been completed, the economy was in such trouble voluntary controls were impossible. The Treasury had squeezed the DEA into irrelevance before it properly got going.