A History of Modern Britain

by Andrew Marr

  At one point in the campaign when the Labour leader seemed to have closed the gap to just four points and when Mrs Thatcher herself was performing badly, hit by agonizing toothache, the Tories had a real panic, ‘Wobbly Thursday’. That dreadful Kinnock, it seemed, was having a better campaign than she was. He sailed around, surrounded by admiring crowds, young people, nurses, waving and smiling and little worried by the press while she was having a horrid time. What was going on? In the event, the Conservatives need not have worried at all. Despite a last-minute BBC prediction of a hung Parliament, and a late surge of Labour self-belief, they romped home. The Tories had an overall majority of 101 seats, almost exactly the share of the vote (42 per cent) they had enjoyed after the Labour catastrophe of 1983. Labour had made just twenty net gains. At home in his Welsh constituency, despairing, Kinnock punched the wall. His police protection officer, who had been much moved by some of the great Kinnock speeches he had witnessed in the past three weeks, offered words of comfort. ‘Don’t worry, sir, it could have been worse.’ Kinnock is said to have swivelled round towards him, eyes narrowed, looking suddenly dangerous. ‘Worse? Could have been worse? Just tell me, how could it have been worse?’ The police officer blandly replied: ‘Well sir, in the old days, they’d have chopped your head off.’

  Afterwards, surveying the wreckage of their hopes, Kinnock and his team won plaudits from the press for the brilliance, verve and professionalism of their campaign. It had been transformed from the shambles of only four years earlier. At the same time the Conservatives had been flat-footed and unsure of themselves compared to their previous two elections, which only goes to show that the detail of electioneering, which obsesses Westminster politicians, is perhaps less important than they think. And what of the SDP-Liberal Alliance, the big new idea of eighties politics? They were out of puff. They had been floundering in the polls for some time, caught between Kinnock’s modest Labour revival and Thatcher’s continuing popularity with a large and solid minority of voters. Their gamble was that Labour was dying, and it had failed. The public had enjoyed robust media mockery of the competing David Steel/David Owen dual leadership as much as the leadership itself. Though Owen was popularly seen as the dominant partner his Social Democrats had a woeful election, seeing their eight MPs reduced to five and losing Roy Jenkins in the process, a tribulation Owen bore with fortitude. The SDP would soon begin to fall apart, though an Owenite rump party limped on for a while after the rest merged with the Liberals. Good PR, good labelling, goodwill; none of it had been good enough. In 1987 Thatcher had not created the country she dreamed of, but she could argue that she had won a third consecutive victory on the back of ideas, not on the back of envelopes.

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  The Year of Hubris, 1988 – and Why We Still Live There

  For true believers the story of Margaret Thatcher’s third and last administration can be summed up in the single word, betrayal. Her hopes of a free-market Europe were betrayed by the continentals, abetted by her own treacherous Foreign Office. Her achievements in bringing down inflation were betrayed by her Chancellor, Nigel Lawson. Finally she was betrayed directly – ‘treachery with a smile on its face’ – when her cabinet ministers turned on her and forced her to resign on 20 November 1990. The British revolution was sold out by faint-hearts, its great leader exiled to an executive home in south London, and glory departed from the earth. But there is another word that sums up the story better – not betrayal, but hubris. In the late eighties the Thatcher revolution overreached itself. The inflationary boom happened because of the expansion of credit and a belief among ministers that, somehow, the old laws of economics had been abolished; Britain was now in a virtuous, endless upward spiral of increasing prosperity. Across the Welfare State swaggering, highhanded centralism continued on steroids, ever grander. Near the end, Thatcher’s fall was triggered by a disastrous policy for local taxation whose blatant unfairness was never properly considered by ministers, as if it did not really matter. And by the end, her own brutal rudeness to those around her left her almost friendless. She had been in power too long.

  The year after the election, 1988, was the real year of hubris. The Thatcher government began laying about it with a frenzy unmatched before or since, flaying independent institutions and bullying the professions as if it was a short-tempered teacher and they were uppity children. England’s senior judges came under tighter new political control. They would hit back. University lecturers lost the academic tenure they had enjoyed since the days when students arrived by ox-cart, making jokes in Latin. In Kenneth Baker’s Great Education Reform Bill, or ‘Gerbil’ of that year, Whitehall grabbed direct control over the running of school curriculums, creating a vast new state bureaucracy to dictate what should be taught, when and how, and then to monitor the results. Teachers could do nothing. The cabinet debated the detail of maths courses; Mrs Thatcher spent much of her own time worrying about the teaching of history. It happened at a time when education ministers were complaining bitterly in private about the appalling quality of talent, not among teachers, but civil servants, the very people they were handing more power to.

  A former and penitent Education Secretary from the age of comprehensives, Thatcher believed schooling was now a national disgrace. She wanted to scupper trendy-lefty teachers by giving parents, generally traditionalist, more choice about which school to choose. That meant establishing Whitehall-controlled independent state schools specializing in technical subjects, City Technology Colleges. It also meant persuading other schools to opt out of local authority control to become grant-maintained, rewarded with a small bribe. Neither idea worked. Only a small number of highly costly CTCs ever opened and the few schools who opted out found they had opted in – to tight Treasury and Department of Education control. Later under John Major’s government, the inevitable extension of central financial control would produce yet another Whitehall-style organization (though, in fact, based in York), the Funding Agency for Schools. It was meant to be able to close schools, open schools, expand them, change their character and cut their scale, all without reference to local wishes. It was described by a right-wing think tank as having ‘an extraordinary range of dictatorial powers’ giving the Education Secretary ‘authority similar to Henry VIII’s dissolution commissioners’.

  It was the same pattern in health. In 1988 too, the new Health Secretary, Kenneth Clarke, pressed ahead with the system of ‘money following the patient’, a Monopoly-board version of the market in which hospitals ‘sold’ their services, and local doctors, on behalf of the ill, ‘bought’ them. The market was not real, of course, because the hospitals could not go out of business and the doctors, with a limited range of hospitals to choose from, could hardly withhold their money and refuse to buy their patients a heart bypass or hip replacement. The initial theory was perfectly intelligent. It was an attempt to bring private sector-like behaviour into the health service, a new regime of efficiency and tight budgeting. It looked enough like a real market to cause a huge and lengthy revolt by doctors and patients’ groups. They were worrying about the wrong problem.

  Because the government did not really trust local people to work together to improve the health service, the Treasury seized control of budgets and contracts. And to administer the system nearly 500 National Health Service trusts were formed, apparently autonomous but staffed by failed party candidates, ex-councillors and party donors. Any involvement by elected local representatives was brutally terminated. Mrs Thatcher later wrote: ‘As with our education reforms, we wanted all hospitals to have greater responsibility for their affairs…[and] the self-governing hospitals to be virtually independent.’ But as with her education reforms, the real effect was to create a new bureaucracy overseeing a regiment of quangos. Every detail of the ‘internal market’ contracts was set down from the centre, from pay to borrowing to staffing. The rhetoric of choice in practice, meant an incompetent dictatorship of bills, contracts and instructions. Those who could voted with their chequ
ebooks. Between 1980 and 1990, the number of people covered by the private health insurance company Bupa nearly doubled, from 3.5 million to a little under 7 million. It wasn’t only salaried, professional people with health insurance written into their contracts who paid for private medicine: by the late eighties private hospitals had queues of tattooed men in jeans waiting to be seen, cash in hand.

  Hubris about what the State can and cannot do was found everywhere. Training may be unglamorous but it is crucial to any modern economy. Here too a web of unelected bodies was spun, disbursing Treasury money according to Whitehall rules. The same happened in housing, which Thatcher said was more serious a matter even than health and education at the time, and which in 1988 saw the establishment of unelected Housing Action Trusts to take over the old responsibility of local authorities for providing cheap homes. Nearly twenty years after most of these bodies began work, there is still a puzzle here.

  Mrs Thatcher said she was trying to pull the State off people’s backs. In the end, that was the point of her. She thought so, too. In her memoirs she wrote of her third government, ‘the root cause of our contemporary social problems…was that the state had been doing too much.’ So why did she let it bustle around doing more and more? Simon Jenkins concluded that ‘Her most potent legacy was potency itself.’ The more a leader is self-certain, the more there is in the world around her that she wants to change and the fewer other people she can trust. That means taking more powers. Letting other institutions and smaller-scale leaders find their own way through a busy world goes for a Burton. The institutions most hurt were local councils. Under our constitution, local government is defenceless against a Prime Minister with a secure parliamentary majority and a loyal cabinet. So it has been hacked away. It is time to address the moment when this programme of crushing alternative centres of power came so badly unstuck it destroyed the Lady Lenin of the free market herself.

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  Enter the Peasants, with Billhooks

  Margaret Thatcher would say the poll tax was actually an attempt to save local government. Like schools, hospitals and housing, councils had been subject to a grisly torture chamberful of pincers, bits, whips and flails as ministers tried to stop them spending money, or raising it, except as Whitehall wished. Since the war local government had been spending more but the amount of money it raised independently came from a relatively narrow base of people, some 14 million property-owners. Thatcher had been prodded by Edward Heath into promising to replace this tax, the ‘rates’, as early as 1974 but nobody had come up with a plausible and popular-sounding alternative. She intensely disliked rates, regarding them as a tax on self-improvement and inherently un-Conservative. Yet in government, the problem nagged away at her.

  There was a malign dynamic at work. The more powers government took away from local councils, the less councils mattered and the more local elections were used merely as giant referendums on central government, a cost-free protest vote. Once, local elections were not national news; they were about who was best to run towns and counties. In the late sixties and seventies they became national news, a regular referendum in which the Prime Minister was applauded or slapped. It was generally the latter. Under Margaret Thatcher the Tories lost swathes of local councils in bloody electoral defeats, again and again. The result was more socialist councils, mistrusted even more by central government, which therefore, as we have seen, took still more powers away from them, which made the elections even less relevant, and fuelled more protest voting and so on. If this was not bad enough, then it was clear to Thatcher and her ministers that socialist councils were pursuing expensive hard-left policies partly because so few of the local voters were ratepayers. Too many could vote for high-spending councils without feeling any personal pinch.

  One way of cutting the knot would to be to make all those who voted for local councils pay towards their cost. This was the origin of the poll tax, or community charge as it was officially known, a single flat tax for everyone. It would mean lower bills for many homeowners and it would make local councils more responsive to their voters. On the other hand, it would mean a new tax for approximately 20 million people which would be regressive. The poorest in the land would pay as much as the richest. This broke a principle which stretched much further back that the ‘post-war consensus’. The idea had been knocking around for some years before it was picked up by the government and subjected to a long and intense internal debate, which we will skip, except to note that not everyone thought it was a good idea. The poll tax was sold to Mrs Thatcher by her Environment Secretary, Kenneth Baker, at a seminar at Chequers in 1985, along with the nationalization of the business rate. Nigel Lawson tried very hard to argue the Prime Minister out of it, telling her it would be ‘completely unworkable and politically catastrophic’.

  He was outgunned by a stream of lady-pleasers keen to prove him wrong, and indeed the tax was being discussed at the very same cabinet meeting Heseltine stalked out of during the Westland affair. It might have been less of a disaster – it might even have been successful – had it been brought in very slowly, over ten years as first mooted, or four as was then planned. But at the 1987 Tory conference there was a collective rush of blood to the head. Intoxicated by the bold simplicity of the thing, party members urged Thatcher to bring it in at once. Idiotically, she agreed. There was, to be fair, a reason for hurry. Rates, like the modern council tax, depended on the relative value of houses across Britain, which changed with fashion and home improvement. Every so often, therefore, there had to be a general revaluation to keep the tax working. Yet each revaluation meant higher rates bills for millions of homeowners and businesses, and governments tended to try to put them off. In Scotland a crisper law did not allow this. There, a rates revaluation had finally happened and caused political mayhem. It gave English ministers a nasty glimpse of what was in store for them too eventually. Scottish ministers begged Thatcher to be allowed the poll tax first. They were given their head.

  Exemptions were to be made for the unemployed and low paid but an attempt by wisely nervous Tory MPs to divide the tax into three bands so that it bore some relation to people’s ability to pay, was brushed aside despite a huge parliamentary rebellion. When the tax was duly introduced in Scotland, as we shall see later, it caused chaos and widespread protest. In England, the likely price of the average poll tax kept rising. Panicking ministers produced expensive schemes to cap it, and to create more generous exemptions, undermining the whole point. Capping the tax would remove local accountability; and the more exemptions, the less pressure on councils from their voters. Yet even Thatcher began to grow alarmed, as she was told that well over 80 per cent of people would be paying more. On 31 March 1990, the day before the poll tax was due to take effect in England and Wales, there was a massive demonstration against it which ended with a riot in Trafalgar Square. Scaffolding was ripped apart and used to throw at mounted police, cars were set on fire, shops smashed. More than 300 people were arrested and 400 policemen hurt. Thatcher dismissed it as mere wickedness. More than a riot, though, it was the growing swell of protest by middle-class, normally law-abiding voters who insisted they simply would not pay it, that shook her cabinet. As the Conservatives’ ratings slumped in the country, Tory MPs who had opposed the tax, including Michael Heseltine’s key organizer, Michael Mates, began to ask their colleagues whether it was not now time that she was removed from power.

  100

  The Final Curtain

  The killing of Margaret Thatcher’s political career has a dark lustre about it, like something from a book of old stories. She had conducted her premiership with a sense of vivid and immediate self-dramatization, the heroine of peace and war, fighting pitched battles in coalfields and on the streets, word-punching her way through triumphal conferences, haranguing rival leaders, always with a sense that history was being freshly minted, day by day. This is why so many insults levelled at her tended to twist into unintended compliments – the Iron Lady, La Pasionara of Privi
lege, She Who Must Be Obeyed, the Leaderene, the Blessed Margaret, even the Great She-Elephant. Reflected in her bloodied breastplate the eighties glowed more luridly than any other modern decade, flashing gold with the City’s new wealth, sunny as the Soviets collapsed, livid in its confrontations and cruelty nearer to home. She had no sense of her own limits. The world was made anew. Her fall lived up in every way to her record. When a great leader topples, poetry requires that her personal failings bring her down. The story insists it must be more than a trip on the carpet, weariness or age. And this story’s ending lives up to its earlier scenes.

  There were several powder-trails that led towards the final explosion. One was the poll tax. Another was economic policy, and Europe, which had become almost the same thing. We have seen how Lawson wanted to tie the pound to the anti-inflationary expertise and reputation of the West German Central Bank, ‘shadowing’ the Deutschmark in the European exchange rate mechanism. In effect, he was looking for somewhere firm to plant down policy in the queasy morass of the new global financial free-for-all. Thatcher disagreed. She thought currencies should float freely, Ariel to his Caliban. She also knew that the ERM was intended one day to lead to a single European currency, part of the European Commission President Jacques Delors’s plan for a freshly buttressed European federal state. Lawson, dogged, bull-like, ignored her and shadowed the German currency anyway, a fact somehow both denied yet generally known. Thatcher read about it in the newspapers. When the cost of Lawson’s policy became excessive she finally ordered him to stop. He grumpily agreed but the two of them stopped talking.