Faced with this defeat, Heath concluded that there had, after all, to be an ‘industrial strategy’. On 21 March 1972 Barber presented a reflationary Budget to Parliament. The following day, John Davies unveiled his White Paper, called Industry and Regional Development, which contained mechanisms by which ministers could, in the phrase of the time, use public money to ‘back winners’ in industry, with a bias in favour of depressed regions. The new policy, not previously disclosed to the Cabinet, had been prepared mainly by Heath and William Armstrong, with Davies as little more than its spokesman, and the Treasury in the dark. When it became the Industry Bill in May, Tony Benn greeted it warmly from the Labour benches as ‘spadework for socialism’. In June, the pound was floated. Over the summer, Heath organized a series of tripartite meetings between government, the Confederation of British Industry (CBI) and the TUC to discuss the objectives of economic management. These discussions tried to produce the basis for an agreed policy to control prices and wages. However, the TUC ultimately baulked at the wages part of the agreement, and after a weekend discussion at Chequers on 28–29 October Heath decided that the government would press ahead unilaterally with wage and price control. On 6 November he announced to the House of Commons that he would impose a ninety-day freeze on wages, prices, rents and dividends. This was framed as an emergency measure – and probably the government genuinely intended it as such – but the fact was that the government had broken decisively with the principles of a free economy with which it had entered office. There was no general revolt in the party, but, in a sign of their growing dissatisfaction with their leader, Tory backbenchers elected Edward Du Cann,* a long-standing opponent of Heath, as chairman of the 1922 Committee† that autumn. The holder of that position, which at that time commanded great prestige, was a counterbalance to the power of the Prime Minister. On the whole, the crisis measures were well received in the country, at first. But for the rest of Heath’s time in office the emergency deepened, and the distance from the intentions of 1970 grew.
In after years, critics of Mrs Thatcher attacked her for her acquiescence in changes which she later so decisively repudiated. She herself had a somewhat uneasy conscience in the matter. In her memoirs, she makes much of the fact that she was not present at the Cabinet meeting of 20 March 1972 which considered the Budget and Davies’s White Paper. However, at the meetings which she did attend, she launched no frontal assault on the new policy. ‘Should I have resigned?’ she wrote. ‘Perhaps so. But those of us who disliked what was happening had not yet either fully analysed the situation or worked out an alternative approach. Nor, realistically speaking, would my resignation have made a great deal of difference. I was not senior enough for it to be anything other than the littlest “local difficulty”.’6 In fact, there is no evidence that she even considered resigning. If she did, she kept it to herself.‡ And, as she rather self-contradictingly points out in the same paragraph, some of those who disliked what was happening had analysed it. Notable among them were Enoch Powell, Nicholas Ridley,* John Biffen† and Jock Bruce-Gardyne.‡
Partly because she was a woman in a man’s world, and partly because she was a busy minister, Mrs Thatcher was not a member of any gang of like-minded people who debated these matters. The discontented, including the four named above and John Nott§ and Cecil Parkinson,¶ were part of the influential, free-market-oriented Economic Dining Club, which met once a month in one another’s houses when Parliament was sitting: Mrs Thatcher was not a member, and was not invited to join until after the general election of February 1974. Indeed, earlier suggestions that she should join were blocked by those who thought her presence would reduce the jollity of the all-male proceedings and force them to start serious discussions even before dinner had begun.7 Mrs Thatcher later alleged that she objected, in Cabinet, that the tripartite system of economic discussions was ‘anti-parliamentary’,8 but Cabinet records contain no evidence of this. Heath himself took some pleasure, in later years, in pointing out that Mrs Thatcher ‘didn’t argue a great deal in Cabinet’, and that, if she showed signs of ‘being difficult’, ‘once she’d heard three taps on the Cabinet table, then she knew [that the debate was over].’9 Other pro-Heath witnesses have also maintained that she voiced no dissent in his Cabinets.10
Some light on Mrs Thatcher’s attitude to her own political career at this time, and to the government of which she was a part, is shed by an airgram from the US Embassy in London to the State Department. It was sent by the Ambassador, Walter Annenberg* (much later one of her close American friends), on 25 June 1973, accompanying the memorandum of a conversation at lunch at the Connaught Hotel by Dirk Gleysteen of the Embassy staff.11 Mrs Thatcher, Annenberg wrote, has put in a performance which is ‘solid, respectable and unspectacular. She has not sought to introduce radical remedies to deal with Britain’s problems in education and science.’ ‘She is a strong supporter of Heath,’ he went on, and he poured cold water on the idea that she might become prime minister: ‘it is most doubtful that she could, or does, realistically expect to lead her party … A well-educated, intelligent and even sophisticated woman herself, Mrs Thatcher shares with others in her party a certain anti-intellectual bias.’
Gleysteen’s memo was more gossipy. His lunch the previous month had taken place the day after Anthony Barber had announced spending cuts from which education had been exempted. Mrs Thatcher told Gleysteen that she had persuaded colleagues not to cut education as planned: ‘When the chips were down, education policy would not win an election and it was therefore important not to let this area be vulnerable to negative attacks.’ Asked by Gleysteen what the next election would be about, she ‘unhesitatingly said: “Food prices and housing” ’, and viewed these in what Gleysteen described as an ‘ideological’ light: ‘She said she considered it a Tory duty to try to frame all government policy in such a fashion as to lessen the growing dependence of the citizen on the government.’
Becoming loquacious, she then passed comments on various colleagues in government: ‘Geoffrey Howe. Mrs Thatcher obviously respects and thinks highly of him but said he is “too willing to compromise” and she wondered if he would get “over this weakness”.’ ‘She said Michael Haseltine [sic] had everything it took in politics except brains.’ And she reserved her highest praise for Keith Joseph: ‘She has tremendous admiration for Joseph and considers him brilliant, versatile and full of further promise. She said that he could handle any ministry and she was confident that he has been marked for higher responsibility.’ Bits of this report indicate that Mrs Thatcher is a woman of her own views (‘slightly to the right-of-center’ said Annenberg). Nothing suggests serious revolt against the direction of the government.
The records do show, however, that Mrs Thatcher maintained a fairly consistent position in Cabinet – though not an important one, because of her non-economic brief and her lack of seniority. Seated on the same side of the table as Heath, but as far away from him as it was possible to sit, she sometimes found difficulty in getting attention, and on one occasion the Cabinet Secretary, Burke Trend, actually records her intervention as ‘not heard’ (though he heard it himself). Robin Butler,* later cabinet secretary and, from 1972, one of Heath’s private secretaries, noted that Mrs Thatcher’s interventions ‘sounded rather shrill and fell on stony ground’: they were delivered with ‘more emphasis than confidence’.12
Almost all her interventions on topics outside her department, though, showed her opposed to corporatism, union power and wage and price control. In March 1971 she objected in Cabinet to the fact that supplementary benefits were paid to the families of strikers. In May of that year she complained about public sector pay outstripping that of the private sector and attacked the fashionable notion of ‘comparability’. In July she opposed government purchase of shares in BP, saying, ‘We are passing up the chance to tap the market.’ In February 1972 she called for sources of power supply to be ‘more widely diffused in smaller units’; and in December, when Heath proposed to pour
more money into the coal industry, she argued for a policy of conserving more coal and extracting less. She had a strong sense of the political opportunity for Conservatives presented by strikes, and urged a readiness to make the argument against union power as wide and as public as possible. During the rail dispute of June 1972 she declared to her Cabinet colleagues, ‘The real battle is – and should be presented [as being] – between unions and people, not between unions and government.’ When the prices and incomes policy was introduced, she did not confront it head on, in general terms, but deployed practical, grocer’s-daughter arguments against aspects of it. On 30 October 1972, for example, she explained that a freeze before Christmas would cause shortages, and she insisted that luxury items should remain exempt from the freeze, as this was ‘essential if the basics are not to disappear’. When the Cabinet discussed how to ‘de-escalate’ the freeze in January 1973, Mrs Thatcher said that a ‘clean break’ with the policy might be ‘psychologically wiser’.13 Cecil Parkinson, who had entered Parliament in a by-election in 1970, remembered her taking him aside at some time in 1973 and saying, ‘Look, I’m fighting all these incomes policies and statutory controls in Cabinet, but I need people outside Cabinet to speak up.’14 She intensely disliked the idea that inflation was a price worth paying for economic growth and social peace. She always remembered a conversation in the rose garden at Chequers with Robin Butler, then (1971) a youngish member of Heath’s so-called Think Tank, the Central Policy Review Staff (CPRS). He told her, she recalled, ‘If we can’t beat inflation, we’ve got to learn to live with it.’ Mrs Thatcher replied emphatically, ‘Robin. No. No!’15 Ten years later, when she interviewed Butler for the post of principal private secretary, she reminded him of the incident: ‘You said inflation was endemic. I’ve never heard a more shocking remark from a young man.’16
On non-economic subjects, too, Mrs Thatcher pursued lines which were to become recognizable in her subsequent career, putting her, for the most part, to the right of the majority of her Cabinet, though not her parliamentary, colleagues. When it was explained by Barber that the introduction of Value Added Tax (VAT) was a necessary consequence of British entry into the EEC,* which finally took place on 1 January 1973, she nevertheless opposed the tax as ‘dislocating and politically unpopular’. On Northern Ireland, a problem by then so great that Heath gave it a huge proportion of his mental energy, Mrs Thatcher wanted to threaten the Irish Republic with reprisals if it did not control the IRA, and opposed the prorogation of the devolved, Unionist-dominated Parliament at Stormont on the grounds that it would be to ‘suspend democracy in part of the UK’. Heath rebuked her, saying that direct rule would merely put the province in the same category as Scotland and Wales. When the Yom Kippur War broke out with the Arab attack on Israel in October 1973, she allied herself in Cabinet with Keith Joseph (who was Jewish) and the Lord Chancellor, Lord Hailsham, against the prevailing, pro-Arab view of the Foreign Office and of Heath himself. On 18 October she burst out bitterly that the British policy of standing aside from the conflict had ‘lost support of everyone, especially young. Must say no question of Israel being wiped off face of earth.’ Heath immediately slapped her down, saying: ‘Don’t accept Educ’s [in Cabinet, ministers are always referred to by department rather than by name] view of public opinion. It’s a Jewish-inspired press campaign.’17 She was perfectly capable of speaking her mind, and that mind was already of a distinct cast. What is also true, however, is that she did not think it her place to raise large issues of principle in direct form. On 1 July 1971, for example, the Cabinet discussed how much the question of loss of British sovereignty to the EEC should be dealt with explicitly in the White Paper making the case for entry, and how serious the loss of sovereignty involved really was. Mrs Thatcher was silent throughout. She said in later years, with regret, that she had regarded the arguments that Powell and others put forward about sovereignty at the time as ‘rhetorical devices’.18
It is not hard to understand why Mrs Thatcher, and any other colleagues who felt dissatisfaction with the trend of the Heath government, nevertheless went along with it. In addition to the natural desire of ministers to stick together for as long as possible, there was something subsequent generations have forgotten – the personal prestige of Ted Heath. Having won the 1970 election in defiance of the opinion polls and the pundits, Heath was highly successful in establishing himself in public respect, though not affection. The contrast between him and the ‘slippery’ Harold Wilson was marked, and worked, most of the time, in his favour. His commitment to British entry into the EEC and to power-sharing between Unionist and Nationalist in Northern Ireland assured him of the support of the establishment; his concern to tackle Britain’s economic failure and industrial relations chaos was clearly sincere and energetic. In his conduct of government business, Heath was surprisingly good at forging a loyal team, and making traditional Cabinet government work. Mrs Thatcher later complained that his Cabinet was much reduced in importance after the first year in government,19 and there is some truth in this, particularly over economic policy. But the records show many lively discussions, even towards the end of the administration. In private conversation years later, Mrs Thatcher paid Heath a backhanded compliment for his way of dealing with colleagues: ‘I was impressed by the lead Ted gave in Cabinet. If I’d have done it, I’d have been called bossy.’20 In truth, Heath maintained loyalty and unanimity to a great degree, until the end, and suffered very little from leaks to the press.
It followed from this that, when the skies darkened, the reaction of colleagues and, to some extent, of public opinion was to draw closer to Heath rather than to attack him. Although a prices and incomes policy defied the principles on which the Conservatives had come into office, the context for its introduction was widely seen as that of a crisis – an extreme situation demanding extreme, and temporary, measures. The danger for Tory critics of the policy was that they would find themselves in effective, though not ideological, alliance with trade union militants, both trying to undermine the Prime Minister. This is something that Margaret Thatcher would never for a moment have contemplated. She was as desperate as Heath to defeat trade union power, and so saw herself on the same side of the barricade. Besides, her instincts always inclined towards party loyalty, and Heath was the leader of her party.
It was also important that the drama of the industrial disputes which led to the U-turn was played out against a fast-changing background of labour law reform. In the first six months of its existence, the Heath government began a serious attempt to fulfil its election promise on industrial relations. It sought to accomplish what Harold Wilson had been forced to abandon, and change the state of the law on trade unions. The Industrial Relations Bill, which finally passed into law in August 1971, ‘was the centrepiece of our long-term economic programme’, wrote Heath, ‘and we had a clear mandate to introduce it.’21 The Bill established the right to join or not to join a trade union and provided that future collective agreements should be legally enforceable. It established a new National Industrial Relations Court to adjudicate the cases that the new law would create. The idea was to bring regularity and legal form to procedures which had become wild and uncontrollable. The political and economic prize of success was huge, and one which had eluded all British governments since the war. The new law did not come into force until March 1972, and its progenitors had high hopes of it. By early August, it had failed, and was seen to have failed.
The law foundered on the non-cooperation of the unions, and the contradictory workings of the courts. Unions refused to register under the Act or to recognize the new court. In the first month of the Act’s operation, the new court declared that the blacking of container lorries by Liverpool dockers should cease. The dockers’ union, the TGWU, was fined £5,000 for contempt because it would not recognize the court. Refusing to pay, it was fined a further £50,000 and threatened with the sequestration of its assets. It then paid the fine, but the unofficial blacking of container l
orries continued, and spread. Meanwhile, during a dispute with the three rail unions, the Act was invoked by the government to enforce a so-called cooling-off period and then a compulsory ballot on a strike. The members voted by five to one in favour of industrial action, and so the new law had worked smoothly against the purpose of its framers.
Matters got worse for the government. The TGWU appealed against the Merseyside ruling by Sir John Donaldson in the National Industrial Relations Court (NIRC), which held that unions, rather than their individual members, were legally responsible for those members’ actions and should be made to pay accordingly. In the Appeal Court, the Master of the Rolls, Lord Denning, took the opposite view, saying that individual trade unionists were legally liable. The new court thus had its authority cut away. Confusion then ensued as the NIRC tried to turn its attention from collective lawbreakers to individuals, many of whom were only too happy to be arrested in defence of their cause. In July five dockers who defied an order from the NIRC to stop obstructing container lorries in Hackney were arrested and detained in Pentonville prison, quickly becoming the ‘Pentonville Five’. There were sympathy stoppages, including five days in which no national newspapers appeared, and also, because of the continuing dispute about containerization, a national dock strike. The TUC voted for a one-day general strike and broke off the tripartite talks which Heath had begun.
Margaret Thatcher: The Authorized Biography Page 33