Coming to the rescue with a speed which looked more political than legal, the Law Lords, led by Lord Wilberforce, who had recently been in charge of the capitulation to the miners, overturned Denning, returning to Donaldson’s original contention that the law did hold unions responsible for the actions of their members. The Pentonville Five were consequently cheated of martyrdom, and released. The government was saved from out-and-out confrontation, but not from the humiliation of its new legal procedures and of the entire Industrial Relations Act. Although the government refused to give in to the TUC demand to repeal its precious Act, its tripartite approach to economic management effectively meant putting the Act on one side. In August 1972, ACAS, the Advisory Conciliation and Arbitration Service, was set up by the TUC and the CBI as the approved mechanism for dealing with industrial disputes. The strategy behind the Industrial Relations Act had therefore collapsed. The attempt to give a legal frame to labour relations had not worked. Given the push of inflation and the power of the unions, another way had to be found to seek industrial sanity. By a logic which the Heath government did not like, but could no longer resist, the way that presented itself was a prices and incomes policy. Enoch Powell later noted that Sir Geoffrey Howe, the Solicitor-General, had told a backbench colleague in June 1972 that he was ‘mad’ to advocate an incomes policy, but by November, as minister for trade and consumer affairs, Howe was implementing one himself.22 When Howe brought the Counter-Inflation (Temporary Measures) Bill before the House, Powell was the only Conservative to vote against it. The U-turn was complete.
Even more than she was worried by the change of economic policy, Mrs Thatcher was shocked by the unions’ challenge to the rule of law. When Wilberforce had made his recommendations on the miners’ pay, she had publicly regretted the damage done (‘it is the people who have to pay’), but had declared that in future the Industrial Relations Act would come to the rescue: ‘If we ever face a similar situation again, the law on picketing … will be quite different.’23 It turned out that the ‘quite different’ law made no difference. In a speech in Devon on 29 July 1972, she linked, in terms of moral obliquity, the defiance of the Industrial Relations Act with the sectarian disorders in Northern Ireland which had led Heath to impose direct rule from Westminster in March. She deplored ‘an industrial situation where the orders of the courts were being challenged’.24 The lesson she learnt was that labour law had to be framed differently if it was to work: ‘Never, never, never put a trade unionist in prison for going on strike’ and ‘Never go for the person; go for the funds.’25 She also learnt from the mistakes of the supposedly more moderate Heath, ‘not to try to do everything with the unions at once’.26
The psychological situation of the government after the U-turn was an odd one. It bought trade union acquiescence with a financial profligacy which undermined economic health, but at the same time prepared for confrontation, as if it sought both war and peace. Right up until the end, this split state of mind afflicted the government, and Heath in particular, producing a fundamental ambiguity in the election campaign of February 1974. Still in her post at Education, Mrs Thatcher was pretty well powerless to influence events, but she did not feel ambiguous. She expected conflict and almost welcomed it. She considered union co-operation with government to be bogus because the unions were using the threat of ‘naked force’, and she feared the growing power of Communists and others on the hard left within the union movement: ‘It was very obvious to me that this was a power struggle.’27
The final conflict took some time to come. At first the prices and incomes policy, with its Stage 1 and Stage 2, was reasonably orderly, and the short-term economic growth caused by Barber’s expansionary policies anaesthetized the wounds. But many saw that a battle could not be indefinitely delayed, and the mood soured. In a private diary that he began on 1 January 1973, the senior and disgruntled Conservative backbencher Airey Neave foresaw it. In his entry for 15 February he used a phrase which was soon to acquire public resonance. Stage 2 of the prices and incomes policy, he wrote, raised the question of ‘Who governs Britain?’28 He did not much enjoy the way Heath was governing his country. Three days later, Neave heard his leader speak at the Savoy Hotel: ‘No recognition of backbenchers. He does not realise how unpopular he is. I also realise that while he is PM I shall never receive an honour.’29* Gradually, the tide of public opinion, which had moved back towards the Conservatives, turned against them once more. In July a surge of support for the Liberals gave them amazing by-election victories in Ripon and the Isle of Ely. Late in the same month the inflationary effects of monetary laxity forced Barber to raise the Minimum Lending Rate from 7.75 per cent, first to 9 per cent and then to 11.5 per cent. In late August the twenty-year-old Carol Thatcher wrote to her aunt Muriel succinctly summing up her mother’s predicament: ‘I think Education and the prospect of losing her seat to the Liberals at the next election is driving Mum round the bend … don’t write here [the Thatcher home in Flood Street, Chelsea, to which they had moved in 1972 after selling the house in Lamberhurst]* – everything goes to Dept Ed. for metal detecting and bomb checks – bloody Irish.’30
Stage 2 of the prices and incomes policy had given workers an increase of £1 per week plus 4 per cent, a formula designed to benefit the low-paid disproportionately. It had worked, in the sense that no group of workers had successfully defied it. Over the summer, Stage 3 was prepared. It involved formulae of considerable complication, and included the establishment of a study of ‘relativities’ by the Pay Board, so that the lot of different groups of workers could be compared and their grievances about these differences addressed in Stage 4. Mrs Thatcher was very little involved in any of this, but in her memoirs she records the moment when the absurdity of the processes was borne in upon her. As a member of the Cabinet Economic Sub-Committee which dealt with pay, she one day attended a meeting at which William Armstrong was also present. The main subject was the pay of senior civil servants, such as William Armstrong. ‘What struck me … was that no one doubted that this particular group needed a larger pay increase than pay policy allowed. And what was true for Under-Secretaries in the civil service was true for innumerable other groups throughout the economy. Our pay policy was not just absurd: far from being “fair”, it was fundamentally unjust.’31
Shortly after the announcement of Stage 3 on 8 October 1973, the Yom Kippur War broke out with the Arab attack on Israel. The oil producers’ cartel, OPEC, announced a price rise of 70 per cent in the price of crude oil, and also imposed cutbacks in supply. By the end of the year, the price was to double again. This sudden change of circumstances gave new power to the National Union of Mineworkers as it set out to press its latest pay claim. It became much harder for the government to burn oil in order to conserve coal stocks, and the dependency of British industrial production on coal was increased. Heath, however, believed that the miners had been squared. Over the summer, he had held a secret meeting in the garden of 10 Downing Street with Joe Gormley, the moderate miners’ leader. Heath and William Armstrong, who was also present, had got the impression that the miners’ 35 per cent pay claim could be transmogrified into an agreement about special payments for ‘unsocial hours’ which could be brought within the ambit of Stage 3. For reasons beyond Gormley’s control, this turned out not to be the case. The NUM executive was more militant than he. An overtime ban, which, because of the nature of coal production, had an immediate effect on output, began on 12 November. The Trade and Industry Secretary, Peter Walker,* announced the fifth state of emergency in that Parliament. There were restrictions on heating in shops, offices and schools, and petrol ration coupons were printed, though not used. On 28 November, Heath, who had lost faith in the National Coal Board and taken personal charge of the negotiations, received the whole of the NUM executive at No. 10. At this meeting, there was an exchange between Heath and Mick McGahey, the Scottish miners’ leader, who was a Communist. Its exact words are disputed, but it seems that Heath said: ‘What is it you
want, Mr McGahey?’ and McGahey replied, ‘I want to see the end of your government.’32 The impression grew that the motive of the dispute was political. The natural conclusion was that the Last Battle approached.
Heath’s reaction to the crisis, however, was strange. Though convinced of the political motivation of the miners and utterly committed to standing his ground on compliance with Stage 3, he also hated the idea of an electoral confrontation. He kept telling the miners that they stood to benefit from the relativities provisions of Stage 3, and kept looking for a deal. He was extremely reluctant to use the public rhetoric of confrontation. Seeing the strength of support for the government’s position in the opinion polls, William Waldegrave,† who was just taking over from Douglas Hurd as head of Heath’s political office, advised the Prime Minister to exploit the crisis and go for a ‘Who governs Britain?’ election. Senior Tories, such as Lord Carrington‡ and Ian Gilmour,§ were more doubtful. They feared ‘We’d have let the genie of social revenge out of the bottle.’33 Heath shared this anxiety, and also hated the idea of an early election because he rightly feared that it would bring down the Sunningdale power-sharing agreement in Northern Ireland which he had only just achieved. He had not had a proper holiday that year, and was utterly exhausted, a condition which always makes decisions more difficult. On 13 December 1973 he broadcast to the nation, without really having decided what his line was. He called on the British people to ‘close our ranks so that we can deal together with the difficulties’. Did he want a fight or not? Airey Neave wrote in his diary, ‘we watched PM give a wooden appeal to the nation on television. Today I suggested to some Members that Whitelaw should be PM but they thought him “too emotional”.’* Mrs Thatcher remembered going to a party of her Lamberhurst neighbours Kenneth and Patricia McAlpine shortly before Christmas, where all the steps were lit with candles. She erroneously recalled this as being because of power cuts, whereas in fact they were merely decorative. What she did remember clearly was that everyone at the party was urging the government to fight: ‘Go on, you show ’em this time.’34 Tory supporters were waiting for a lead.
None was yet forthcoming, although the atmosphere was heavy with doom. On 1 January 1974 Airey Neave wrote in his diary, ‘The next few weeks may decide the future of the parliamentary system.’ On the same day, a three-day week was introduced by the government to conserve fuel and avoid power cuts. Television closed down each night at 10.30. The measures worked quite well, and productivity rose, creating a political problem for the government: if the overtime ban could thus be circumvented, what was the need for the atmosphere of political crisis? Heath’s indecision about an election continued, with Lord Carrington and Jim Prior, by now chairman and deputy chairman of the party, crying ‘Forward!’ and Willie Whitelaw crying ‘Back!’† Carrington and Prior settled on the date of 7 February as the last polling day where the Tories would have the initiative, but Heath, still dithering, rejected it after Whitelaw took him out to dinner to dissuade him.‡ Heath held out for yet another meeting with the TUC to try to resolve the crisis. Mrs Thatcher’s patience was wearing thin. In Cabinet she agreed to ‘one last heave but with miners and not TUC. Can’t go on being a puppet government.’35 ‘The opinion polls show us 4 percent ahead,’ wrote Neave, ‘but the delay is swinging opinion the other way.’36 On 4 February the NUM ballot showed 81 per cent in favour of any action the executive chose to take. A strike was called for 9 February. On 7 February Heath announced a general election for the 28th of that month. At the Cabinet meeting which agreed the final decision, Mrs Thatcher told colleagues that it ‘will be a bitter election but at the same time the most idealistic’. She also, in contrast to her later description of her attitudes at the time, argued that Heath should seek ‘a doctor’s mandate’* from the electorate, campaigning more on ‘fairness’ than on confrontation.37 Willie Whitelaw said to Heath: ‘If we lose we’re all in this together and you will have preserved our honour.’38
Although the logic of his electoral decision dictated otherwise, Heath still disliked the idea of a fight about ‘Who governs Britain?’ He did not want a head-on collision with the miners. He announced, even as he launched his election campaign, that he would refer their claim to the relativities panel of the Pay Board and would abide by its view, making people ask why an election was needed at all. He persuaded himself that he needed a new mandate to deal with the new economic circumstances created by the oil price shock. Heath had made the bold, immoderate decision to go to the country over a great issue of principle in the middle of winter and almost a year and a half before an election was due by law, yet he insisted on conducting the campaign in terms so moderate that people wondered what the fuss was about. At a mass meeting in Gravesend shortly before the end of the campaign, a heckler called out to Heath: ‘What can you do if you win that you can’t do now?’39 There was never a satisfactory answer to this question.
Various things went wrong for Heath in the course of the campaign. The relativities board found that it had used the wrong figures in determining the miners’ claim and that miners’ pay had been overstated by 8 per cent. This discovery, which a day later proved statistically false itself, was leaked, with damaging effect. In the middle of the campaign, the new retail price figures showed inflation running at 20 per cent per annum, which emphasized that the Conservatives had got less than nowhere with inflation. At the outset, Enoch Powell had declared that he would not stand again as a Conservative Party candidate because the government had betrayed the promises it made in 1970. Two weeks later, he intervened again, calling on his supporters to vote Labour because of its opposition to membership of the EEC. In Powell’s stronghold of the West Midlands, enough of his followers duly did so. Given that the margin of defeat proved so small, it could fairly be said that it was Powell who turned Heath out.
The campaign was not, in fact, a particularly glorious one for the Labour Party. Harold Wilson, fighting his fourth election as leader, seemed jaded. His party avoided offering any answers to the economic crisis of the day and its proposed ‘Social Contract’ with the trade unions, concocted suddenly after the beginning of the campaign, had little content. But that did not matter much. It was Heath who had called the election when he did not have to, perhaps when he did not want to. It was Heath who had submitted an unsatisfactory record to the electorate, Heath who was causing all this bother. ‘I’m like Baldwin,’ Wilson said to Bernard Donoughue, who was to run his Policy Unit after the election. ‘I’m here to give people a quiet life.’40 And if Labour’s quietist position seemed no more of an answer than the Tories’ confrontational one, there were always the Liberals, capitalizing on popular disillusionment with both the parties who had so mismanaged things over the previous ten years.
Mrs Thatcher, like most of her party, believed that the Conservatives would win. Although she had grown more and more dissatisfied with Ted Heath, and privately critical of his tactics in handling the miners’ dispute, particularly of his delay in election timing, she thought the fight was right: ‘There was a feeling that we were being tough, and that that was a good thing.’41 Although she played no prominent part in the national campaign, she fought it in Finchley on the rhetorical high ground. At her adoption meeting, she said that this was ‘perhaps the most crucial’ in her career, because it was a test of whether Britain was serious about fighting inflation (which, heretically for the future monetarist, she attributed to ‘wage-push’) and whether wage claims were to be decided by force or by reasonableness. Her own patch of Education was not a leading feature of the election. She focused, more uncompromisingly than Heath, on the problem with the miners:
The coal industry is nationalised. You own it. One of the arguments put forward for nationalised industry was that people would not strike against the rest of the people of the country, but that has not worked out. All our problems are now coming from nationalised industries because they have created a monopoly. This election is a ballot of all the owners of the industry.42
Her campaigning style was combative. In her only national broadcast of the campaign, a BBC Election Call programme in which she shared a platform with Willie Whitelaw, Mrs Thatcher dismissed the idea of a nation-saving coalition of all the talents which was beginning to come up: ‘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.’43 And in her only full press interview of the campaign, in the Daily Express three days later, she presented herself as doughty: ‘ “I get very wild with people who don’t realise that underneath all this” – she taps a gold suit button – “there’s a bit of tough steel that’s me.” ’44
By mid-morning of polling day, Mrs Thatcher was worried. She didn’t like the way so many people on normally apathetic non-Tory council estates in Finchley were turning up to vote.45 Her fears were justified. Her own majority was almost halved.
Mrs Margaret Thatcher (Conservative) 18,180
Martin O’Connor (Labour) 12,202
Margaret Thatcher: The Authorized Biography Page 34