Laurence Brass (Liberal) 11,221
Conservative majority 5,978
The national result gave the Conservatives a larger share of the vote than Labour, but four fewer seats. The Liberals, with an astonishing 6 million votes (almost 20 per cent of the whole), pulled the Tories down, although their gain of seats was tiny. Labour won 301 seats, the Conservatives 297, the Liberals 14. No party had an overall majority in the House of Commons.
Heath tried to cling to power. By convention, he was entitled to do this, as the Queen, breaking her visit to Australia and returning home because of the crisis, was advised. She let him try to form a new administration. But, although the rules permitted him, public opinion was more impatient. He had gambled, was the feeling in the country and even in much of the party, and he had failed. ‘I thought from the start that E. Heath would have done better to resign,’ wrote Airey Neave in his diary for 2 March 1974. A sense of doom hung over the few frantic days that followed. If Heath had not broken with the Ulster Unionists, many of whom, until his suspension of Stormont, had taken the Tory whip, he could have struggled on. Overtures were made from that direction, but came to nothing.46 A more likely partner was the Liberal Party. On 1 March the Cabinet met to discuss the suggestion coming from Heath and those closest to him, such as Carrington and Prior (Willie Whitelaw was ill), that a deal should be sought. The idea was that ‘moderates’ should come together, and a coalition be mustered of the ‘anti-socialist vote’. In words that suggest the weakness of the enthusiasm for this, Robert Armstrong, who was Heath’s principal private secretary at the time, recorded that the Cabinet gave ‘an indication of their inclination towards an attempt to come to an understanding with the Liberals’.47 But even this tepidity was too much for Mrs Thatcher. For the first time in three and a half years in Cabinet, she let rip. She protested at the suggestion that the Liberals were a force that had to be accommodated: ‘But 5 m. Lib. votes are non-Liberal. They are ours, and if we coalesce we lose them for ever. And don’t sell constitution for a mess of pottage.’48 Recorded by the Cabinet Secretary Sir John Hunt* as one voice speaking together, she and Keith Joseph said: ‘We must keep our integrity.’ ‘What wd effect on parly party be of dabbling with electoral reform?’ asked Mrs Thatcher. ‘We must accept consequences of election and offer patriotic opposition to Labour,’ said Joseph.
The Cabinet overruled its two rebels, however, and the following day Heath saw Jeremy Thorpe, the Liberal leader.† The following night, Sunday 3 March, after attending a dinner given in No. 11 by Anthony Barber, which Mrs Thatcher also attended, Heath saw Thorpe again and on the morning of Monday 4 March reported the conversations to the Cabinet. Neither side could give enough ground to satisfy the other. The Cabinet approved Heath’s final letter to Thorpe, offering only a full coalition, rather than the loose arrangement he preferred, and no more than a Speaker’s Conference on proportional representation. Thorpe duly rejected it later that day, and the Cabinet met once more to hear this before agreeing that the matter was at an end. Armstrong recorded the last moments of Heath’s premiership: ‘At 6.25 p.m., the Prime Minister left 10 Downing Street for Buckingham Palace. I went with him; on the drive neither of us said a word. There was so much, or nothing, left to say.’49 The Queen asked Harold Wilson to form his third Labour administration.
Unusually for a secretary of state for education, the Department gave a farewell party for Mrs Thatcher: they had grown quite fond of her by the end. Her secretary, Alison Ward, noticed that, in accordance with her long-standing habit of taking nothing for granted, she was the only person on the ministerial corridor in the House of Commons who had cleared her desk before the government had fallen.50 In a newspaper interview a few days after the defeat, Mrs Thatcher claimed that ‘It is easier for a woman than a man to give up power because you are not so lost. I can fill the time by spring-cleaning the house.’51 But her later memory of her reaction was almost the opposite: ‘I can’t tell you how lost I felt.’52
Tory disappointment at the election result was deep, and therefore discontent grew. Heath addressed the 1922 Committee the following day and Airey Neave spoke to him afterwards: ‘he is much deflated. He was also, one remembers, a bad Leader of the Opposition.’53 The plotting was pretty well instantaneous: ‘Hugh Fraser* said I should be on the front bench,’ said Neave. ‘He is beginning to campaign against Heath.’54 Even at the grandest level, there was feeling against Heath, or at least a sense that he could not just carry on regardless. On the night that Heath resigned as prime minister, Carrington gave him dinner at his house in Ovington Square, along with Tim Kitson,† Douglas Hurd and Charlie Morrison.‡ These men agreed that Heath should offer himself for re-election as party leader and deputed Morrison, after dinner, to say this to him. Morrison did so, but Heath simply replied, ‘The rules don’t allow it,’ and that was that.55 About a week later, Harold Wilson told Bernard Donoughue of a conversation he had just had with Lord Home, whom Heath had replaced in 1965. Lord Home, said Wilson, ‘(and especially Lady Home) wants Heath out from Tory leadership. He is like me. He wants revenge.’56
Possible successors to Heath began to be touted, though none found very widespread favour. On 13 March, Neave joined a dinner attended by Whitelaw who, he noted, was ‘drinking a fair amount of whisky’. ‘Willie wants Ted Heath’s job but would not be my choice, though I thought so a few weeks ago.’57 Other names thrown up in conversation among leading Tories at this time included Robert Carr,* Mrs Thatcher, Du Cann and Geoffrey Howe, though there were anti-feminist anxieties that Howe’s wife Elspeth† would be too busy to help him. But on the whole these names did not excite enthusiasm.58
The first test of the new Opposition was over the Labour government’s proposal to get rid of Stage 3 of the prices and incomes policy. The Conservative business managers put down an amendment opposing this. Tory backbenchers were furious. It was an issue on which the government might be defeated, provoking a second election in which the Tories could expect to do worse than before. Besides, more and more of them believed that prices and incomes policies had failed and should be ditched. Luckily for the Opposition front bench, the government indicated that it would stick to Stage 3 for the time being – while ending the miners’ dispute by giving them their rise on the basis of the recommendations of the Pay Board. The Tories were therefore able to withdraw their amendment. But the backbenchers poured out their anger. ‘His leadership is bad and he and his Cabinet have been wrong about everything for the last 3½ months,’ wrote Neave.59 Four days later he went on: ‘the knives are really out for Heath … I believe the whole Shadow Cabinet should resign and submit themselves for re-election by party each session.’60 The next day Neave noted, ‘Tonight Du Cann is seen as the alternative candidate,’ and recorded his own intention of standing for the Executive of the 1922 Committee.61
Heath was able to maintain his position through this perilous time, partly because of the disunity of his opponents, but more because of the electoral quandary. No one knew when the next general election would come, but all agreed that, because Labour lacked an overall majority, it could be at any moment. As Mrs Thatcher herself put it in a debate on the Housing Bill in Parliament: ‘In this Parliament it is difficult to know what to do: if one is not cooperative, one is in trouble; if one is cooperative, one is in trouble.’62 In the face of such uncertainty, Conservative backbenchers did not dare force a leadership contest, and indeed, under the rules, devised for the 1965 contest, there was no clear mechanism for doing so. Heath was not going to offer one. On 22 March Neave discovered that he, in common with many other malcontents, had been elected to the ’22 Executive. On 25 March some of the rebels, including Du Cann and Nicholas Ridley, dined at Hugh Fraser’s house in Campden Hill Square. Airey Neave was present: they ‘decided’, he wrote, ‘that Heath would not go’.63
The grumbling continued. In the following month Neave bumped into a fellow backbencher, Dr Gerard Vaughan,* who told him that the party was ‘rudderless’: ‘He
said new MPs liked Margaret Thatcher and thought the rest of the Front Bench technocrats.’64 George Gardiner,† a new and, at that time, pro-European MP, in later years confirmed this unhappiness among the new boys, saying they all felt ignored by Heath.65 Even the Chief Whip, Humphrey Atkins,‡ had by this time developed a low opinion of Heath himself.66 Yet more irritation was created when it became clear that Heath was determined to carry over from his time as prime minister his unusually personal grip on economic policy. On 9 May the new, anti-Heath 1922 Executive met and discussed policy-making. ‘It is said E. Heath is in charge of the important area of counter-inflation …’ wrote Neave. ‘The Executive is very opposed to this arrangement and will protest. I get the impression he is still an autocrat. The grumbling about him is still serious. He has to be made to understand that he will lose another election if he does not alter his curt attitude but how can he do it? He seems as afraid of everyone as they are of him.’67
By late May the unhappiness had almost reached breaking point, and the 1922 Executive seriously discussed a planned campaign of revolt. The problem was how to manage the succession. At a dinner given by David Renton, Hugh Fraser, Nicholas Ridley, Edward Du Cann, Neave and others discussed the matter: ‘We agreed we might have to take action if things blew up. Edward would have to tell Heath the Party would not support him. People do not think we have yet reached this point but I think we soon shall. The difficulty is that Heath will fight.’68 Faced with that difficulty, Heath’s opponents stood back. A few days later, Neave saw Heath about nuclear reactors, on whose behalf he was a paid lobbyist: ‘He was in a v. poor state, red faced, far too fat§ and depressed. I think he should stand down in favour of Whitelaw but he will need a lot of persuading.’69 Neave did not dare attempt such persuasion in person. Faced with Heath’s intransigence, the 1922 Executive ‘decided to keep the leadership question “on ice” ’.70
In a tragi-comic attempt to create better relations with backbenchers, Heath’s PPS, Kenneth Baker,* who had got wind of a small party the Neaves were giving for new Conservative MPs, asked Neave why the leader had not been asked. Taken aback, Neave pretended that he had been planning a second party to which Heath would be invited. This went ahead. Neave had thirty-eight acceptances and one and a half dozen bottles of champagne from Oddbins. His brief description of the occasion conveys the atmosphere: ‘E. Heath arrived with many others at 7 p.m. and was very frosty for the first 10 mins. I had a job to get him to talk to anyone. I started with George Gardiner and his wife, Ivan Lawrence,† Patrick Mayhew …’‡ Winston Churchill,§ grandson of the late Prime Minister, was one of the few guests who was not of the new intake, so Heath asked him what he was doing there. In return, Churchill asked him the same question: ‘Whereupon Heath replied, “I am the chief fornicator.”¶ This’, said Neave, ‘sounds a strange joke.’71 It was also typical of Heath’s bewildering conversational style. Neave felt he got nothing out of the party. His wife had received no flowers or card from the leader, he complained to his diary, and Heath ‘gets fatter every day which gives a poor impression on TV’.72 A week later, he recorded again: ‘Heath has never thanked Diana for the party. I wonder very much whether it was worth it. I certainly have no hopes of patronage in his direction. My advice has never been sought on those policy areas in which I might have been useful.’73 In later years, when asked why he had lost the leadership of his party, Heath used to say that it was simply because he had not handed out enough honours.74 There were other, bigger reasons, but he was not completely wrong.*
Heath might have been more successful at maintaining his position if he had tried to incorporate critical voices into his new Shadow Cabinet. His instinct, though, was to surround himself with those closest to him, and he made the crucial decision to deny Keith Joseph his ambition to become shadow Chancellor and give the post instead to the likeable, loyal but unexciting Robert Carr. Joseph refused the substitute post of Industry and insisted instead on a position without portfolio, but with an emphasis on economic questions, leaving him free to range over the whole field of ideas. To prevent him leaving the Shadow Cabinet and so causing a public division, Heath granted Joseph his request. This was dangerous. There was an accompanying agreement that Joseph could approach Conservative donors to set up his own think tank to look at market-based solutions to the political and economic problems of the day. This was fatal. At the time, though, the idea seemed more worthy than threatening. The declared purpose of the think tank was to study the workings of the market economy, particularly abroad. Joseph wanted to use the term ‘Social Market’ – then an admired model from post-war Germany – in the title of his new organization, but was dissuaded by his more rigorist adviser Alfred Sherman. The Centre for Policy Studies was born.† Putting in Adam Ridley,‡ the deputy director of the Conservative Research Department, as his spy on the putative board, Heath thought that all was well. He was wrong. The CPS gave Joseph the platform and back-up he needed to launch a full intellectual critique of the Heath years. The Heathites did not pay enough attention. ‘We were a bit one-eyed about what was going on in the party,’ said Sara Morrison.75 In May, Mrs Thatcher, the only potential rebel whom Heath had promoted, making her shadow environment secretary, joined the CPS as Joseph’s vice-chairman.
It was largely through Joseph and the CPS that Mrs Thatcher’s interest in the power of conservative ideas rekindled. Until February 1974 her career had been mentally conformist. Although her sex and her social background made her something of an outsider in the Tories’ higher circles, and although she had staked out her position as someone on the mainstream right of the party, she had never before felt cause to question the very basis of her party’s policies. Now she did, and as she began to question, she began to think more boldly. Alfred Sherman, who assisted the process, described her, approvingly, as a person of ‘beliefs, not of ideas’.76 This was true. She never possessed the intellectual’s spirit of free inquiry, impracticality or love of paradox. She was motivated always by moral earnestness and by her desire to achieve certain right results, rather than indulge in what she would have considered idle speculation. But ideas and the men – almost all of them were men – who purveyed them excited her. Apart from the mugging up that she did for her CPC Lecture in 1968, Mrs Thatcher had never before made time for much reading of political and economic thought. Now she got started – reading Keynes (whose Economic Consequences of the Peace she admired much more than the demand-management theories of the Keynesians which she so often attacked), Milton Friedman, Frédéric Bastiat, the mid-nineteenth-century French free-trader, Arthur Koestler and much more. The Institute of Economic Affairs (IEA), presided over by Ralph Harris* and Arthur Seldon,† provided an intellectual forum for the development of free-market ideas, then outside the mainstream of political discourse.‡ Mrs Thatcher devoured their pamphlets and others, including work by liberal economists such as Graham Hutton,§ Brian Griffiths¶ and Douglas Hague.|| Sherman, who had a long memory for real and imagined slights, recalled that he lent her a great many books which she never returned.77
The CPS gave Mrs Thatcher the context, the sense of direction and the camaraderie that she sought. She remembered its office in Wilfred Street as ‘a very cosy place’, and when it set up shop she went along to help, even assisting with wiring up the electric plugs.78 Simon Webley, one of the CPS’s moving spirits, remembered her holding up the wires and exclaiming, ‘The brown one is supposed to be the live one. That is absolutely ridiculous. Brown is for earth.’79 Her practicality and her ideological enthusiasm combined. For her, the CPS was the chance to ‘get back to the north star’, almost literally to find the words for what she knew she believed, but which the Heath years had suppressed. She did not contribute new ideas herself but drew them from Keith Joseph and from Alfred Sherman. From the beginning to the end of her career, Mrs Thatcher maintained an unbounded admiration and affection for Keith Joseph, although when she was prime minister she quite often found him exasperating and spoke rudely to him. His gent
lemanly public-spiritedness, his sometimes tortured courtesy, his Jewishness, his enthusiasm for policy, his interest in the intersection of economic, social and welfare subjects which many Tory grandees considered beneath their notice, all these endeared him to her. So did the fact that, from her earliest days in Parliament, Joseph had helped her, encouraged her rise and often worked with her on subjects such as housing. In Heath’s Cabinet, the two were drawn closer by a growing unease which neither fully articulated at the time. After the defeat of February 1974 their feelings burst out, like a forbidden love at last permitted to express itself. Mrs Thatcher considered Joseph ‘the most sensitive human being I have ever met in forty years of politics’.80 Lord Carrington, au contraire, described him as ‘the gentlest, kindest, most insensitive man I’ve ever met’.81 Yet in a way both meant the same thing – that Joseph cared so desperately, thought so deeply, meant so well, and yet somehow bungled things. All these qualities were to become even more apparent in the course of 1974, and all of them, the bungling included, were to help the cause of Margaret Thatcher.
Alfred Sherman was a very different character. A former Communist, and former machine-gunner for the anti-Franco Republicans in the Spanish Civil War, Sherman maintained a Marxist rigour of thought after his conversion to the right, and a Leninist capacity to identify virtually everyone else as the enemy. His style of argument was absolute. When arguing against public spending on railways, for example, he was not content to call for privatization or a reduction of subsidy: he argued that all rail track should be torn up and the lines converted into bus lanes. He was manifestly, almost proudly, ill fitted to the compromises of party politics, but that did not, at first at least, undermine his importance. He took pride in ‘thinking the unthinkable’. Having known Keith Joseph since advising him on aspects of Middle East policy in 1969,82 he had persuaded him of the virtue of market solutions to problems at the time of the Selsdon conference. As the Heath government began to go wrong, Sherman returned to the charge, and by February 1974 he had found in Joseph a repentant sinner desperate to atone for his misdeeds. He told him how to do so. Mrs Thatcher, at this stage, liked Sherman. ‘Alfred Sherman was a genius,’ she remembered. She linked his Jewishness with that of Joseph as part of their combined virtue and declared: ‘We owe them so much.’83 She added, however, that Sherman was ‘very difficult to get on with’. This was an understatement.
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