Working on the assumption that there would be an election in the autumn of 1978, the Conservatives drew up their manifesto. All policy groups (there were no fewer than ninety-three of them) were told to wind up their work on 30 June. Most of the policy papers and manifesto drafts show the victory of the cautious over the bold. Michael Heseltine, who had been asked to look into the abolition of domestic rates which the party had promised in October 1974, reported that all the possible replacements were fraught with difficulty. A poll tax, for example, was ‘extremely regressive’ for the poor. He recommended that the pledge stand but that the manifesto should state that it would take a ‘lower priority’ than income tax cuts. He also proposed a ‘root-and-branch reappraisal of centralised decision-taking’ and the granting of ‘increased discretion to local authorities’.88 Beside this passage, Mrs Thatcher put the wiggly line which was always the mark of her disapproval.
Even the radical Nicholas Ridley, charged with recommending a policy on the nationalized industries, wrote of denationalization (the word ‘privatization’ was not used in the documents) that ‘The objective must be pursued cautiously and flexibly, recognising that major changes may well be out of the question in some industries such as the utilities.’ As for telecommunications, which at that time were entirely controlled by the Post Office, they would be split into a separate enterprise, but ‘The telephone network would remain nationalised but private telephone suppliers would be given a larger role.’89 Ridley did, however, recommend that there could be a direct sale to the public of assets in the British Steel Corporation, British Rail, the National Freight Corporation, the British National Oil Corporation and the National Bus Company. On 10 July 1978 the Shadow Cabinet agreed that the ideas about denationalization would not be published.
The pulling together of the manifesto coincided with a row about Mrs Thatcher’s entourage. Early in her leadership, she had been worried that her office was unable to deal properly with the vast number of letters (3,000 a week) pouring in. Matters came to a head in 1976 when the Duke of Rutland, the local Duke from her Grantham childhood, and not one to ignore lèse-majesté, received a reply, from a member of Mrs Thatcher’s staff, to a letter he had written to Mrs Thatcher. The reply began ‘Dear Mr Rutland’. When she heard about this, Mrs Thatcher exploded. Alistair McAlpine recruited David Wolfson, who was helping run his family business, Great Universal Stores, and therefore knew about direct mail, to advise on improvements. Soon Wolfson developed a role of improving communication between Central Office and the Leader’s office. In the summer of 1978, when she thought the general election was imminent, Mrs Thatcher asked Wolfson to work for her full time, and made him secretary to the Shadow Cabinet. This caused a row because, by virtue of being director of the Research Department, Chris Patten was automatically secretary to the Shadow Cabinet. Patten was therefore upset by what he saw as a personal and ideological snub. Mrs Thatcher probably intended no offence. She seems not to have been aware that Patten held the post, a fact which, in itself, must have been galling to him. Wolfson’s view was that it all started because there was nowhere for him to sit in the Leader’s crowded offices, except in the Shadow Cabinet room. She therefore hit upon the title to go with the geography, and asked him to take the minutes. He never actually did so, and life went on very much as before.90* But the incident illustrated Mrs Thatcher’s surprisingly vague attitude to position, hierarchy, job titles and so on, in some ways an attractive trait, but one which often caused affront. It also brought out her fondness for having people about her whose first loyalty was to her, not to the machine.
The process of manifesto-making made all factions anxious. While Chris Patten feared that he and what he saw as his enlightened liberal conservatism might be excluded, Thatcherites worried that sogginess would prevail. A fragment of Wolfson’s comments to Mrs Thatcher on the manifesto’s early draft survives. On the proposal that competition be promoted by ‘Strengthening the Monopolies Commission’, he writes, ‘Help. Haven’t we learnt anything?’, and when it is suggested that the government should be ‘enlarging’ the Office of Fair Trading, he writes ‘MORE UNPRODUCTIVE CIVIL SERVANTS’.91 For her part, Mrs Thatcher fretted that the energy and discipline of their policy-making were being dissipated in too many promises. The minutes for the Shadow Cabinet meeting of 31 July record, ‘Mrs Thatcher pointed out that because a large number of nuggets were being inserted, we were in danger of losing our credibility on the reduction of expenditure. She proposed that the next manifesto draft put the main emphasis on a few central objectives on which everything else depended: (a) the cutting of taxes and (b) strengthening internal and external defence.’92 But the same meeting went on to agree that ‘We should not pick a fight with the unions on a minor issue by a crude commitment on strikers’ benefits.’
Mrs Thatcher’s feelings at the time reflected the conflict she harboured between prudence and conviction. In a private interview given to David Butler and Dennis Kavanagh on 9 August 1978, she said that she had tidied her desk and was ready for 10 Downing Street. She explained how a leader needed a ‘total lack of fear’, and that she had achieved ‘a degree of intellectual and political freedom which came from not having a wife and kids’ to support. She analysed the three main problems of the day as inflation, taxation and regulation, and said that all three were created by government. She had no time for any government of national unity, she said, or for proportional representation, the method of voting likely to bring such a coalition about. In the Shadow Cabinet, she told Butler and Kavanagh, only Carrington, Prior and Ian Gilmour wanted PR, which just showed. Carrington, her interviewers reported her saying, ‘was an old Whig, a superb tactician but who could not think long … However he was always articulating his doubts and uncertainties and this made her impatient. She said to people like him: I know what. You tell me how.’93 That last sentence could stand as a summary of her approach throughout her years of opposition.
Asked in the same interview what were the sources of her political strategy, she said, ‘My beliefs,’ but she squared these with political caution by arguing that the Tories should not make Hugh Gaitskell’s mistake in 1959, in relation to tax cuts, of floating good ideas too early. It would take a huge amount of time to ‘unscramble socialism’: ten years were needed to change everything, so that, for example, the market would gradually infringe on welfare services and health insurance services would become ‘things that trade unions were willing to negotiate about’. Privately defying those colleagues who still supported wage controls, Mrs Thatcher said that the worst thing about the Heath government’s incomes policy had been that it ‘undermined respect for the rule of law’. Foreshadowing the preoccupation with the environment which was to grow stronger in later years, she told the two dons that she had spent part of the morning defrosting her fridge and had noticed the energy waste: ‘Wasn’t it possible to use some of the heat that was generated from a refrigerator into house heating?’94 In this private interview, more than in public utterances at the time, Mrs Thatcher articulated the robust views for which she would later become famous.
The full draft of the manifesto came together at the end of August 1978. The first version of the leader’s foreword – all versions were written chiefly by Ian Gilmour – shows how tentative was the approach. ‘This election’, it convolutedly began, ‘is not just about unemployment and inflation, important as these are to many people. It is about all the things that seem to have gone wrong in Britain in the last few years.’95 This vagueness and negativity were improved for the full draft. The new opening sentence declared: ‘The people of Britain have been suffering from too much government – but they have not been well served by government.’96 But, although the new words enunciated a clearer theme, there was still no sense of urgency, and, despite ‘Labour isn’t working’, the foreword failed to mention jobs as a priority until Mrs Thatcher wrote it in herself. The longing, felt so strongly by Butskellites,* to be seen to be ‘striking a balance’ governed much of
the document. ‘We will be even-handed in our approach to industrial problems,’ said the draft, and ‘What we propose is neither revolutionary nor reactionary.’ ‘We shall not undertake any sweeping changes in the law on industrial relations,’ it promised. Mrs Thatcher went to work on this document with her pen. She deleted the suggestion that union reforms must come from within the union movement, and where the draft said that the closed shop could be retained when a ‘massive majority’ voted for it, she wrote caustically, ‘i.e. no rights for minorities’. ‘Need for more emphasis on left wing drift of Labour,’ she scrawled, and where the draft spoke of constitutional reform being based on ‘as much cross-party agreement as possible’, she crossed it out. Against the economic section, she complained, ‘This is a goldmine of promises.’ The paragraph on pay wandered around the subject of not having a single norm and spoke of the importance of ‘informed discussion about the Government’s economic objectives’. Mrs Thatcher wrote, ‘This paragraph is pathetic.’ Against some pious hopes about jobs for young people, she scribbled, ‘There is absolutely no recognition in this paragraph that jobs come from satisfying the customer.’97
And although most of her interventions were on the main areas of economic and industrial policy, Mrs Thatcher peppered the document with other comments. On immigration, she added, ‘but there can be no question of compulsory repatriation.’ In the section which included Europe, the draft wanted Members of the European Parliament to ‘have the authority to halt the flow of unnecessary legislation’. Mrs Thatcher, ever alert against increasing the EEC’s constitutional powers, crossed out ‘have the authority to halt’ and substituted ‘should deter’. She had no objection, however, to supporting ‘the development of a concerted EEC foreign policy’.98 At this time, she was anxious that the EEC act as a stronger and more united bloc against Soviet expansionism. In general, even with the Leader’s injections of vim, the document which the Conservatives planned to offer the electorate that autumn was bland.
15
May 1979
‘There’s only one chance for a woman’
On 7 September 1978, Jim Callaghan announced in a television broadcast that there would not be an autumn election. It was a surprising decision that wrongfooted everyone, including, perhaps, himself. That summer, inflation, which had roared ahead before the intervention of the IMF, had fallen below 10 per cent. The July introduction of Stage 3 of the government’s pay policy, a 5 per cent norm for pay increases, had seemed to promise an orderly management which public opinion contrasted favourably with Mrs Thatcher’s apparent devotion to a ‘free-for-all’. Yet Callaghan wobbled. His voting arithmetic made him doubtful of victory – he was very anxious not to have to struggle through another hung Parliament – and he knew there would be pay disputes in the autumn. He seems to have believed that his prices and incomes policies would have inflation beaten by the summer of 1979.1 He thought the 5 per cent rule would be his salvation. In fact, it turned out to be his crucifixion. Bernard Donoughue who, like almost everyone close to Callaghan, had been kept in the dark by his boss about the postponement, recorded in his diary, ‘I felt terribly disappointed,’ and Tom McNally,* Callaghan’s political adviser, told him: ‘Either he [Callaghan] is a great political genius or he has just missed the boat.’2
On the day that Callaghan announced his postponement, Mrs Thatcher was touring the Midlands. Since Callaghan had chosen a broadcast to the nation as his means of announcing his decision, most had assumed that an election would be called and so a huge press-pack was following Mrs Thatcher. The news, which reached her by bush telegraph a few hours before the broadcast, surprised and deflated her, although she knew, rationally, that it did not damage her chances. She had been so girded for battle that it was difficult to lay her armour down again. Michael Dobbs,* who accompanied her, remembered her, conscientious as ever, spending far too much time late at night in the hotel talking to the travelling press, whom she did not want to let down. She was exhausted. At last Denis pushed his way into the crowded room, and said, ‘Come on, woman. Bedtime.’ She meekly followed.3
The news of delay was more enthusiastically received in the Conservative Research Department. Chris Patten was inspecting galley proofs of the Conservative manifesto with Angus Maude when it came through. Until then, he had been worrying that Callaghan was bound to win as a reassuring ‘management of decline’ figure. Postponement gave the Tories their chance: ‘We danced on the table with joy.’4†
There were plenty of signs of coming industrial trouble that might invalidate Callaghan’s decision to delay. On 22 September, for example, Ford workers walked out in protest at the 5 per cent pay limit, and at the Labour Party conference at the beginning of October the pay policy was rejected, thanks to union block votes,‡ by a big margin. But the short-term effect of Callaghan’s decision was to help Labour and put pressure on the Conservatives. Callaghan’s own speech at the conference was thought to have ‘changed the atmosphere’5 for the better, and the opinion polls shifted. Gallup, which had recorded a 7 per cent Tory lead in September, returned a 5 per cent Labour lead the next month. The Tories duly obliged their opponents with another public split about pay policy.
The immediate cause of the split was Ted Heath. At the beginning of the year, strenuous attempts had been made by Humphrey Atkins and Lord Carrington to improve Heath’s relations with Mrs Thatcher. Atkins suggested that she meet Heath to get his advice following his recent trip to the Middle East. To his surprise, she agreed and the two met secretly in her house in Flood Street. This was not a success. Mrs Thatcher considered that Heath did not unbend.6 Heath’s version was the same, but the other way round. ‘It turned into her views,’ he recalled.7 In February, Atkins took further soundings from Heath’s doctor and confidant, Brian Warren, about what role, if any, Heath would like in Conservative politics. Atkins then saw Heath and was dismayed to find that he had chosen to interpret this feeler from the Chief Whip as a job offer from Mrs Thatcher herself. Heath expressed his readiness to be in the Shadow Cabinet (which had not been mentioned).8 Poor Atkins then had to write Heath a letter making clear that Mrs Thatcher had not known of his approach to Warren. The opportunity for wilful misinterpretation was there, and Tim Kitson, still, out of kindness, looking after Heath in Parliament, suspected he would take it, because of his tendency to self-deception.9 This proved to be the case. Heath resumed his ‘incredible sulk’ for the next six months, and at the party conference made a speech from the floor, described by The Times as ‘stuffy and charmless’.10 He referred to Mrs Thatcher’s suggestion that the 5 per cent pay limit had already been broken and said that, if it had been, ‘there is nothing for gloating, nothing for joy. We should grieve for our country.’ On television that night, he said that ‘free collective bargaining produces massive inflation’ and that if Callaghan ‘says he is going to the country and expresses the view that we cannot have another roaring inflation or another free-for-all, I would say I agree with that’. Heath supporters, notably Jim Prior, took their stand on the wording of The Right Approach to the Economy, which had said that ‘the Government must come to some conclusions about the likely scope for pay increases,’ but Keith Joseph caused further discord by saying on television that this sentence referred only to pay in the public sector.
In a weak internal political position, and with opinion polls showing that the public preferred the Heath–Callaghan view about pay to the free-for-all which she was thought to advocate, Mrs Thatcher was embarrassed. But she was also determined not to get trapped into committing to an incomes policy. In a private conversation with Bill Deedes after the Labour Party conference and before her own, she revealed her anxieties about the idea that the country could be run by a pact between unions and government. ‘Sovereignty of Govt has to be reasserted,’ Deedes’s notes recorded her saying. ‘Govt and Unions have roles to play – honourable roles, but must be clear what these roles are.’ Deedes reminded her that ‘TUs have done in 2 Govts and are about to do in a thir
d.’ ‘No, she couldn’t say that,’ Mrs Thatcher told him cautiously. ‘– But … they must revert to their proper job.’ She complained to Deedes that Jim Prior had been ‘behaving very oddly’ and that it was ‘not too clear what he would be saying at the Brighton Conf’.11 At Brighton, Prior told his audience that a statutory incomes policy might have to happen ‘under certain circumstances’. Mrs Thatcher publicly contradicted him on television: ‘None of us could think of the circumstances.’12 And in her party conference speech, which the dispirited rank and file considered slightly weak, she stuck to a formula which allowed scope for differences without conceding her position: ‘We believe in realistic, responsible collective bargaining, free from government interference’.13 Before the end of the month, Labour held the fairly marginal seat of Berwick and East Lothian at a by-election, its best by-election result in that Parliament. Heath had appeared on the hustings in the campaign and reiterated his support for an incomes policy. ‘So it still looks open and interesting,’ wrote Bernard Donoughue in his diary, ‘and suggests we might have won an election now.’14 Thatcherites were angry at what they saw as Heath’s disloyalty. ‘Receiving support from Ted Heath is like being measured for the undertaker,’ said George Gardiner.15 But an NOP poll in November showed a Tory lead of 3 per cent which rose to 14 per cent if Heath were once again leader of the party. The Tories felt stuck. For the only time in its history, the party had published its compendious election Campaign Guide in the wrong year, assuming a poll in the autumn of 1978. The mood was: ‘There was nothing more we could do.’16
Margaret Thatcher: The Authorized Biography Page 53