by Gordon Pitts
“Now, Mr. Day, you sit here.”
Graham Day remembers those words from one of the first times he was summoned to 10 Downing Street. He had regularly met with the prime minister during his stint at British Shipbuilders, but the meetings would be more frequent and intense at Leyland. It represented, to Thatcher, the failure of top-down British industrial policy and labour intransigence. Leyland also had large implications for British trade and employment and, until Day’s arrival, had been a money pit for the government. So she paid a lot of attention to it.
They met in her sitting room, and Thatcher pointed to the chair at her left. Henceforth, he would sit in that chair. She proceeded to grill him on his plans to turn the auto company around. The questions were very specific, but he was new in his job and he had to give general answers: “I don’t know about that yet.” “Here are the things I think are the most important.” “These are the things I’m drilling down on.” But she was impatient, pointing out that Leyland’s previous bosses had constantly asked for money for things that never panned out.
He admitted he wasn’t sure where the exact truth lay. Maybe in the next couple of months he would know, and then he would tell her. “Whatever I tell you, even if I’m wrong, it will be what I believe to be the truth,” he remembers saying.
He came out of the session shell-shocked. About a month later, there was another meeting at No. 10—the same tough questioning about detailed projections. Emerging from the relentless assault, Day asked the civil servant accompanying him if he would face this kind of beating every time. The bureaucrat doubted there would be another meeting like this. Day should understand, he said, that her greatest fear was that he would tell her what he thought she wanted to hear, not what Day believed. “She may not agree with what you believe, but she is desperate to know what you really believe.”
He passed the test. He never faced another grilling of that intensity, and Thatcher came to appreciate the wry Canadian who told the truth. It was a durable relationship of mutual admiration and respect that continued through the most important decade of Graham Day’s life.
They were an odd couple: a shopkeeper’s daughter from the Midlands who had taken chemistry at Oxford and been drawn into Conservative politics; and a shopkeeper’s son from Halifax who combined a smooth baritone voice with a love of opera and the arts. But to the British establishment, he was, like her, an outsider. The upper echelons of British government and business were dominated by old boys from public schools (private schools, in Canadian terminology), graduates of elite Oxford and Cambridge, and members of the best clubs. She was an Oxford grad, but not one of them. And he was a rough-hewn colonial.
The men Thatcher enlisted to run the state companies often hailed from outside the classic establishment mould. John King ( British Airways), Ian MacGregor (British Coal), John Egan ( Jaguar) were bootstrap business people, not to the manor born. And she trusted them to run their companies. Whereas she was often a micro-manager of government decision making, she stayed mostly out of Day’s way once he had won her trust.
Day had spent his life looking for a leader like this, someone who would assign him a task and step back to let him accomplish it. To be a good leader, you must also know how to be a follower, and he got very good at managing up. He could put her at ease. He was not her most high-profile industrialist—King and Egan shone a bit more brightly—but perhaps that is what she liked about him: he did not screw up, and thus avoided embarrassing headlines.
Not everyone found the Thatcher style to their taste: the great head of hair, the withering contempt for fools, the high-pitched voice, sometimes grating, sometimes inspirational, the tendency to ream someone out with exquisite brutality. She always carried a handbag, so a verbal attack by the prime minister became known as handbagging. Yet there was something seductive about her. Thus the famous quote, “She has the lips of Marilyn Monroe and the eyes of Caligula.” The line was attributed to French president François Mitterrand, who understood the politics of power, in government and in the bedroom.
Thatcher could be extraordinarily kind to underlings, but she could turn on her closest cabinet colleagues. In the end, she drove many of them into the arms of party rebels, which helped spur her downfall. The image of heartlessness—deserved or not—was one that lingered. Even people who liked her general thrust felt that the monetarist policies of the Conservative government had unduly savaged manufacturing, leaving a wasteland in the old areas of the Industrial Revolution. And she didn’t seem to care. Anyone who resisted her radical prescriptions was dismissed as “wet.” Her judgment of individuals often came down to one question: “Is he one of us?” Day became “one of us.”
Her stubborn refusal to bend was infuriating to her detractors. The miners’ strike of 1984–85 was a major test, and she would not budge. The miners capitulated and returned to work, leaving a bitter taste that still lingers. The musical Billy Elliot, the tale of a plucky miner’s son who overcomes his mother’s death and class prejudices to become a ballet dancer, became a hit movie and, as a play, ran for eleven years in London’s West End. Even in 2016, audiences cheered its anti- Thatcher sentiments, still applauding the lyrics: “Merry Christmas Maggie Thatcher / We all celebrate today / ’Cause it’s one day closer to your death.”
Day appreciated that Thatcher could mete out rough justice, test people for their judgment, and, if they fell short, cut them down with a comment. Day saw this happen with a member of the Policy Unit, a group of people recruited from private industry to advise the prime minister on policy. A stunningly confident and well-educated young man had just been plucked out of the mining industry to join the Unit. New to his job, the fellow was preparing a briefing file on Rover before a meeting with Thatcher. Catherine Bell, an official from the Department of Trade and Industry with deep expertise in the area, offered to help prepare the file. No need, the young man huffily declined. He had it all in hand.
The day of the meeting, Day took his customary seat; the young man sat opposite. The prime minister, as was her custom, zeroed in on one item in her new policy advisor’s briefing. Turning to Day, she said, “Now, I understand you want to spend £25 million to do this.” Day replied that, no, he did not want to spend it for that particular purpose—he was intending something entirely different. Day calmly explained how the money was being generated and how it was being spent. Thatcher looked at the young man, closed the file, and disdainfully let it drop to the floor. She said to him, “You can leave.” According to Day, “I never saw him again.”
Day enjoyed the execution because he had such a strong regard for public servants, and he abhorred the arrogance of refusing the offer of help. “Why would you not have someone else give you their comments, even if it were horseshit?” he says, bewildered.
As time went on, he would be called in to advise Thatcher just ahead of Prime Minister’s Questions in the House. Often, the conversation ranged beyond Rover to his views on industrial and economic policy. The nature of the relationship changed, reflected in her willingness to kick off her shoes and have a drink. Whatever the issue, she might ask what he thought of it. One day, near the beginning of their relationship, she began by saying, “Now, Mr Day.” He suggested that he call her Prime Minister and she call him Graham. She smiled broadly, saying that would work. At that point, he felt the relationship was one with a future. Although she was disdainful of lavish ceremony, he treated her with a certain courtliness that she found appealing.
His role was to keep her and her office aware of any events that might end up in the public domain. For example, there was the launch of that Rover saloon car, the Sterling. Day was asked to bring a model of the car to No. 10 so that Margaret and Dennis Thatcher could look it over. She wanted to drive the vehicle to show confidence in a revived Rover, but there was a problem. As revealed in Thatcher’s private papers, her aides were agitated because she had not driven a car for years. Imagine the indomitable prime mi
nister crashing this symbolically important car in Downing Street. So Day had a couple of professional drivers quietly take the car down to the prime minister’s country house, Chequers, where she was able to test it out. The Rover drivers were given a tour of the estate, and she served tea. Two weeks later, as crowds watched and her staff sweated, she drove the car a short distance on Downing Street and then reversed it. No crash occurred, and cameras captured the event. Aides breathed a sigh of relief, and Rover gained valuable publicity.
Day would later tell Canadian journalist Rod McQueen, in a Financial Post profile, “I’m an unabashed admirer of Mrs. T. and I’ve had all four sharp sides of her tongue, particularly in my early dealings with her until I understood why. My admiration is not founded on the fact that she was always right all of the time, none of us are, but because she was steadfast…. Right, wrong or indifferent, she was a politician of conviction, not consensus.” Once a topic had been fully thrashed out, the prime minister might wrap up by saying, “Can you deliver?” or, “Then we are agreed, are we not?” He came to understand that was his last kick at the can, he told McQueen. If he said yes, he knew that, as long as he delivered his part of the deal, she would deliver hers.
From time to time, civil servants would phone Day to say that, although they knew he was determined to follow a certain action, could he, in fact, “trim it a bit?” That was shorthand for being more flexible—delaying the action or dulling some of its sharp edges. Day would ask whether they wanted to speak to Thatcher or should he. There were never any takers.
As the relationship strengthened, he would end up at Downing Street, sometimes at a working dinner, where people from various corners of business would come in to discuss a topic she needed to know about. The formal occasion that stands out was when Prime Minister Brian Mulroney landed at No. 10. There was a dinner followed by a reception for the Canadian leader, and Day was standing there with a drink when he heard her voice at his side, “Graham, come and meet your prime minister.” Without even thinking, he said, “Prime Minister, you are my prime minister.” Indeed, she was.
He knew he had truly arrived when he attended an agricultural fair one day. There was a luncheon in a canvas tent, and Day was called over to join Nicholas Ridley, now secretary of state for trade and industry. Ridley mentioned there was a takeover offer for Jaguar, and Day agreed he had heard about talks between Ford and Jaguar, now a publicly listed company. The government held the “the golden share,” a residue of the former state ownership that gave it the right to veto any sale. Selling Jaguar to a foreign buyer would be controversial. Ridley asked for Day’s opinion on what to do with the golden share. Day recommended against exercising it, arguing instead for confidence in the market. Then Day added, “I assume you’re going to tell the boss that, aren’t you?” And Ridley grinned,“Oh, yes.” Within a couple of days, the government announced it would not deploy its golden share. Ford bought Jaguar for £1.6 billion. Ford would later write off its entire investment, but that is another story.
One of Day’s most powerful impulses is loyalty. He sticks by people, sometimes to a fault. He steadfastly defends the Thatcher revolution, and sees the justification in the turnaround in Britain’s economy during her tenure. He hears critics who decry the era’s creation of crass millionaires. His riposte: “Millionaires were created but they took enormous risks, they paid tax on the money, and they created jobs. The tax rate came down and that helped create jobs, too. Did the government and the bureaucrats get everything right? Of course not. Policy, yes, but execution didn’t always happen that way.”
For Day, his support of Thatcher was not about simply earning a living; “I believed I was doing something which had value. I was a little cog in a series of cogs that was making that economy better and stronger.” He was often called Thatcher’s hatchet man, but while he was cleaning up state-owned companies, he insists he cut only about ten thousand jobs, and these were shed through attrition. That compares with the more than one hundred and fifty thousand workers who were employed in various companies he led. He can’t speak, however, to the fate of jobs after he had sold the privatized companies. Take, for example, Cammell Laird. Cut loose from British Shipbuilders, it was merged with another privatized organization, and by 1986 was reduced to fourteen hundred jobs, down from ten thousand a decade earlier; about thirty years later, the shipyard, though still in operation, would employ a core workforce of about a thousand people. But Day always argued he would preserve only the preservable jobs. He was best known for taking out managers he thought were surplus or unable to do the job. This is what truly earned him the hatchetman label. “Were there things I wish I hadn’t had to do?” he asks. “Yes, and if a lot of my predecessors had done a better job, I would not have had to come in to clean it up.”
Ann Day understood that there were two strong women in Graham’s life, and although she was clearly pre-eminent, the lady at No. 10 held a particular status: “He would have gone through fire for her,” Ann says, “and he did.”
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In January 1988, Day came home to make a speech at the Empire Club in Toronto. Hailed as something of a conquering hero, he delivered a progress report on the Thatcher privatization efforts and his role in them. Although Day had not been involved in the big flashy public offerings, he had done a lot of deals, including a selloff of parts of Rover Group. But there was more to do: “During 1988 we will start to plan for the return of the group to full private ownership,” he pledged.
It couldn’t happen soon enough for Thatcher. Her memoirs reflect her concerns at the time. By the late 1980s, she observed, “Rover had by now a superb chairman in Graham Day, who had been making great efforts to do what I had always hoped would be done—dispose of surplus assets and increase the drive for higher productivity.” But she was not happy with the numbers. “It retained an apparently insatiable appetite for cash.”
Thus the pressure intensified as Day faced a barrage of competing interests: hyper-anxious MPs, hovering global car companies, and a trade and industry minister, Lord Young, with a can-do reputation who wanted to reap the political credit for finding a solution. And there was one very impatient prime minister. A buyer had to have the essential attribute of being British, while guaranteeing the security of the Rover workforce. There were not many companies with that kind of profile.
At that time, Geoffrey Owen was editor of the Financial Times, and he wrote a lot about industrial policy. He knew Graham Day—and he was knowledgeable about the Rover Group’s challenges. On March 1, 1988, he attended what was heralded as an important news conference involving the Rover Group and major defence contractor British Aerospace (BAe), the big conglomerate that also managed Britain’s stake in Europe’s Airbus passenger jet project. It turned out the two British companies were entering exclusive talks towards a merger. On hand were Graham Day and Professor Roland Smith, BAe’s larger-than-life chairman, plus the ebullient Lord Young, who would later call it “the deal of the decade.” Owen wrote in the Financial Times that the merger would at last move Rover out of the public sector. He added that “the deal will be expensive to the taxpayer—the purchaser will press for substantial debt writeoffs—but ministers will see this as a price worth paying. What is far more open to doubt is whether the deal makes industrial sense for the two companies.”
Whatever those doubts, Thatcher was pleased. She argues in her memoirs that there was, in fact, “an industrial logic” in BAe’s eventual acquisition of Rover Group. She said the car business—if relieved of debt and provided with substantial new investment—would complement BAe’s defence and aerospace business. Cars were a steadier business than a few huge defence contracts. And, of course, Rover would stay British.
But, almost thirty years later, Geoffrey Owen, now retired, is even more sceptical of the industrial merit of the deal. He says the discussion of the merger’s great synergies was “rubbish.” The sale to British Aerospace was all about getting Rover out
of public ownership, while solving a problem for Thatcher. He asserts, “it was a blot on Graham’s reputation to have overseen a merger with no logic whatsoever, except for a political solution to an awkward situation.”
Graham Day strongly disputes Owen’s allegation that the BAe deal made only political sense. Day argues that the transaction was, at its core, commercial. He repudiates any suggestion that, in this and other privatizations, he was essentially a political fixer, not a genuine business leader. Thatcher was consistent, he says, in seeking two possible outcomes from the privatizations. In some cases, she expected large financial proceeds from the flotation of profitable companies such as British Telecom. In others, she sought the elimination of state money flowing into cash-strapped companies. Shipbuilders and Rover fell into the second category. “After the sales of several subsidiaries, including trucks and vans, Rover became profitable with positive cash flow which made the sale to British Aerospace possible,” Day argues. BAe also acquired employee training practices that far surpassed its own efforts. His critics might have smelled politics at work, but for Day it was business.
For insiders to the deal, the sale to British Aerospace was never seen as the end of the story. Five years later, BMW, the upmarket German automaker, paid £800 million for the Rover business, beating out Honda, which many felt would have been the best owner, based on its long association with Rover. Day argues that the £800 million was a tangible tribute to his team in making Rover a desirable property to own.
What he could not foresee was that the BMW purchase would be a disaster. Day believes that the Rover workforce culture, so strengthened during his regime, clashed with the new German management. By 2000, BMW was racking up massive losses, and it sold Land Rover to Ford for £1.8 billion. Eventually India’s Tata acquired both Jaguar and Rover from Ford. Today, Britain’s auto industry, thanks to an influx of foreign investment, is no longer British owned, but it is a productive, competitive industry. That is not entirely Graham Day’s doing, but he was a critical part of getting there.