The Iron Lady

by John Campbell

  Her statement that there was ‘no such thing as society’ gave offence mainly because it seemed to legitimise selfishness and reduced public provision for the poor to the bounty of the rich. It denied that sense of social solidarity which Conservatives as much as socialists had in their different ways always tried to inculcate, replacing it with an atomised society bound together only by contractual obligations. But it also had implications for other public amenities beyond the social services: transport, art and leisure facilities, sewers and prisons. The doctrine that citizens should be allowed to keep as much as possible of their own money to spend on personal consumption, while essential public facilities like roads and railways, museums and libraries, swimming pools and playing fields were financed wherever possible by private enterprise – or private benefaction – rather than by the state, as in most other European countries, derived from the same belief that Adam Smith’s multiplicity of individual decisions would somehow work their magic and the market would provide. But by the end of the decade – still more by the end of the century – it was becoming apparent that this was not the case. There was necessary collective investment in public facilities which only the state could provide. There was such a thing as society after all.

  The consequence of the Prime Minister’s denial of society at the very moment when she was promising, at the party conference, to devote her third term to ‘social affairs’ was that she found herself embarked on a hotchpotch of incoherent reforms, in some respects more ambitious than originally intended and generally ill-thought out. It was not only that reform of the National Health Service forced itself on to the agenda, in addition to the plans already announced in the manifesto for education, housing and the poll tax. The Government soon became embroiled in a swathe of other legislation involving broadcasting, football supporters, firearms, the legal profession, official secrets, pubs, homosexuality, child support and war criminals. Mrs Thatcher’s promise to ‘resist the temptation to meddle in the citizens’ lives’ was soon forgotten. The drive to reform every corner of British society was taken up by a new generation of ambitious younger ministers – many of them originally Heathites, now keen to make up for lost time by jumping on the Thatcher bandwagon, believing they could get away with anything, with no cautionary elders like Whitelaw and Hailsham left in the Cabinet to restrain them. Meanwhile, the economic miracle which was supposed to make all things possible was turning sour.

  Thus Mrs Thatcher’s third term was a saga of boastful talk and loudly proclaimed radicalism, but also a lot of misdirected energy due to a fundamental contradiction at the heart of the Government’s purpose and a crippling lack of trust and sympathy between an increasingly irrational Prime Minister and her closest colleagues, which eventually resulted in her brutal deposition.

  The new Cabinet

  The old division of the Cabinet into ‘wets’ and ‘dries’ had long since been superseded. Of the original wets, only Whitelaw and Walker now survived. From 1981, with the accession of Lawson, Tebbit, Parkinson and Ridley to senior positions, Mrs Thatcher had begun to forge a Cabinet much more in her own mould than the one she had been obliged to form in 1979. By 1987, however, with the departure of Tebbit, Brittan and Biffen, the balance was tilting against her again. The critical mass of the new Cabinet was made up of up-and-coming pragmatists from the centre-left of the party – Hurd, Baker, Clarke, MacGregor, Fowler, King, Rifkind and Major – who had come into politics under Heath.They had absorbed the lessons Keith Joseph and Mrs Thatcher had taught, but they were by no means natural Thatcherites. Of course the Cabinet as a body counted for very little in the determination of policy. Most of its members would continue to support her so long as she was riding high. But its changing composition should have been another warning that it would not automatically back her when the going got rough.

  In addition, after only seven months she lost Willie Whitelaw, who was taken ill at a carol service in December and resigned in January 1988. Many see this as a critical turning point. It was during a late-night speechwriting session with her wordsmiths at Blackpool that Mrs Thatcher famously remarked that ‘Every Prime Minister should have a Willie’. When she realised what she had said she swore them all to secrecy; but the story inevitably got out.5 The unconscious double entendre drew a lot of ribaldry, but her point was absolutely true: every Prime Minister does need a Willie, though few are lucky enough to have one. Whitelaw was not only rigidly loyal himself, but he had the authority to impose loyalty on others. For eight and a half years his reassuring and defusing presence was hugely important to the survival and success of Mrs Thatcher’s governments. His departure left the Government without its sheet anchor in the increasingly heavy seas of the next three years.

  ‘What’s to stop us?’

  The Government made a much more purposeful start to its third term than it had done to its second. Following her usual very brief holiday in Cornwall – interrupted on 19 August by a horrific incident in the quiet Wiltshire town of Hungerford when a single gunman ran amok, killing sixteen people – she used the latter part of the recess to demonstrate that she did care about the forgotten parts of Britain which she had seemed wilfully to ignore in the election. She visited several run-down inner cities – Glasgow, Cleveland and Wolverhampton – touring carefully selected scenes of urban decay to preach her message that enterprise, not Government subsidy, would create the jobs to bring regeneration. A photo-call in Cleveland resulted in a famous picture of the Prime Minister, with her handbag, marching determinedly into a wasteland which had once been a steelworks. When a journalist asked where the money would come from to revive such areas, she demanded that he tell her.6 She saw the solution less in terms of money than in the anticipated impact of the three Bills already announced – Ridley’s new forms of tenancy, Baker’s education reforms and the community charge, all designed to weaken the grip of Labour councils which she saw as the cause, not a reflection, of urban deprivation. ‘Where one finds poverty in the inner cities,’ she had declared back in 1979, ‘there one finds that Socialist government has operated for many years.’7

  So far as physical regeneration was concerned her model was the redevelopment of London’s docklands, which she praised during the election as ‘a classic example of Toryism at work. Take the dereliction, improve it, make progress, do it by putting in a little bit of taxpayer’s money to prime the pump and along comes industry.’8 There was actually nothing specifically Tory about it – the proposal for a Docklands Development Corporation had first been put forward by the Labour MP Bob Mellish in the 1960s – but it fitted well with Mrs Thatcher’s desire to bypass obstructive councils. The idea was to create a body which could override the local authorities, cut through the jungle of local planning regulations, buy up and redevelop derelict land and offer incentives to attract business to the area. The London Docklands Development Corporation was eventually established in 1981 by Michael Heseltine, with a similar body for Merseyside (planned before that summer’s riots). Their success encouraged Ridley to announce another four Urban Development Corporations in 1986. Now Mrs Thatcher resolved to set up four more and more than double the amount of money put into them. In December Ken Clarke – rather than Ridley – was put in charge of the inner-city programme, initially with a budget of £2 billion. By the time Mrs Thatcher herself chaired a multi-departmental press conference in March 1988 to launch a White Paper, Action for Cities, that figure had been raised to £3 billion.

  The programme, with a multiplicity of subordinate schemes – Enterprise Zones, Business in the Community, City Action Teams, Derelict Land Grants – achieved considerable success over the next decade, at least in physically redeveloping derelict areas. Much of the benefit, however, particularly in London, accrued to ‘yuppies’ and other middle-class incomers, rather than to the original inhabitants who could not afford the new housing and found themselves either displaced or servicing the new population.

  The 1987 party conference at Blackpool was an unabashed vict
ory rally not spoiled as the 1983 equivalent had been by revelations about Cecil Parkinson. ‘That makes three wins in a row,’ Mrs Thatcher told the adoring faithful. ‘Just like Lord Liverpool. And he was Prime Minister for fifteen years. It’s rather encouraging.’ Dismissing calls for a period of ‘consolidation’, she insisted that the third victory was just ‘a staging post on a much longer journey’, and tempted fate by demanding ‘What’s to stop us?’ 9

  One week later the mood was abruptly punctured by the collapse of the New York stock market. When the markets reopened on Monday morning, London duly followed New York and Tokyo down the tube: 23 per cent was wiped off share values in one day. ‘Black Monday’ delivered a devastating blow to Mrs Thatcher’s view of Britain’s restored ‘greatness’. Though in principle she believed in the global market, she was shocked by the reminder of the British economy’s vulnerability to a crash on Wall Street, and the helplessness of her government to act independently.

  The most embarrassing effect in the short run was the wreck of the privatisation of British Petroleum, whose shares went on sale at the worst possible moment. After a string of successes over the spring and summer with British Airways, the British Airports Authority and Rolls-Royce, the Government was suddenly left with millions of shares on its hands in what The Times called ‘the biggest flotation flop in history’.10 Lawson refused to ‘pull’ the sale, but the Treasury was obliged to underwrite the issue itself at just seventy pence a share – instead of 120 pence – giving rise to gleeful Labour jeers of renationalisation. In fact, the losers were neither the Government nor the public, but the bankers. The episode proved to be only a blip in the sequence of successful privatisations. The second instalment of BP shares the following summer netted the taxpayer the biggest yield yet.

  Far more serious in the long run were the measures Lawson took to try to mitigate the impact of the stock-market crash on the British economy. Amid widespread – but as it turned out erroneous – fears of an American-led recession, he cut interest rates by half of one per cent on 20 October, then by another half per cent on 4 November, to boost demand. Both he and Mrs Thatcher claim to have been unmoved by the general panic over a perfectly normal ‘correction’ of overvalued stocks.11 Nevertheless, with the economy in fact already beginning to overheat, cutting interest rates at all turned out to be the wrong medicine at the wrong time.

  Social Thatcherism: education, housing and health

  In November all the key planks of the Government’s programme were unveiled, starting with Baker’s Education Bill, known as the Great Education Reform Bill, or ‘Gerbil’ for short. It was really five Bills in one, each one of which – setting up a National Curriculum, giving schools the right to opt out of local-authority control, establishing City Technology Colleges, reforming the universities, and (as an afterthought) abolishing the Inner London Education Authority – could have been a substantial measure on its own. But the perils of introducing major legislation with inadequate prior consultation were illustrated as Baker and his colleagues, battered by conflicting pressures from various parts of the educational establishment on the one hand and the Prime Minister on the other, were forced to improvise policy as they went along. By the time the Bill finally concluded its passage through Parliament in July 1988 it had swollen from 137 clauses to 238 and taken up 370 hours of parliamentary time – a post-war record.

  By comparison with Baker’s monster, Ridley’s Housing Bill was modest and attracted relatively little controversy. Here too council tenants were empowered to opt out of local-authority control. Housing Action Trusts (HATs) were supposed to improve rundown estates by converting them to private ownership. At the same time new forms of rented tenure (‘assured’ and ‘shorthold’ tenancies) were designed to bring more private rented property on to the market. In fact, little of this came to pass. Despite large sums of public money on offer as an inducement, tenants proved unwilling to exchange the public-sector landlord they knew for the uncertainty of the private sector: as a result, no HATs at all were set up before November 1990 and only four by 1996, while the amount of private renting increased only marginally.

  The real story of housing in the late 1980s was a shocking increase in the number of people without homes at all, who resorted to sleeping on the streets, under flyovers and in shop doorways in London and other big cities. This sudden phenomenon of visible homelessness was due to a combination of reasons, at least three of them the direct result of Government policy: the reduction in the public housing stock due to the non-replacement of the million former council houses sold to their tenants; higher rents in both council and private rented housing; and the withdrawal of benefits from several categories of claimant, specifically the young and single unemployed. In addition, an increasing rate of family break-up was creating more demand for homes, while more young people, for a variety of reasons, good and bad, were leaving home. The situation was further exacerbated towards the end of the decade by the number of homes repossessed when their proud purchasers – who had been encouraged to buy their houses in the heyday of council-house sales a few years earlier – were unable to keep up the mortgage payments when interest rates soared after 1988. All these factors together made homelessness a disturbingly visible – and for the Government politically embarrassing – problem by 1990.

  Mrs Thatcher was extraordinarily unsympathetic towards the homeless. In the Commons she regularly listed all the measures the Government was taking to provide alternatives: hostels, bed-and-breakfast accommodation and the like. But she revealed her true feelings in her memoirs. ‘Unfortunately there was a persistent tendency in polite circles to consider all the “roofless” as victims of middle class society’, she wrote, ‘rather than middle class society as victim of the “roofless”.’12 From her cosy suburban perspective she regarded the young homeless on the streets as social misfits who should go back to their families – ignoring the fact that many had not got families, had been thrown out, abused by their families, or simply (in approved Thatcherite manner) had left homes in areas of high unemployment and moved to London or other big cities looking for work. She lumped them all together as suffering from ‘behavioural problems’.

  Nor was poverty merely a matter of income. The 1987 edition of Social Trends, published by the Central Statistical Office, reported not only a widening gap between rich and poor but specifically a widening health gap, with the poor showing much greater liability to illness and shorter life expectancy, while a number of poverty-related illnesses like rickets and even consumption, previously eradicated, were making a comeback.13 The Government’s Chief Medical Officer, Sir Donald Acheson, blamed the effect of poor diet and poor housing.14 Back in 1980 a report on inequalities in health commissioned by the Labour Government from Professor Sir Douglas Black had sounded the same warning: the DHSS, on Mrs Thatcher’s instructions, had buried it. Seven years later, after repeated cuts in benefits, the position was very much worse.

  Meanwhile, very much against Mrs Thatcher’s will, the Government was drawn into major reform of the National Health Service. It was already clear during the election that the state of the NHS was at the top of the public’s concerns. However strenuously the Prime Minister insisted that the NHS was not merely ‘safe’ in her hands but was being funded with unprecedented generosity, the public saw only underfunding, deteriorating services and mounting crisis. That autumn the situation deteriorated further, with seemingly daily stories of staff shortages, long waiting lists, bed closures, postponed operations and deaths – all attributed to a deliberate policy of ‘Tory cuts’. At first Mrs Thatcher kept on reeling off her statistics, claiming that real spending on the NHS had risen by 30 per cent since 1979. But increasingly, as the Annual Register commented, ‘this tactic began to seem arid and repetitious’.15 Her figures were also misleading: health spending had indeed increased between 1979 and 1983 – reaching 6.7 per cent of GNP that year – but it had fallen over the past four years, while the British Medical Association (BMA) reckon
ed that the NHS needed to grow by 2 per cent a year just to keep up with the demands of an ageing population and new medical developments. International comparisons showed that Britain’s per capita spending on health was now the lowest in northern Europe. In December the combined Royal Colleges published a report entitled Crisis in the NHS; the British Medical Journal declared the service to be ‘in terminal decline’; while in the Commons Neil Kinnock told Mrs Thatcher that she was ‘making a fool of herself’ by continuing to deny what every shade of expert opinion was telling her.16 In the end she had to be seen to respond.

  In the short term there was nothing for it but to inject more money. But more money alone could not be the whole answer – and it was certainly not one that Mrs Thatcher or her Chancellor were prepared to contemplate. Opinion polls indicated public willingness to pay higher taxes to fund the health service, and some – though by no means all – Tory MPs were urging Lawson to put higher NHS spending before further tax cuts in his next budget. But this was contrary to everything Mrs Thatcher believed in. In her heart she was perfectly clear what she would have liked to do: she would have liked to move away from tax-funded health care altogether. But in practice she knew that privatisation on any significant scale was out of the question. Public opinion demanded that the NHS must remain essentially taxation-based and free to patients at the point of service. That being so, and the tax base being finite, the only alternative was to look at ways of improving delivery of the service.