Book: The Downing Street Years, 1979-1990



The Downing Street Years, 1979-1990

Margaret Thatcher

The Downing Street Years, 1979-1990

THE DOWNING STREET YEARS

1979–1990

Dedication

MARGARET, THE LADY THATCHER. O.M., P.C., F.R.S.

HOUSE OF LORDS

LONDON SW1A 0PW

The Downing Street Years, 1979-1990
The Downing Street Years, 1979-1990

Introduction

‘Ayes, 311. Noes, 310.’ Even before the figures were announced by the tellers, we on the Opposition benches knew that Jim Callaghan’s Labour Government had lost its motion of confidence and would have to call a general election. When the four tellers return to read the total of votes recorded in the lobbies, MPs can see which party has won from the positions they take up facing the Speaker. On this occasion the two Tories walked towards the Speaker’s left hand in the space usually occupied by government whips. A great burst of cheering and laughter rose from the Tory benches, and our supporters in the spectators’ galleries roared with out-of-order jubilation. Denis, who was watching the result from the Opposition box on the floor of the House, shouted ‘hooray’ and was, quite properly, reproved by one of the Serjeants at arms. Through the din, however, the stentorian guards’ officer tones of Spenser Le Marchant, the 6′ 6″ Tory MP for High Peak who was famous for his intake of champagne, could be heard booming out the result — the first such defeat for a British Government in more than fifty years.

We had known the figures would be close, but we had not known how close as we filed in and out of the lobbies. I looked for the unexpected faces who might decide the outcome. Labour whips had been assiduously rounding up the handful of independent MPs whose votes might put them over the top. In the end everything turned on the decision of one elusive Irish MP, Frank Maguire, who did indeed arrive at the Palace of Westminster, lifting the hopes of Labour ministers. The wait before the announcement was filled with rumour and counter-rumour across the Chamber. It seemed endless. Our Chief Whip quietly gave me his own forecast. I said nothing and tried to look inscrutable, doubtless without success. Some on the Labour benches, hearing of Mr Maguire’s appearance, began to grin in anticipation of victory. But Mr Maguire had arrived only to abstain. And on 28 March 1979, James Callaghan’s Labour Government, the last Labour Government and perhaps the last ever, fell from office.

The obsequies across the despatch box were brief and almost formal. Mr Callaghan told the House that he would take his case to the country and that Parliament would be dissolved once essential business had been transacted. Replying for the Opposition, I said that we would co-operate in this to ensure a dissolution of Parliament at the earliest opportunity. A slight sense of anti-climax after all the excitement took hold of MPs. On all sides we felt that the Commons was for the moment no longer the centre of events. The great questions of power and principle would be decided elsewhere. I got up to leave the Chamber for a meeting of the Shadow Cabinet in my Commons room, and Willie Whitelaw, who could often sense my mood even before I realized it myself, put an encouraging arm around my shoulder.

The Shadow Cabinet meeting was brisk and businesslike. Our main concern was to prevent the Labour Government from scoring any parliamentary runs in the limited time left to it. In particular, we were strongly of the view that there should be no budget statement, whatever limited tax changes might be needed to keep public finance on an even keel. We resolved that in office we would honour the Labour Government’s pledge to increase pensions by the amounts which the Prime Minister had announced in the confidence debate. And we decided to press for an election on 26 April, the earliest possible date, knowing that Labour would wish to stretch out the timetable in the hope of restoring their party morale. (In the end we had to settle for 3 May.) Then, the business concluded, we had a celebratory drink and broke up.

Driving back to my home in Flood Street, Chelsea, with Denis, I reflected on the coming battle. We had a fight on our hands, of course; but barring accidents it was a fight we should be able to win. The Government’s defeat in the confidence debate symbolized a larger defeat for the Left. It had lost the public’s confidence as well as Parliament’s. The ‘winter of discontent’, the ideological divisions in the Government, its inability to control its allies in the trade union movement, an impalpable sense that socialists everywhere had run out of steam and ideas — all these gave a fin de siècle atmosphere to the approaching election campaign.

The Tory Party, by contrast, had used its period in Opposition to elaborate a new approach to reviving the British economy and nation. Not only had we worked out a full programme for government; we had also taken apprenticeships in advertising and learnt how to put a complex and sophisticated case in direct, clear and simple language. We had, finally, been arguing that case for the best part of four years, so our agenda would, with luck, strike people as familiar common sense rather than as a wild radical project. On all these scores I felt a reasonable confidence.

The prospects after an election victory were another matter. Britain in 1979 was a nation that had had the stuffing knocked out of it with progressively more severe belabourings over the previous hundred years. Beginning in the 1880s, our industrial supremacy had been steadily eroding in the face of first American, then German competition. To be sure, some part of this erosion was inevitable and even welcome. As the pioneer of the industrial revolution, Britain enjoyed a head start over its competitors that was bound to diminish as nations with larger populations and more abundant natural resources entered the race. But since their rise would mean the growth of large export markets for Britain as well as fierce competition in domestic and third markets — Imperial Germany, for instance, was Britain’s second largest export market in 1914 — this commercial rivalry was more blessing than curse.

What made it in the event more curse than blessing was Britain’s failure to respond to the challenge effectively. We invested less; we educated and trained our people to a lower standard; and we allowed our workers and manufacturers to combine in various cartels that restricted competition and reduced efficiency. Thoughtful observers had noticed these trends by the beginning of this century. Arthur Balfour’s Tory administration of 1902–5 reformed education, training and scientific research in response to a non-partisan public agitation that has come to be called the ‘quest for national efficiency’. But such attempts to revive Britain’s economy by social reform were battling against very profound social forces: the natural complacency of a nation grown used for more than a hundred years to ‘top dog’ status; the economic ‘cushion’ provided by Britain’s vast overseas investments (equal in 1914 to 186 per cent of GNP); the deceptive might of an empire which continued to expand until 1919 but which cost more to defend than it contributed to national wealth; and, of course, the exhausting national losses of the First and Second World Wars. As a result, the Britain that woke up on the morning after 1945 was not only a nation drained by two great military efforts in defence of common civilization, but also one suffering from a prolonged bout of economic and financial anaemia.

With the election of Attlee’s Labour Government, however, there began a sustained attempt, which lasted over thirty years, to halt this relative decline and kick-start a resurgence along lines which — whether we call them socialist, social democrat, statist or merely Butskellite[1] — represented a centralizing, managerial, bureaucratic, interventionist style of government. Already large and unwieldy after its expansion in two world wars, the British Government very soon jammed a finger in every pie. It levied high rates of tax on work, enterprise, consumption, and wealth transfer. It planned development at every level — urban, rural, industrial and scientific. It managed the economy, macro-economically by Keynesian methods of fiscal manipulation, micro-economically by granting regional and industrial subsidies on a variety of criteria. It nationalized industries, either directly by taking ownership, or indirectly by using its powers of regulation to constrain the decisions of private management in the direction the Government wanted. (As Arthur Shenfield put it, the difference between the public and private sectors was that the private sector was controlled by government, and the public sector wasn’t controlled by anyone.) It made available various forms of welfare for a wide range of contingencies — poverty, unemployment, large families, old age, misfortune, ill-health, family quarrels — generally on a universal basis. And when some people preferred to rely on their own resources or on the assistance of family and friends, the Government would run advertising campaigns to persuade people of the virtues of dependence.

The rationale for such a comprehensive set of interventions was, to quote the former Labour Cabinet minister, Douglas Jay, that ‘the gentleman in Whitehall really does know better what is good for the people than the people know themselves.’ A disinterested civil service, with access to the best and latest information, was better able to foresee economic eventualities and to propose responses to them than were the blind forces of the so-called ‘free market’.

Such a philosophy was explicitly advocated by the Labour Party. It gloried in planning, regulation, controls and subsidies. It had a vision of the future: Britain as a democratic socialist society, third way between east European collectivism and American capitalism. And there was a rough consistency between its principles and its policies — both tending towards the expansion of government — even if the pace of that change was not fast enough for its own Left.

The Tory Party was more ambivalent. At the level of principle, rhetorically and in Opposition, it opposed these doctrines and preached the gospel of free enterprise with very little qualification. Almost every post-war Tory victory had been won on slogans such as ‘Britain Strong and Free’ or ‘Set the People Free’. But in the fine print of policy, and especially in government, the Tory Party merely pitched camp in the long march to the left. It never tried seriously to reverse it. Privatization? The Carlisle State Pubs were sold off. Taxation? Regulation? Subsidies? If these were cut down at the start of a Tory government, they gradually crept up again as its life ebbed away. The welfare state? We boasted of spending more money than Labour, not of restoring people to independence and self-reliance. The result of this style of accommodationist politics, as my colleague Keith Joseph complained, was that post-war politics became a ‘socialist ratchet’ — Labour moved Britain towards more statism; the Tories stood pat; and the next Labour Government moved the country a little further left. The Tories loosened the corset of socialism; they never removed it.

Indeed, Keith’s formulation may have been too kind. After a reforming start, Ted Heath’s Government, in which we both served, proposed and almost implemented the most radical form of socialism ever contemplated by an elected British Government. It offered state control of prices and dividends, and the joint oversight of economic policy by a tripartite body representing the Trades Union Congress, the Confederation of British Industry and the Government, in return for trade union acquiescence in an incomes policy. We were saved from this abomination by the conservatism and suspicion of the TUC which perhaps could not believe that their ‘class enemy’ was prepared to surrender without a fight.

No theory of government was ever given a fairer test or a more prolonged experiment in a democratic country than democratic socialism received in Britain. Yet it was a miserable failure in every respect. Far from reversing the slow relative decline of Britain vis-à-vis its main industrial competitors, it accelerated it. We fell further behind them, until by 1979 we were widely dismissed as ‘the sick man of Europe’. The relative worsening of our economic position was disguised by the rising affluence of the West as a whole. We, among others, could hardly fail to benefit from the long economic expansion of the post-war western world led by the United States. But if we never had it so good, others — like Germany, France, Italy, Denmark — increasingly had it better. And, as the 1970s wore grimly on, we began to fail in absolute as well as relative terms.

Injections of monetary demand, which in the 1950s had produced a rise in real production and a fall in unemployment before causing a modest rise in prices, now went directly into high rates of inflation without so much as a blip on the charts for production and unemployment. State subsidies and direction of investment achieved progressively more inefficient industries and ever lower returns on capital. Laws giving protective immunity to the trade unions at the turn of the century were now abused to protect restrictive practices and overmanning, to underpin strikes, and to coerce workers into joining unions and participating in industrial action against their better judgement. Welfare benefits, distributed with little or no consideration of their effects on behaviour, encouraged illegitimacy, facilitated the breakdown of families, and replaced incentives favouring work and self-reliance with perverse encouragement for idleness and cheating. The final illusion — that state intervention would promote social harmony and solidarity or, in Tory language, ‘One Nation’ — collapsed in the ‘winter of discontent’ when the dead went unburied, critically ill patients were turned away from hospitals by pickets, and the prevailing social mood was one of snarling envy and motiveless hostility. To cure the British disease with socialism was like trying to cure leukaemia with leeches.

Another approach was needed — and for international reasons as well as domestic ones. Britain’s weakened economic position meant that its international role was bound to be cramped and strained as well. Our most painful experience of the country’s reduced circumstances was the failure of the Suez expedition in 1956. This was the result of political and economic weakness rather than military failure, because the Government withdrew a victorious force from the Canal Zone in response to a ‘run on the pound’ encouraged by the US Government. Whatever the details of this defeat, however, it entered the British soul and distorted our perspective on Britain’s place in the world.

We developed what might be called the ‘Suez syndrome’: having previously exaggerated our power, we now exaggerated our impotence. Military and diplomatic successes such as the war in Borneo — which preserved the independence of former British colonies against Indonesian subversion, helped to topple the anti-western dictator, Sukarno, and thus altered the long-term balance of power in Asia in our interest — were either dismissed as trivial or ignored altogether. Defeats, which in reality were the results of avoidable misjudgement, such as the retreat from the Gulf in 1970, were held to be the inevitable consequences of British decline. And comic opera enterprises, such as Harold Wilson’s ‘invasion’ of Anguilla in March 1969 (for once, ‘police action’ seems the right term) were gleefully seized upon to illustrate the reality of reduced British power. The truth — that Britain was a middle-ranking power, given unusual influence by virtue of its historical distinction, skilled diplomacy and versatile military forces, but greatly weakened by economic decline — seemed too complex for sophisticated people to grasp. They were determined to think themselves much weaker and more contemptible than was in fact the case, and refused all comfort to the contrary.

What made this more dangerous in the late 1970s was that the United States was undergoing a similar crisis of morale following its failure in Vietnam. In fact, the ‘Vietnam Syndrome’ was perhaps more debilitating than its Suez counterpart because it embodied the conviction that the United States was fortunately incapable of intervention abroad since such intervention would almost certainly be inimical to morality, the world’s poor, or the revolutionary tides of history. Hobbled by this psychological constraint and by a Congress also deeply influenced by it, two presidents saw the Soviet Union and its surrogates expand their power and influence in Afghanistan, southern Africa and Central America by subversion and outright military invasion. In Europe, an increasingly self-confident Soviet Union was planting offensive missiles in its eastern satellites, building its conventional forces to levels far in excess of NATO equivalents. It was also constructing a navy that would give it global reach.

A theory, coined after the collapse of communism to justify the policy of ‘doves’ in the Cold War, holds that because the Soviet Union was comparatively weak in the late 1980s, after almost a decade of western economic and military revival, it must have been a hollow threat in the late 1970s. Quite apart from the logical absurdity of placing a cause after its effect, the history of the Soviet Union from 1917 until just the other day refutes this argument. The Soviet Union was a power which deliberately inflicted economic backwardness on itself for political and ideological reasons, but compensated for this by concentrating resources on its military sector and by using the power this gave it to obtain further resources by force or the threat of force. It would extort subsidized credits from a West anxious for peace in periods of ‘thaw’, and seize new territories by subversion and conquest in periods of ‘chill’. By the late 1970s, the US, Britain and our European allies were faced by a Soviet Union in this second aggressive phase. We were neither psychologically, nor militarily, nor economically in shape to resist it.

Taken together, these three challenges — long-term economic decline, the debilitating effects of socialism, and the growing Soviet threat — were an intimidating inheritance for a new Prime Minister. I ought perhaps to have been more cowed by them in my imagination than in fact I was as we drove back to Flood Street. Perhaps if I could have foreseen the great roller-coaster of events in the next eleven years, described in this volume, I would have felt greater apprehension. Perversely, however, the emotion I felt was exhilaration at the challenge. We had thought, talked, written, discussed, debated all these questions — and now, if all went well in the next few weeks, we would finally get the chance to deal with them ourselves.

Some of this exhilaration came from meeting a wide range of my fellow-countrymen in four years as Opposition Leader. They were so much better than the statistics said: more energetic, more independent, more restive at the decline of the country, and more ready than many of my parliamentary colleagues to support painful measures to reverse that decline. We would incur more odium, I believed, by reneging on our promises of radical conservatism with a U-turn than by pressing firmly ahead through whatever attacks the socialists hurled against us. I sensed, as apparently Jim Callaghan also sensed in the course of the campaign, that a sea change had occurred in the political sensibility of the British people. They had given up on socialism — the thirty-year experiment had plainly failed — and were ready to try something else. That sea change was our mandate.

And there was a more personal factor. Chatham[2] famously remarked: ‘I know that I can save this country and that no one else can.’ It would have been presumptuous of me to have compared myself to Chatham. But if I am honest, I must admit that my exhilaration came from a similar inner conviction.

My background and experience were not those of a traditional Conservative prime minister. I was less able to depend on automatic deference, but I was also perhaps less intimidated by the risks of change. My senior colleagues, growing to political maturity in the slump of the 1930s, had a more resigned and pessimistic view of political possibilities. They were perhaps too ready to accept the Labour Party and union leaders as authentic interpreters of the wishes of the people. I did not feel I needed an interpreter to address people who spoke the same language. And I felt it was a real advantage that we had lived the same sort of life.[3] I felt that the experiences I had lived through had fitted me curiously well for the coming struggle.

I had grown up in a household that was neither poor nor rich. We had to economize each day in order to enjoy the occasional luxury. My father’s background as a grocer is sometimes cited as the basis for my economic philosophy. So it was — and is — but his original philosophy encompassed more than simply ensuring that incomings showed a small surplus over outgoings at the end of the week. My father was both a practical man and a man of theory. He liked to connect the progress of our corner shop with the great complex romance of international trade which recruited people all over the world to ensure that a family in Grantham could have on its table rice from India, coffee from Kenya, sugar from the West Indies and spices from five continents. Before I read a line from the great liberal economists, I knew from my father’s accounts that the free market was like a vast sensitive nervous system, responding to events and signals all over the world to meet the ever-changing needs of peoples in different countries, from different classes, of different religions, with a kind of benign indifference to their status. Governments acted on a much smaller store of conscious information and, by contrast, were themselves ‘blind forces’ blundering about in the dark, and obstructing the operations of markets rather than improving them. The economic history of Britain for the next forty years confirmed and amplified almost every item of my father’s practical economics. In effect, I had been equipped at an early age with the ideal mental outlook and tools of analysis for reconstructing an economy ravaged by state socialism.

My life, like those of most people on the planet, was transformed by the Second World War. In my case, because I was at school and university for its duration, the transformation was an intellectual rather than a physical one. I drew from the failure of appeasement the lesson that aggression must always be firmly resisted. But how? The ultimate victory of the Allies persuaded me that nations must co-operate in defence of agreed international rules if they are either to resist great evils or to achieve great benefits. That is merely a platitude, however, if political leaders lack the courage and farsightedness, or — what is equally important — if nations lack strong bonds of common loyalty. Weak nations could not have resisted Hitler effectively — indeed, those nations that were weak did not stand up to him. So I drew from the Second World War a lesson very different from the hostility towards the nation-state evinced by some post-war European statesmen. My view was — and is — that an effective internationalism can only be built by strong nations which are able to call upon the loyalty of their citizens to defend and enforce civilized rules of international conduct. An internationalism which seeks to supersede the nation-state, however, will founder quickly upon the reality that very few people are prepared to make genuine sacrifices for it. It is likely to degenerate, therefore, into a formula for endless discussion and hand-wringing.

I held these conclusions very tentatively at the war’s end. But they hardened into firm convictions in the 1940s and ’50s when, in the face of the Soviet threat, those institutions like NATO which represented international co-operation between strong nation-states proved far more effective in resisting that threat than bodies like the United Nations which embodied a superficially more ambitious but in reality weaker internationalism. My concern in 1979 was that the resistance of NATO to the latest Soviet threat was less adequate than I would have liked precisely because national morale in most NATO countries, including Britain, was so depressed. To resist the Soviet Union effectively it would be necessary to restore our own self-confidence (and, of course, our military strength) beforehand.

I recalled a similar collapse of national morale from my first days in active politics as a Young Conservative fighting the 1945–51 Labour Government. Some nostalgia for the austerity period apparently lingers. That is, I believe, an exercise in vicarious sacrifice, always more palatable than the real thing. Seen from afar, or from above, whether by a socialist gentleman in Whitehall or by a High Tory, socialism has a certain nobility: equal sacrifice, fair shares, everyone pulling together. Seen from below, however, it looked very different. Fair shares somehow always turn out to be small shares. Then, someone has to enforce their fairness; someone else has to check that this fairness does not result in black markets or under-the-counter favouritism; and a third person has to watch the first two to make sure that the administrators of fairness end up with no more than their fair share. All this promotes an atmosphere of envy and tittle-tattle. No one who lived through austerity, who can remember snoek, Spam, and utility clothing, could mistake the petty jealousies, minor tyrannies, ill-neighbourliness and sheer sourness of those years for idealism and equality. Even the partial dismantling of the ration-book state in the early 1950s came as an immense psychological relief to most people.

I particularly remember the political atmosphere of those years. Although the Tory rethinking associated with Rab Butler and the Conservative Research Department was important in reviving the Tory Party’s intellectual claims to office, there was a somewhat more robust and elementary rethinking going on at the grass roots. Our inspiration was less Rab Butler’s Industrial Charter than books like Colm Brogan’s anti-socialist satire, Our New Masters, which held up the moral pretensions of socialists to relentless and brilliant mockery, and Hayek’s powerful Road to Serfdom, dedicated to ‘the socialists of all parties’. Such books not only provided crisp, clear analytical arguments against socialism, demonstrating how its economic theories were connected to the then depressing shortages of our daily lives; but by their wonderful mockery of socialist follies, they also gave us the feeling that the other side simply could not win in the end. That is a vital feeling in politics; it eradicates past defeats and builds future victories. It left a permanent mark on my own political character, making me a long-term optimist for free enterprise and liberty and sustaining me through the bleak years of socialist supremacy in the 1960s and ’70s.

I was elected to the House of Commons in 1959 as the Member for Finchley, and later served in the Governments of Harold Macmillan, Alec Douglas-Home and Ted Heath. I enjoyed my early ministerial career: it was an absorbing education both in the ways of Whitehall and in the technicalities of pensions policy. But I could not help noticing a curious discrepancy in the behaviour of my colleagues. What they said and what they did seemed to exist in two separate compartments. It was not that they consciously deceived anyone; they were in fact conspicuously honourable. But the language of free enterprise, anti-socialism and the national interest sprang readily to their lips, while they conducted government business on very different assumptions about the role of the state at home and of the nation-state abroad. Their rhetoric was prompted by general ideas they thought desirable, such as freedom; their actions were confined by general ideas they thought inevitable, such as equality.

At the start, as an inexperienced young minister, I had to live with this. When we went into Opposition after the 1964 and 1966 defeats, I joined with Ted Heath in a rethinking of party policy which seemed to foreshadow much of what we later came to call Thatcherism. ‘Selsdon Man’ won the 1970 election on a radical Conservative manifesto.[4] But the Party’s conversion to its own philosophy proved skin-deep. After two years of struggling to put it into effect, the Heath Government changed course equally radically and adopted a programme of corporatism, intervention and reflation. I had my doubts, but as a first-time Cabinet minister I devoted myself principally to the major controversies of my own department (Education), and left more senior colleagues to get on with their own responsibilities. Yet all my instincts chafed against this. Perhaps because of my very unease, I noticed earlier than most that the very policies adopted as concessions to reality were also the least successful. Incomes policy, in addition to restricting people’s freedom, was invariably the prelude to a wages explosion. And that was one among many. Almost all the policies hawked about by ‘practical’ men on ‘pragmatic’ grounds turned out in the end to be highly impractical. Yet this fact never seemed to dent their enthusiasm. Indeed, Ted Heath responded to the defeat of his Government on the issue of incomes policy in the first 1974 election by proposing a still more ambitious scheme of interventionist government in the second.



While I was pondering on this mystery, Keith Joseph made a remark which reverberated powerfully in my mind. ‘I have only recently become a Conservative,’ he said, meaning that for his first twenty years in politics, many of them at the top, he had been a sort of moderate Fabian. I recognized both the truth of Keith’s remark and also that my own case was subtly different: I had always been an instinctive Conservative, but I had failed to develop these instincts either into a coherent framework of ideas or into a set of practical policies for government. And the faster the illusions of practical men crumbled before the onrush of reality, the more necessary it was to set about developing such a framework. Keith and I established the Centre for Policy Studies to do just that.

With Keith, I had come to see ever more clearly that what appeared to be technical arguments about the relationship between the stock of money and the level of prices went right to the heart of the question of what the role of government in a free society should be. It was the job of government to establish a framework of stability — whether constitutional stability, the rule of law, or the economic stability provided by sound money — within which individual families and businesses were free to pursue their own dreams and ambitions. We had to get out of the business of telling people what their ambitions should be and how exactly to realize them. That was up to them. The conclusions I reached fitted precisely those which my own instincts and experience themselves suggested. But I was aware that all too few of my colleagues in the Shadow Cabinet and in the House of Commons saw matters like this. I knew that I would have to go carefully to persuade them of what needed to be done and why.

The years in Opposition had often been frustrating, but at least they had given me the chance to see that our policies for government reflected my priorities and had been worked out in sufficient detail. We had published the outlines of our policy in The Right Approach in 1976 and The Right Approach to the Economy the following year. We had toyed with the idea of other similar documents, but had in fact come down in favour of speeches to set out our policy proposals. Behind the public pronouncements lay years of intense work by policy groups, usually chaired by the relevant Chief Shadow Spokesmen, whose conclusions were brought before the Leader’s Consultative Committee, as the Shadow Cabinet was formally known, where policies were discussed, modified, rejected or approved.

There were three points to which I had returned again and again during this period. First, everything we wished to do had to fit into the overall strategy of reversing Britain’s economic decline, for without an end to that decline there was no hope of success for our other objectives. This led on to the second point: all policies had to be carefully costed, and if they could not be accommodated within our public expenditure plans they would not be approved. Geoffrey Howe and his very talented Shadow Treasury team combed through everything in great detail to ensure this was the case. Finally, we had to stress continually that, however difficult the road might be and however long it took us to reach our destination, we intended to achieve a fundamental change of direction. We stood for a new beginning, not more of the same.

I was again asking the Conservative Party to put its faith in freedom and free markets, limited government and a strong national defence; I knew that we would be able to keep the Party united around this programme for the election campaign. But in the dark days which would precede tangible success I would have to struggle to ensure that this time the Conservative Government kept its nerve. If we failed, we would never be given another chance.

I was preoccupied by these reflections as we drove home, had a small family celebration at Flood Street, and finally turned in for the night. My last thought was: the die is cast. We had made every sensible preparation for the election and for governing afterwards. If honest endeavour were the test, we would not fail. In the end, however, Man proposes and God disposes. We might deserve success, but we could not command it. It was, perversely, a comforting thought. I slept well.

CHAPTER I

The Downing Street Years, 1979-1990

Over the Shop

First days and early decisions as Prime Minister

TO THE PALACE

We knew we had won by the early hours of Friday 4 May, but it was not until the afternoon that we gained the clear majority of seats we needed — 44 as it eventually turned out. The Conservative Party would form the next government.

There were many friends with me as we waited for the results to come in during those long hours in Conservative Central Office. But I can remember an odd sense of loneliness as well as anticipation when I received the telephone call which summoned me to the Palace. I was anxious about getting the details of procedure and protocol right; it is extraordinary how on really important occasions one’s mind often focuses on what in the cold light of day seem to be mere trivia. But I was haunted by tales of embarrassing episodes as one prime minister left and his successor entered office: Ted Heath’s departure from No. 10 was a case in point. I now could not help feeling sorry for James Callaghan, who just a little earlier had conceded victory in a short speech, both dignified and generous. Whatever our past and indeed future disagreements, I believed him to be a patriot with the interests of Britain at heart, whose worst tribulations had been inflicted by his own party.

At about 2.45 p.m. the call came. I walked out of Central Office through a crowd of supporters and into the waiting car, which drove Denis and me to the Palace on my last journey as Leader of the Opposition.

The Audience at which one receives the Queen’s authority to form a government comes to most prime ministers only once in a lifetime. The authority is unbroken when a sitting prime minister wins an election, and so it never had to be renewed throughout the years I was in office. All audiences with the Queen take place in strict confidence — a confidentiality which is vital to the working of both government and constitution. I was to have such audiences with Her Majesty once a week, usually on a Tuesday, when she was in London and sometimes elsewhere when the royal family were at Windsor or Balmoral.

Perhaps it is permissible to make just two points about these meetings. Anyone who imagines that they are a mere formality or confined to social niceties is quite wrong; they are quietly businesslike and Her Majesty brings to bear a formidable grasp of current issues and breadth of experience. And, although the press could not resist the temptation to suggest disputes between the Palace and Downing Street, especially on Commonwealth affairs, I always found the Queen’s attitude towards the work of the government absolutely correct.

Of course, under the circumstances, stories of clashes between ‘two powerful women’ were just too good not to make up. In general, more nonsense was written about the so-called ‘feminine factor’ during my time in office than about almost anything else. I was always asked how it felt to be a woman prime minister. I would reply: ‘I don’t know: I’ve never experienced the alternative.’

After the audience, Sir Philip Moore, the Queen’s Secretary, took me to his office down what are called the ‘the Prime Minister’s stairs’. I found my new principal private secretary, Ken Stowe, waiting there, ready to accompany me to Downing Street. Ken had come to the Palace with the outgoing prime minister, James Callaghan, barely an hour before. The civil service already knew a good deal about our policies because they carefully scrutinize an Opposition’s manifesto with a view to the hasty preparation of a new administration’s legislative programme. Of course, as I quickly learnt, some senior civil servants would need more than a conscientious reading of our manifesto and a few speeches truly to grasp the changes we firmly intended to make. Also, it takes time to build up relationships with staff which reach beyond the formal level of respect to trust and confidence. But the sheer professionalism of the British civil service, which allows governments to come and go with a minimum of dislocation and a maximum of efficiency, is something other countries with different systems have every cause to envy.

Denis and I left Buckingham Palace in the prime ministerial car: my previous car had already gone to Mr Callaghan. As we drove out through the Palace gates, Denis noticed that this time the Guards saluted me. In those innocent days before security had to become so much tighter for fear of terrorism, crowds of well-wishers, sightseers, press and camera crews were waiting for us in Downing Street itself. The crowds extended all the way up Downing Street and out into Whitehall. Denis and I got out of the car and walked towards them. This gave me the opportunity to run through in my mind what I would say outside No. 10.

When we turned to the cameras and reporters, the cheers were so deafening that no one in the street could hear what I was saying. Fortunately, the microphones thrust in front of me picked it up and carried it over the radio and television.

I quoted a famous prayer attributed to St Francis of Assisi, beginning, ‘where there is discord, may we bring harmony.’ Afterwards a good deal of sarcasm was expended on this choice, but the rest of the quotation is often forgotten. St Francis prayed for more than peace; the prayer goes on: ‘Where there is error, may we bring truth. Where there is doubt, may we bring faith. And where there is despair, may we bring hope’. The forces of error, doubt and despair were so firmly entrenched in British society, as the ‘winter of discontent’ had just powerfully illustrated, that overcoming them would not be possible without some measure of discord.

10 DOWNING STREET

Inside No. 10 all the staff had turned out to welcome us. I am assured that in the days before television there was a good practical reason for this ceremony, in that everyone in the building has to be able to recognize the prime minister personally, both for security reasons and for the smooth running of the many different services which are provided there. It is also true that within No. 10 there is almost a family atmosphere. The number of staff is relatively small — a total of between 70 or 80, though because of the shift system not all will be there at one time. That figure comprises those working in the Private Office, including the duty clerks who ensure that No. 10 is able to operate round the clock; the Press Office, where someone is also always on call; the ‘garden room girls’ who do the secretarial and paperwork; ‘confidential filing’, which sorts and files the enormous accumulations of documents; the parliamentary section which deals with Parliamentary Questions, Statements and Debates; the correspondence section where some four to seven thousand letters are received every week; the sections which deal with Church matters and with honours; the Political Office and the Policy Unit; and the messengers and other staff who keep the whole extended family supplied with tea and coffee and — above all — information from the outside world. It is an extraordinary achievement, and it requires people of unusual qualities and commitment, not least when you compare these relatively slender resources and modest surroundings with, for example, the White House with its 400 staff, or the German Chancellery with 500.

The prime minister’s private secretaries, headed by the principal private secretary, are crucial to the effective conduct of government. They are the main channel of communication between the prime minister and the rest of Whitehall, and they bear a heavy burden of responsibility. I was fortunate to have a succession of superb principal private secretaries over the years. Other private secretaries, specializing in economic or foreign affairs, also quickly acquired judgement, expertise and a knowledge of my thinking which allowed me to rely on them. Bernard Ingham, my press secretary, who arrived five months after I became Prime Minister, was another indispensable member of the team. I was told that Bernard’s politics had been Labour, not Conservative: but the first time we met I warmed to this tough, blunt, humorous Yorkshireman. Bernard’s outstanding virtue was his total integrity. An honest man himself, he expected the same high standards from others. He never let me down.

The hours at No. 10 are long. I never minded this. There was an intensity about the job of being Prime Minister which made sleep seem a luxury. In any case, over the years I had trained myself to do with about four hours a night. The Private Office too would often be working till 11 o’clock at night. We were so few that there was no possibility of putting work on someone else’s desk. This sort of atmosphere helps to produce a remarkably happy team, as well as a formidably efficient one. People are under great pressure, and there is no time for trivia. All the effort has to go into getting the work done. Mutual respect and friendly relations are often the result. This feature of No. 10 shapes people’s attitudes not only towards each other but towards the prime minister whom they all directly or indirectly serve. The cheers and clapping when a new prime minister arrives may perhaps be a traditional formality. But the tears and regrets when the outgoing prime minister makes his or her final departure are usually genuine.

Of course, I had visited No. 10 when I served as Education Secretary in Ted Heath’s Government of 1970–4 and, indeed, before that as a Parliamentary Secretary to the Minister of Pensions in Harold Macmillan’s and Alec Douglas-Home’s Governments. So I knew that the house is much larger than it looks from the outside because it is, in fact, two houses, one situated behind the other, joined by passages, with an extra wing linking the two buildings. But although familiar with the reception rooms and the Cabinet Room, I knew little of the rest of the building.

LIFE ‘OVER THE SHOP’

Number Ten is more than an office: it is intended to serve as the prime minister’s home. I never had any doubt that when the Callaghans had left I would move into the prime minister’s small flat at the top of the building. Every practical consideration suggested it, as well as my own taste for long hours of work. As we used to say, harking back to my girlhood in Grantham, I liked living over the shop. I was not able to move out of the house in Flood Street where my family had been living for the last ten years until the first week of June. But from then, until November 1990, Downing Street and Chequers were the twin centres of my personal and professional life.

The flat at No. 10 quickly became a refuge from the rest of the world, though on occasion a good deal of business was done there too. It was right at the top of the building — up in the rafters, in fact. But that was an advantage, for the stairs provided me with about the only real exercise I got. There were plenty of cupboards and a box room in which to dump everything until it found a more permanent place and into which piles of books and papers could be pushed when visitors were due.

Denis and I decided that we would not have any living-in domestic help. No housekeeper could possibly have coped with the irregular hours. When I had no other engagement, I would go up to the flat for a quick lunch of salad or poached egg on Bovril toast. But usually it was 10 or 11 o’clock at night when I would go into the kitchen and prepare something — we knew every way in which eggs and cheese could be served and there was always something to cut at in the fridge — while Denis poured me a night-cap.

The deep freeze was always kept well stocked and the microwave, when it appeared, did sterling work when sudden meals were required because we were working late into the night on a speech, a statement or decisions required for the Falklands campaign or the Libyan raid — or Resolutions at the UN Security Council. On these occasions we used the small dining-room in the flat, which was next to the even smaller kitchen; secretaries from the Political Office, not paid by the taxpayer, would always lend a hand.

Prime Minister or not, I never forgot that I was also MP for Finchley; nor, indeed, would I have wanted to. My monthly surgeries in the constituency and the correspondence which was dealt with from within No. 10 by my secretary, Joy Robilliard (who had been Airey Neave’s secretary until his death), kept me directly in touch with people’s worries. I always had the benefit of a first-class constituency agent and a strongly supportive constituency chairman, which as any MP knows makes a world of difference. I also kept up my own special interests which had been developed as a result of constituency work, for example as patron of the North London Hospice.

I could never have been Prime Minister for more than eleven years without Denis at my side. Always a powerful personality, he had very definite ideas about what should and should not be done. He was a fund of shrewd advice and penetrating comment. And he very sensibly saved these for me rather than the outside world, always refusing to give interviews. He never had a secretary or public relations adviser but answered between thirty and fifty letters every week in his own hand. With the appearance of the ‘Dear Bill’ letters in Private Eye he seemed to become half the nation’s favourite correspondent.

Denis shared my own fascination with politics — that, of course, is how we first met — but he also had his own outside interests, not least sport. He was passionately interested in rugby football — having indeed been a referee. He was also heavily involved in charities, an active member of the Sports Aid Foundation and of the Lord’s Taverners. Denis delivered many speeches on his favourite (nonpolitical) subjects. The one which for me best summed up his character and convictions was on sport and ethics and contained these lines:

The desire to win is born in most of us. The will to win is a matter of training. The manner of winning is a matter of honour.

Although Denis had a deep interest in everything military, and by choice would have stayed in the army at the end of the Second World War, the unexpected death of his father left him with no option but to return to run the family business, a paint and chemicals company. I am glad he did. For his industrial experience was invaluable to me. Not only was he familiar with the scientific side (something which we had in common); he was also a crack cost and management accountant. Nothing escaped his professional eye — he could see and sense trouble long before anyone else. His knowledge of the oil industry also gave me immediate access to expert advice when in 1979 the world experienced the second sudden oil price increase. Indeed, through him and our many friends I was never out of touch with industry and commerce.

Being prime minister is a lonely job. In a sense, it ought to be: you cannot lead from the crowd. But with Denis there I was never alone. What a man. What a husband. What a friend.

INSIDE DOWNING STREET

In some ways 10 Downing Street is an unusual sort of home. Portraits, busts and sculptures of one’s prime ministerial predecessors remind one of the nearly 250 years of history into which one has stepped.

As prime minister one has the opportunity to make an impact on the style of No. 10. Outside the flat I had displayed my own collection of porcelain, which I had built up over the years. I also brought with me a powerful portrait of Churchill from my room in the House of Commons. It looked down on those who assembled in the antechamber to the Cabinet Room. When I arrived, this area looked rather like a down-at-heel Pall Mall club, with heavy and worn leather furniture; I changed the whole feel by bringing in bookcases, tables and chairs from elsewhere in the building. There might be some difficult times to come in the Cabinet Room itself, but there was no reason why people should be made to feel miserable while they were waiting to go in.

Although it was not until I had been there some ten years that I had the most important redecorations done, I tried from the start to make the rooms seem more lived in. The official rooms had very few ornaments and when we arrived No. 10 looked rather like a ‘furnished house to let’, which in a way, I suppose, it was. Downing Street had no silver. Whenever there was an official dinner the caterers had to bring in their own. Lord Brownlow, who lived just outside Grantham, lent me silver from his collection at Belton House: it sparkled and transformed the No. 10 dining-room. One particular piece had a special meaning for me — a casket containing the Freedom of the Borough of Grantham, of which both the previous Lord Brownlow and later my father had been Mayor. The gardeners who kept St James’s Park brought in flowers. And happily, the flowers kept on coming, sent by friends and supporters, right until my last days at Downing Street, when you could hardly move down the corridors for a floral display which rivalled the Chelsea Flower Show. I also had the study repapered at my own expense. Its unappealing sage-green damask flock wallpaper was stripped off and replaced by a cream stripe, which was a much better background for some fine pictures.

I felt that Downing Street should have some works by contemporary British artists and sculptors, as well as those of the past. I had met Henry Moore when I was Secretary of State for Education and much admired his work. The Moore Foundation let No. 10 borrow one of his smaller sculptures which fitted perfectly in an alcove in the main hallway. Behind the sculpture was hung a Moore drawing, which was changed every three months; among my favourites were scenes of people sleeping in the London Underground during the Blitz.

I was conscious of being the first research scientist to become prime minister — almost as conscious, in fact, as I was of being the first woman prime minister. So I had portraits and busts of some of our most famous scientists placed in the small dining-room, where I often lunched with visitors and colleagues on less formal occasions.

I felt strongly that when foreign visitors came to Downing Street they should see something of Britain’s cultural heritage. When I came to No. 10 all the paintings in the main dining-room were copies. They were replaced. For example, I was lent a picture of George II, who had actually given No. 10 to Sir Robert Walpole, the first prime minister. On my foreign visits I quickly found that many of our embassies had superb works of art which added greatly to the impression people had of Britain. I wanted foreign visitors to No. 10 to be similarly impressed. I knew that there were large numbers of excellent British paintings in our museums which were not on show. I was able to borrow some Turners, a Raeburn from Scotland and some pictures from the Dulwich Gallery and these were hung in the White Drawing Room and the main reception room. I also had some fine portraits hung of the nation’s heroes; through them you could feel the continuity of British history. I recall on one occasion watching President Giscard d’Estaing gazing at two portraits in the dining-room — one of the young Nelson and the other of Wellington. He remarked on the irony. I replied that it was no less ironic that I should have to look at portraits of Napoleon on my visits to Paris. In retrospect, I can see that this was not quite a parallel. Napoleon lost.

On this first evening, though, I could do little more than make a brief tour of the main rooms of the building. Then I entered the Cabinet Room where I was greeted by more familiar faces — among them my daughter Carol. There was Richard Ryder who had been and would continue for a time as my political secretary, responsible for keeping me in touch with the Conservative Party in the country; David Wolfson (now Lord Wolfson) who acted as my Chief of Staff, bringing to bear his charm and business experience on the problems of running No. 10; Caroline Stephens (later to become Caroline Ryder) who became my diary secretary; Alison Ward (later Alison Wakeham) my constituency secretary; and Cynthia Crawford — known to all of us as ‘Crawfie’ — who acted as my personal assistant and who has stayed with me ever since. We did not waste much time in conversation. They were anxious to sort out who was to go to which office. I had exactly the same task in mind: the choice of my Cabinet.

CABINET-MAKING

Choosing a Cabinet is undoubtedly one of the most important ways in which a prime minister can exercise power over the whole conduct of government. But it is not always understood how real are the constraints under which the choices take place. By convention, all ministers must be members of either the Commons or the Lords, and there must not generally be more than three Cabinet members in the Lords, thus limiting the range of potential candidates for office. In addition one has to achieve distribution across the country — every region is easily convinced it has been left out. You must also consider the spectrum of party opinion.

Even so, the press expect the Cabinet of some twenty-two ministers to be appointed and the list to be published within about 24 hours — otherwise it is taken as a sure sign of some sort of political crisis. My American and other foreign friends are often astonished at the speed with which British Governments are formed and announced.

So I do not think that any of us at No. 10 relaxed much that day, which turned out to be a long one. (The previous night I had had no more than a couple of hours’ sleep, if that.) I received the usual detailed security briefing which is given to incoming prime ministers. Then I went upstairs to the study in which I was to spend so many hours in the years which followed. I was accompanied by Willie Whitelaw and our new Chief Whip, Michael Jopling. We began to sift through the obvious and less obvious names and slowly this most perplexing of jigsaws began to take shape. While Willie, the Chief Whip and I discussed the appointments to the Cabinet, Ken Stowe sought to contact those involved to arrange for them to come in the next day.

At 8.30 p.m. we took a break for a meal. Knowing that there were no canteen facilities at No. 10, my personal staff brought in a Chinese meal from a take-away and some fifteen of us sat down to eat in the large dining-room. (That, I think, was the last take-away while I was Prime Minister.)

I knew that the hardest battles would be fought on the ground of economic policy. So I made sure that the key economic ministers would be true believers in our economic strategy. Geoffrey Howe had by now thoroughly established himself as the Party’s chief economic spokesman. Geoffrey was regularly bullied in debate by Denis Healey. But by thorough mastery of his brief and an ability to marshal arguments and advice from different sources, he had shown that beneath a deceptively mild exterior he had the makings of the fine Chancellor he was to become. Some of the toughest decisions were to fall to him. He never flinched. In my view these were his best political years.

After becoming leader in 1975, I had considered appointing Keith Joseph as Shadow Chancellor. Keith had done more than anyone else to spell out in his speeches and pamphlets what had gone wrong with Britain’s economic performance and how it could be transformed. He has one of the best minds in politics. He is an original thinker, the sort of man who makes you understand what Burke meant when he wrote of politics being ‘philosophy in action’. He is rare in another way too: he combines humility, open-mindedness and unshakeable principle. He is deeply and genuinely sensitive to people’s misfortunes. Although he had no doubt of the Tightness of the decisions which we were to make, he knew that they meant unviable firms would collapse and overmanning become unemployment, and he cared about those who were affected — far more than did all our professionally compassionate critics. But such a combination of personal qualities may create difficulties in the cruel hurly-burly of political life which Chancellors above all must endure. So Keith took over at Industry, where he did the vital job that no one else could have done of altering the whole philosophy which had previously dominated the department. Keith was — and remains — my closest political friend.

John Biffen I appointed Chief Secretary to the Treasury. He had been a brilliant exponent in Opposition of the economic policies in which I believed and, before that, a courageous critic of the Heath Government’s U-turn. But he proved rather less effective than I had hoped in the gruelling task of trying to control public expenditure. His later performance as Leader of the House where the qualities required were acute political sensitivity, good humour and a certain style was far happier. John Nott became Secretary of State for Trade. He, too, had a clear understanding of and commitment to our policies of monetary control, low taxes and free enterprise. But John is a mixture of gold, dross and mercury. No one was better at analysing a situation and prescribing a policy to deal with it. But he found it hard, or perhaps boring, to stick with the policy once it had been firmly decided. His vice was second thoughts.



With Geoffrey and Keith helping me to give a lead to the Cabinet, however, and with the loyalty I knew I could rely upon from Willie and some of the others, I believed we could see the economic strategy through.

Otherwise, it seemed prudent in the light of our effective performance in Opposition and the election campaign to maintain a high degree of continuity between Shadow Cabinet and Cabinet posts. Willie Whitelaw became Home Secretary, and in that capacity and later as Leader of the Lords he provided me personally and the Government as a whole with shrewd advice based on massive experience. People were often surprised that the two of us worked so well together, given our rivalry for the leadership and our different outlook on economics. But Willie is a big man in character as well as physically. He wanted the success of the Government which from the first he accepted would be guided by my general philosophy. Once he had pledged his loyalty, he never withdrew it. He supported me steadfastly when I was right and, more important, when I wasn’t. He was an irreplaceable deputy prime minister — an office which has no constitutional existence but is a clear sign of political precedence — and the ballast that helped keep the Government on course.

But I felt that some changes in portfolios were required. I brought in the formidable Christopher Soames to be Leader of the House of Lords. Christopher was his own man, indeed excessively so, and thus better suited to solo performances — whether as Ambassador in Paris or the last Governor of Rhodesia — than to working in harmony with others. Peter Carrington, who had led the Lords skilfully in Opposition, became Foreign Secretary. His unrivalled experience of foreign affairs more than qualified him for the job. Peter had great panache and the ability to identify immediately the main points in any argument; and he could express himself in pungent terms. We had disagreements, but there were never any hard feelings. We were an effective combination — not least because Peter could always tell some particularly intractable foreign minister that whatever he himself might feel about a particular proposition, there was no way in which his prime minister would accept it. This generally proved convincing. I was determined, however, that at least one Foreign Office minister should have a good grounding in — and sound views on — economic policy. I had Peter bring in Nick Ridley.

Two other appointments excited more comment. To his surprise, I asked Peter Walker to be Minister of Agriculture. Peter had never made a secret of his hostility to my economic strategy. But he was both tough and persuasive, priceless assets in dealing with the plain absurdities of the European Community’s Common Agricultural Policy. His membership of the Cabinet demonstrated that I was prepared to include every strand of Conservative opinion in the new Government, and his post that I was not prepared to put the central economic strategy at risk.

That was perhaps less clear in my decision to keep Jim Prior on at Employment. I shall describe elsewhere the divergences of opinion between Jim and the rest of us during Opposition. Running on from that time there was a lively argument about trade union reform. We all agreed that trade unions had acquired far too many powers and privileges. We also agreed that these must be dealt with one step at a time. But when it came down to specific measures, there was deep disagreement about how fast and how far to move. Yet there was no doubt in my mind that we needed Jim Prior. There was still the feeling in the country, and indeed in the Conservative Party, that Britain could not be governed without the tacit consent of the trades unions. It was to be some years before that changed. If we had signalled the wholesale reform of the unions over and against their opposition at the outset, it would have undermined confidence in the Government and perhaps even provoked a challenge we were not yet ready to face. Jim was the badge of our reasonableness. He had forged good relations with a number of trade union leaders whose practical value he perhaps overestimated. But he was an experienced politician and a strong personality — qualities he subsequently demonstrated to great effect in Northern Ireland.

The law prescribes that only twenty-two people may receive the salaries of Cabinet ministers. My decision to appoint a Foreign Secretary from the House of Lords meant that we had to have an additional Foreign minister in the Cabinet to answer in the Commons. Members of the House of Commons in any case dislike seeing too many Members of the Lords in the Cabinet. They accept, of course, that the Leader of the Lords and the Lord Chancellor (in this case the distinguished and effervescent Quintin Hailsham) and possibly a third peer of obvious suitability must be in the Cabinet. But they demand that there must be a second Cabinet minister in the Commons to answer for any departmental head who is a peer. In this post I appointed Ian Gilmour. (A similar arrangement would later be necessary when David Young joined the Cabinet, first at Employment and then at Trade and Industry.) Ian remained at the Foreign Office for two years. Subsequently, he was to show me the same loyalty from the back-benches as he had in government.

I was anxious to have Angus Maude in the Cabinet to benefit from his years of political experience, his sound views, and his acid wit. He would handle government information. At the end of the day, we were short of one place. As a result, Norman Fowler, as Minister of State at Transport, was not able to be an official member of the Cabinet, although he attended all our meetings.

By about 11 p.m. the list of Cabinet was complete and had been approved by the Queen. I went upstairs to thank the No. 10 telephonists who had had a busy time arranging all the appointments for the following day. Then I was driven home.

On Saturday I saw the future Cabinet one by one. It all went smoothly enough. Those who were not already Privy Councillors were sworn in at Buckingham Palace.[5] By Saturday afternoon the Cabinet was appointed and the names announced to the press. That gave every new minister the weekend to draft instructions to his department to put into effect the manifesto policies. In fact there was slightly more time than usual, since Monday was a Bank Holiday.

OTHER APPOINTMENTS

On Saturday night we completed the list of junior ministers, and I saw or telephoned them on the Sunday. Many of these would later enter Cabinet, including Cecil Parkinson, Norman Tebbit, Nick Ridley and John Wakeham. The best junior ministers were always in great demand by their seniors: a really good ministerial team is of enormous importance in keeping effective political control over the work of a government department. There were some sixty posts to be filled. But the whole Government had been appointed and announced within 48 hours of my entering Downing Street.

My last and best appointment was of Ian Gow as my Parliamentary Private Secretary (or PPS). Ian’s combination of loyalty, shrewdness and an irrepressible sense of fun was to see us all through many difficult moments. He was an instinctive parliamentarian who loved every aspect of the House of Commons. In private conversation he had the ability to draw everyone into the political circle and make them feel theirs was the vital contribution. In public his speeches were marked by a deadpan humour which could reduce both sides of the House to tears of laughter. We remained close friends after Ian’s principled resignation over the Anglo-Irish agreement which he opposed from a standpoint of undiluted Unionism. His murder by IRA terrorists in 1990 was an irreplaceable loss.

Monday was, as I have noted, a Bank Holiday. I came into No. 10 and took the opportunity to complete a number of nonministerial appointments. John Hoskyns arrived in the afternoon to become head of my Policy Unit.[6] John’s background was in business and computers; but over and above that experience, he had strong powers of analysis and had helped formulate our economic strategy in Opposition. He propagated the theory that a ‘culture of decline’ was the ultimate cause of many of Britain’s economic problems. In government he repeatedly compelled ministers to relate each problem to our overall strategy of reversing that decline. He kept our eye on the ball.

That same day I saw Kenneth Berrill, the head of the Central Policy Review Staff (CPRS) or ‘Think-Tank’. The CPRS had originally been set up by Ted Heath as a source of long-term policy advice for the Government, at a time when there were fewer private think-tanks, fewer special advisers in government and a widespread belief that the great questions of the day could be resolved by specialized technical analysis. But a government with a firm philosophical direction was inevitably a less comfortable environment for a body with a technocratic outlook. And the Think-Tank’s detached speculations, when leaked to the press and attributed to ministers, had the capacity to embarrass. The world had changed, and the CPRS could not change with it. For these and other reasons, I believe that my later decision to abolish the CPRS was right and probably inevitable. And I have to say that I never missed it.

I also asked Sir Derek Rayner to set up an Efficiency Unit that would tackle the waste and ineffectiveness of government. Derek was another successful businessman, from what everyone used to describe as my favourite company, Marks & Spencer. The two of us used to say that in politics you judge the value of a service by the amount you put in, but in business you judge it by the amount you get out. We were both convinced of the need to bring some of the attitudes of business into government. We neither of us conceived just how difficult this would prove.

On the same day I saw Sir Richard O’Brien on a matter which illustrates the extraordinary range of topics which crossed my desk in these first days. Sir Richard was not only chairman of the Manpower Services Commission, the QUANGO which supervised the nation’s training schemes,[7] but also chairman of the committee to advise the prime minister on the appointment of a new Archbishop of Canterbury. (Donald Coggan had announced his intention to retire; his successor had to be found by the end of the year.) He informed me about the committee’s work and gave me an idea of when it would be ready to make its recommendations. In view of my later relations with the hierarchy, I could wish that Sir Richard had combined his two jobs and established a decent training scheme for bishops.

It was the nation’s financial and economic affairs, however, which required immediate attention. Sir John Hunt, the Cabinet Secretary, gave a reassuring impression of quiet efficiency which turned out to be entirely accurate. He had prepared a short brief on the most urgent questions, such as public sector pay and the size of the Public Sector Borrowing Requirement (PSBR), and compiled a list of imminent meetings with other heads of government. Each of these required early decisions to be made. My last appointment that Monday afternoon was with Geoffrey Howe to discuss his forthcoming budget. That night — most unusually — I managed to get back to Flood Street for dinner with the family. But there was no let-up in activity. I had a stack of papers to read on every conceivable subject.

Or so it seemed. The ceaseless flow of red despatch boxes had begun — anything up to three each evening and four at weekends. But I set to with a will. There is never another opportunity like that given to a new government with a fresh electoral mandate to place its stamp firmly on public affairs, and I was determined to take advantage of it.

EARLY DECISIONS

On Tuesday at 2.30 p.m. we held our first Cabinet meeting. It was ‘informal’: no agenda had been prepared by the Cabinet Secretariat and no minutes were taken. (Its conclusions were later recorded in the first ‘formal’ Cabinet which met on the customary Thursday morning.) Ministers reported on their departments and the preparations they had made for forthcoming legislation. We gave immediate effect to the pledges in our manifesto to see that both the police and the armed forces were properly paid. As a result of the crisis of morale in the police service, the fall in recruitment and talk of a possible police strike, the Labour Government had set up a committee on police pay under Lord Justice Edmund Davies. The committee had devised a formula to keep police pay in line with other earnings. We decided that the recommendations for pay increases due for implementation on 1 November should be brought forward. This was duly announced the following day, Wednesday. We similarly decided that the full military salary recommended by the latest Report of the Armed Forces Pay Review Body should be paid in full, as from 1 April.

At that first informal Cabinet we began the painful but necessary process of shrinking down the public sector after years in which it was assumed that it should grow at the expense of the private sector. So we imposed an immediate freeze on all civil service recruitment, though this would later be modified and specific targets for reduction set. We started a review of the controls imposed by central on local government, though here, too, we would in due course be forced down the path of applying still tougher, financial controls, as the inability or refusal of local councils to run services efficiently became increasingly apparent.

Pay and prices were an immediate concern, as they continued to be throughout those economically troubled early years. Professor Hugh Clegg’s Commission on Pay Comparability had been appointed by the Labour Government as a respectable means of bribing public sector workers not to strike with postdated cheques due to be presented after the election. The Clegg Commission was a major headache, and the pain became steadily more acute as the cheques fell due.[8]

As regards pay bargaining in the nationalized industries, we decided that the responsible ministers should stand back from the process as far as possible. Our strategy would be to apply the necessary financial discipline and then let the management and unions directly involved make their own decisions. But that would require progress in complementary areas — competition, privatization and trade union reform — before it was to show results.

There would also have to be a fundamental overhaul of the way in which prices were controlled by such interventionist measures as the Price Commission, government pressure, and subsidy. We were under no illusion: price rises were a symptom of underlying inflation, not a cause of it. Inflation was a monetary phenomenon which it would require monetary discipline to curb. Artificially holding down increases merely reduced investment and undermined profits — both already far too low for the country’s economic health — while spreading a ‘cost plus’ mentality through British industry.

At both Cabinets, I concluded by emphasizing the need for collective responsibility and confidentiality between ministers. I said I had no intention of keeping a diary of Cabinet discussions and I hoped that others would follow my example. Inconvenient as that may be for the authors of memoirs, it is the only satisfactory rule for government. But I had to repeat this warning against leaks many times.

We were still in the first week of government, but we had to decide the content of the first Queen’s Speech. This was largely the task of ‘QL’,[9] the Cabinet committee chaired by Willie Whitelaw, which was responsible for making recommendations to the Cabinet on legislation for inclusion in the Queen’s Speech. We were fortunate that our manifesto commitments had been so clear; the Queen’s Speech almost wrote itself.

In all this activity of government-making and policy-setting, however, I knew I could not afford to neglect the back-benchers. After twenty years in the House of Commons, through six Parliaments, I had seen how suddenly trouble could arise and the business of the House be put in jeopardy. So on Tuesday evening, before Parliament assembled the following day, I had invited the Chairman and Officers of the 1922 Committee for a talk, to celebrate our victory and discuss the work of the coming parliamentary session.[10] The name — which is usually abbreviated to ‘the ‘22’ — commemorates the events of that year, when Conservative back-benchers forced the resignation of Lloyd George’s coalition Government, bringing about a general election and the return of a Conservative administration under Bonar Law. It should remind anyone who is inclined to doubt it of the ‘22’s importance to government. Even in less stormy times, a heavy legislative programme is only possible when there is a good working understanding between No. 10, the ‘22, the Whips’ Office and the Leader of the House.

Wednesday 9 May saw the new parliament assemble for the election of the Speaker. The Speaker of the previous parliament had been George Thomas, a former Labour Cabinet minister, and he was the unanimous choice to continue in that office. My respect for George Thomas, already great, was to grow over the years. He was a deeply committed Christian with a shining integrity that gave him as Speaker a special kind of authority — but in my speech of congratulation, something else was on my mind: I had to keep remembering not to refer to Jim Callaghan as Prime Minister.

VISIT OF HELMUT SCHMIDT

On the following day Members of Parliament assembled-to take the oath. But Thursday was a day of more than ceremonial importance (indeed there was one ceremony which somehow got lost in the rush — Denis’s birthday). It was on that day that Helmut Schmidt, the West German Federal Chancellor, arrived in London on an official visit originally arranged with the Labour Government — the first head of a foreign government to visit me as Prime Minister.

There had been some discussion about whether this visit should go ahead. But I was particularly keen that it should. I had met Herr Schmidt in Opposition and had soon developed the highest regard for him. He had a profound understanding of the international economy on which — although he considered himself a socialist — we were to find ourselves in close agreement. In fact, he understood a good deal better than some British Conservatives the importance of financial orthodoxy — the need to control the money supply and to restrain public spending and borrowing so as to allow room for the private sector to grow. But he had to be told straight away that although Britain wanted to play a vigorous and influential role in the European Community, we could not do so until the problem of our grossly unfair budgetary contribution had been resolved.[11] I saw no reason to conceal our views behind a diplomatic smokescreen; indeed I wanted to convince Helmut Schmidt of both the reasonableness of our position and the strength of our determination precisely because he and West Germany exercised great influence in the Community. So I used every occasion to get the message across.

The speech which I delivered that Thursday evening at our dinner in honour of the Federal Chancellor was my first opportunity to set out my new approach towards the European Community. I rejected right from the start the idea that there was something ‘un-European’ in demanding that inequities be sorted out. In a passage which caught the media’s attention, I said:

It has been suggested by some people in this country that I and my Government will be a ‘soft touch’ in the Community. In case such a rumour may have reached your ears, Mr Chancellor, from little birds in Smith Square, Belgrave Square, or anywhere else, it is only fair that I should advise you frankly to dismiss it (as my colleagues did long ago!).[12] I intend to be very discriminating in judging what are British interests and I shall be resolute in defending them.

At our joint press conference the following day we were asked about our personal relations, since Helmut Schmidt was a socialist who had always referred to Mr Callaghan as ‘Jim’. When I stressed the similarity of our policies, he intervened: ‘Don’t go too far, Prime Minister, and do not spoil my relations with my own Party, please!’

WORKING WEEKEND

On Saturday I flew to Scotland to address the Scottish Conservative Conference, something I always enjoyed. Life is not easy for Scottish Tories; nor was it to become easier. Unlike English Conservatives, they are used to being a minority party, with the Scottish media heavily slanted against them. But these circumstances gave Scottish Conservatives a degree of enthusiasm and a fighting spirit which I admired, and which also guaranteed a warm-hearted and receptive audience. Some leading Scottish Tories, though a small minority, still hankered after a kind of devolved government, but the rest of us were deeply suspicious of what that might mean to the future of the Union. While reaffirming our decision to repeal Labour’s Scotland Act, I indicated that we would initiate all-party talks ‘aimed at bringing government closer to the people’. In the event we did so by rolling back the state rather than by creating new institutions of government.

My main message to the conference, however, was a deliberately sombre one, intended for Britain as a whole. That same day an inflation figure of 10.1 per cent had been published. It would rise further. I noted:

The evil of inflation is still with us. We are a long way from restoring honest money and the Treasury forecast when we took over was that inflation was on an upward trend. It will be some considerable time before our measures take effect. We should not underestimate the enormity of the task which lies ahead. But little can be achieved without sound money. It is the bedrock of sound government.

As our economic and political difficulties accumulated in the months ahead, no one could claim that they had not been warned.

We arrived back at RAF Northolt and drove to Chequers where I spent my first weekend as Prime Minister. I do not think anyone has stayed long at Chequers without falling in love with it. From the time of its first prime ministerial occupant, David Lloyd George, it has been assumed that the holders of that office would not necessarily have their own country estates. For that reason, Lord Lee’s gift to the nation of his country house for the use and relaxation of prime ministers marks as much a new era as did the Reform Bills.

When I arrived as Prime Minister, the curator was Vera Thomas, who knew and loved each perfectly polished piece of furniture, each historic portrait, each glittering item of silver. Chequers itself is an Elizabethan house, but has been substantially rebuilt over the years. The centre of the house is the great hall, once a courtyard, enclosed at the end of the last century, where in winter a log fire burns, giving a slight tang of woodsmoke through every room.

Thanks to the generosity of Walter Annenberg, US Ambassador to Britain from 1969–74, Chequers has a covered swimming pool. But in the years I was there it was only used in the summer. Early on I learned that it cost £5,000 a year to heat. By saving this money we had more which could be spent on the perpetual round of necessary repairs to the house. Perhaps the most important work I had done was the cleaning of the Elizabethan panelling in the dining-room and the Great Parlour. Once the layers of varnish and dirt had gone, we discovered some beautiful marquetry beneath that had not been seen for many years.

The group which gathered for Sunday lunch just ten days after our election victory was fairly typical of a Chequers weekend. My family were there, Denis, Carol, Mark. Keith Joseph, Geoffrey and Elspeth Howe, the Pyms and Quintin Hailsham represented, as it were, the Government team. Peter Thorneycroft and Alistair McAlpine were present from Central Office — the latter having been, as Conservative Party Treasurer, one of the most effective fund raisers of all time and one of my closest and most loyal friends. David Wolfson, Bryan Cartledge (my private secretary) with their wives, and our friends Sir John and Lady Tilney completed the party.

We were still in a mood to celebrate our election victory. We were away from the formality of No. 10. We had completed the initial task of getting the Government on the road. We still had that spirit of camaraderie which the inevitable disputes and disagreements of government were bound to sap. The meal was a light-hearted and convivial one. It was perhaps an instance of what a critic was later to call ‘bourgeois triumphalism’.

But we were aware that there was a long road ahead. As my father used to say:

It’s easy to be a starter, but are you a sticker too?

It’s easy enough to begin a job, it’s harder to see it through.

At 7 p.m. that evening Denis and I returned to London to begin my second full week as Prime Minister. Work was already piling up, with boxes coming to and from Chequers. I recall once hearing Harold Macmillan tell an eager group of young MPs, none more eager than Margaret Thatcher, that prime ministers (not having a department of their own) have plenty of spare time for reading. He recommended Disraeli and Trollope. I have sometimes wondered if he was joking.

CHAPTER II

The Downing Street Years, 1979-1990

Changing Signals

Domestic politics in the first six months — until the end of 1979

To turn from the euphoria of election victory to the problems of the British economy was to confront the morning after the night before. Inflation was speeding up; public sector pay was out of control; public spending projections were rising as revenue projections fell; and our domestic problems were aggravated by a rise in oil prices that was driving the world into recession.

The temptation in these circumstances was to retreat to a defensive redoubt, adopting a policy of false prudence: not to cut income tax when revenues were already threatening to fall; not to remove price controls when inflation was already accelerating; not to cut industrial subsidies in the teeth of a rising recession; and not to constrain the public sector when the private sector seemed too weak to create new jobs. And, indeed, these adverse economic conditions did slow down the rate at which we could hope to regenerate Britain. But I believed that was all the more reason to redouble our efforts. We were running up the ‘Down’ escalator, and we would have to run a great deal faster if we were ever to get to the top.

THE FIRST QUEEN’S SPEECH

Our first opportunity to demonstrate to both friends and opponents that we would not be deterred by the difficulties was the Queen’s Speech. The first Loyal Address (as it is also called) of a new government sets the tone for its whole term of office. If the opportunity to set a radical new course is not taken, it will almost certainly never recur. And the world realizes that underneath all the brave new rhetoric, it is Business As Usual. I was determined to send out a clear signal of change.

By the end of the debates on the Address it was evident that the House of Commons could expect a heavy programme, designed to reverse socialism, extend choice and widen property ownership. There would be legislation to restrict the activities of Labour’s National Enterprise Board and to begin the process of returning state-owned businesses and assets to the private sector. We would give council tenants the right to buy their homes at large discounts, with the possibility of 100 per cent mortgages. There would be partial deregulation of new private sector renting. (Decades of restrictive controls had steadily reduced the opportunities for those who wished to rent accommodation and thereby retarded labour mobility and economic progress.) We would repeal Labour’s Community Land Act — this attempt to nationalize the gains accruing from development had created a shortage of land and pushed up prices. We removed the obligation on local authorities to replace grammar schools and announced the introduction of the Assisted Places Scheme, enabling talented children from poorer backgrounds to go to private schools. These were the first of what I hoped would be many steps to ensure that children from families like my own had the chance of self-improvement. We would, finally, curb what were often the corrupt and wasteful activities of local government direct labour organizations (usually socialist controlled).

When I spoke in the Queen’s Speech debate, two points attracted particular attention: the abolition of price controls and the promise of trade union reform. Most people expected that we would keep price controls in some form, at least temporarily. After all, the regulation of prices, wages and dividends had been one of the means by which, throughout most of the western world, governments sought to extend their powers and influence and to alleviate the inflationary effects of their own financially irresponsible policies.

But there was plenty of evidence, gathered by the Confederation of British Industry (CBI), that while price controls had a minimal effect on inflation, they certainly damaged industrial profitability and investment. One of our first discussions in ‘E’ Committee — the economic strategy committee of the Cabinet, of which I was the chairman — was whether we should press ahead with early and total abolition of the Price Commission. Some ministers argued that with inflation accelerating, the coming rise in prices would be blamed on the Commission’s abolition and therefore on the government. This argument had some force. But John Nott, the Trade Secretary, was keen to act swiftly; and he was right. It would have been still more difficult to abolish the Commission later in the year when prices were already rising faster. Perhaps the first time our opponents truly realized that the Government’s rhetorical commitment to the market would be matched by practical action was the day we announced abolition. We made public at the same time our decision to strengthen the powers of the Director-General of Fair Trading and the Monopolies and Mergers Commission to act against monopoly pricing, including prices set by nationalized industries.



I was also keen to use my speech in the debate to put an authoritative stamp on our trade union reforms. Jim Prior’s preferred strategy was one of consultation with the trade unions before introducing the limited reforms of trade union law which we had proposed in Opposition. But it was vital to show that there would be no back-tracking from the clear mandate we had received to make fundamental changes. Initially, we proposed three reforms in the Queen’s Speech. First, the right to picket — which had been so seriously abused in the strikes of the previous winter and for many years before — would be strictly limited to those in dispute with their employer at their own place of work; thus secondary picketing would become unlawful. Second, we were committed to changing the law on the closed shop, under which employees had effectively been compelled to join a union if they wished to obtain or keep a job, and which at that time covered some five million workers. Those who lost their jobs for this reason must in future be entitled to proper compensation. Third, public funds would be made available to finance postal ballots for union elections and other important union decisions: we wanted to discourage votes by show of hands — the notorious ‘car park’ votes — and the sharp practice, rigging and intimidation which had become associated with ‘trade union democracy’.

In retrospect it seems extraordinary that such a relatively modest programme was represented by most trade union leaders and the Labour Party as an outright attack on trade unionism. In fact, we would have to return — and soon — to the issue of trade union reform. As time went by, it became increasingly clear to the trade union leaders and to the Labour Party that not only did we have huge public support for our policies, but that the majority of trade unionists supported them too, because their families were being damaged by strikes which many of them had not voted for and did not want. We were the ones in touch with the popular mood.

This was my first major parliamentary performance as Prime Minister, and I emerged unscathed. Nowadays, prime ministers make relatively few speeches in the House. The most important are speeches, like this, which deal with the government’s legislative programme, speeches answering motions of censure, statements after international summits and debates which arise at times of international tension. This may be one reason why it is often difficult — over and above the moral blow of losing an election and leaving office — for prime ministers to revert to becoming Leaders of the Opposition, a job which demands more speech-making, but with less thorough briefing. Certainly, Jim Callaghan, who had never led his party in opposition, looked uncomfortable in that role. It was no surprise to me when he decided in October 1980 to step down from a position which his own left wing was making increasingly intolerable for him.

But it is Questions to the Prime Minister every Tuesday and Thursday which are the real test of your authority in the House, your standing with your party, your grip of policy and of the facts to justify it. No head of government anywhere in the world has to face this sort of regular pressure and many go to great lengths to avoid it; no head of government, as I would sometimes remind those at summits, is as accountable as the British prime minister.

I always briefed myself very carefully for Questions. One of the private secretaries, my political secretary, my Parliamentary Private Secretary and I would go through all the likely issues which might come up without any notice. This is because the questions on the Order Paper only ask about the prime minister’s official engagements for that day. The real question is the supplementary whose subject matter may vary from some local hospital to a great international issue or to the crime statistics. Each department was, naturally, expected to provide the facts and a possible reply on points which might arise. It was a good test of the alertness and efficiency of the Cabinet minister in charge of a department whether information arrived late — or arrived at all; whether it was accurate or wrong, comprehensible or riddled with jargon. On occasion the results, judged by these criteria, were not altogether reassuring. However, little by little I came to feel more confident about these noisy ritual confrontations, and as I did so my performance became more effective. Sometimes I even enjoyed them.

THE 1979 BUDGET

The next watershed in the Government’s programme was the budget. Our general approach was well known. Firm control of the money supply was necessary to bring down inflation. Cuts in public expenditure and borrowing were needed to lift the burden on the wealth-creating private sector. Lower income tax, combined with a shift from taxation on earning to taxation on spending, would increase incentives. However, these broad objectives would have to be pursued against a rapidly worsening economic background at home and abroad.

Britain’s rate of inflation was running at 10 per cent when we took office, and rising. (The three-month rate was 13 per cent.) This reflected the lack of financial discipline in Labour’s last years, when they broke free of the constraints imposed on them by the International Monetary Fund (IMF) in 1976. There was also a pay explosion as powerful unionized groups rode roughshod over the remains of Labour’s incomes policy. And internationally, oil prices had begun to rise sharply, and were already about 30 per cent higher than six months earlier, as a result of the continuing turmoil in Iran after the fall of the Shah in 1978. This had an increasingly damaging effect on the international economy.

The oil price rise increased worldwide inflationary pressures. But it also had a perverse and, at least in the short term, damaging effect on the domestic economy because sterling was a petro-currency and it appreciated accordingly. Sterling was strong for other reasons too. Following the election there had been a general increase in confidence in the British economy. We were also pursuing a tight monetary policy, requiring high interest rates (interest rates had to go up by two percentage points at the time of the budget), and this attracted foreign capital. As a result of all these factors, sterling continued to rise.

We were perhaps better prepared for taking the required economic decisions than any previous Opposition. We had, every year, conducted our own internal public expenditure exercises, seeking to identify cuts wherever possible and putting figures on them. We had also, through the ‘Stepping Stones’ group of Shadow ministers and advisers of which John Hoskyns had been the main inspiration, worked out how to combine our policies to achieve the overall objective of reversing Britain’s economic decline.

But no amount of advance preparation could change the unpleasant facts of finance or the budget arithmetic. The two crucial discussions on the 1979 budget took place on 22 and 24 May between me and the Chancellor. Geoffrey Howe was able to demonstrate that to reduce the top rate of income tax to 60 per cent (from 83 per cent), the basic rate to 30 per cent (from 33 per cent), and the PSBR to about £8 billion (a figure we felt we could fund and afford) would require an increase in the two rates of VAT of 8 per cent and 12.5 per cent to a unified rate of 15 per cent. (The zero rate on food and other basics would be unchanged.) I was naturally concerned that this large shift from direct to indirect taxation would add about four percentage points onto the Retail Price Index (RPI).

This would be a once and for all addition to prices (and so it would not be ‘inflationary’ in the correct sense of the term which means a continuing rise in prices). But it would also mean that the RPI, by which people generally measured living standards and all too frequently adjusted wage demands, would double in our first year of office.[13] I was also concerned that too many of the proposed public spending cuts involved higher charges for public services. These too would have a similar effect on the RPI. I recalled at my first budget meeting with Geoffrey that Rab Butler as Chancellor in 1951 had introduced his tax cuts gradually. Should we do the same? Geoffrey stuck to his guns. We went away to consider the question further.

At our second meeting we decided to go ahead. Income tax cuts were vital, even if they had to be paid for by raising VAT in this large leap. The decisive argument was that such a controversial increase in indirect taxes could only be made at the beginning of a parliament, when our mandate was fresh. If we waited, hoping that either economic growth or cuts in public expenditure would do the job for us, we might never achieve the structural shift needed to boost incentives. We must establish the direction of our strategy from the start and do it boldly. By the end of that second meeting the shape of the budget which Geoffrey Howe announced on 12 June had effectively been set.

It was generally agreed to be a dramatic reforming budget even by those opposed to us, like the Guardian newspaper, which described it as ‘the richest political and economic gamble in post-war parliamentary history’. Its main provisions followed closely our discussions at the end of May: a cut in the basic rate of income tax from 33 to 30 per cent (with the highest rate cut from 83 to 60 per cent), tax allowances increased by 9 per cent above the rate of inflation, and the introduction of a new, unified rate of VAT at 15 per cent.

Apart from the budget’s big income tax cuts, however, we were able to reduce or remove controls on a number of areas of economic life. Pay, price and dividend controls had gone. Industrial Development Certificates, Office Development Permits and a range of circulars and unnecessary planning controls were also removed or modified. (Geoffrey Howe’s second budget in 1980 was to announce the creation of Enterprise Zones, where businesses could benefit from tax breaks and rate exemption to attract investment and promote employment in run-down areas.)

But I took greatest personal pleasure in the removal of exchange controls — that is the abolition of the elaborate statutory restrictions on the amount of foreign exchange British citizens could acquire. These had been introduced as an ‘emergency measure’ at the start of the Second World War and maintained by successive governments, largely in the hope of increasing industrial investment in Britain and of resisting pressures on sterling. The overwhelming evidence was that they no longer achieved either of the objectives previously expected of them (if in fact they ever had done). With sterling buoyant and Britain beginning to enjoy the economic benefits of North Sea oil, the time had come to abolish them entirely. They were duly removed in three stages — some at the time of the Budget, a few others later in July, and the remainder in October (with the temporary exception of controls relating to Rhodesia). The legislation itself stayed on the Statute Book until 1987, but no further use was made of it. Not only did the ending of exchange controls increase the freedom of individuals and businesses; it encouraged foreign investment in Britain and British investment abroad, which has subsequently provided a valuable stream of income likely to continue long after North Sea oil runs out.

But not every capitalist had my confidence in capitalism. I remember a meeting in Opposition with City experts who were clearly taken aback at my desire to free their market. ‘Steady on!’, I was told. Clearly, a world without exchange controls in which markets rather than governments determined the movement of capital left them distinctly uneasy. They might have to take risks.

We had also been distracted throughout our budget discussions by the worrying level of public sector pay rises. Here we had limited freedom of manoeuvre. Hard, if distasteful, political calculations had led us to commit ourselves during the election campaign to honour the decisions of the Clegg Commission on those claims which had already been formally referred to it. The issue was now whether to refer the unsettled claims of other groups to Clegg, or to seek some new method of dealing with the problem.

It was quite clear to me that in the longer run there were only two criteria which could apply to pay in the public as in the private sector. The first was affordability: ultimately, it was the taxpayer and ratepayer who had to pay public sector wage bills, and if that burden passed beyond a certain limit, the country’s economy would suffer. The second was recruitment: pay had to be sufficient to attract and retain people of the right ability and professional qualifications. However, the whole bureaucratic apparatus designed to achieve ‘comparability’ between public and private sector pay — not just the Clegg Commission but the Civil Service Pay Research Unit and other bodies — obscured these simple criteria.

We decided to submit evidence to the Commission about the necessity of keeping departmental budgets within reasonable limits and what that meant for public sector pay. But we also decided to keep the Commission in existence for the time being, and indeed refer new claims to it on an ad hoc basis. We thought at the time that the Commission might actually make lower pay awards than ministers themselves might have had to concede. But that turned out to be a highly optimistic assessment and, as a result, we underestimated the public expenditure cost of Clegg.

In retrospect, we made a mistake. Even at the time, the warning signs were evident. Geoffrey Howe told me that, allowing for some success in buying out restrictive practices, average pay could well be at least two to three percentage points higher than the recent June Forecast had assumed. In the end, it was not until August 1980 that we announced that Clegg would be abolished after its existing work had been completed. Its last report was in March 1981. The fact remains, however, that the momentum of public sector pay claims created by inflation, powerful trade unions and an over-large public sector was not going to be halted, let alone reversed, all at once.

CIVIL SERVICE REFORM

Whatever the short-term difficulties, I was determined at least to begin work on long-term reforms of government itself. If we were to channel more of the nation’s talent into wealth-creating private business, this would inevitably mean reducing employment in the public sector. Since the early 1960s, the public sector had grown steadily, accounting for an increased proportion of the total workforce.[14] Unlike the private sector, it actually tended to grow during recessions while maintaining its size during periods of economic growth. In short, it was shielded from the normal economic disciplines which affect the outside world.

The size of the civil service reflected this. In 1961 the numbers in the civil service had reached a post-war low of 640,000; by 1979 they had grown to 732,000. This trend had to be reversed. Within days of taking office, as I have noted, we imposed a freeze in recruitment to help reduce the Government’s pay bill by some 3 per cent. Departments came up with a range of ingenious reasons why this principle should not apply to them. But one by one they were overruled. By 13 May 1980 I was able to lay before the House our long-term targets for reducing civil service numbers. The total had already fallen to 705,000. We would seek to reduce it to around 630,000 over the next four years. Since some 80,000 left the civil service by retirement or resignation every year, it seemed likely that our target could be achieved without compulsory redundancies. We were, in fact, able to do it.

But the corollary of this was that we should reward outstanding ability within the civil service appropriately. The difficulties of introducing pay rates related to merit proved immense; we made progress, but it took several years and a great deal of pushing and shoving.

Similarly, I took a close interest in senior appointments in the civil service from the first, because they could affect the morale and efficiency of whole departments. I was determined to change the mentality exemplified in the early 1970s by a remark attributed to the then head of the civil service, that the best that the British could hope for was the ‘orderly management of decline’. The country and the civil service itself were sold short by such attitudes. They also threatened a waste of scarce talent.

I was enormously impressed by the ability and energy of the members of my private office at No. 10. I usually held personal interviews with the candidates for private secretary for my own office. Those who came were some of the very brightest young men and women in the civil service, ambitious and excited to be at the heart of decision-making in government. I wanted to see people of the same calibre, with lively minds and a commitment to good administration, promoted to hold the senior posts in the departments. Indeed, during my time in government, many of my former private secretaries went on to head departments. In all these decisions, however, ability, drive and enthusiasm were what mattered; political allegiance was not something I took into account.

Over the years, finally, certain attitudes and work habits had crept in that were an obstacle to good administration. I had to overcome, for instance, the greater power of the civil service unions (which in addition were increasingly politicized). The pursuit of new and more efficient working practices — such as the application of information technology — was being held up by union obstruction. In a department like Health and Social Security where we needed to get the figures quickly to pay out benefits, these practices were disgraceful. But eventually we overcame them. There was even a problem at the very top. Some Permanent Secretaries had come to think of themselves mainly as policy advisers, forgetting that they were also responsible for the efficient management of their departments.

To see for myself, I decided to visit the main government departments to meet as many people as possible and discuss how they were tackling their priorities. I devoted most of a day to each department. In September 1979, for instance, I had a useful discussion with civil servants at the Department of Health and Social Security. I brought up the urgent need to dispose of surplus land held by the public sector. I was keen that where hospitals had land which they did not need they should be able to sell it and retain the proceeds to spend on improving patient care. There were arguments for and against this, but one argument advanced on this occasion, which was all too symptomatic of what had gone seriously wrong, was that this was somehow unfair on those hospitals which did not have the good fortune to have surplus land. We clearly had a long way to go before all the resources of the Health Service would be used efficiently for the benefit of patients. But this visit planted seeds that later grew into the Griffiths[15] reforms of NHS management and, later still, the internal market reforms of the Health Service in 1990.

Similarly, on 11 January the following year, I visited the Civil Service Department (CSD). This was an enlightening, if not an encouraging, experience. The CSD was set up in 1968, following publication of the Fulton Committee Report, with responsibility for the management and pay of the civil service. To the nucleus of the Pay and Management Divisions of the Treasury were added the Civil Service Commission and the newly established Civil Service College. The CSD employed 5000 people, headed by Sir Ian Bancroft, the senior Permanent Secretary. Although as Prime Minister I was in overall charge of the civil service, the duties were exercised by a Minister of State and the CSD had always lacked credibility and power in Whitehall.

Not without cause. When I arrived at the CSD, many of my worst fears about the civil service were confirmed. I met able and conscientious people attempting to manage and monitor the activities of civil servants in departments of which they knew little, in policy areas of which they knew even less. Because the staff of other departments were aware of the disadvantages under which the CSD worked, they took scant notice of the recommendations they received from it. After this visit, the only real question in my mind was whether responsibility for the CSD’s work should be redistributed to the Treasury or the Cabinet Office.

Inevitably, my visits to government departments were not as long as I would have liked. There were other limits too on what I could learn on these occasions — particularly that senior civil servants might feel inhibited from speaking freely when their ministers were present. Consequently, after discussing the matter with Sir Ian Bancroft and having a word with Cabinet colleagues, I invited the Permanent Secretaries to dinner at No. 10 on the evening of Tuesday 6 May 1980. There were twenty-three Permanent Secretaries, Robin Ibbs (Head of the CPRS), Clive Whitmore, my principal private secretary, David Wolfson and myself around the dining-table.

This was one of the most dismal occasions of my entire time in government. I enjoy frank and open discussion, even a clash of temperaments and ideas, but such a menu of complaints and negative attitudes as was served up that evening was enough to dull any appetite I may have had for this kind of occasion in the future. The dinner took place a few days before I announced the progamme of civil service cuts to the Commons, and that was presumably the basis for complaints that ministers had damaged civil service ‘morale’.

What lay still further behind this, I felt, was a desire for no change. But the idea that the civil service could be insulated from a reforming zeal that would transform Britain’s public and private institutions over the next decade was a pipe-dream. I preferred disorderly resistance to decline rather than comfortable accommodation to it. And I knew that the more able of the younger generation of civil servants agreed with me. So, to be fair, did a few of the Permanent Secretaries present that night. They were as appalled as I was, and retreated into their shells. It became clear to me that it was only by encouraging or appointing individuals, rather than trying to change attitudes en bloc, that progress would be made. And that was to be the method I employed.[16]

PUBLIC SPENDING

Such an approach, however, would take years. We were dealing with crises on a weekly basis during the second half of 1979 as we scanned the figures on public spending and borrowing, against the background of an international economy slipping faster and faster into recession. Our first task was to make whatever reductions we could for the current financial year, 1979–80. Ordinarily, public spending decisions were made by government during the summer and autumn of the previous year and announced in November. Even though we were several months into the current financial year, we had to begin by reopening the public expenditure plans we had inherited from the Labour Government. We would announce our new public expenditure plans with the Budget. The scope for cuts was limited, partly because of this, partly because of our own election pledges, and partly because some changes we wanted to make required legislation.

We had promised to increase resources for defence and law and order, and not to cut spending on the National Health Service. We were also pledged to raise retirement pensions and other long-term social security benefits in line with prices — and to honour Labour’s promised pension increases that year. We might have taken cash from the contingency reserve, but if there was to be any cash to take we would have to resist extra claims by government departments — no easy matter. Another possible device would be to squeeze the volume of public expenditure by holding to the existing cash limits, even though inflation had risen since they were set by the previous government. But that in turn would mean holding the line on public sector pay — again, no easy matter. Receipts from privatization might help us to balance the books. But although government-owned shares in British Petroleum could be sold at once, the sale of state-owned assets on a really large scale would need legislation. Much of the work on public expenditure cuts which we had done in Opposition had been overtaken by events, the most damaging of which was the generosity of Professor Clegg. In short, we seemed to be boxed in.

But I was determined that we should make as vigorous a start as possible. I felt that the Treasury’s first proposals for cuts in the current financial year, 1979–80, did not go far enough. Indeed, I had a meeting less than a fortnight after entering No. 10 with Treasury officials at which I told them so very firmly. Accordingly, John Biffen brought forward revised proposals that cut a further £500 million off the total, and I made it clear to colleagues that that was the least we could do.

In the end we were able to announce £3.5 billion of economies along with Geoffrey’s Budget. In addition to the measures we were originally considering, we sought savings on industrial support, particularly regional development grants, on energy and on holding back projected spending on development land and public investment.

We also decided to raise prescription charges, which had remained at the same level for eight years during which time prices had risen two and a half times. (The wide range of exemptions would be maintained.) This had not been our first choice for savings from the DHSS budget. We had originally discussed extending the number of so-called ‘waiting days’ which must lapse before an applicant is entitled to sickness or unemployment benefit from three to six days. We decided not to press ahead with this, but nevertheless the idea found its way into the press in one of the leaks that were continually to bedevil our discussions of public spending.

No sooner had we agreed savings for the current year, 1979–80, than the still more difficult task was upon us of planning public expenditure for 1980–81 and subsequent years. In July 1979, when the crucial decisions were being hammered out, we had a series of particularly testing (and testy) Cabinet discussions on the issue. Our goal was what it had been in Opposition, that is to bring public expenditure back to the 1977–8 level in real terms. We hoped to achieve this by 1982–3. But, in spite of the reductions we had made, public expenditure was already threatening to run out of control. That in turn would have serious consequences for the PSBR, and thus for interest rates, in the longer term for taxation, and ultimately for our entire programme.

Nonetheless — or perhaps for that very reason — there was strong opposition from some ministers to the cuts. These were the so-called ‘wets’ who over the next few years took their opposition to our economic strategy to the very brink of resignation.[17] Some argued that the strategy had been overtaken by events; and indeed for those who had not heard that Keynes was dead, the prospect of reducing expenditure and curbing borrowing as we and the world sank into recession was undoubtedly alarming. Others put up a hundred and one reasons why any particular cut was out of the question. Defence, for instance, would not be able to achieve its sacrosanct target of 3 per cent growth a year. Or the DES would not be able to make economies in the time available (in spite of declining pupil numbers.) Or the Department of Employment would have to find money in response to the mounting jobless total. In the light of this opposition, I instructed a small group of key ministers to discuss with departments the proposals for reductions and report back to Cabinet.

Geoffrey Howe was superbly stolid in resisting this pressure. Later in July he set out for colleagues the precise implications of a failure to agree the £6.5 billion reductions he was proposing. He also dispelled some of the misunderstandings. Ministers had to recognize that we were not cutting to the bone, but merely reining in the increases planned by Labour and compensating for other increases that the deepening recession had made almost inevitable.

Labour’s previously announced plans would have increased expenditure in 1979–80 by some 2 to 3 per cent over the level of 1978–9, and in 1980–81 by some 5 per cent, on the transparently erroneous assumption that the economy would grow by between 2 per cent and 3 per cent a year. Not that Labour was unique in this. The Treasury used to produce a fascinating chart, the so-called ‘porcupine’, in which the forecasts of economic growth in successive public spending white papers shot ever upwards, looking a little like porcupine quills, while the actual course of economic growth stubbornly remained on an only gently rising gradient. This was a literally graphic illustration of the overoptimistic assumptions on which past public expenditures plans had been based year after year. I was determined not to add another set of spikes.

In this case, Labour’s plans would have involved expenditure of a further £5 billion in 1980–81 to be financed out of growth that was not happening. Moreover, this overshoot had been aggravated by a rate of pay increase in the public sector which was forecast to be 18 per cent, and which which would cost another £4.5 billion. To offset these increasing obligations we had to find substantial cuts. We had to make reductions of £6.5 billion in the expenditure plans for 1980–81, just to hold the PSBR in that year down to £9 billion. That figure was in itself too high. But the ‘wets’ continued to oppose the cuts both in Cabinet and in the indecent obscurity of leaks to the Guardian.



It was not until the end of July that the Cabinet brought itself to take the necessary decisions. The conclusions were extensively leaked. Even so, we decided the wisest course was to wait for the autumn before publishing the full figures in the Autumn Statement. We had made some tough decisions in those first three months. It was, however, only a start.

Over the summer the economic situation worsened. On my return from my first Commonwealth summit in Lusaka in August, Geoffrey Howe presented me with a general survey of the economy which he rightly described as ‘not very cheerful’. Unemployment was likely to begin to rise as the international recession deepened. Inflation was accelerating. Our competitiveness had worsened as a high pound and high wage costs put industry under increasing pressure. We became increasingly worried about the implications of pay rises for unemployment and bankruptcies. I asked that we should collect and circulate examples of excessive pay awards, which priced goods out of the market and destroyed jobs.

In September we again returned to public spending. We not only had to publish the conclusions we had agreed in July, but also our plans for the years up to 1983–4. And that meant more economies. We decided on a renewed drive to cut waste and reduce civil service numbers. We also agreed sharp increases in the price of electricity and gas (which had been artificially held down by Labour) that would come into effect in October 1980. Electricity would rise by 5 per cent, and gas by 10 per cent, over and above inflation.

The 1980–81 Public Expenditure white paper was duly published on 1 November. These public spending plans honoured our pledges to provide more resources for defence, law and order and social security (reflecting the year’s record pensions uprating). They would also hold the public spending total for 1980–81 at the same level as 1979–80. In spite of the fact that this reduction of some £3.5 billion from Labour’s plans was denounced as draconian, it really was not large enough. That was evident not only to me, but also to the financial markets, already concerned about excess monetary growth.

Here, too, we seemed to be running up the ‘Down’ escalator. On 5 November Geoffrey Howe came to see me. The money supply figures were well above target, principally because the PSBR and bank lending were both higher than expected. The PSBR had been affected by one strike which held up payment of telephone bills and by another which had disrupted VAT payments. Companies were borrowing to finance wage settlements they could not afford. Interest rates overseas were on the way up. And the public spending figures had also, as I suspected, proved too high for the markets. A financial crisis threatened. In the days of Denis Healey this would have elicited a fiscal package or ‘mini-budget’. We had no hesitation in rejecting this approach. Higher interest rates or lower public spending, not tinkering with fiscal demand management, were the appropriate response.

On 15 November we accordingly raised Minimum Lending Rate (MLR — the successor to Bank Rate) to 17 per cent. (Measured by the RPI, inflation at this time was running at 17.4 per cent.) Other measures to help fund the PSBR were also announced.

Of course, the Opposition had a field day, attacking our whole strategy as misguided and incompetent. The fact of the matter was not that our strategy was wrong but that we had yet to apply it sufficiently rigorously and get a grip on public spending and borrowing. That in turn was increasing the pressure on the private sector through higher interest rates. Keith Joseph had warned of this in Opposition in his Stockton Lecture in 1976, which was later published as a pamphlet under the title Monetarism is not Enough, in which he said:

Though, it is true, there is always talk of cutting public expenditure, it has remained almost entirely talk. Cutting public expenditure has come to mean juggling with figures… But whereas cuts in public expenditure rarely eventuate, squeezes on the private sector are ‘for real’. The interest rate is increased, bank lending is contracted, taxes are raised, other old-fashioned deflationary measures are used. The private sector is punished for the state sector’s profligacy.

I knew that we had to break this vicious spiral. We had to make further attempts to curb public spending and borrowing — no matter how difficult — because otherwise private enterprise would have to bear a crushing burden of public sector profligacy. Geoffrey and I accordingly decided that we had no alternative but to seek further spending reductions in 1980–81 and in subsequent years. He brought forward a paper, first to me and a small group of ministers and then to the full Cabinet, proposing an extra £i billion reduction in 1980 — 81, and £2 billion in each of the following years. From what I had seen of departmental ministers’ fierce defence of their own budgets, I knew that this would provoke trouble. But I also knew that the great majority in the Party were determined to see the strategy succeed. So I sought to take my case to them.

I had already told the Party Conference in Blackpool on 12 October:

It is your tax which pays for public spending. The government have no money of their own. There is only taxpayers’ money.

Just before the November rise in interest rates, I had used the platform of the Lord Mayor’s Banquet to reaffirm that we would hold to our monetary policy in the fight against inflation:

We shall take whatever action is necessary to contain the growth of the money supply. This government, unlike so many of its predecessors, will face up to economic realities.

I now made it clear that we would return to the attack on excessive public spending. The Party Leader’s speeches to the 1922 Committee are an opportunity to appeal directly for support for the Government’s policies. On Thursday 13 December, I told the ‘22 that we needed to ‘have another go at getting expenditure down’ and was well received. A little less than a month later, I agreed to be interviewed by Brian Waiden on Weekend World and said of public spending that ‘if we got a billion off, I would be quite pleased’. The atmosphere quickly became more propitious for a renewed drive against overspending.

In Cabinet on 24 January 1980 we returned to a discussion of public expenditure for 1980–81 and the years to 1983–4. Higher oil prices, almost no growth projected in industrialized countries in the coming year, and the steel strike[18] adding to the PSBR, formed a sombre background to our deliberations. I knew that these next two years would be crucial. We had to take the required action on inflation and public spending in that time: then as growth resumed, we would again be in a position to move towards lower taxes and lower interest rates. But the ‘wets’ launched a fierce attack on our policy and the theory underlying it. It was argued, for instance, that the PSBR should be allowed to rise during a recession. Our response was that it was a very different matter when the PSBR started out by being far too high — the legacy of a Labour Government which had doubled the national debt during its period in office. Individual ministers defended their bailiwicks. Jim Prior argued persuasively for a continuation of the special employment measures.[19] We agreed but decided that we would have to take another look at the the burgeoning social security budget.

A week later, Cabinet resumed its discussion — and focused closely on social security.[20] Both for public spending reasons and in order to deal with the ‘Why Work?’ problem (namely, the disincentive to work created by the small disparity between in-work and out-of-work incomes), we had already agreed to tax short-term social benefits as soon as possible. In the interim we decided to reduce these benefits — unemployment, sickness, injury, maternity and invalidity benefits — by 5 per cent. The so-called earnings related supplement (payable with certain short-term benefits) would be reduced from January 1981, and abolished in January 1982. We also decided to introduce legislation to deal with the vexed question of supplementary benefit for strikers’ families. This was not only expensive to provide; it shifted the balance of power in industrial disputes against employers and responsible union leaders. In future, assessments would assume that £12 a week was provided either from the striker’s own resources, or from union strike pay. We finally agreed a number of disparate savings on housing, on expenditure by the Property Services Agency, and from a rise in prescription charges to £1.

When Geoffrey Howe delivered his second budget on 26 March 1980,[21] he was able to announce that we had found over £900 million in further savings in 1980–81 (though part of that was absorbed by an increase in the contingency reserve). Overall, at current prices this was over £5 billion less than Labour had planned to spend. In the circumstances, it was a formidable achievement, but also a fragile one. As the economy sank deeper into recession, there would be fresh demands, some of them difficult to resist, for higher public spending on programmes like social security and the loss-making nationalized industries. In a paper he wrote for me in June 1979, John Hoskyns had used a memorable phrase about governments ‘trying to pitch [their] tent in the middle of a landslide’. As we moved into the 1980–81 public expenditure round and the forecasts worsened, I could hear the canvas strain and the ground rumble.

IRISH TERRORIST OUTRAGES

The second half of 1979, though dominated by economic policy and by the intense round of diplomatic activity,[22] was also a time darkened by terrorism. Barely a fortnight after entering No. 10 I had delivered the address at the Memorial Service for Airey Neave.[23] Not long afterwards, IRA terrorists struck another blow which shocked people around the world.

I was at Chequers for the Bank Holiday Monday of 27 August when I learnt of the shocking murder of Lord Mountbatten and, that same day, of eighteen British soldiers. Lord Mountbatten was killed by an explosion on board his boat off the coast at Mullaghmore, County Sligo. Three other members of his party were killed and three injured.

In an even greater defiance of civilized custom, the murder of our soldiers was even more contemptible. Eighteen were killed and five injured in a double explosion triggered by remote controlled devices at Narrow Water, Warrenpoint, near Newry, close to the border with the Republic. The IRA had exploded the first bomb and then waited for those who came by helicopter to rescue their comrades before detonating the second. Among those murdered by the second bomb was the Commanding Officer of the Queen’s Own Highlanders.

Words are always inadequate to condemn this kind of outrage: I decided immediately that I must go to Northern Ireland to show the army, police and civilians that I understood the scale of the tragedy and to demonstrate our determination to resist terrorism. Having returned to London from Chequers, I stayed there on Tuesday to allow those involved to deal with the immediate aftermath while I held two meetings with colleagues to discuss the security requirements of the province. That evening I wrote personally to the families of the soldiers who had died; such letters are not easy to write. There were, alas, to be many more of them during my time in office.

I flew to Ulster on Wednesday morning. For security reasons, the visit was given no prior publicity. I went first to the Musgrave Park Hospital in Belfast and talked to the injured soldiers, then visited the Lord Mayor of Belfast at City Hall. I had insisted that I must meet the ordinary citizens of the city, and since the best way to do so was to walk through Belfast’s shopping centre, that is where I went next. I shall never forget the reception I received. It is peculiarly moving to receive good wishes from people who are suffering. One never knows quite how to respond. But I formed then an impression I have never had reason to revise, that the people of Ulster will never bow to violence.

After a buffet lunch with soldiers of all ranks from 3 Brigade, I received a briefing from the army and then departed by helicopter to what is rightly referred to as the ‘bandit country’ of South Armagh. Dressed in a camouflage jacket worn by a female soldier of the Ulster Defence Regiment (a ‘Greenfinch’), I saw the bomb-battered Crossmaglen RUC station — the most attacked RUC-Army post in the Province — before running back to the helicopter. It is too dangerous for either security force personnel or helicopters to remain stationary in these parts.

My final visit was to Gough barracks, the RUC base in Armagh, followed by a return flight to the mainland at six that evening. It is difficult to convey the courage of the security forces whose job it is to protect the lives of us all from terrorism. In particular, members of the UDR, who do their military duty living in the community where they and their families are always vulnerable, show a quiet, matter-of-fact heroism which I have never ceased to admire.

Back in London, we continued our urgent discussions on security. There were two major questions. How were we to improve the direction and co-ordination of our security operations in the province? And how were we to get more co-operation in security matters from the Irish Republic? On the first, we decided that the difficulties of coordinating intelligence gathered by the RUC and the army would be best overcome by instituting a new high-level security directorate. On the second, we agreed that I would tackle the Irish Prime Minister, Jack Lynch, when he arrived shortly for Lord Mountbatten’s funeral.

Accordingly, we arranged a day’s talks with Mr Lynch and his ministerial colleagues at No. 10 on the afternoon of Wednesday 5 September. The first session was a tête-à-tête between the two prime ministers; then at 4 p.m. we were joined by our respective ministers and officials.

Mr Lynch had no positive suggestions of his own to make at all. When I stressed the importance of extradition of terrorists from the Republic, he said that the Irish constitution made it very difficult. Mr Lynch pointed out that under Irish law terrorists could be tried in the Republic for offences committed in the UK. So I asked that RUC officers — who would have to amass the evidence for such prosecutions — be able to attend interrogations of terrorist suspects in the south. He said they would ‘study’ it. I knew what that meant: nothing doing. I asked that we extend the existing arrangements by which our helicopters could overfly the border across which terrorists seemed able to come and go almost at will. He said they would study that as well. I sought more effective liaison both between the RUC and the Garda, and between the British and Irish armies. Same response. At one point I got so exasperated that I asked whether the Irish Government was willing to do anything at all. They agreed to a further meeting between ministers and officials, but there was a fatal absence of the political will to take tough measures. I was disappointed, though not altogether surprised. However, I was determined to keep up the pressure on the Republic. I could not forget that by the time of my visit to Northern Ireland 1,152 civilians and 543 members of the security forces had been killed as a result of terrorist action.

We also lost no opportunity to use the revulsion the killings provoked in the US to inform public opinion there about the realities of life in Ulster. The emotions and loyalties of millions of decent Irish-Americans are manipulated by Irish Republican extremists, who have been able to give a romantic respectability to terrorism that its sordid reality belies. As a result, there has been a continuing flow of funds and arms which helps the IRA to continue its campaign, whereas in 1979 we were faced with the absurd situation that the purchase of 3,000 revolvers for the RUC was held up by a state department review under pressure from the Irish Republican lobby in Congress.

I visited the province again on Christmas Eve. This time I met members of the Northern Ireland prison service as well as the security forces. For the prison officers, too, faced grave danger and worked often in appalling conditions. From March 1978 they had been dealing with the consequences of the so-called ‘dirty protest’[24] by over 350 terrorist prisoners, seeking ‘special category status’ and privileges. Seventeen prison officers had been murdered in the past four years, seven of them in the previous three months. It made the troubles of a political life seem very trivial.

CHAPTER III

The Downing Street Years, 1979-1990

Into the Whirlwind

Foreign affairs during the first eighteen months in 1979–1980

BRITAIN AND THE EUROPEAN COMMUNITY

I had made a number of political visits abroad before I became Prime Minister, travelling on various occasions to the Soviet Union, the United States, Germany, Israel and Australia. I enjoyed these tours — as long as there was plenty to read, interesting people to meet and we were doing useful work. But it is certainly a very different experience going abroad as Prime Minister, accompanied everywhere by a highly professional team of advisers, on what is usually a hectic schedule, and meeting heads of government on equal terms.

Familiarizing myself with this new role was not made easier by the fact that within weeks of coming into office I had to face the problem of Britain’s excessive contribution to the European Community (EC) budget — something which required tough bargaining from a difficult position, and the use of diplomatic tactics which many people thought less than diplomatic. Nor was our budget contribution the only source of contention within the EC, even in those early days. It became increasingly clear to me that there were real differences of vision about Europe’s future.

Shortly after I took office the first direct elections to the European Parliament were held. (In those days the Parliament was formally known as ‘the European Assembly’, which perhaps gives a more accurate impression of its limited role.) In the course of the campaign I made a speech in which I emphasized my vision of the Community as a force for freedom:

We believe in a free Europe, not in a standardized Europe. Diminish that variety within the member states, and you impoverish the whole Community…

I went on:

We insist that the institutions of the European Community are managed so that they increase the liberty of the individual throughout the continent. These institutions must not be permitted to dwindle into bureaucracy. Whenever they fail to enlarge freedom the institutions should be criticized and the balance restored.

There has, however, always been a contrary tendency in the Community — interventionist, protectionist, and ultimately federalist. The sharpness of the contrast between these two views of Europe would only become fully apparent as the years went by. But it was never far beneath the surface of events and I was always aware of it.

I was also very much aware of another feature of the EC, which had been apparent from its earliest days, continued to shape its development and diminished Britain’s capacity to influence events — namely, the close relationship between France and Germany. Although this relationship may have seemed to depend on personal rapport — between President Giscard and Chancellor Schmidt or President Mitterrand and Chancellor Kohl — the truth is that it was explicable more in terms of history and perceptions of long-term interest. France has long feared the power of Germany and has hoped that by superior Gallic intelligence power can be directed in ways favourable to French interests. Germany, for her part, knows that although she has contributed considerably more to the EC financially and economically than any other state, she has received an enormous return in the form of international respectability and influence. The Franco-German axis would remain a factor to be reckoned with, and I shall have more to say about it later.

THE STRASBOURG EUROPEAN COUNCIL

My first European Council took place in Strasbourg on 21 and 22 June 1979. France hosted the talks. Strasbourg had been chosen as the venue in acknowledgement of the new importance of the European Parliament (which holds two-thirds of its sessions there) following the elections, in which Conservatives had won 60 of the 78 British seats.

I was confident that Chancellor Schmidt had taken away from our earlier discussions a clear impression of my determination to fight for large reductions in Britain’s net budget contribution. I was hoping he would pass the message on to President Giscard, who was to chair the summit; both men were former Finance ministers and should be well able to understand Britain’s point of view. (I could not help noticing too that they spoke to one another in English: but I was too tactful to remark on it.)

The background to the British budget problem is quickly described, though the precise details were extremely complicated. At the time of the negotiations for Britain’s accession we had received an assurance (as I would continue to remind other member states) that:

should an unacceptable situation arise within the present Community or an enlarged Community, the very survival of the Community would demand that the [Community] Institutions find equitable solutions, [my italics]

The reason why such an assurance had been necessary was that Britain’s unique trading pattern made her a very large net contributor to the EC budget — so large that the situation was indeed unacceptable. We traditionally imported far more from non-EC countries than did other Community members, particularly of foodstuffs. This meant that we paid more into the Community budget in the form of tariffs than they did. By contrast, the Community budget itself is heavily biased towards supporting farmers through the Common Agricultural Policy (CAP): indeed when we came into office more than 70 per cent of the budget was spent in this way. The CAP was — and is — operated in a wasteful manner. The dumping of these surpluses outside the EC distorts the world market in foodstuffs and threatens the survival of free trade between the major economies. The British economy is less dependent on agriculture than that of most other Community countries and our farms are generally larger and more efficient than those of France and Germany; consequently we receive less in subsidy than they do. Britain traditionally received a fairer share of the receipts of the Community’s non-agricultural programmes (such as the regional and social funds), but the growth of these programmes had been limited by the power of the farming lobby in Europe and by the international recession.

The previous Labour government had made a great play of ‘renegotiating’ the terms of Britain’s original entry. In 1975 a Financial Mechanism to limit our contribution had been worked out in principle: but it had never been triggered, and never would be, unless the originally agreed conditions were changed. As a result, there was no solid agreement to which we could hold our Community partners.

One other development had worsened the overall position: Britain’s prosperity, relative to that of our European neighbours, had steadily declined. In spite of North Sea oil, by 1979 Britain had become one of the least prosperous members of the Community, with only the seventh highest GDP per head of population among the member states. Yet we were expected shortly to become the largest net contributor.

So from the first my policy was to seek to limit the damage and distortions caused by the CAP and to bring financial realities to bear on Community spending. But at the Council meeting in Strasbourg I also had two short-term objectives. First, I wanted to have the budget question raised now and to gain acceptance of the need for action, though without at this stage going into too much detail. Second, I wanted to secure a firm undertaking from other heads of government that at the next Council meeting in Dublin the Commission would bring forward proposals to deal with the problem.

I sought at the start to strengthen our ‘European credentials’. We Conservatives were welcomed in Strasbourg because we were seen as more pro-European than Labour: I tried to emphasize this by indicating that although we were not then in a position to join the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS), we were ‘minded’ — an expression used so as not to offend the House of Commons to which it had not yet been announced — to swap some of our own reserves in the Bank of England for ecus (the European Currency Unit). I knew that Chancellor Schmidt was keen that we should commit sterling to the ERM; but I already had doubts about the wisdom of this course, which subsequently were reinforced. In any case, as it happened, my announcement of our intentions as regards the ecu ‘swap’ did not receive much visible welcome from the others: like other such concessions to the ésprit communautaire, it appeared simply to be pocketed and then forgotten.

If the budget issue was to concentrate minds as I wished, it had to be raised on the first day, because the communiqué is always drafted by officials overnight, ready for discussion the following morning. The draftsmen would therefore have to receive their instructions before the end of the first day. This did not prove easy. Over lunch I spoke to President Giscard about what I wanted and gained a strong impression that we would be able to deal with the budget early on. The whole group of us then set out to walk to the Hôtel de Ville through Strasbourg’s narrow and attractive streets. The bonhomie seemed tangible.

But when we resumed, it quickly became clear that President Giscard was intent on following his previous agenda, whatever he had given me to understand. At least I was well briefed and took an active part in the discussion about energy and the world economy. I pointed out that Britain had not flinched from the hard decisions required to ride out these difficulties and that we were making large cuts in public spending. By twenty minutes to seven that evening, we had decided, if we could, to hold Community imports of oil between 1980 and 1985 at a level no higher than that of 1978. We had agreed to stress the importance of nuclear energy. We had committed ourselves to keep up the struggle against inflation. Inevitably, I suppose, we had agreed to say something about ‘convergence’ between the economic performance of member states (a classic piece of Euro-jargon). In fact, we had done almost everything except what I most wanted us to do — tackle the budget issue.

Fortunately, I had been warned what might happen next. President Giscard proposed that as time was getting on and we needed to get ready for dinner, the matter of the budget should be discussed the following day. Did the Prime Minister of the United Kingdom not agree? And so at my very first European Council I had to say ‘no’. As it turned out the lateness of the hour probably worked in my favour: conclusions are often easier to reach when time presses and minds are turning to the prospect of French haute cuisine and grands crus. I spelt out the facts: and the facts were undoubtedly telling. It was agreed to include in the communiqué an instruction to the Commission to prepare proposals for the next Council to deal with the matter. So, a little late, we rose for dinner. Argument always gives one an appetite.

At these gatherings, the custom was that heads of government and the President of the Commission dine together; foreign ministers formed a separate group. It was also customary to discuss foreign affairs. The plight of the Vietnamese ‘boat people’ was one topic which, of course, directly concerned Britain. Another was Rhodesia. It is interesting also to note that even then we were discussing the perennial problem of the Japanese trade balance.

Strasbourg had one solid result: it had put the question of Britain’s unfair budget contribution squarely on the agenda. I felt that I had made an impression as someone who meant business, and afterwards I learned that this feeling was correct. It was at Strasbourg, too, that I overheard a foreign government official make a stray remark that pleased me as much as any I can remember: ‘Britain is back,’ he said.

THE TOKYO G7 SUMMIT

Many of the wider issues discussed at Strasbourg were raised again shortly afterwards in the still grander surroundings of the economic summit of the seven principal western industrial powers in Tokyo (the Group of Seven, or G7 for short). As soon as I had finished my report to the House of Commons on the Strasbourg Council, we drove out to Heathrow for the long flight to Japan. I knew that oil prices and their effect on the economy would again be top of the agenda. I was well briefed. Denis’s knowledge of the oil industry was at my disposal and I had also had a thorough briefing by oil experts over lunch at Chequers. They knew the oil business inside out; by contrast, I was to find at Tokyo that politicians who thought they could limit oil consumption by setting out plans and targets had little practical understanding of the market.

I took the opportunity to discuss some other, equally important, matters en route to Tokyo. We had sought and were given permission from the Soviet Union to shorten the route to Japan by overflying Russia. In Moscow the plane landed to refuel and I was met by the Soviet Prime Minister, Alexei Kosygin, who broke off a meeting of communist prime ministers to come to the airport. To my surprise, an unscheduled dinner was laid out in the airport lounge. Hospitality in the Soviet Union was always generous for important visitors: there were two worlds, one for foreign dignitaries and the party élite, with luxuries of all kinds, and another for the ordinary people, with only the plainest of goods, and not many of them.

The motive for the Soviets’ special attention was soon clear. They wanted to know more about the ‘Iron Lady’ — as their official news agency, Tass, had christened me following a speech I made in 1976 while Leader of the Opposition.

In East-West relations this was the lull before a huge political storm. Under the guise of détente the Soviets and their communist surrogates had pursued for some years a policy of covert aggression, while the West had let slip its defences. At Tokyo I was to find further evidence of the Carter Administration’s overconfidence in the goodwill of the Soviet Union. The second Strategic Arms Limitation Treaty (SALT II) had been signed only days before. There was even talk of a SALT III. But the mood was about to change, for the Soviet invasion of Afghanistan was less than six months away.

Although we discussed defence, the most sensitive matter I raised with Mr Kosygin was the plight of the ‘boat people’, who were leaving Vietnam in their hundreds of thousands. They were the victims of appalling persecution, terrible enough to make them sell all their belongings, leave their homes and risk their lives sailing in overcrowded and dangerous ships, with no certainty of escape. A large merchant fleet sailed under the British flag and naturally our ships were picking up these tragic refugees from communism to save them from the risk of shipwreck and piracy. The rule of the sea is that survivors from shipwreck can be landed at the next port of call. But it often happened that the next port of call — in Singapore, Malaysia or Taiwan — refused to take them unless we agreed that they should be allowed to come on to Britain. At home we were still experiencing all the social and economic pressures of past mass immigration and consequently this was something we were most reluctant to agree. At Taiwan, although they would be given medical attention and food on the ship, they were not being allowed to land. The boat people themselves refused to land in Canton: they had had enough of communism. So this meant that Hong Kong became their favoured immediate destination, from where they hoped to go on to the United States or elsewhere in the West. The communists, of course, knew perfectly well that this flood of emigration was a costly embarrassment to the West and doubtless they hoped it might destabilize other countries in the region.

I put it to Mr Kosygin that Vietnam was a communist country and a close ally of the Soviet Union, and that he had considerable influence there. What was happening was a disgrace not only to the regime in Vietnam, but to communism as a whole. Could he do nothing to stop it? His words were translated to me: ‘W-e-ll’, he said (or the Russian equivalent), ‘they are all drug-takers or criminals…’ He got no further. ‘What?’, I asked. ‘One million of them? Is communism so bad that a million have to take drugs or steal to live?’ He immediately dropped the subject. But the point had been made and fully understood, as the nervous looks on the faces of his staff — and indeed some of mine — indicated. I could not stop the stream of persecuted refugees but I could and would always challenge the lies with which the communists sought to justify their persecution. After an hour and forty minutes we returned to the plane and resumed the flight to Tokyo. Later I referred the matter to the United Nations — it was too big for any one country to tackle.

The round of international summits makes a prime minister’s life nowadays very different from what it was in the time of Anthony Eden, Harold Macmillan or Alec Douglas-Home. While in Opposition I had been sceptical of the value of much of this activity. In government I still worried that summits took up too much time and energy, particularly when there was so much to do at home: within a few months of taking office I had been to Strasbourg to represent Britain in Community matters, I was at Tokyo to represent her in the wider economic forum, and I would soon be going to Lusaka for the meeting of the Commonwealth heads of government.

The G7 had its roots in international action to counter the economic crisis of the mid-1970s. The first meeting was held in 1975 at Rambouillet in France. Since then the numbers attending and the formality of proceedings have increased year by year, and the result has not been an improvement. The principal advantages and disadvantages were well summed up by Chancellor Schmidt. The G7 summits had, he believed, helped the West to avoid what he called ‘beggar my neighbour’ policies — the competitive devaluations and protectionism which had inflicted such economic and political harm during the 1930s. On the other hand, he thought that too often the summits had been tempted to enter into undertakings which could not be kept; I agreed. There was always pressure, to which some governments were all too ready to bend, to come up with forms of words and ambitious commitments which everyone could accept and no one took seriously.

However, the soaring price of oil gave the 1979 Tokyo economic summit more than usual significance. Indeed, the Organization of Petroleum Exporting Countries (OPEC, the cartel of major oil producers) was meeting at the same time as the G7, its principal customers.[25] While we were in Tokyo the price of a barrel of Saudi oil rose from $14.54 to $18, with many OPEC crudes going higher still. Consequently, all the talk was of how to limit western dependency on oil and of deceptively specific targets to be met by particular dates. But I knew that the main way of reducing consumption was to allow the price mechanism to do its job. The danger, if we did not, was that countries would seek to accommodate higher oil prices by printing money, leading to inflation, in the hope of staving off recession and unemployment. We had seen in Britain that inflation was a cause of unemployment rather than an alternative to it, but not everyone had learned that lesson.

The previous summit had been held in Bonn in 1978 when the doctrine of ‘fine tuning demand’ had still been fashionable. Germany had then been expected to act, as the jargon had it, as the ‘locomotive’ for growth, pulling the world out of recession. As Chancellor Schmidt was to tell the summit leaders at Tokyo, the main result had been to put up German inflation: he would not go down that path again. At Bonn there had been no new heads of government present and the old nostrums prevailed. At Tokyo, by contrast, there were three newcomers — the Japanese Prime Minister and Conference Chairman, Mr Ohira, the new Prime Minister of Canada, Joe Clark, and myself. Apart from me, the strongest advocates of free market economics were Helmut Schmidt and, to an even greater extent, Count Otto von Lambsdorff, his Finance minister.

On leaving the plane at Tokyo airport, I stepped into a huge crowd of reporters (some two thousand reporters attended these summits then, and more now). They had turned out to see that extraordinary, almost unprecedented, phenomenon — a woman prime minister. The weather was extremely hot and humid. There was very tight security. I was glad when we arrived at the hotel where the great majority of foreign delegates, with the exception of the President of the United States, were staying. Soon after my arrival, I went to see President Carter at the United States Embassy where we talked over our approach to the issues which would arise, especially energy consumption, which posed a particular problem — and one with important political implications — for the US. Mrs Carter and Amy joined us at the end of the meeting. In spite of press criticism, the Carters obviously enjoyed having their daughter travelling with them — and why not, I thought.

It was impossible not to like Jimmy Carter. He was a deeply committed Christian and a man of obvious sincerity. He was also a man of marked intellectual ability with a grasp, rare among politicians, of science and the scientific method. But he had come into office as the beneficiary of Watergate rather than because he had persuaded Americans of the Tightness of his analysis of the world around them.

And, indeed, that analysis was badly flawed. He had an unsure handle on economics and was therefore inclined to drift into a futile ad hoc interventionism when problems arose. His windfall profits tax and controls on energy prices, for instance, only transformed the OPEC-induced price rises, which they were intended to cure, into unpopular queues at filling stations. In foreign affairs, he was over-influenced by the doctrines then gaining ground in the Democratic Party that the threat from communism had been exaggerated and that US intervention in support of right-wing dictators was almost as culpable. Hence he found himself surprised and embarrassed by such events as the Soviet invasion of Afghanistan and Iran’s seizure of American diplomats as hostages. And in general he had no large vision of America’s future so that, in the face of adversity, he was reduced to preaching the austere doctrine of limits to growth that was unpalatable, even alien, to the American imagination.

In addition to these political flaws, he was in some ways personally ill-suited to the presidency, agonizing over big decisions and too concerned with detail. Finally, he violated Napoleon’s rule that generals should be lucky. His presidency was dogged with bad luck from OPEC to Afghanistan. What it served to demonstrate, however, was that in leading a great nation decency and assiduousness are not enough. Having said which, I repeat that I liked Jimmy Carter; he was a good friend to me and to Britain; and if he had come to power in the different circumstances of the post-Cold War world, his talents might have been more apposite.

That evening the European members of the summit met together for dinner, hosted by President Giscard. The Community had, of course, already agreed its own approach to energy at Strasbourg. The main issue now was how this would fit in with that which the three non-EC governments at the G7 wished to pursue.

The following morning, after the inevitable photographs, the first session began in the Conference Room on the second floor of the Akasaka Palace. Delegations sat around an oblong table and were arranged in alphabetical order: it was always useful that this placed us next to the United States. The precise arrangements for the arrival of the leaders reflected formal considerations of precedence, heads of state arriving after heads of government, and the order in each category determined by length of time in office. Precedence meant most to the French and least to the Americans: in fact, neither Jimmy Carter nor Ronald Reagan took much notice of it at all. As the rest of us sat there we would speculate as to who would manage to arrive last.

The meeting began, as usual, with a short general speech by each head of government. Chancellor Schmidt spoke before me in the first session, and after me in the second. We found ourselves stressing exactly the same points — the importance of the battle against inflation and the crucial role of the price mechanism in limiting energy consumption. My interventions appeared to be well received — not least by the Germans, as Count Lambsdorff subsequently told us. It was perhaps the nearest we ever came to an Anglo-German entente. I noted that many of our present difficulties stemmed from the pursuit of Keynesian policies with their emphasis on the deficit financing of public expenditure and I stressed the need to control the money supply in order to defeat inflation. There followed, after Mr Ohira and Chancellor Schmidt had taken a similar line, an extraordinary intervention by President Giscard in which he mounted a spirited defence of Lord Keynes and clearly rejected the basic free market approach as unnecessarily deflationary. Sig. Andreotti — Italy’s Prime Minister then and again in my last days as Prime Minister — endorsed the French view. It was a revealing expression of the fundamental philosophical differences which divide the Community.

It was also revealing about the personalities of President Giscard and Prime Minister Andreotti. President Giscard d’Estaing was never someone to whom I warmed. I had the strong impression that the feeling was mutual. This was more surprising than it seems, for I have a soft spot for French charm and, after all, President Giscard was seen as a man of the Right. But he was a difficult interlocutor, speaking in paragraphs of perfectly crafted prose which seemed to brook no interruption. Moreover, his politics were very different from mine: though he had the manners of an aristocrat, he had the mind-set of a technocrat. He saw politics as an élite sport to be carried on for the benefit of the people but not really with their participation. There might be something to be said for this if technocrats really were cool intellectual guardians above the passions and interests of the rest of us. But President Giscard was as likely as anyone to be swept away by intellectual and political fashion; he simply expressed his passions coldly.

Prime Minister Andreotti was no more on my wavelength than the French President. Even more than the latter, this apparently indispensable participant in Italian governments represented an approach to politics which I could not share. He seemed to have a positive aversion to principle, even a conviction that a man of principle was doomed to be a figure of fun. He saw politics as an eighteenth-century general saw war: a vast and elaborate set of parade ground manoeuvres by armies that would never actually engage in conflict but instead declare victory, surrender or compromise as their apparent strength dictated in order to collaborate on the real business of sharing the spoils. A talent for striking political deals rather than a conviction of political truths might be required by Italy’s system and it was certainly regarded as de rigueur in the Community, but I could not help but find something distasteful about those who practised it.

For all their hospitality, it would be difficult to claim too much for the quality of Japan’s chairmanship of the proceedings. At one stage I intervened to clarify for the sake of the officials — the ‘sherpas’ as they are known — precisely which of the two alternative draft communiqués we were discussing. While we were entertained that evening at a banquet given by the Emperor of Japan, the sherpas began their work. At about two o’clock in the morning, still in my evening dress, I went to see how the communiqué drafters were getting on with their work. I found them refining their earlier draft in the light of our discussions and setting out alternative forms of words where decisions would be required from the summit the following day. I hoped we would be as businesslike as they evidently were.

The following day we met once again at the Akasaka Palace to go through the communiqué, always a tedious and lengthy process. There was some disagreement between the Americans and the Europeans about the base year from which to set our different targets for the reduction of oil imports. But for me perhaps the most revealing discussion concerned the Japanese target. Until almost the last moment it was far from clear whether Mr Ohira’s advisers would allow him to give a figure at all. Since I was quite convinced that the market itself would achieve the necessary limitation of oil consumption, regardless of what we announced, it all seemed rather academic to me. When in the end the Japanese did announce their figures no one had any idea what sort of reduction they constituted, if any; but President Carter warmly congratulated them all the same.

And so the communiqué was issued and the customary press conference held. The most important decision made had nothing to do with checking oil consumption. It was that, despite the inclinations of several G7 governments, we were not going to fall into the trap of trying to achieve a co-ordinated reflation of demand. It was a useful signal for the future.

From Tokyo I flew to Canberra, arriving the following morning. This was my third visit to Australia, though it was to be only a brief one. There was time to see my daughter, Carol, who was working as a journalist there, but my main purpose was to talk to Malcolm Fraser, the Australian Prime Minister. I briefed him on what had taken place at Tokyo. But even more important, we discussed the forthcoming Commonwealth Conference in Lusaka at which Rhodesia would inevitably be the main issue. Over the next eight months, Rhodesia was to take up a great deal of my time.

THE RHODESIAN SETTLEMENT

Rhodesia had been a long-standing source of grief to successive British governments, and an acute problem since Ian Smith’s Unilateral Declaration of Independence in 1965. It had caused particular difficulties for the Conservative Party, a large section of which believed that the economic sanctions imposed against the illegal regime were futile and damaging and insisted on voting against them when they came up for annual renewal. Both the Conservative and Labour front benches had long been committed to seek a settlement on the basis of the so-called ‘six principles’ whose fundamental purpose was to lay down the conditions for a transition to black majority rule, while upholding the rights of the white minority and ensuring true democracy, the rule of law and an end to discrimination. But this degree of common ground between the leaders of both parties was not necessarily shared by their supporters.

The elections of April 1979 in Rhodesia fundamentally changed the whole position. Under the new constitution, worked out under the ‘internal settlement’ with Ian Smith, Bishop Muzorewa was elected as head of a black majority government, in a 64 per cent turn-out of a black majority electorate. The ‘Patriotic Front’ parties — the guerillas of Robert Mugabe and Joshua Nkomo — had not, of course, taken part in the elections. Viscount Boyd of Merton — a former Conservative Colonial Secretary — had attended as an observer and reported back to me, as Leader of the Opposition, that the elections had been fairly conducted. It was generally considered that all of the six principles had now been fulfilled and there was wide expectation that we would recognize the new government when we took office.

However, I was well aware that what the people of Rhodesia needed above all was peace and stability. It was the war, relentlessly carried on by the guerillas, which had forced the white minority government to make concessions: that war had to be ended. To bring peace we had either to win international acceptance for the new regime or bring about the changes which would win such acceptance.

The first and most immediate problem was the attitude of the neighbouring ‘front line’ African states. They must, if at all possible, be won over. We sent Lord Harlech, another former Conservative minister and an ex-Ambassador to Washington, for talks with the Presidents of Zambia, Tanzania, Botswana, Malawi and Angola. He also went to Mozambique and Nigeria. I was not at all keen at this stage that he should even talk to the leaders of the Patriotic Front, Mr Mugabe and Mr Nkomo: their forces had carried out atrocities which disgusted everyone and I was as keen to avoid dealings with terrorists abroad as I would be at home. However, unpleasant realities had to be faced. Peter Carrington’s view was that it was essential to secure the widest possible recognition for a Rhodesian regime, since that country held the key to the whole South African region. He turned out to be right.

Accordingly, Lord Harlech did see the Patriotic Front leaders as well as Bishop Muzorewa and others. His mission at least made clear how large were the obstacles to achieving an end to the war. In July the Organization of African Unity (OAU) endorsed the Patriotic Front as the sole legitimate authentic representative of the people of Zimbabwe. Nigeria, with which Britain had important economic ties, was bitterly hostile to the Muzorewa Government. Black African states insisted on viewing Bishop Muzorewa’s Government as nothing more than a façade for continued white minority rule. The fact that this greatly underrated the change which the internal settlement had effected did nothing to reduce the consequences of their attitude for Rhodesia.

Although we did not intend to continue the joint Anglo-American approach pursued by Labour, which had got nowhere, the attitude of the United States was of vital importance. President Carter was under strong political pressure from US black and liberal opinion. The Administration would soon have to say whether Bishop Muzorewa’s Government met the conditions set by Congress, without which recognition and the lifting of sanctions by the US would not be possible. It was likely that the conclusion would be that it did not meet those conditions.

Yet the situation did offer opportunities, if we were able to grasp them. First, nearly everyone considered that it was Britain’s responsibility to solve the problem, and even though this frequently made us the object of criticism it also gave us a relatively free hand if we knew how to use it. Second, there was a great weariness among the parties involved and not just the Rhodesians themselves. The surrounding African states were finding it costly, disruptive and dangerous to play host to the two guerilla armies, themselves the target of the well-trained and effective Rhodesian army. Nkomo’s forces in Zambia were said to outnumber Zambia’s own army. There was a real desire for a settlement. But how to reach it?

Our best chance of a breakthrough was likely to be at the forthcoming Commonwealth Conference in Lusaka. This would be the first regular Commonwealth Heads of Government Meeting held in Africa. Zambia adjoined the Rhodesian war zone. It was also land-locked, so that the Queen, who is traditionally present during the first days as Head of the Commonwealth (though she does not open or attend the meeting) could not use the Royal Yacht Britannia. There were, accordingly, some worries about Her Majesty’s safety, on which it was my responsibility to advise. My feeling was that there was no reason why her visit should not go ahead, and I gave that advice shortly before the start of the Queen’s African tour, from which she went on direct to Lusaka where she received an enormous welcome. I, by contrast, was far from being their favourite person, when, late in the evening of Monday 30 July, I arrived in Lusaka to face, without prior notice, a hostile and demanding press conference.

We had put the long flight out to good use, working through the precise approach we should take. I had a first-class team of advisers, and, of course, a first-class Foreign Secretary — with whom I had a lively exchange when he suggested that our mission was really a ‘damage limitation exercise’, at that time (as I told him) a phrase I had never even heard. I said that I wanted to do better than that; and between us in the end we managed to do so.

Our strategy was to take full responsibility ourselves for reaching a settlement. The task in Lusaka was to persuade the Commonwealth leaders to accept this, and to acknowledge that the Rhodesian problem was not the responsibility of the Commonwealth as a whole. To obtain that result we had to make it clear that Britain would be ready to resume authority in Rhodesia and to hold fresh elections. We knew also that there would have to be significant changes to the present constitution of Rhodesia if, after elections, the new government was to receive international recognition and acceptance. Those changes could only be brought about by some kind of Constitutional Conference bringing together all sides. The decision whether or not to hold such a conference would very much depend on how matters went at Lusaka.

My arrival in Zambia coincided with an announcement by the Nigerian Government that it was nationalizing BP’s Nigerian oil assets. This was not a good start, but I went on to have an extremely useful day of talks with other heads of government before the conference officially began on the Tuesday. There was, in fact, a high turn out: 27 heads of government were present and all 39 full Commonwealth members were represented. Our host was President Kenneth Kaunda. At the closed session, the opening speech — one of the best of the conference — was given by Prime Minister Lee Kuan Yew of Singapore who reviewed international political developments. But much serious business was done ‘in the margins’, as the diplomatic jargon has it, of the larger meetings. For example, the Prime Minister of Sri Lanka asked me whether a substantial sum of British overseas aid was still available for the construction of the massive Victoria Dam in his country. I confirmed it on a postcard — undoubtedly one of the most expensive I have ever written.

However, it was the situation in Rhodesia which had to be the real priority. In my opening public statement at the conference on the Wednesday I said that we would ‘listen with the greatest attention to what is said at this meeting in Lusaka’. But on Friday, at the conference’s closed session to discuss Rhodesia, I was able to be much more specific. I said that everyone should recognize just how much had changed as a result of Bishop Muzorewa’s election even though ‘there are those who seem to believe that the world should simply go on treating [him] as if he were Mr Smith.’ I drew attention to the extensive international consultations we had undertaken to identify a solution. I acknowledged that from these we had learned the strength of the view ‘that the constitution under which Bishop Muzorewa has come to power is defective in certain important respects’, in particular the provisions whereby the white minority could block all unwelcome constitutional change. We had also observed that those consulted criticized the composition and powers of the various service commissions, and I noted ‘it is clearly wrong that the Government of [Rhodesia/Zimbabwe] should not have adequate control over certain senior appointments.’ We had been told that it was essential that the the Patriotic Front should be able to return and take a full part in politics. Finally, we had been impressed by the general conviction that any solution must derive its authority from Britain as the responsible colonial power.

I summed up our intentions:

The British Government are wholly committed to genuine black majority rule in Rhodesia… We accept that our objective must be to establish… independence on the basis of a constitution comparable with the constitutions we have agreed with other countries… We will therefore present our proposals as quickly as possible to all the parties, and at the same time call on them to cease hostilities and move forward with us to a settlement.

It had been agreed to hold back the debate on southern Africa until the Friday so that after it the heads of government could go straight to their customary informal weekend retreat for private discussions on Rhodesia’s future. My task was to win the support of the key figures there. A small group was set up consisting of myself and Peter Carrington, Mr (now Sir) Sonny Ramphal, Secretary-General of the Commonwealth, President Kaunda of Zambia, President Nyerere of Tanzania, Messrs Fraser and Manley, the Prime Ministers of Australia and Jamaica and Mr Adefope, the representative of Nigeria. Sir Anthony Duff, who was part of my team, drafted the heads of agreement. It all went remarkably smoothly until the very end. Our meeting ended successfully at Sunday lunch time and the full version of the agreement was to have been discussed and endorsed by the full conference on Monday morning. However, on Sunday afternoon Malcolm Fraser chose to brief the Australian press. This required some rapid and unconventional action.

That evening we all attended a Commonwealth service in Lusaka Cathedral, where we had the benefit of a long polemical sermon from the Archbishop. I had been told already that the press knew the substance of what had been decided. Sonny Ramphal and I were sitting together; he was to read the first lesson, and I the second. After he had read his I showed him a note I had received from Peter Carrington about Malcolm Fraser’s intervention, suggesting that we must now brief the British press on what had taken place, subject to the Secretary-General’s approval. On the back of my hymn sheet, while I was reading the second lesson, Mr Ramphal wrote an alternative suggestion. The heads of government had been invited to a barbecue that evening at Malcolm Fraser’s conference villa: we could hold a meeting there and settle a communiqué to be issued at once. This seemed to me an excellent idea. I agreed to telephone Kenneth Kaunda immediately after the service to warn him of what we had in mind. And so the meeting came about. It took an hour and there were some very pointed comments. I was none too pleased with Malcolm Fraser myself. But the conclusion was satisfactory. Indeed, most of us were relieved that it had all been so amicable and that our proceedings could therefore end a day early.

I returned home on Wednesday morning. I was well pleased with what had been achieved, so much of it by Peter Carrington and Tony Duff. Many had believed that we could not come out of Lusaka with an agreement on the lines we wanted. We had proved them wrong. We had incidentally proved the Zambian press wrong too: they had so convinced themselves beforehand of the truth of their own propaganda about me that it was clearly a shock to find that they were dealing with a real person rather than a colonial cardboard cut-out. I had no illusions about the scale of the task ahead: it was never going to be easy to steer Rhodesia to independence, legitimacy and stability. But after Lusaka I believed that it could be done, and that we had won the African good will to carry it through successfully.

Britain accordingly called a Constitutional Conference for the interested parties at Lancaster House in London in September. Its purpose was emphasized as being not just to talk but to reach a settlement. Peter Carrington arranged the agenda to take the most difficult questions last, so that the first item to be agreed was the new constitution; only then would come the question of the transitional arrangements; and finally the calling of a cease-fire. We calculated that the longer the conference continued, the less any of the interested parties would be willing to take responsibility for breaking it up. We reserved to ourselves the task of putting forward final proposals in each phase and we required the parties to respond, even if these proposals did not meet all their objectives. At each stage we had to exert pressure — direct and indirect — on the two sides to reach a satisfactory compromise. Peter Carrington chaired the conference with great skill and took charge of its day-to-day work. My role lay outside it. The heads of the ‘front line’ states came to London in person or sent in High Commissioners to see me for a progress report. President Machel of Mozambique was especially helpful in putting pressure on Robert Mugabe. I also gave dinner for President Nyerere, another strong backer of Mr Mugabe. His concern was how to blend the three separate armies — the two guerilla armies and the Rhodesian army — into one, a task which in fact would fall to the British army to achieve. The Lancaster House proposals could not have got through without the support of the Presidents of the ‘front line’ states and, indeed, many other Commonwealth countries.

Just after the conference concluded, all three rival leaders — Bishop Muzorewa, Robert Mugabe and Joshua Nkomo — came to see me together at No. 10. We talked upstairs in my study. They were in contemplative mood, pondering the future. I had the clear impression that each of them expected to win. Perhaps that was just as well.

Probably the most sensitive aspect of our approach related to the transitional arrangements: it was clear to me that, both for constitutional and practical reasons, Britain must resume direct authority in Rhodesia until the elections were over, though for as short a period as possible. On 15 November a bill was introduced to provide for the appointment of a Governor and for sanctions to be removed as soon as he arrived in Rhodesia. Christopher Soames accepted the post. The decision to send him, as Governor, to Salisbury on 12 December, even before the Patriotic Front had accepted the cease-fire proposals, certainly involved some risk and was much criticized at the time. But we were clear that the momentum had to be maintained. Moreover, Christopher was an ideal appointment: not only did he have the authority of a Cabinet minister and wide diplomatic experience, he and his wife, Mary, had precisely the right style to carry off this most delicate and demanding job. Heavy pressure from the US and the ‘front line’ states finally led the Patriotic Front to accept the proposals for the cease-fire on 17 December, and the agreement was finally initialled on 21 December. I telephoned the Soameses in Salisbury on Christmas Day to wish them the season’s greetings and ask how things were. The reply was that in spite of several severe breaches of the cease-fire and some clear intimidation by the supporters of Mr Mugabe, the situation looked increasingly hopeful.

The outcome of the elections is well known. Mr Mugabe’s party, to most people’s surprise, won an overwhelming victory. On 18 April Rhodesia, as the Republic of Zimbabwe, finally received its independence.

It was sad that Rhodesia/Zimbabwe finished up with a Marxist government in a continent where there were too many Marxists malad-ministering their countries’ resources. But political and military realities were all too evidently on the side of the guerilla leaders. A government like that of Bishop Muzorewa, without international recognition, could never have brought to the people of Rhodesia the peace that they wanted and needed above all else. From the British point of view the settlement also had large benefits. With the Rhodesian question finally solved, we again played an effective role in dealing with other Commonwealth — and especially African — issues, including the pressing problem of the future of Namibia and the longer-term challenge of bringing peaceful change to South Africa. Britain had demonstrated her ability, by a combination of honest dealing and forceful diplomacy, to settle one of the most intractable disputes arising from her colonial past.

THE EC BUDGET AGREEMENT OF 1980

With the Lancaster House Conference still in progress, I had to turn my mind once again to the vexed question of how to negotiate a substantial reduction in Britain’s net contribution to the European Community budget. Figures had at long last been put on the size of that contribution and henceforth it was difficult for anyone to deny the scale of the problem. Also the European Commission had produced a report which indicated that it was indeed possible, in line with well-established Community principles, to achieve a ‘broad balance’ between British contributions and receipts. There were, therefore, some grounds for optimism, but I had no illusion that a settlement would be easy and I was well aware of the possibility of sharp practice. British officials had indicated to those of the presidency my concern at the procedural wrangles which had characterized the previous Strasbourg Council and my desire that the presidency should take a firm line and get the budget discussed early.

By this time, the member states of the Community knew that we were serious. On 18 October I delivered in Luxemburg the 1979 Winston Churchill Memorial Lecture, which, as the occasion required, dealt principally with foreign affairs.

I warned:

I must be absolutely clear about this. Britain cannot accept the present situation on the Budget. It is demonstrably unjust. It is politically indefensible: I cannot play Sister Bountiful to the Community while my own electorate are being asked to forego improvements in the fields of health, education, welfare and the rest.

We had also taken every opportunity to seek wider understanding of the merits of our case. I had talks in Bonn with Helmut Schmidt at the end of October, and on 19 and 20 November there was a two-day Anglo-French summit in London. The Germans and the French knew that I meant business.

In the run up to the Dublin Council, we examined carefully the measures available to us to bring pressure on the Community. Christopher Soames, who had great experience of the ways and wiles of the Europeans, sent me a note to the effect that the Community had never been renowned for taking unpleasant decisions without long wrangling and that I should not worry too much about the cards in my hand because a major country like Britain could disrupt the Community very effectively if it chose. I noted his advice. In this spirit, we had examined quite early on — though we looked at it again later — the possibility of withholding British payments to the Community. For practical and legal reasons this always seemed a non-starter. Nevertheless, I believed that even the possibility caused satisfactory anxiety in the Commission, whose pressure to get a satisfactory settlement was vital. We also had the lever of refusing to agree agricultural price increases, which the French and German Governments — each facing elections — wanted to see. Our moral position was strengthened, too, by the fact that the French had broken the EC law by obstructing British lamb imports: the European Court of Justice found against them on 25 September — though morality counts for little in the Community.

At the next Council — in Dublin at the end of November, the Irish having now assumed the European Community Presidency — the issue of our budget contribution dominated the business. The obvious security risk from the IRA required that I be lodged overnight in splendid isolation in Dublin Castle, the former seat of British rule. The Irish press enjoyed the idea that I slept in the bed used by Queen Victoria in 1897, though I had the advantage over her of a portable shower in my room. Indeed, I was very well looked after. The hospitality was perhaps the best feature of the visit, and contrasted strongly with the atmosphere at the meetings which was extremely and increasingly hostile. I had expected something of the sort. I went to Dublin with a newly tailored suit. Ordinarily I would have enjoyed wearing something new on an occasion as important as this, but I thought twice: I didn’t want to risk tainting it with unhappy memories. This was not, though, the only wise decision I made at Dublin: the principal one was to say very clearly, and with at least as much force as at Strasbourg, the word ‘no’.

The Council opened amicably enough in Phoenix Park at the Irish President’s official residence where he hosted lunch. Back in the Council at Dublin Castle we got down to business. My opening speech set out the facts of our case in somewhat greater detail than at Strasbourg and I elaborated on them in the vigorous debate which followed. There was a good deal of argument about the figures, at the root of which was an obscure and complex issue — how to calculate the losses and gains resulting to individual states from the operation of the CAP. But which ever way one did the sums, there was no doubt that the UK was making a huge net contribution, and unless it was mitigated it was about to become the biggest. We were not arguing that we should be net beneficiaries (though some in Britain would have wished me to); in fact, we were only asking for a ‘broad balance’. It was unacceptable that at a time when we were making cuts in public spending at home we should be expected to make a net contribution of more than £1 billion a year. I emphasized Britain’s commitment to the Community and our wish to avoid a crisis, but I left no one in any doubt that this is precisely what the Community would face if the problem were not resolved.

We had put forward our own proposals on the budget. But the Commission had come up with some of its own and I was prepared to accept their basic approach as a starting point. First, they proposed that action be taken to shift the weight of Community expenditure generally away from agriculture towards structural and investment programmes. The trouble was that this would take too long — if it happened at all. Second, they proposed, in addition, specific spending on UK projects to boost our receipts. But there simply were not enough suitable projects. Finally, on the contribution side, the 1975 Correction Mechanism had so far failed to cut our payments. If it were reformed on the lines the Commission was proposing, it could help reduce our net contributions — but still not by enough: we would still be contributing about the same as Germany and much more than France. Something far more radical would be required.

I made one other point which was to prove of some significance. I said that, ‘the arrangement [must] last as long as the problem.’ It seemed to me then, and even more so by the end of the Council, that we simply could not have these battles every year, all to establish what common sense and equity ought to have made self-evident from the beginning.

It quickly became clear that I was not going to make the other heads of government see matters like this. Some, for example the Dutch Prime Minister, Mr Andries Van Agt, were reasonable, but most were not. I had the strong feeling that they had decided to test whether I was able and willing to stand up to them. It was quite shameless: they were determined to keep as much of our money as they could. By the time the Council broke up Britain had been offered a refund of only £350 million, implying a net contribution of some £650 million. That refund was just not big enough and I was not going to accept it. I had agreed that there should be another Council to discuss the matter further, but I was not overoptimistic after what I had seen and heard in Dublin. For me it went much further than hard bargaining about money, which was inevitable. What I would not accept was the attitude that fairness as such did not seem to enter into the equation at all. I was completely sincere when I had said that Britain was asking no more than its due; and my anger when such a proposition was regarded with cynical indifference was equally genuine.

It was while reflecting on the quintessentially un-English outlook displayed by the Community at this time and later that I came across the following lines from Kipling’s ‘Norman and Saxon’ in my old, battered collection of my favourite poet’s verse. The Norman baron with large estates is warning his son about our English forefathers, the Anglo-Saxons, and says:

The Saxon is not like us Normans. His manners are not so polite.

But he never means anything serious till he talks about justice and right.

When he stands like an ox in the furrow with his sullen set eyes on your own,

And grumbles, ‘This isn’t fair dealing’, My son, leave the Saxon alone.

At the press conference after the Council, I gave a vigorous defence of our position. I said that the other states should not have ‘expected me to settle for a third of a loaf. I also refused to accept the communautaire language about ‘own resources’. I continued to state without apology that we were talking about Britain’s money, not Europe’s. I said:

I am only talking about our money, no one else’s; there should be a cash refund of our money to bring our receipts up to the average level of receipts in the Community.

Most of the other heads of government were furious. The Irish press was vitriolic. One British newspaper, The Times, described my performance at the press conference as ‘bravura’, though there was more criticism from the leader columns. The best comment, I felt, was from Le Figaro, which said:

To accuse Mrs Thatcher of wishing to torpedo Europe because she defends the interests of her country with great determination is to question her underlying intentions in the same way that people used to question those of de Gaulle in regard to French interests.

I liked the comparison.

We used the period between the end of the Dublin meeting and the next European Council to press our case, both in public and through diplomatic means. On 29 and 30 January I had talks with the Italian Prime Minister (later President) Francesco Cossiga. I had already had dealings with Sig. Cossiga in 1979 when the Schild family, my constituents, were kidnapped in Sardinia. I had found him highly competent and deeply concerned. He was also a man of principle, as his earlier resignation as Minister of the Interior after the murder of the former Christian Democrat Leader Aldo Moro showed, and as I already knew him to be from my own experience. Italian politics and Italian politicians do not evoke much understanding or sympathy from the British, or indeed from the Italians, and I confess to sharing some of that disenchantment. But Francesco Cossiga was himself a sceptic about the usual Italian practices. He was the nearest thing to an independent in Italian politics; in negotiations he always played a straight hand; he could be relied upon to keep his word, as he did over the stationing of Cruise missiles in Italy; and he was an undoubted Anglophile and a strong admirer of the Glorious Revolution of 1688 as the birth of true liberal politics. I was glad that it was Sig. Cossiga who was due to host the next European Council.

On 25 February Helmut Schmidt came to London again. Our talks centred on the question of our budget contribution and on the German Chancellor’s repeated wish to see sterling within the ERM, and — contrary to the usual misleading press reports — they were useful and quite jolly. On 27 and 28 March there was a full scale Anglo-German summit in London. I sought once more to stress how seriously we felt about the British contribution. Subsequently, I learned that Helmut Schmidt had been telling other Community governments that if there were no solution there was a danger that we would withhold British contributions to the Community. So I had created the desired impression. The European Council due for 31 March and 1 April had to be postponed because of a political crisis in Italy (not an unusual event), but we pressed for a new Council before the end of April and it was finally called for Sunday and Monday 27 and 28, to meet in Luxemburg.

At this time, there was a marked hardening of public opinion in Britain as the result of our treatment by the Community. In particular, there was much speculation about possible withholding of Britain’s contributions, which did not displease me, though I was cautious in public on the subject. I said on Panorama on 25 February that we would consider withholding but would be loath to do it because it meant going against Community law. I also went on French television on 10 March and said:

I wouldn’t expect France to be the biggest contributor if she had an income below average in the Community. And I do indeed assure you that your very distinguished French politicians would be the first to complain if that were so.

I gave an interview to Die Welt in which I said:

We shall do our utmost to prevent matters coming to a crisis. But it must be realized that things cannot continue like this.

The atmosphere in Luxemburg turned out to be a good deal better than in Dublin. I was optimistic. From a discussion I had had with Sig. Cossiga, who had spoken to President Giscard, it seemed at first that the French were prepared to set a ceiling on the size of our net contributions for a period of years irrespective of the growth in the overall Community budget, subject to review at the end of the period. This would have been a step forward. On closer examination, however, it became clear that what the French really wanted was to get decisions on their most politically sensitive topics — farm prices in the CAP, lamb and fishing rights — before settling the budget. Finally, it was agreed that parallel meetings should be held over the weekend: Agriculture ministers would meet and so would a group of officials working on the budget issue.

As a result we did not get around to talking about the budget at all at our first session. Indeed, only after dinner, and the usual foreign affairs tour de table, did I obtain agreement that the official group should resume effective negotiation that evening. The French were the main stumbling block: the proposals their officials presented were much less helpful to us than President Giscard’s had seemed to be. In the meantime, the Agriculture ministers of the other governments of the Community had agreed on a package of proposals which would have raised farm prices, increasing again the proportion of the Community budget devoted to agriculture (quite contrary to the proposals put forward in Dublin) and giving the French a sheep meat regime which was more or less all that they wanted. Against this — for us — distinctly unfavourable background, we received eventually the offer of a limit on our net contribution of about £325 million, applying only to the year 1980. Under a subsequent proposal our net contribution would have been limited to about £550 million for 1981 as well.

My reaction was that this was too little. But above all I was not prepared to have a settlement that only lasted for two years. Helmut Schmidt, Roy Jenkins (President of the Commission) and almost everyone else urged me to settle. But I was not willing to return the following year to face precisely the same problem and the attitude that went with it. So I rejected the offer. The draft communiqué, moreover, was unacceptable to us since it continued to insist on the old dogma that ‘own resources are intended to provide the finance for Community policies; they are not contributions from member states.’ Nor did it make reference to the assurances we had been given on our accession to the Community that action would be taken ‘should an unacceptable situation arise’.

Many reacted to my decision in luxemburg with disbelief: in some circles the very last thing expected of a British prime minister was that he or she should quite so unashamedly defend British interests. But there was, I noted, a contrast between the reaction in some of the press which was extremely hostile and the reaction in the House of Commons and the country, which was thoroughly supportive.

In fact, we were a good deal closer to a settlement than was widely recognized. Great progress had already been made in winning agreement to substantial reductions in our contribution. What remained was to secure these reductions for the first two years with a reliable undertaking for the third. We had a number of powerful levers by which we could apply pressure to this end. The French were increasingly desperate to achieve their aims in the Agriculture Council. There was even talk of overriding the British veto by abrogating the so-called Luxemburg compromise of 1966, established to accommodate de Gaulle. (This was an understanding rather than a formal agreement with the force of law, which enabled any one country to block a majority decision when its vital national interests were at stake.) In fact, precisely this did happen at the Agriculture Council in May 1982 — and this during the Falklands War. However, at this particular time it would have been a dangerous move, particularly since the French had already been found in breach of Community law over lamb imports. The Germans, too, were keen to see higher agricultural prices. Most important of all, the Community would, we thought, probably reach the limit of its financial resources in 1982. Its persistent overspending was catching up with it, and greater resources could only be made available with British agreement. Ultimately our negotiating position was a strong one.

It soon became clear that Luxemburg, following the clashes in Dublin, had had the desired effect. In spite of talk of the Luxemburg offer having now been ‘withdrawn’, there was evidence of a general desire to solve the budget issue before the next full European Council at Venice in June. The easiest way to achieve this appeared to be a meeting of the Community Foreign ministers.

Peter Carrington, having received his mandate from me, flew to Brussels on Thursday 29 May with Ian Gilmour. After a marathon eighteen-hour session they came back with what they considered an acceptable agreement, arriving at lunch time on Friday to brief me at Chequers.

My immediate reaction was far from favourable. The deal involved a net budget contribution in 1980 higher than envisaged at Luxemburg. It appeared from Peter’s figures that we would pay rather less under the new package in 1981, though to some extent this was sleight of hand, reflecting different assumptions about the size of that year’s total budget. But the Brussels proposal had one great advantage: it now offered us a three-year solution. We were promised a major review of the budget problem by mid-1981 and if this had not been achieved (as proved to be the case) the Commission would make proposals along the lines of the formula for 1980–81 and the Council would act accordingly. The other elements of the Brussels package relating to agriculture, lamb and fisheries, were more or less acceptable. We had to agree a 5 per cent rise in farm prices. Overall, the deal marked a refund of two-thirds of our net contribution and it marked huge progress from the position the Government had inherited. I therefore decided to accept the offer.

CRISES IN THE MIDDLE EAST

Wider international affairs had not stood still while we were engaged in bringing Rhodesia to legal independence and negotiating a reduction in our Community Budget contribution. In November 1979, forty-nine American diplomatic personnel had been taken hostage in Iran, a source of deep and growing humiliation to the greatest western power. In December at the invitation of President Carter I made a short visit to the United States — the first of many as Prime Minister. In a short speech at my reception on the White House Lawn I went out of my way to reaffirm my support for American leadership of the West. Then in a speech the next day in New York I warned of the dangers of Soviet ambitions and urged the need for strong western defence:

The immediate threat from the Soviet Union is military rather than ideological. The threat is not only to our security in Europe and North America but also, both directly and by proxy, in the Third World… we can argue about Soviet motives but the fact is that the Russians have the weapons and are getting more of them. It is simple prudence for the West to respond.

I also undertook to support the United States in the UN Security Council in seeking international economic sanctions against Iran under Chapter 7 of the UN Charter. The President and I discussed defence and the situation in Ulster. I took the opportunity to thank him for all he had been doing behind the scenes in the final stages of the negotiations on Rhodesia.

Then, at the end of 1979, the world reached one of those genuine watersheds which are so often predicted, which so rarely occur — and which take almost everyone by surprise when they do: the Soviet invasion of Afghanistan. In April 1978, the Government of Afghanistan had been overthrown in a communist-inspired coup; a pro-Soviet government was established, which, however, was met by widespread opposition and eventual rebellion. In September 1979 the new President, Taraki, was himself overthrown and killed by his deputy, Hafizullah Amin. On 27 December, Amin in turn was overthrown and killed, to be replaced by Babrak Karmal, whose regime was supported by thousands of Soviet troops.

The Soviets had long considered Afghanistan to have a special strategic significance and sought to exercise influence there through so-called ‘Treaties of Friendship’. It was said that they were probably concerned, in the light of events in Iran, at the possibility of anarchy in Afghanistan leading to a second fundamentalist Muslim state on their borders, which might destabilize their own subject Muslim population. The West had for some time been anxious that the Soviets would make a drive for the oil in the Gulf. And the energy crisis gave them a still stronger reason to do so.

Perhaps I was less shocked than some by the invasion of Afghanistan. I had long understood that détente had been ruthlessly used by the Soviets to exploit western weakness and disarray. I knew the beast.

What had happened in Afghanistan was only part of a wider pattern. The Soviets had instigated Cubans and East Germans to advance their aims and ambitions in Africa. They had been working to further communist subversion throughout the Third World, and for all the talk of international peace and friendship, they had built up armed forces far beyond their defensive needs. Whatever their precise motives now in Afghanistan, they must have known that they had threatened the stability of Pakistan and Iran — the latter unstable enough already under the Ayatollah — and were within 300 miles of the Straits of Hormuz. Moreover, bad as the situation was in itself, it could be worse as a precedent. There were other areas of the world in which the Soviets might prefer aggression to diplomacy, if they now prevailed: for example, Marshal Tito was evidently approaching the end of his life in Yugoslavia and there could be opportunities for Soviet intervention there. They clearly had to be punished for their aggression and taught, albeit belatedly, that the West would not only talk about freedom but was prepared to make sacrifices to defend it.

On Friday 28 December President Carter rang me at Chequers and we discussed at length what the Soviets were doing in Afghanistan and what our reaction should be. What had happened was a bitter blow to him. Britain had not felt able to comply with all that the Americans had wanted of us in response to the hostage crisis: in particular, we were not willing (or indeed legally able) to freeze Iranian financial assets, which would have had a devastating effect on international confidence in the City of London as a world financial centre. However, I was determined that we should follow America’s lead now in taking action against the USSR and its puppet regime in Kabul. We therefore decided on a range of measures, including the curtailment of visits and contacts, non-renewal of the Anglo-Soviet credit agreement and a tightening of the rules on technology transfer. I also sought to mobilize the governments of the European Community to support the Americans. But, like President Carter, I was sure that the most effective thing we could do would be to prevent their using the forthcoming Moscow Olympics for propaganda purposes. Unfortunately, most of the British Olympic team decided to attend the Games, though we tried to persuade them otherwise: of course, unlike their equivalents in the Soviet Union, our athletes were left free to make up their own minds. At the UN our ambassador, Tony Parsons, helped to rally the ‘non-aligned’ countries to condemn the Soviet Union’s aggression. In London, on 3 January, I saw the Soviet Ambassador to enlarge in vigorous terms on the contents of my exchanges by telegram with President Brezhnev.

From now on, the whole tone of international affairs began to change, and for the better. Hard-headed realism and strong defence became the order of the day. The Soviets had made a fatal miscalculation: they had prepared the way for the renaissance of America under Ronald Reagan.

But this was the future. America had still to go through the humiliating agony of the failed attempt to rescue the Iranian hostages. As I watched President Carter’s television broadcast explaining what had happened, I felt America’s wound as if it were Britain’s own; and in a sense it was, for anyone who exposed American weakness increased ours. I was soon, though, in a position to demonstrate that there would be no flinching when it came to dealing with our own brand of Middle East terrorism.

I first learned of the terrorist attack on the Iranian Embassy at Prince’s Gate in Knightsbridge on Wednesday 30 April during a visit I was making to the BBC. The early reports were, in fact, misleadingly anodyne. It soon became known, however, that several gunmen had forced their way into the Iranian Embassy and were holding twenty hostages — most of them Iranian staff, but also including a policeman who had been on duty outside and two BBC journalists who had been applying for visas. The gunmen were threatening to blow up both the embassy and the hostages if their demands were not met. The terrorists belonged to an organization calling itself ‘the Group of the Martyr’; they were Iranian Arabs from Arabistan, Iraqi-trained and bitterly opposed to the prevailing regime in Iran. They demanded that a list of 91 prisoners be set free by the Iranian Government, that the rights of Iranian dissidents should be recognized and a special aeroplane provided to take them and the hostages out of Britain. The Iranian Government had no intention of conceding these demands; and we, for our part, had no intention of allowing terrorists to succeed in their hostage taking. I was conscious that, though the group involved was a different one, this was no less an attempt to exploit perceived western weakness than was the hostage taking of the American embassy personnel in Tehran. My policy would be to do everything possible to resolve the crisis peacefully, without unnecessarily risking the lives of the hostages, but above all to ensure that terrorism should be — and be seen to be — defeated.

Willie Whitelaw, as Home Secretary, took immediate charge of operations from the special emergency unit in the Cabinet Office. The unit is immediately activated when a security crisis occurs. On it representatives of the Cabinet Office, Home Office, Foreign Office, military, police and intelligence services advise a minister in the chair — usually, as on this occasion, the Home Secretary; I only once and briefly took this role at the time of the hijack of an aircraft from Tanzania to Stansted. Hour by hour information is gathered, sifted and analysed so that every circumstance and option can be properly evaluated. Throughout the crisis, Willie kept in regular contact with me. In turn the Metropolitan Police kept in touch with the terrorists by a specially laid telephone line. We also made contact with those who might be able to exert some influence over the gunmen. The latter wished to have an Arab country’s ambassador act as intermediary. But we were extremely doubtful about this: there was a risk that the objectives of such an intermediary would be different from our own. Moreover, the Jordanians, whom we were prepared to trust, refused to become involved. A Muslim imam did talk to the terrorists, but without result. It was a stalemate.

Willie and I were completely agreed as to the strategy. We would try patient negotiation; but if any hostages were wounded we would consider an attack on the embassy; and if a hostage were killed we would definitely send in the Special Air Service (SAS). There had to be some flexibility. But what was ruled out from the start was to let the terrorists leave, with or without the hostages.

The position began to deteriorate on Sunday afternoon. I was called back early from Chequers and we were driving back to London when a further message came over the car-phone. There was too much interference on the line to be able to talk easily so I had my driver pull into a lay-by. Apparently, the information was that the hostages’ lives were now at risk. Willie wanted my permission to send in the SAS. ‘Yes, go in’: I said. The car pulled back out onto the road, while I tried to visualize what was happening and waited for the outcome. Executed with the superb courage and professionalism the world now expects of the SAS, the assault took place in the full glare of the television cameras. Of the 19 hostages known to be alive at the time of the assault all were rescued. Four gunmen were killed; one was captured; none escaped. I breathed a sigh of relief when I learned that there were no police or SAS casualties. Later I went to the Regent’s Park Barracks to congratulate our men. I was met by Peter de la Billière, the SAS commander, and then watched what had happened on television news, with a running commentary, punctuated by relieved laughter, from those involved in the assault. One of them turned to me and said, ‘we never thought you’d let us do it.’ Wherever I went over the next few days, I sensed a great wave of pride at the outcome; telegrams of congratulation poured in from abroad: we had sent a signal to terrorists everywhere that they could expect no deals and would extort no favours from Britain.

The Middle East continued to occupy my attention throughout the rest of 1980. At the European Council in Venice on 12 and 13 June the heads of government discussed Israel and the Palestinian question. The key issue was whether the Community governments were to call for the PLO to be ‘associated with’ the Middle East peace talks, or to ‘participate in’ them: I was very much against the latter course, for as long as the PLO did not reject terrorism. In fact, the final communiqué reflected what seemed to me the right balance: it reaffirmed the right of all the states in the region — including Israel — to existence and security, but also demanded justice for all peoples, which implied recognition of of the Palestinians’ right to self-determination. So, of course, it pleased no one.

Then the Middle East focus shifted again. In September 1980 Iraq attacked Iran and we were once again in the throes of a new crisis, with potentially dangerous political and economic implications for western interests. Saddam Hussein had decided that the chaos in Iran provided him with a good opportunity to renounce the 1975 Algiers Settlement of the two countries’ disputed claims to the Shatt-al-Arab waterway and seize it by force.

Shortly after the outbreak of the war Peter Carrington came over to Chequers to discuss the situation with me. I was chiefly concerned to prevent the conflict spreading down the Gulf and involving the vulnerable oil-rich Gulf States, which had traditionally close links with Britain. I told Peter that I did not share the common view that the Iranians would quickly be beaten. They were fanatical fighters and had an effective airforce with which they could attack oil installations. I was right: by the end of the year and after initial successes, the Iraqis became bogged down and the war threatened both the stability of the Gulf and western shipping. But by this time we had put in the Armilla Patrol to protect our ships.

As I looked back on the international scene that Christmas of 1980 at Chequers, I reflected that the successes of British foreign policy had helped us through a particularly dark and difficult time in domestic, and particularly economic, affairs. But as in economic matters so in foreign affairs I knew that we were only starting the course. Tackling Britain’s Community budget problem was only the first step to reforming the Community’s finances. Bringing Rhodesia to legal independence was but a prelude to addressing the problem of South Africa. The West’s response to the Soviet invasion of Afghanistan would have to be a fundamental rethinking of our relations with the communist bloc and this had barely begun. The renewed instability in the Gulf as a result of Iraq’s attack on Iran would ultimately require a new commitment by the western powers to the security of the region. All these issues were to dominate British foreign policy in the years ahead.

CHAPTER IV

The Downing Street Years, 1979-1990

Not At All Right, Jack

The restructuring of British industry and trade union reform in 1979–1980

BRITAIN’S INDUSTRIAL PROBLEMS

In the years since the war British politics had focused, above all, on the debate about the proper role of the state in the operation of the economy. By 1979 and perhaps earlier, optimism about the beneficent effects of government intervention had largely disappeared. This change of attitude, for which I had long worked and argued, meant that many people who had not previously been Conservative supporters were now prepared to give our approach at least the benefit of the doubt. But I knew that this entirely justified lack of faith in the wisdom of the state must be matched by a renewed confidence in the creative capacity of enterprise.

A sort of cynical disdain, often disguised as black humour, had come to characterize many people’s attitude to industry and unions. We all enjoyed the film I’m All Right, Jack, but the problem was no laughing matter.

British goods will only be attractive if they can compete with the best on offer from other countries, in respect of quality, reliability and price, or some combination of the three, and the truth is that too often British industrial products were uncompetitive. This was not simply because the strong pound was making it difficult to sell abroad, but because our industrial reputation had steadily been eroded. In the end reputation reflects reality. Nothing less than changing that reality — fundamentally and for the better — would do.

In spite of what might seem the more immediate and pressing problems of strikes, price competitiveness and international recession, the root of Britain’s industrial problem was low productivity. British living standards were lower than those of our principal competitors and the number of well-paid and reasonably secure jobs was smaller because we produced less per person than they did. Some twenty-five years earlier our productivity was the highest in western Europe; by 1979 it was among the lowest. The overmanning resulting from trade union restrictive practices was concealed unemployment; and beyond a certain point — certainly beyond the point we had reached in 1979 — overmanning would bring down businesses and destroy existing jobs, and abort those which otherwise could have flourished. Outdated capacity and old jobs have to go to make the most of new opportunities. Yet the paradox which neither British trade unions nor the socialists were prepared to accept was that an increase in productivity is likely, initially, to reduce the number of jobs before creating the wealth that sustains new ones. Time and again we were asked when plants and companies closed, ‘where will the new jobs come from?’ As the months went by, we could point to the expansion of self-employment and to industrial successes in aerospace, chemicals and North Sea oil. Increasingly we could also look to foreign investment, for example in electronics and cars. But the fact is that in a market economy government does not — and cannot — know where jobs will come from: if it did know, all those interventionist policies for ‘picking winners’ and ‘backing success’ would not have picked losers and compounded failure.

Because our analysis of what was wrong with Britain’s industrial performance centred on low productivity and its causes — rather than on levels of pay — incomes policy had no place in our economic strategy. I was determined that the Government should not become enmeshed, as previous Labour and Conservative administrations had been, in the obscure intricacies of ‘norms’, ‘going rates’ and ‘special cases’. Of course, pay rises at this time were far too high in large parts of British industry where profits were small or nonexistent, investment was inadequate, or market prospects looked poor. Judged by relative labour costs, our level of competitiveness in 1980 was some 40 to 50 per cent worse than in 1978: and around three-fifths of this was due to UK unit labour costs increasing at a faster rate than those abroad, with only two-fifths the result of exchange rate appreciation. There was little, if anything, we could do to influence the exchange rate, without allowing inflation to rise still further and faster. But there was a great deal which trade union negotiators had it in their power to do if they wished to prevent their own members and others being priced out of jobs; and as the scale of union irresponsibility grew apparent, talk of the need for a pay policy began to be heard.

So it was important that from the very beginning — even before we had realized the extent of the pay explosion which was under way — I stood firm against suggestions of pay policies. Some senior colleagues supported a return to incomes policy: shortly after we took office Jim Prior argued for early talks with the TUC and CBI about pay. We had already had vigorous disagreements on the issue in Opposition. The Right Approach to the Economy had gone further than I would have liked in proposing a ‘forum’ for discussion between employers and unions of the pay implications of government economic policy. A far weaker reference had been included in the 1979 manifesto. I had now come to feel that all such talk was at best irrelevant and at worst misguided.

Of course, it is of great importance that all those involved in wage bargaining should know and understand the economic framework in which they are operating and the facts of life confronting their particular business. Within a given money supply (provided that the government sticks to it), the more taken out in higher pay, the less available for investment, and the smaller the number of jobs.

Some people offered what they thought of as the ‘German model’. We were all conscious of Germany’s economic success. Indeed, we had helped create the conditions for it after the war by introducing competition and restructuring their trade unions. There were those in Britain who went further than this and said that we should copy the German corporatist tendency of making national economic decisions in consultation with business organizations and trade union leaders. However, what might work for Germany would not necessarily work for us. The German experience of hyperinflation between the wars meant that nearly everyone there was deeply conscious of the need to keep inflation down, even at the expense of a short-term rise in unemployment. German trade unions were also far more responsible than ours, and of course the German character is different, less individualistic and more regimented. So the ‘German model’ was inappropriate for Britain.

In any case, we already had the National Economic Development Council (NEDC) in which ministers, employers and trade unionists met from time to time. And so I was quite sure that we should not proceed further with the idea of a new ‘forum’. In fact, I felt that we should do all that we could to reinforce the contrary view: the whole approach based on prices and incomes controls should be swept away. The Government would set the framework, but it was for businesses and workforces to make their own choices, and to face the consequences of their actions, good and bad. In the private sector rates of pay must be determined by what businesses could afford, depending on their profitability and productivity. In the public sector also affordability was the key — in this case meaning the scale of the burden it was right to ask the taxpayer and ratepayer to bear. Given that government was the ultimate owner and banker, however, the mechanism by which these disciplines could be made effective was bound to be less clear and direct than in the private sector.

THE 1980 BUDGET AND THE MEDIUM TERM FINANCIAL STRATEGY (MTFS)

The income tax cuts in our 1979 budget were intended to give more incentives to work. But the budget of 1980 was still more directly focused on improving our underlying economic performance. Towards the end of February Geoffrey Howe came to see me to discuss the shape of it. We were agreed entirely about the monetary and fiscal position: we would continue with the present money supply targets, which were still not being met, and keep the PSBR at the same level as the previous year.

However, I was more concerned about his tax proposals. There was no doubt about the difficulties industry was facing. Very high pay awards had left firms short of cash, though oil companies were in a better position due to the oil price rise. There was, therefore, a strong argument for a budget which helped business. On the other hand, I certainly did not want to see personal incentives diminished. It was going to be difficult to get the balance right. In any case, there was also a question of the precise means to help industry. My instinct was to go for a lower PSBR and so bring down interest rates. But many in industry wanted us to cut the National Insurance Surcharge (NIS) — a tax introduced by Labour, which had substantially raised business costs. Geoffrey had also been pressing from the previous December for a package of capital tax cuts and reliefs.

In the end we settled on a ‘budget for business’, but only by fairly modest and inexpensive measures. Geoffrey Howe’s second budget on 26 March 1980 helped small businesses through enterprise zones,[26] gave tax relief to encourage the investment of venture capital, and introduced building allowances for small workshops.

As regards income tax, personal allowances generally were raised in line with inflation. But the lower rate band of 25 per cent, which we had inherited from the Labour Party and which complicated the tax system, was abolished. To balance this we raised the thresholds of the higher rate bands by about seven percentage points less than inflation. The budget also announced difficult and unpopular measures on prescription charges and social security benefits.

However, the most important aspect of the 1980 budget related to monetary policy rather than taxation. We announced in the budget our Medium Term Financial Strategy (quickly known as the MTFS), which was to remain at the heart of our economic policies throughout the period of their success and which was only relegated in importance in those final years, when Nigel Lawson’s imprudence had already begun to steer us to disaster. A little historical irony is provided by the fact that Nigel himself, as Financial Secretary, signed the Financial Statement and Budget Report (FSBR), or ‘Red Book’, in which the MTFS first burst on an astonished world, that he had contributed much to its preparation and that he was its most brilliant and committed exponent.

The MTFS was intended to set the monetary framework for the economy over a period of years. The aim was to bring down inflation by decreasing monetary growth, while curbing borrowing to ensure that the pressure of disinflation did not fall solely on the private sector in the form of higher interest rates. The monetary figures for later years that we announced in 1980 were illustrative rather than firm targets — though this did not prevent commentators poking tiresome, if predictable, fun when the targets were altered or not met. The 1980 MTFS figures for the money supply were expressed in sterling M3 (£M3), though the Red Book noted that ‘the way in which the money supply is defined for target purposes may need to be adjusted from time to time as circumstances change,’ an important qualification.[27]

Not all of those who shared our fundamental economic objectives entirely welcomed the MTFS. To some it seemed like a new version of Labour’s 1965 ‘National Plan’. Others questioned whether it would succeed in affecting expectations in the economy as we intended, and wondered what would happen if it did not. But there was a crucial difference between the MTFS and the old style economic planning. We were seeking to secure greater financial stability, within which business and individuals could operate with confidence. We knew that we could do this only by controlling those things which government could control — namely the money supply and public borrowing. Most post-war economic planning, by contrast, sought to control such things as output and employment, which ultimately government could not control, through batteries of regulations on investment, pay and prices, that distorted the operation of the economy and threatened personal liberty. The MTFS broke with all of this. Certainly, no one could guarantee that people would adjust their behaviour to take account of the MTFS; indeed, pay bargainers, particularly in the public sector, conspicuously failed to do so, at least in the early period. The MTFS would only influence expectations in so far as people believed in our determination to stick to it: its credibility depended on that of the Government — and ultimately, therefore, on the quality of my own commitment, about which I would leave no one in doubt. I would not bow to demands to reflate: it was this which turned the MTFS from an ambitious aspiration into the cornerstone of a successful policy.

FIRST STEPS OF TRADE UNION REFORM: THE 1980 EMPLOYMENT ACT

A firm financial strategy was necessary to improve our economic performance: but we never believed that it would be sufficient, even with tax cuts and deregulation of industry. We also had to deal with the problem of trade union power, made worse by successive Labour governments and exploited by the communists and militants who had risen to key positions within the trade union movement — positions which they ruthlessly exploited in the callous strikes of the winter of 1978–9.

The economic effects of union power were still painfully clear. Pay rises were soaring while business prospects plummeted with the onset of recession. The engineering industry dispute in 1979 provided a good demonstration of how much poison excessive trade union power and privilege had injected into British industry — and not just the public but the private sector too. The engineering industry had every commercial reason to reduce costs so as to compete. Yet after a ten-week strike, the employers, the Engineering Employers’ Federation (EEF), conceded a 39-hour week, increases of £13 a week for skilled men and an extra week’s holiday phased over four years, all of this greatly increasing their costs. The EEF had crumbled and, because of the centralized system of pay bargaining, employers throughout the industry had also given in. The EEF had long accepted the closed shop as an unavoidable fact of life. So the unions’ power over their members was more or less absolute. Some employers, in search of a quiet life, preferred it that way. But it meant that when a dispute did occur the trade union was able to exercise what amounted to intimidation over its members — ‘lawful intimidation’ in the unhappy phrase coined by Labour’s former Attorney-General, Sam Silkin. Those who wanted to continue working could be threatened by the union with expulsion and the consequent loss of their job. The engineering strike was not a political strike, nor one which threatened to bring ordinary life to a halt. But it was precisely the sort of strike which no country fighting for its industrial future could afford — an object lesson in what was wrong. Its consequences damaged the whole industry for years to come.

Indeed, for the greater part of my term of office the need for new steps in trade union reform was repeatedly demonstrated by industrial disputes. The disadvantage of this was that, in a sense, we were always behind events, learning the lessons of the last strike. The advantage was, however, that we could point to recent abuses to justify reform and could therefore rely on public opinion to help us push it through.

On 14 May 1979, less than a fortnight after I formed the Government, Jim Prior wrote to me setting out his plans for trade union reform. There was a certain amount that we could do at once. We could set up our promised inquiry into the coercive recruitment practices of the printing union SLADE — which would deal also with the activities of the NGA in the advertising industry. We could also make certain changes to employment legislation by Order in Council, with the aim of reducing the heavy burden placed — on small firms in particular — by the provisions on unfair dismissal and redundancy. But we would have to consult with employers and unions quite extensively about our main proposals on secondary picketing, the closed shop and ballots. As a result, the larger changes we wanted would not be in place in time for strikes which might occur that winter. Jim Prior was optimistic that if the TUC was properly handled — and he thought that he could handle the TUC — they would not reject our proposals outright. The CBI was also, as usual, opposed to any ‘precipitate’ action. In reply I pointed out that they would be the first people to complain if secondary picketing started again. I also made it clear that I thought that a bill must be published by November, if at all possible, and should reach its committee stage in the Commons before Christmas. I had a further discussion with Jim about tactics on the afternoon of Wednesday 6 June. Jim said that for purposes of negotiation his proposals to the TUC would go somewhat further than those in our manifesto, but I insisted that our final position should not be less than the manifesto — a significantly different emphasis.

Two weeks later Jim set out his proposals in a Cabinet paper. These were very similar to those which were ultimately contained in the 1980 Act. They covered three main areas: picketing, the closed shop and ballots. We planned to limit the specific immunities for picketing, given under the legislation of 1974 and 1976, strictly to those who were themselves party to the dispute and who were picketing at the premises of their own employer. Powers would be taken to issue a statutory code on picketing. Where there was a closed shop, we proposed to give employees who might be dismissed for refusing to join a union the right to apply to an industrial tribunal for compensation. There would be a legal right of complaint for those arbitrarily expelled or excluded from union membership. We would extend the present protection for employees who objected to joining a union because of deeply held personal conviction. A new closed shop could in future only be established if an overwhelming majority of workers voted for it by secret ballot. A statutory code relating to the closed shop would be drawn up. Finally, the Secretary of State for Employment would be given power to reimburse trade unions for the postal and administrative costs of secret ballots.

These early proposals were as notable for what they did not contain as for what they did. At this stage they did not extend to the question of secondary action other than secondary picketing, nor did they deal with the wider question of trade union immunities. In particular, they left alone the crucial immunity which prevented action being taken by the courts against union funds. On the first of these points — secondary action — we were awaiting the conclusions of the House of Lords in the important case of Express Newspapers v. MacShane.[28] It is worth noting that the changes we made in all these areas, including that of picketing, were changes in the civil, not the criminal, law. In public discussion of subsequent strikes this distinction was often lost. The civil law could only change the way in which unions behaved if employers or, in some cases, workers were prepared to use it. They had to bring the case. By contrast, the criminal law on picketing, which was clarified but not substantially altered in the years ahead, had to be enforced by the police and the courts. Although the Government would make it clear that the police enjoyed its moral support and would improve police equipment and training, the constitutional limits on us in this area were real and sometimes frustrating.

As the summer wore on, it became obvious that although the TUC was prepared to talk to the Government about our proposals, it had no intention of actually co-operating with them. On 25 June at their request I met the TUC General Council. I was depressed, but not a bit surprised, to discover that there was no willingness on their side to face economic facts or to try to understand the economic strategy we were pursuing. I told the TUC that we all wanted high living standards and more jobs, but that if people wanted a German standard of living then they must achieve a German standard of output. When the TUC said that they wanted more government spending, I pointed out that there was no shortage of demand in the economy: the problem was that because of our uncompetitiveness that demand was being met by imports. I got nowhere. The TUC Conference in September was marked by unreasoning and unqualified opposition to everything we proposed — even the provision of funds for secret ballots in which no compulsion was involved, other than the moral pressure to consult their own members.

On the evening of Wednesday 12 September I held a meeting with Geoffrey Howe, Jim Prior and other colleagues to plan our strategy. I thought that it was hopeless trying to change the attitudes of most trade union leaders, who were socialist politicians first, second and third. Instead, we agreed that we must appeal over their heads to their members.

I was convinced that rank-and-file unionists felt very differently to the union bosses about the reforms. In due course, we must liberate them by breaking down the closed shop and by ensuring genuine democracy within the unions; then they themselves would bring the extremists and union apparatchiks into line. But until we could make such changes — and it would take more than our present bill to do that — all we could do was to call for their support as persuasively and powerfully as we could.

So time and again I drummed home the message that it was ordinary trade unionists and their families who were hurt by the irresponsible use of trade union power. For example, in my speech to the Party Conference in Blackpool on Friday 12 October 1979, I said:

The days when only employers suffered from a strike are long since past. Today strikes affect trade union members and their families just like the rest of us. One union can deprive us all of coal, or food, or transport easily enough. What it cannot do is defend its members against similar action by other unions… Recently there was a strike which prevented telephone bills from being sent. The cost of that strike to the Post Office is £110 million. It will have to be paid for by everyone who uses the telephone… The recent two-days-a-week strike by the Engineering Union lost industry £2 billion in sales. We may never make up those sales and we shall lose some of the jobs which depend on them.

I developed this theme again when I spoke to the Conservative Trade Unionists’ (CTU) Conference in Nottingham on Saturday 17 November. Strikes were not the only problem; rather, it was the whole socialist economic approach to which the union bosses were wedded, and in particular their preference for monopoly and protection. I took the example of British Steel — which soon became all too topical — to make the point:

British Steel would like to import coking coal to make its steel more competitive. But the NUM opposes this saying, ‘Buy our coking coal, even if it is more expensive.’ If British Steel agree, they must, in turn, say to the car manufacturers, ‘Buy our steel, even if it is more expensive.’ But then British Leyland and the other car manufacturers have to ask the consumer, ‘Please buy our cars even if they are more expensive.’ But we are all consumers and as consumers we all want a choice. We want to buy the best value for money. If foreign cars, or washing machines, are cheaper or better than British, the consumer wants the choice. There is a broken circuit. Producers want a protected market for their products. That is the union demand. But the same trade unionists, as consumers, want an open market. They cannot both win. But they can both lose.

In the last part of 1979 and the early months of 1980 we continued refining the Employment Bill and spent a good deal of time on the question of secondary action and immunities. We also discussed item by item measures to deal with the burdens which past Labour legislation had placed on industry. One such burden was Schedule 11 of the Employment Protection Act, 1975. Schedule 11 was a typical case: it showed how an apparently harmless measure, introduced for the best of motives, could defeat the intentions of its originators and result in higher unemployment. Schedule 11 provided that the ‘recognized terms and conditions’ of employment for a particular industry should apply throughout that industry. The original aim was to deal with pockets of low pay; the principle had wartime antecedents, but in recent years it had been exploited by higher paid groups, such as those working for the BBC. In that instance the unfortunate television licence holder had to foot the bill. Generally, by forcing wage levels up to the level obtaining in the strongest firms, Schedule 11 caused jobs to be lost.

But by far the most contested issue was that of trade union immunities. Our proposals on secondary picketing had already begun to address it. But we now took a further step. We had received the report of the enquiry set up earlier into the recruitment activities of the printing union SLADE, undertaken by Mr Andrew Leggatt QC[29] In response, we decided to remove the immunity where industrial disruption was called or threatened by people other than those directly working for a particular firm with the intention of coercing its employees into joining a trade union.

We decided to go further, following the House of Lords decision in the MacShane case on 13 December. The MacShane case was important because it confirmed the wide scope of existing immunities in the case of secondary action. Most of the immunities then enjoyed by trade unions had their origin in the Trade Disputes Act (1906), which Labour extended significantly after its narrow election victory in October 1974. The MacShane case arose from a dispute that began in 1978 between the National Union of Journalists (NUJ) and a number of provincial newspapers. The provincial papers managed to keep going during the dispute by publishing stories supplied to them by the Press Association. The NUJ unsuccessfully attempted to prevent this, first, by direct appeal to NUJ members working for the Press Association and then, when that failed, by instructing its people on national newspapers to black Press Association material altogether. In response the Daily Express applied for an injunction against the NUJ. The Court of Appeal in December 1978 ruled in favour of the Express that the NUJ secondary action had exceeded that which could be regarded as furthering the objectives of the dispute and therefore did not enjoy immunity. As a result of this decision, injunctions could be and were granted. However, when the case went to the House of Lords, the Appeal Court’s ruling was overturned. Essentially, the Lords decided that for purposes of law an industrial action was ‘in furtherance of a trade dispute’, and therefore immune, if trade union officials genuinely believed it to be so. This subjective test had the most disturbing implications. It meant that henceforth there would be virtually unlimited immunity for secondary industrial action.

The position was complicated by the outcome of two other court cases. One of these — N. W. L. Limited v. Nelson & Wood, or the ‘Nawala Case’ — resulted from the attempts of the International Transport Workers’ Federation to prevent the employment by a British shipping company of overseas seamen in British registered ships. The Federation’s action threatened the future of the British shipping industry. Still more important, however, was the second case, which widened the scope for secondary action in the steel strike. The Iron and Steel Trades Confederation (ISTC) had called out its members in the private steel sector as part of its dispute with the British Steel Corporation which had begun on 2 January 1980. Duport Steels, a private steel company, was granted an injunction by the Court of Appeal against Bill Sirs, General Secretary of the ISTC. The Court of Appeal ruled that immunity did not apply in this case because the ISTC’s argument was essentially with the Government rather than BSC itself. But again, the House of Lords unanimously reversed this ruling, relying on broadly the same grounds as in the MacShane case. The practical result was that the strike spread once more to the private steel companies.

We were all agreed that the law as now interpreted by the Courts must be changed. In Opposition, we had opposed all of the moves Labour made to extend trade union powers and immunities and in our manifesto we had said that, ‘the protection of the law should be available to those not concerned in a dispute.’ We agreed that it was right now to clarify the precise limits of immunity. But we disagreed both about what immunity, if any, there should be for secondary action and about the timing of the introduction of the necessary change into the Employment Bill. Again and again, Jim Prior said that he did not want decisions about changes in the law to be linked with a particular dispute. But as the steel strike worsened, with none of our proposed legislation yet in force — let alone measures to deal with secondary strikes and blacking — the public criticism grew. I had the greatest sympathy with the critics, though I wished that some employers had earlier been rather more robust. Whenever those of us who felt that we ought to go faster put our case — and our number included Geoffrey Howe, John Nott, Keith Joseph, Angus Maude, Peter Thorneycroft and John Hoskyns — Jim Prior was always able to argue against ‘hasty action’ by reference to the cautious attitude of the CBI.

On the afternoon of Wednesday 30 January Jim came to see me at his request and poured out a tale of woe. Apparently the unions’ mood had changed markedly for the worse since Christmas. We were facing a ‘day of action’ from the unions in Wales. The steel unions had managed to call out their members in private steel companies. I replied that, while I had every respect for his views, I did not share his pessimism.

In fact, by this stage I did not share Jim’s analysis of the situation at all. He really believed that we had already tried to do too much and that we should go no further, whether in the area of trade union law or general economic strategy. I, for my part, had begun bitterly to regret that we had not made faster progress both in cutting public expenditure and with trade union reform.

There was, of course, a more profound and general divide between us. For all his virtues, Jim Prior was an example of a political type that had dominated and, in my view, damaged the post-war Tory Party. I call such figures ‘the false squire’. They have all the outward show of a John Bull — ruddy face, white hair, bluff manner — but inwardly they are political calculators who see the task of Conservatives as one of retreating gracefully before the Left’s inevitable advance. Retreat as a tactic is sometimes necessary; retreat as a settled policy eats at the soul. In order to justify the series of defeats that his philosophy entails, the false squire has to persuade rank-and-file Conservatives and indeed himself that advance is impossible. His whole political life would, after all, be a gigantic mistake if a policy of positive Tory reform turned out to be both practical and popular. Hence the passionate and obstinate resistance mounted by the ‘wets’ to the fiscal, economic and trade union reforms of the early 1980s. These reforms had either to fail or be stopped. For if they succeeded, a whole generation of Tory leaders had despaired unnecessarily. Ian Gilmour expressed this feeling in the clearest form; but Jim Prior was infected by it too, and it made him timid and overcautious in his trade union policy. I had to stake out a more determined approach.

Brian Waiden interviewed me for Weekend World on Sunday 6 January. I used the occasion to say that we would be introducing a new clause in the Employment Bill to rectify the problem left by the MacShane judgement. I made it clear that we did not intend to remove the immunity enjoyed by trade unions as regards action intended to cause people to break their employment contracts, but would concentrate on the immunity relating to action designed to cause employers to break their commercial contracts. I also drew attention to the way in which trade union immunities had combined with nationalized monopolies to give huge power to the trade unions in these industries. We needed to restrict the immunities and to break the monopolies by introducing competition.

All my instincts told me that we would have strong public support for further action to restrict union power, and the evidence supported me. An opinion survey in The Times on 21 January 1980 asked people the question: ‘Do you think sympathy strikes and blacking are legitimate weapons to use in an industrial dispute, or should the new law restrict their use?’ Seventy-one per cent of those who replied — and 62 per cent of trade unionists who did so — said that a new law should indeed restrict their use.

It would, though, be difficult to go further without support from business leaders. On the morning of Tuesday 5 February I had two meetings with industrialists. The first was with the CBI. Some of them said that the present bill, as drafted, went as far as possible. On hearing this I did not conceal my frustration. I said that, with regard to the timing of more radical measures, there would always be a risk of confrontation with the trade unions, but that it seemed to me it would be better to accept the risk over the coming few months than wait until the autumn when the unions could cause the maximum disruption. I said that I now regretted that we had not brought forward more radical proposals when the bill was introduced. This left us with two possibilities: we could amend the existing bill or announce in the consultative document which we were planning to issue that further legislation would be introduced. The CBI went away in no doubt about my feelings.

The second meeting that day was with the private sector steel producers. There was a sharp contrast between their outlook and that of the CBI. They complained that the private steel companies had been dragged into a dispute not of their making and in which they would be the only real victims. As a result of the strike they were losing about £10 million a week. The ISTC had effectively torn up all its procedural agreements with the private companies and instructed their employees to strike. It was clear that there was no real grievance on the part of private sector steel workers: in the Duport Steels case, when the Court of Appeal had granted its injunction to stop secondary action, there had been a complete return to work before the Lords reversed the decision and the private sector strike resumed. The threat of losing union cards was the decisive factor in persuading private sector workers to join the strike. In these circumstances it is not surprising that the private sector steel companies wanted immediate legislation to outlaw secondary picketing. And there was nothing I was able to offer them except sympathy.

In answer to a letter from a leading industrialist urging ‘caution’, I replied setting out my views:

Insofar as we do not effectively change the law we would be positively confirming what Lord Diplock said [in Duport Steels Limited and others v. Sirs and others]. We would be indicating that we are not prepared to protect the person who through no fault of his own has suffered damage at the hands of another. We should be telling the law-abiding citizen that we prefer to strengthen the powers of those who inflict injury rather than to help those who suffer from it.

…You refer to moderate Trade Unionists. I have countless letters from them pleading with me to strengthen their hand against the militants, telling me that is why they voted for us and that now this Government by failing to take effective action has let them down.

If we flinch from this task now, when we have public and massive Trade Union opinion with us, they are not likely to have much faith in us to do it next winter.

I finished by quoting Shakespeare’s Measure for Measure:

Our doubts are traitors,

And make us lose the good we oft might win,

By fearing to attempt.

I returned to the task of toughening up the law. Ministers now agreed to restore the law to what it had been understood to be before the MacShane judgement, adding further tests relating to the dispute to be applied by the Courts. There would not, however, be a total ban on secondary action. There followed a short period for consultation and the new clause was introduced into the Employment Bill at the Report Stage in the House of Commons on 17 April 1980, limiting immunity for secondary action which broke or interfered with commercial contracts. Immunity would only exist when the action was taken — by employees of suppliers or customers of the employer in dispute — with the ‘sole or principal purpose’ of furthering the primary dispute and when the action was reasonably likely to succeed. Of great significance for the future was the fact that we announced the publication of a green paper on trade union immunities, which would appear later in the year and would look at the whole issue from a wider perspective.

In fact, the 1980 Act did not directly affect the outcome of the steel strike. The one action open to us which could have done so would have been to accelerate the introduction of Clause 14 of the Employment Bill, which made secondary picketing unlawful. I was strongly attracted by this option. My wish to pursue it had been greatly increased by the mass picketing which had taken place at the private sector steel firm of Hadfields on Thursday 14 February. Keith Joseph telephoned me at Chequers the following Sunday morning to discuss what had happened. We had no doubt that it constituted a grave breach of the criminal law. The question was whether the use of the civil law, and in particular Clause 14, would make matters better or worse.

I telephoned Willie Whitelaw, the Home Secretary, about the public order situation and suggested that we could introduce a one-clause bill on picketing the following week. I also spoke to Michael Havers, the Attorney-General. It was clear to me that the police would need to stop large numbers of pickets arriving at their destination if picketing was to be effectively controlled and the threat of intimidation removed. The civil law, though, could not play any part in that. There was even an argument that a change in the civil law introduced directly in response to violence would make it more difficult to bring pressure on people to respect and obey the criminal law. However, I wanted all of the possibilities to be examined urgently.

After discussion with ministers on Monday (18 February) it was decided not to accelerate the clause relating to secondary picketing. But instead the Attorney-General would restate the next day in the House of Commons the criminal law as it related to picketing. Jim Prior would also write a public letter to Len Murray, the TUC General Secretary, drawing attention to the breach of all the traditionally accepted and understood codes for picketing. In these ways we sought to keep up the pressure.

THE 1980 STEEL STRIKE

The debate about trade union reform, both inside and outside government, was conducted under the shadow of industrial conflict: in particular, the issues of secondary action and immunities became inextricably entangled with the 1980 steel strike. But that strike also challenged our economic strategy directly; and it is unlikely, once the strike had begun, that our economic policies would have survived if we had suffered defeat.

The steel industry, like the motor vehicle industry, was suffering the after-effects of overambitious policies of state intervention. It was Ted Heath’s Government, of which I had been a member, which had set BSC on course for huge investment in expanded capacity in the years before that first oil shock which cut so many such ambitions down to size. The following Labour Government had made some closures but, by setting up a review under Lord Beswick in 1974–5, it had largely sought to buy time. The greater the delay in taking remedial action, however, the less chance there was to make proper use of the most up-to-date plant and this, in turn, worsened the position of BSC as a whole, clouding the prospect for steelmen’s jobs and increasing the burden on the taxpayer, who had to fund huge losses.

One of my first decisions about the nationalized industries was to agree to the closure of the Shotton steel works in North Wales. Measures aimed at providing new job opportunities in the area would be announced, but I knew that the closure would have a devastating effect on the steelmen and their families. A delegation from Shotton had come to see me when I was on a visit to Wales as Leader of the Opposition. I felt desperately sorry for them. They had done all that was expected. But it was not — and could not be — enough.

BSC exemplified not only the disadvantages of state ownership and intervention, but also the way that British trade unionism dragged down our industrial performance. A good example of what was wrong was to be found at the Hunterston ore terminal on the Clyde. Here BSC had built the largest deep-water jetty in Europe. It had been opened in June 1979, but could not be used until November because of a manning dispute between the Transport and General Workers’ Union (TGWU) and the ISTC. For five months bulk ore carriers had to be diverted to the Continent, where their cargo was transferred to smaller vessels for shipment to Terminus Quay, Glasgow, and from there finally sent on to Ravenscraig.

As the end of 1979 approached, external factors over which we had no control made BSC’s problems rapidly worsen. There was huge international overcapacity in steel as the world headed deeper into recession. Steel industries almost everywhere were facing losses and closures. But the fundamental problems of BSC were home-grown. It took BSC nearly twice as many man-hours to produce a tonne of steel as its major European competitors. We had reached the absurd position that the value added by BSC was if anything a little less than the wage bill. Over the five years to 1979–80 more than £3 billion of public money had gone into BSC, which amounted to £221 for every family in the country. Yet still the losses accumulated. Keith Joseph and I were prepared to continue for the present to fund BSC’s investment and redundancy programme; what we were not prepared to do was to fund losses which arose from excessive wage costs, unearned by higher productivity.

If we were serious about turning BSC round — with all the closures, job losses, and challenges to restrictive practices that would involve — we faced the risk of a very damaging steel strike. There was only one worse alternative: to allow the present situation to continue.

BSC’s cash limit for 1980–81 was first set in June 1979: the aim was for it to break even by March 1980. This objective had, in fact, been set by the previous Labour Government. But by 29 November 1979 BSC had announced a £146 million half-year loss and abandoned its break-even target for March, putting it back a further twelve months. The crisis was fast approaching.

On 6 December Keith Joseph let me know what the implications were. BSC could not afford any general wage increase from 1 January other than the consolidation of certain additional increases agreed the previous year — amounting to 2 per cent. Any further increase would be dependent on local negotiations and conditional on the equivalent improvements in productivity. The Corporation had told the unions the week before that 5 million tonnes of surplus capacity, over and above the closure of iron- and steel-making at Corby and Shotton, would have to be shut down. Already Bill Sirs was threatening a strike. I agreed with Keith that we must back the Corporation in its stand. We also agreed that BSC must win the support of public opinion and bring home to the unions the harm which a strike would do to their own members.

As the strike loomed, there was much disquiet about whether the management of BSC had properly prepared its ground for it. The figures used to justify the management’s position were questioned, even by Nicholas Edwards, the Secretary of State for Wales. He might have been right. But I said that we must not attempt to substitute our judgement as politicians for that of the industry. It was up to the management of BSC — at last — to manage.

On 10 December the BSC Board confirmed that 52,000 steel jobs would have to go. The business prospects for BSC were still worsening. Indeed, when we looked at their figures for future steel demand we thought that they were, if anything, slightly optimistic. But again, there was no intention to set our judgement against that of the Board and management. Even before the strike, we had been searching for a successor to the present Chairman, Sir Charles Villiers, whose contract was due shortly to come to an end. We had already received seven or eight firm refusals from suitable candidates and it was clear that fear of government interference was one of the main deterrents.

It was difficult to be sure about the outcome of the strike. BSC, the private steel producers and the steel users all had healthy levels of stocks. The fact that the steel users and stockholders were effectively given three weeks’ notice of the strike allowed them to build up stockpiles. Moreover, because of the depressed state of industry many steel-using companies were operating well below capacity. But, on the other hand, there would be serious problems for the users of tin plate, and possibly for the car industry, and the situation could, of course, rapidly worsen if dockers and transport workers took effective action to stop steel moving around the country and to halt imports. However, BSC and its workforce would suffer most. Its current prices were already above those of our European competitors and the domestic market for steel was likely to be lost permanently to foreign steel companies which could ensure a reliable supply in the future.

From the end of December I chaired regular meetings of a small group of ministers and officials to monitor the steel situation and decide what action needed to be taken. It was a frustrating and anxious time. The details of the BSC offer were not well understood either by the steel workers or by the public. BSC did little to explain its position. It would not put out broadsheets or buy newspaper space, on the ground that such actions might be seen as provocative. The hope was that other pressures could be brought to bear on the ISTC and the National Union of Boilermakers (NUB). Moreover, in a misguided attempt to canvass support for various pay offers which they had made, BSC allowed a bewildering array of different figures to gain currency, pleasing no one: to the general public the figures always seemed to be increasing, while to the unions they never seemed sufficient.

For its part, the ISTC was more conscious of pay settlements to other groups of workers — the ‘going rate’ — than it was of the bleak commercial realities of the industry in which its members worked. On 28 November Ford workers had voted to accept a 21.5 per cent wage increase. On 5 December coal miners had accepted a 20 per cent settlement — and been publicly praised for their moderation. All this undoubtedly added to the strength of feeling among the steelmen. On 7 January Len Murray and Bill Sirs asked for a settlement of 8 per cent plus 5 per cent ‘on account’ for the local productivity deals. BSC offered 8 per cent plus 4 per cent in advance for a limited period. The next day negotiations collapsed. The General and Municipal Workers’ Union (GMWU) joined the strike; on the following day the craftsmen struck, and although on 10 February the craft union leaders accepted a separate settlement of 10 per cent plus 4 per cent, later that week its members rejected the offer. In the meantime, on 16 January, the ISTC had spread the strike to the private steel sector, where the uncertain legal position and the violent mass picketing added to our difficulties.

It became clear to me fairly early on, however, that the steel strike was not going to bring British industry to a halt. At my strategy meeting on 18 January the figures showed that the strike had so far had little effect on industrial production, which had fallen about 2 per cent the previous week and was perhaps marginally lower by the time we met. Even if private steel production were suspended altogether, there would be enough stocks to support normal manufacturing for another four to six weeks, with problems in some particular areas within two to three weeks. As we had foreseen, it was in the specialist area of food canning that the greatest difficulty might arise.

It was against this background that I met first the unions at their request and then the management of BSC on Monday 21 January at No. 10. The union leaders had seen Keith Joseph and Jim Prior the previous Saturday. One difficulty we had was that the unions might have drawn the wrong impression from widely reported remarks made by Jim, criticizing the BSC management. I had been angry to read this. But, when a week later I was asked about it by Robin Day on Panorama, my reply was sweetly dismissive: ‘we all make mistakes now and then. I think it was a mistake, and Jim Prior was very, very sorry indeed for it, and very apologetic. But you don’t just sack a chap for one mistake.’

In my discussion with Mr Sirs and Mr Smith (the leaders respectively of the ISTC and NUB), I said that the Government was not going to intervene in the dispute. I did not know enough about the steel industry to become involved in the negotiations though, of course, I was keen to hear their views. The unions wanted the Government to bring pressure on BSC to make an increased offer. They wanted some ‘new money’, but I pointed out that there is no such thing: money for the steel industry could only come from other industries which were making a profit. The real issue, I said, was productivity where — although Bill Sirs disputed the figures — it was generally accepted that BSC’s performance lagged far behind. Luxemburg had reduced its steel workforce from 24,000 to 16,000 and substantially increased its productivity, with the result that it was now exporting railway lines to the UK. When I had heard this the previous autumn I had been cut to the quick, and I told him so.

That same afternoon I met Sir Charles Villiers and Bob Scholey, the Chairman and Chief Executive of BSC. They described to me precisely what was on offer and the very limited scope for flexibility. I gave them my full support.

On the following day Bob Scholey and Bill Sirs held a meeting, but to no avail. Bill Sirs continued to ask for 20 per cent, a figure which was obviously unrealistic. The only thing we could do was see the strike through. At my meeting of ministers and officials on 1 February we were told that steel was still moving from the docks. There was little or no evidence of shortages except for the deteriorating position in Metal Box, the food can producers. The report for the week ending 2 February again showed a strong position: manufacturing production was at 96 per cent of its normal level. On 12 February we received clearer evidence still about how industry was coping. Ninety per cent of steel stockholders were continuing to maintain a satisfactory level of deliveries. Limited imports were continuing and getting past the obstacles the unions put up against them. Not surprisingly, perhaps, steel users were reluctant to divulge the size of their steel stocks and potential endurance, but their morale was good. Metal Box expected to deliver 50 per cent of what customers demanded. At British Leyland full production could continue until the end of February.

The real problem was now arising in the private steel sector. The mass picketing at Hadfields raised the stakes. It had overtones of the kind of intimidation and violence which had led to the closure of the Saltley Coke Depot during the miners’ strike in 1972: it was vital that we win through.

British business proved resilient and resourceful in meeting the strike: this turned out to be the decisive factor. Somehow, they got hold of the steel they needed. In the reports presented to my meetings the crunch point at which serious problems for steel users would arise never seemed to come any closer. At the meeting on 4 March all information confirmed that the strike could not succeed. The potential endurance of steel users was being increased by the continued flow of imported steel. If anything the outlook seemed slightly better than the week before. By 14 March all but one of the private sector steel companies were back in production and by the time we met on 18 March that too was working.

Although it was now obvious that the unions had lost — with the strike clearly failing to cripple industry and the strikers themselves increasingly demoralized — the precise terms on which the Government and management had won remained in the balance. On 9 March BSC had held a ‘ballot about a ballot’, asking workers whether they wanted a ballot on pay, which the ISTC had hitherto denied them, and this had shown strong evidence of disenchantment with the ISTC’s tactics and leadership. The union wanted a way out which would save face. BSC had formally proposed arbitration on 17 February and, although rejected, the offer had remained open. There was strong pressure — which I wanted to resist — for a Court of Enquiry into the strike which would propose a settlement. I would have preferred the involvement of ACAS (the Advisory, Conciliation and Arbitration Service). It seemed to me that if ACAS had any reason for existing at all, it should surely have a role in a situation such as this. In fact, we were condemned to watch while BSC and the unions agreed to the appointment of a three-man enquiry consisting of Lords Lever and Marsh (both former Labour Cabinet ministers) and Bill Keyes of SOG AT, which on 31 March recommended a settlement well above the figure originally offered by BSC but substantially below what the ISTC had demanded. The offer was accepted.

At its final meeting on 9 April my committee was told that all the BSC plants were back in operation. Production and steel deliveries were both about 95 per cent of what they would have been without the dispute. The outcome, in spite of the size of the final settlement, was generally seen as a victory for the Government, if not for the BSC management.

The bills, however, kept on coming in. On 6 June Sir Charles Villiers wrote to Keith Joseph saying that he foresaw the need for an additional £400 million in the financial year 1980–81, over and above the £450 million already allocated. The proposals made by BSC to stay within the borrowing limit set by the Government (its EFL or External Financing Limit) involved various financial devices including the sale and lease-back of assets. The only alternative they had to suggest was that in effect BSC should go into liquidation. Clearly, whatever the pressures imposed by the strike, matters should never have been allowed to come to such a pass and it reflected badly on the management. But we had already decided what to do about that. In spite of some outcry over the terms offered, Ian MacGregor had been appointed to succeed Sir Charles Villiers. I expected him to deal with the appalling commercial and financial legacy and in due course we approved very large increases in the funding of BSC to allow him to do this. Nor were we disappointed. Another cost, which we did not begrudge, was the money made available to encourage new development in areas badly affected by redundancies, such as Llanwern, Port Talbot, Consett and Scunthorpe.

This had been a battle fought and won not simply for the Government and for our policies, but for the economic well-being of the country as a whole. It was necessary to stand up to unions which thought that because they were in the public sector they should be allowed to ignore commercial reality and the need for higher productivity. In future, pay had to depend on the state of the employing industry, and not on some notion of ‘comparability’ with what other people received. But it was always going to be more difficult to induce such realism where the state was owner, banker, and at times tempted to be manager as well.

BRITISH LEYLAND: 1979–1980

In many ways British Leyland presented a similar challenge to the Government as BSC, though in a still more acute and politically difficult form. Like BSC, BL was effectively state-owned and controlled, though technically it was not a nationalized industry. The company had become a symbol of Britain’s industrial decline and of trade union bloody-mindedness. However, by the time I entered No. 10 it had also begun to symbolize the fightback by management. Michael Edwardes, BL’s Chairman, had already demonstrated his grit in taking on the trade union militants who had brought the British car industry to its knees. I knew that whatever we decided to do about BL would have an impact on the psychology and morale of British managers as a whole, and I was determined to send the right signals. Unfortunately, unlike the case of BSC, it became increasingly clear that the action required to support BL’s stand against trade union obstruction diverged form what was required on purely commercoal grounds. This was a problem: but we had to back Michael Edwardes.

We had indicated in Opposition our hostility to the Ryder Plan for BL with its enormous cost, unmatched by sufficiently rigorous measures to increase productivity and earn profits.[30] My first direct experience as Prime Minister of BL’s difficulties came in September 1979 when Keith Joseph informed me of BL’s dreadful half-yearly results and of the measures the Chairman and Board intended to take. The new plan involved the closure of BL’s Coventry plant. At least 25,000 jobs would be lost. Productivity would be increased. The development of BL’s medium car range of models would be accelerated. The BL Board said that the Company would require additional funds beyond the £225 million remaining of the £1 billion which Labour, under the Ryder Plan, had in principle committed. In response, Keith made no financial promises. He told BL to look at the scope for raising money from its own resources — that is sales of profitable parts of the company. There was no immediate need to take decisions about funding until the Government received the new BL Corporate Plan from the National Enterprise Board (NEB) in November.

BL’s workers were to be balloted on the Corporate Plan. If it received substantial majority support the Government would find it very difficult to turn down and, as quickly became apparent, the company would want a further £200 million above and beyond the final tranche of Ryder money. The ballot, of which the result would be announced on 1 November, seemed likely to go the company’s way. But it might not; and that would present its own immediate problems. For if the ballot showed anything other than overwhelming support for the company’s proposals there would be speculation about its future, with the prospect of BL’s many small and medium-sized creditors demanding immediate payment and the large holders of loan stock adding to the pressure. BL might be forced precipitately into liquidation in circumstances which would make it impossible for us to formulate a sensible response and for an orderly disposal of its assets to take place. The economic implications of such a collapse were appalling. One hundred and fifty thousand people were employed by the company in the UK; there were perhaps an equal number of jobs in the component and other supplying industries dependent on BL. It was suggested that complete closure would mean a net loss to the balance of trade of around £2,200 million a year and according to the NEB it might cost the Government as much as £1 billion.

There was no mistaking the political and economic gravity of the decisions required. Closure would have some awful consequences, but we must never give the impression that it was unthinkable. If ever the company and workforce came to believe that, there would be no limit to their demands on the public purse. For this reason Keith and I decided not to agree to BL’s request for the Government to issue an undertaking to honour the company’s debt. They had wanted us to publish a letter to this effect even before the ballot result. In fact, 87.2 per cent of those voting supported BL’s plan and BL immediately sought approval from the NEB to go ahead with it. A firm request for money was made to the Government.

Our consideration of the BL Corporate Plan was delayed by two other events. First, as a result of our (unconnected) decision to remove Rolls-Royce from the purview of the NEB, Sir Leslie Murphy and his colleagues resigned and a new Board had to be appointed under Sir Arthur Knight. Second, the Amalgamated Union of Engineering Workers (AUEW) now threatened the very survival of BL by calling a strike following the dismissal on 19 November of Derek Robinson, a notorious agitator, convenor of the shop stewards at Longbridge and chairman of the so-called ‘Leyland Combine Trade Union Committee’. Robinson and others had continued to campaign against the BL plan even after its approval. The management had been right to sack him, pending the outcome of an inquiry by the AUEW.

On Monday 10 December ministers, under my chairmanship, considered the Corporate Plan. The first thing I noticed was that BL’s performance had deteriorated even since it had been drawn up. So I asked for up-to-date forecasts of profits and cash flow. I wanted from Michael Edwardes a proper definition of the circumstances under which the BL Board would abandon the plan. There had to be clear bench marks against which to measure future performance. I also wanted to know whether Michael Edwardes himself intended to remain as Chairman: officially, his contract had only another year to run.

We were now, though, put under pressure to approve the plan before the Christmas recess — without waiting for completion of BL’s wage negotiations — in order to enable the company to sign a collaborative deal with Honda for a new middle-range car. I was not prepared to be bounced into a commitment. In any case, past experience suggested to me that the plan would not in fact be fulfilled. BL’s annual plans always forecast major improvements: but every year things seemed to get worse. Its share of the UK market for cars had slumped from 33 per cent in 1974 to 20 per cent in 1979, and had fallen further, down to only 16 per cent, over the last two months. BL’s productivity was only two-thirds that of its European competitors, and lower still compared with the Japanese: for the company to become competitive again productivity needed to improve by something like 50 per cent. It remained to be seen whether the Plan could transform that. The proposed new models could help. But the first of these was not due until the end of the following year, and by then all its competitors would have new models too. Meanwhile, BL was already running out of cash and would need an advance on money allocated for the next financial year.

I, therefore, asked John Nott, who brought to the problem the expertise and scepticism of a banker, to go over BL’s accounts with the company’s Finance Director. Keith Joseph, John Biffen and others also went over the plan in detail with Michael Edwardes. Their conclusion was that there was only a small chance of BL surviving and that it was probable that the plan would fail, followed by a run-down or liquidation of the company. About a third of BL was thought to be saleable. But the final judgement had to be based on wider considerations. We reluctantly decided that people would simply not understand liquidation of the company at the very moment when its management was standing up to the unions and talking the language of hard commercial common sense. And so, after much discussion, we agreed to endorse the Plan and to provide the necessary financial support. Keith announced our decision to the House of Commons on 20 December.

Agreeing to provide more public money was not, though, the end of the problem: it rarely is. BL’s ballot on their pay offer went badly wrong, partly because the question put to the workforce — ‘do you support your Negotiating Committee’s rejection of the Company’s wage and conditions offer?’ — was confusing. Fifty-nine per cent of those taking part voted against the offer. Moreover, the AUEW enquiry found that Robinson had been unfairly dismissed by the company and an official strike was announced, to begin on 11 February. Michael Edwardes rightly refused to reinstate him or to improve on the pay offer. Contingency plans were made by the BL Board, assisted by Department of Industry and Treasury officials, to cope with the situation if the Plan had to be withdrawn and the company put into liquidation. Michael Edwardes was unwilling, even at this stage, to approach possible foreign buyers for a sell-off of BL, although he agreed to respond positively to any approaches potential buyers might make to him. Certainly, the workforce at BL could be in little doubt as to the seriousness of their position. BL’s share of the market had fallen so low that in January Ford sold more of one model (the Cortina) than BL’s total sales.

Michael Edwardes and the BL Board held their nerve and faced down the union threat. The strikers were told that unless they returned to work by Wednesday 23 April they would be dismissed. But much as I admired BL’s tenacity, I was becoming increasingly unhappy about the Board’s commercial approach. In particular, there was strong resistance from the Board to selling all or part of the company, though this took the form of obstruction rather than declared hostility.

For example, there was fierce initial resistance to my suggestion of engaging an independent financial adviser to advise on the disposal of the company’s assets. It was argued that such an appointment would undermine confidence in the company’s future. It was even suggested that these were matters for management, not government. I could not accept this. Government was the major shareholder in BL and it was right that the shareholder should have a say as to when and how the company’s assets should be sold. In fact, such an adviser was in due course appointed, with Michael Edwardes’s acquiescence.

On Wednesday 21 May Michael Edwardes and two of his colleagues came to a working dinner at No. 10. On the Government side, Geoffrey Howe and Keith Joseph, Robin Ibbs the head of the CPRS, and my private secretary were also present. Michael Edwardes said that BL faced a worse trading environment than when the 1980 Plan was prepared. It would be able to live within its agreed cash limit for 1980 but the £130 million limit provisionally decided for 1981 and the assumption that no government funding would be necessary thereafter were, he said, unrealistic. He claimed to have high hopes of collaboration with a German manufacturer, but that the prospects for selling most parts of the business in the near future were not encouraging. Only Land Rover would fetch a good price at that time, but to sell it separately would leave the rest of the business seriously weakened. Other parts of BL might be sold in a year or two as the recovery programme proceeded. It was obvious where all this was leading: BL was about to present us with yet another demand for taxpayers’ money, and probably for a huge amount.

In reply, I acknowledged that BL had achieved a great deal. But I stressed my anxiety about the endless demands for extra money. I said that BL had failed to meet the targets set out in its Plan. There could be no presumption that any additional money would be provided.

As the summer wore on it became clear that the company’s financial position was deteriorating even further. Michael Edwardes bombarded us with complaints. He was upset about Japanese imports. He drew attention to the (undoubtedly real) difficulties of exporting to Spain because of that country’s high tariffs, while they nevertheless exported their cars freely to us. He worried about the level of sterling. But none of this could disguise the fact that things were going badly wrong at BL and that the Board seemed unable to turn things round. The company lost £93.4 million before interest and tax in the first half-year compared with a profit of £47.7 million for the same period the previous year. Michael Edwardes tried to get the Government to agree to fund the new BL medium-range car — known as the LM10 — separately and in advance of the 1981 Corporate Plan. Indeed, he wanted me to announce the Government’s commitment to this at a dinner given by the Society of Motor Manufacturers and Traders (SMMT) on 6 October. I had no intention of agreeing; once again, I would not be bounced.

Instead, I delivered a rather different and possibly less welcome message to the motor industry. I acknowledged that some of the problems they faced were caused by the world recession. But that was not the real reason for the industry’s difficulties. I said:

This year we have the lowest car production for twenty years. Not because home sales are the lowest — far from it. But because people are buying foreign cars rather than our own. And some of those come from high-wage, high-exchange-rate economies. The world recession may have exacerbated our problems, but it is not the root cause in the motor industry. What has happened to the motor industry since the 1950s exemplifies what has been going wrong in too many other parts of British industry: higher pay not matched by higher productivity; low profits, so low investment; too little going into R & D and new design… and why haven’t we had the productivity? Overmanning. Resistance to change. Too many strikes and stoppages.

The last part of that message seemed to fall on deaf ears. On 27 October BL’s trade unions decided overwhelmingly to reject the company’s offer of a pay increase of 6.8 per cent and recommended a strike. Michael Edwardes wrote to Keith Joseph to say that a strike would make it impossible to achieve the 1981 Corporate Plan submitted just a week before. To win support for the pay offer, he wanted to write to inform union officials of the key aspects of the 1981 Plan, including the funds required for 1981 and 1982 — a figure which he would put at £800 million. I reluctantly accepted Michael Edwardes’s approach but only on the clear understanding that the Department of Industry would make it known that the Government was not committed in any way to finding these funds and that the matter had yet to be considered. In fact, on 18 November BL’s union representatives backed down and finally decided to accept the company’s offer. History repeated itself: almost the same thing had happened the previous year. The need to deal with an industrial relations crisis made it extremely difficult to avoid the impression that we were prepared to provide large amounts of extra public funding for the company. No matter how clear our disclaimers, inevitably people drew that conclusion.

On any rational commercial judgement, there were no good reasons for continuing to fund British Leyland. The 1980 Corporate Plan had foreseen the need for about £130 million of new government equity in the period of 1981 and beyond. In the 1981 Plan which we were now asked to approve that sum had grown by £1 billion. Meanwhile, the outlook for profits was worse. The predictions for market share in successive Plans had grown ever gloomier. Many of BL’s models were uncompetitive. The Metro and the BL/Honda Bounty would help, but neither would yield much in profits. BL was still a high-cost, low-volume manufacturer of cars in a world where low cost and high volume were essential for success.

On 12 January I held a meeting at No. 10 to discuss the Corporate Plan with Keith Joseph, Geoffrey Howe, Norman Tebbit and others. I continued to argue that we should try to find some middle way between total closure and fully funding the Corporate Plan.

I knew that closure of the volume car business, with all that would mean for the West Midlands and the Oxford area, would not be politically acceptable to the Cabinet or the Party, at least in the short term. It would also be a huge cost to the Exchequer — perhaps not very different to the sort of sums BL was now seeking. I told a meeting of ministers on 16 January that the Government must get rid of its financial liability for the volume car business in a way which was both humane and politically acceptable. We might need to pay a ‘dowry’ to make the car business attractive to a buyer: ultimately, of course, it might mean closure — the market, not government, would ultimately determine BL’s future. I said that I was in favour of supporting the BL Plan — but on condition that BL disposed of its assets rapidly or arranged mergers with other companies.

This last point was still extremely contentious. Michael Edwardes told Geoffrey Howe and Keith Joseph that the BL Board would be willing to sell Land Rover and such other parts of the business as they could and close down the volume car business: but they were not willing to sell Land Rover if they were also required to go on trying to salvage the volume car business. He said that the Board’s position would be quite impossible if a public deadline were to be set for its sale.

This attitude, of course, put us in a very difficult position — as it was doubtless intended to do. It irritated one or two ministers to the point of turning them against the whole Plan. Moreover, it had not been possible for us to find the ‘middle way’ which I had sought and which would have involved progressive sale of the business without a total and immediate shut-down. But the political realities had to be faced. BL had to be supported. We agreed to accept BL’s Corporate Plan, involving the division of the company into four more or less independent businesses. We settled the contingencies which would lead to the Plan being abandoned. We set out the objectives for further collaboration with other companies. And — most painfully — we provided £990 million.

This was not, of course, the end of the story for BL, any more than it was for BSC. In due course, it would be shown that the changes in attitude and improvements in efficiency achieved in these years were permanent.[31] To that extent, the account of our policy in 1979–81 towards BL is one of success — at a cost. But the huge extra sums of public money that we were forced to provide came from the taxpayer or, through higher interest rates needed to finance extra borrowing, from other businesses. And every vociferous cheer for higher public spending was matched by a silent groan from those who had to pay for it.

CHAPTER V

The Downing Street Years, 1979-1990

Not for Turning

Politics and the economy in 1980–1981

NO U-TURNS

At 2.30 on the afternoon of Friday 10 October 1980 I rose to address the Conservative Party Conference in Brighton. Unemployment stood at over two million and rising; a deepening recession lay ahead; inflation was far higher than we had inherited, though falling; and we were at the end of a summer of government leaks and rifts. The Party was worried, and so was I. Our strategy was the right one, but the price of putting it into effect was proving so high, and there was such limited understanding of what we were trying to do, that we had great electoral difficulties. However, I was utterly convinced of one thing: there was no chance of achieving that fundamental change of attitudes which was required to wrench Britain out of decline if people believed that we were prepared to alter course under pressure. I made the point with a line provided by Ronnie Millar:

To those waiting with bated breath for that favourite media catchphrase, the ‘U-turn’, I have only one thing to say. ‘You turn if you want to. The lady’s not for turning.’ I say that not only to you, but to our friends overseas — and also to those who are not our friends.

The message was directed as much to some of my colleagues in the Government as it was to politicians of other parties. It was in the summer of 1980 that my critics within the Cabinet first seriously attempted to frustrate the strategy which we had been elected to carry out — an attack which reached its climax and was defeated the following year. At the time that I spoke, many people felt that this group had more or less prevailed.

ARGUMENTS ABOUT PUBLIC EXPENDITURE

Battle was to be joined over the next two years on three related issues: monetary policy, public spending and trade union reform. The ‘wets’ argued that because we had embraced a dogmatic monetary theory that inflation could only be brought down by a fierce monetary squeeze, we were squeezing the economy in the middle of a recession. Such dogmatism, they argued, similary prevented our using practical tools of economic policy like prices and incomes control and forced us to cut public spending when, as Keynes had argued, public spending should be increased to lift an economy suffering from lack of demand.

The most bitter Cabinet arguments were over public spending. In most cases those who dissented from the line which Geoffrey Howe and I took were not merely intent on opposing our whole economic strategy as doctrinaire monetarism; they were trying to protect their departmental budgets. It had soon become clear that the public expenditure plans announced in March 1980 had been far too optimistic. In particular, the large turn round from losses towards profitability in the nationalized industries was not going to come about; local authorities, as usual, were overspending; and the recession was proving deeper than expected, increasing spending on unemployment and other benefits. Government borrowing for the first quarter of 1980 looked like being very large. In addition, Francis Pym, Defence Secretary, was pressing for an increase in the Ministry of Defence (MoD) cash limit.

We had decided to have a general economic discussion in Cabinet on 3 July 1980, before our first collective discussion of the 1981–2 public expenditure round on 10 July. Our aim was to confront spending ministers with the full implications for taxation of a failure to control spending, and to smoke out the arguments for reflation, which were almost daily to be found in the newspapers and in the mouths of pressure groups. But I had no illusions that it would be easy to subject my colleagues’ aspirations to a salutary dose of realism.

Geoffrey spelt out to Cabinet how difficult the economic situation at home and abroad had now become. Inflation in the major economies had risen sharply, oil prices had doubled, and the world was moving further into recession — led in this direction by Jimmy Carter’s United States. Although output in the UK had fallen rather less than predicted in 1980, it was likely in consequence to fall faster than expected in 1981. Inflation was slowing, but less rapidly than we had hoped. The background to the public spending round and to next year’s budget was, therefore, bleak. Then the discussion began. Some ministers argued for large increases in spending to stave off unemployment; others argued for prudence. I summed up by reaffirming the present strategy and noting the need to maintain public spending constraints, to reduce public sector pay increases and so to allow government borrowing and interest rates to fall — although within spending totals I was keen to see a higher priority given to dealing with unemployment, especially among young people. Round one went to Geoffrey and me.

But the debate continued inside and outside government. The “wets” arguments came in different forms of varying sophistication, though their central message was always the same: spend and borrow more. They used to argue that we needed extra public spending on employment and industrial schemes, over and above what we had planned and were effectively forced to spend simply as a result of the recession. But this did not escape from the fact that extra public spending — whatever it was spent on — had to come from somewhere. And ‘somewhere’ meant either taxes levied on private individuals and industry; or borrowing, pushing up interest rates; or printing money, setting off inflation. There was also a feeling, which I equally knew I had to resist, that the refunds which I had secured from the European Community budget should be used to finance extra spending. But why should it be assumed that public spending was better than private spending? Why should the fruits of my efforts to rein in the appetite of the European Community automatically be consumed by an almost as insatiable British public sector? I was, therefore, determined to ensure that the Cabinet endorsed the 1981–2 public expenditure total announced in the previous white paper, as reduced by the European budget receipts.

These basic differences between us came out clearly at the public spending Cabinet on 10 July. Some ministers argued that the PSBR should be allowed to increase to accommodate the huge new requirements of the loss-making nationalized industries. But the PSBR was already far too high, whatever the theoretical merits or otherwise of letting public borrowing rise in a recession. The higher it went, the greater the pressure to raise interest rates in order to persuade people to lend the Government the necessary funds. And at a certain point — if pushed too far — there would be the risk of a full-scale government funding crisis — that is, when you cannot finance your borrowing from the non-banking sector. We could not risk going further in that direction. So I emphasized once again the need to stay within the public spending plans — though within them there could be more priority given to assistance for jobs.

The defence budget was a special problem. We had already accepted the NATO commitment for annual 3 per cent real increases in our defence spending. This had the obvious merit of demonstrating to the Soviets our determination to prevent their winning the arms race on which they had embarked, but in two other respects it was unsatisfactory. First, it meant that the MoD had little incentive to get value for money in the hugely expensive equipment it purchased. Second, the 3 per cent commitment meant that Britain, spending a substantially higher proportion of its GDP on defence than other European countries and going through a peculiarly deep recession, found herself bearing an unfair and increasing burden. There were also problems relating to management of the MoD budget. By the end of 1980 the MoD had overspent its cash limit because, with the depressed state of industry, suppliers had fulfilled government orders faster than expected.

As we moved into the winter of 1980 the economic difficulties accumulated and the political pressure built up. It might have been easier to gain support in the battle for tight control of public spending if the second element of the strategy — the money supply — had been behaving predictably. But it had not. On Wednesday 3 September Geoffrey Howe and I met to discuss the monetary position. What did the figures really mean? Measured in terms of £M3, the money supply had been rising much faster than the target we had set in the MTFS at the time of the March budget. It was hard to know how much of this was the result of our removing exchange controls in 1979 and our decision in June to remove the ‘corset’ — a device by which the Bank of England imposed limits on bank lending. Money analysts argued that both of these liberalizations had misleadingly bloated the £M3 figures.[32] As I put it to Brian Waiden in an interview on Sunday 1 February:

a corset is there to conceal the underlying bulges, not to deal with them, and when you take it off you might see that the bulges are worse.

By contrast, some of the other monetary measures were undershooting their targets. The ‘wets’ found the wayward behaviour of £M3 a suitable subject for mockery at dinner parties. But for Geoffrey and me it was no such diversion. The arguments about which was the most accurate measure of the money supply were highly technical, but they were of great significance.

Of course, we never just looked at monetary figures to gauge what was happening. We also looked at the real world around us. And what we saw told a somewhat different tale from the high £M3 figures. Inflation had slowed down markedly, particularly prices in the shops where competition was intense. Sterling was very strong, averaging just below $2.40 during the second half of 1980. And here the crucial issue was whether the high exchange rate was more or less an independent factor bringing down inflation, or rather a result of the monetary squeeze being tighter than we intended and than the £M3 figures suggested.

Some of my closest advisers thought the latter. Professor Douglas Hague sent me a paper in which he described our policies as ‘lopsided’ in two respects: first, they were bearing down more heavily on the private than the public sector (which I knew to be true), and second, they were putting too much emphasis on controlling the money supply and too little on controlling the PSBR, with the result that interest rates were higher than they should have been. (I also came to share this view over the next year.) In the summer of 1980 I consulted Alan Walters, who was to join me at the beginning of 1981 as my economic policy adviser at No. 10 and upon whose judgement I came more and more to rely. Alan’s view was that the monetary squeeze was too tight and that it was the narrowest definition of ‘money’, known as the monetary base, which was the best, indeed the only reliable, star to steer by. Certainly, during the autumn of 1980 the narrowest definitions of money suggested that we were pursuing a very severe monetary policy.

If there was uncertainty about the monetary position at this time, there was none at all about the trend in public spending, which was inexorably upwards. Public sector pay was one of the worst problems: the bills we received were largely the legacy of Labour’s failed incomes policy, but they had to be paid all the same, and they set a higher base for future settlements as well. The other main culprit for the enormous increase in public spending was, as I have said, the nationalized industries. Looking at the disappointing figures emerging from the public expenditure round, I wrote at the time that they ‘had undermined the Government’s whole public expenditure strategy’. But there was worse to come.

In September, Geoffrey Howe sent me a note elaborating on the warning he had already given to Cabinet about public expenditure. The increases required for the nationalized industries, particularly BSC, would require larger cuts in programmes than those agreed in July in order to hold the total. To the extent that more was provided, as the Cabinet wished, for industrial support and employment, the corresponding cuts would need to be larger still. The fifth public expenditure round in sixteen months was bound to prompt squeals of indignation: and so it proved.

Indeed, a further note from Geoffrey in early October confirmed that the position was, if anything, deteriorating: the figures were worse than suggested the previous month. The latest forecast of the PSBR for 1981–2 approached £11 billion, far higher than planned. The Treasury had already begun to examine ways in which it might be reduced and were looking at the possibility of increasing taxes on the profits from North Sea oil and gas, raising employees’ national insurance contributions and not fully indexing personal income tax allowances in line with inflation. All of these unpalatable tax options reinforced the necessity for further public spending cuts: we needed a cash limits squeeze on all programmes and a cut in local authority current spending, and we would have to look again at defence spending and at the even more politically sensitive social security budget. (The social security budget accounted for a quarter of total public spending, of which the cost of retirement pensions was by far the largest element. But I had pledged publicly that the latter would be raised in line with inflation during the Parliament.) We were entering perilous waters.

The tactics in handling the new public expenditure discussions were obviously very important. Geoffrey and I decided not to take the whole matter to Cabinet cold, as it were, so I called a meeting of key ministers to go into it first. The Chancellor described the position and outlined the arithmetic.

Our plan succeeded. Without too much grumbling, the Cabinet of 30 October endorsed the strategy and confirmed our objective of keeping public spending in 1981–2 and later years broadly at the levels set out in the March white paper. This meant that it would be necessary to make cuts of the order of magnitude proposed by the Treasury — though even with these reductions we would be forced to increase taxes if we were to bring the PSBR down to a level compatible with lower interest rates.

Much stronger Cabinet opposition surfaced when we began to look at the decisions required to give effect to the strategy which had been endorsed. The ‘wets’ now discovered a new approach. They claimed that they lacked sufficient information to judge whether the overall strategy was soundly based. Without this, they said, they were in no position to weigh the economic, political and social consequences of all the various means of achieving it, including changes in taxation and reductions in public spending. The ploy was transparent. In effect, spending ministers were trying to behave as if they were Chancellors of the Exchequer. It would be a recipe for complete absence of spending control and thus for economic chaos.

The three most important areas of discussion at our meeting on Tuesday 4 November were the Health Service and defence budgets, and the special employment measures which Jim Prior wanted. On Health, we decided that the NHS element in the National Insurance Contribution should be raised rather than the health programme itself reduced — so continuing to honour our manifesto pledge. On defence, the Cabinet accepted that the reductions would have to fall somewhere between what the Treasury demanded and the MoD was then offering. Finally, we agreed on the special employment measures, which I later announced in my speech on the Address, and which provided for 440,000 places on the Youth Opportunities Programme — 180,000 more than in the current year.

Two days later, Cabinet met again to continue the discussion. The financial position of the nationalized industries had worsened even in the short time since we had begun our spending review. Public sector pay was still a headache. If we managed to hold future public service pay increases to 6 per cent, as we wished, we could still expect a PSBR of £12 billion in 1981–2, compared with the £7.5 billion implied by the MTFS. It would not be possible to finance a PSBR of this size and reduce interest rates at the same time. Therefore, in order to avoid high interest rates substantial tax increases would be needed. In my summing up I noted that the position would be still worse, if reductions still under discussion — including defence, social security and education — were not actually agreed. In fact, Cabinet made the final decisions about the package the following week.

The Autumn Statement on 24 November 1980, therefore, contained some highly unpopular measures. Employees’ National Insurance Contributions had to go up. Retirement pensions and other social security benefits would be increased by 1 per cent less than the rate of inflation next year if they turned out to have risen by 1 per cent more in the present year. There were cuts in defence and local government spending. It was announced that a new supplementary tax would be introduced on North Sea oil profits. However, there was some good news: the further employment measures — and a 2 percentage point cut in MLR.

DISSENT BY LEAKS

Few members of the public are experts in the finer matters of economics — though most have a shrewd sense when promises do not add up. By the end of 1980 I began to feel that we risked forfeiting the public’s confidence in our economic strategy. Unpopularity I could live with. But loss of confidence in our capacity to deliver our economic programme was far more dangerous. We were now spending more when we believed in spending less; inflation was high when we proclaimed the primacy of bringing it down; and private industry was faltering when we had been saying for years that only successful free enterprise could make a country wealthy. Of course, we could point to factors over which we had little or no control, and above all to the world recession; and on inflation and pay settlements there was movement in the right direction. But our credibility was at stake. And the very last thing I could afford was well-publicized dissent from within the Cabinet itself. Yet this was what I now had to face.

Public dissent from the ‘wets’ was phrased in what was obviously intended to be a highly sophisticated code, in which each phrase had a half-hidden meaning and philosophical abstractions were woven together to condemn practical policies by innuendo. This cloaked and indirect approach has never been my style and I felt contempt for it. I thrive on honest argument. I am interested in practical options. And I prefer to debate my opponents rather than to undermine them with leaks. I do not believe that collective responsibility is an interesting fiction, but a point of principle. My experience is that a number of the men I have dealt with in politics demonstrate precisely those characteristics which they attribute to women — vanity and an inability to make tough decisions. There are also certain kinds of men who simply cannot abide working for a woman. They are quite prepared to make every allowance for ‘the weaker sex’: but if a woman asks no special privileges and expects to be judged solely by what she is and does, this is found gravely and unforgivably disorienting. Of course, in the eyes of the ‘wet’ Tory establishment I was not only a woman, but ‘that woman’, someone not just of a different sex, but of a different class, a person with an alarming conviction that the values and virtues of middle England should be brought to bear on the problems which the establishment consensus had created. I offended on many counts.

The economic and public expenditure discussions of 1980 repeatedly found their way into the press; decisions came to be seen as victories by one side or the other and Bernard Ingham told me that it was proving quite impossible to convey a sense of unity and purpose in this climate. During 1980 the public was treated to a series of speeches and lectures by Ian Gilmour and Norman St John Stevas on the shortcomings of monetarism, which, according to them, was deeply un-Tory, a kind of alien dogma — though they usually took care to cover themselves against charges of disloyalty by including some fulsome remarks praising me and the Government’s approach. Speaking in Cambridge in November, Ian Gilmour claimed that Britain risked ‘the creation of a “Clockwork Orange” society with all its attendant alienation and misery’, which sounded remarkably like Britain in the ‘winter of discontent’.

Industrial leaders helped worsen the general impression of disarray: in the same month the new Director-General of the CBI was promising ‘a bare knuckle fight’ over Government policies, though when I met the CBI shortly afterwards I am glad to say that knuckles were not in evidence. Then in December Jim Prior was reported as urging us not to use the language of the ‘academic seminar’. But perhaps the most astonishing remark — not his last — was John Biffen’s widely reported admission to the Conservative Party Parliamentary Finance Committee that he did not share the enthusiasm for the MTFS, which he — the Chief Secretary to the Treasury — was trying, with singularly little success, to apply in the field of public expenditure. Not surprisingly, when I met the executive of the ‘22 Committee later that month I found that they had a low view of ministerial efforts at presentation. I most certainly agreed. But it was not simply a question of presentation: some ministers were trying to discredit the strategy itself. This could not be allowed to continue.

I had the Christmas holiday to consider what should be done. I decided that it was time to reshuffle the Cabinet. The only question was whether a limited reshuffle would serve to change the balance sufficiently in favour of our economic strategy, or whether much more far-reaching changes were required. I decided on the former.

On Monday 5 January I made the changes, beginning with Norman St John Stevas, who left the Government. I was sorry to lose Norman but he made his own departure inevitable. He had a first-class brain and a ready wit. But he turned indiscretion into a political principle. His jokes at the expense of government policy moved smoothly from private conversation to Commons gossip to the front page of newspapers. The other departure, Angus Maude, had employed his own sharp wit in my support but he felt that it was time to give up the job as Paymaster-General, in charge of government information, in order to return to writing. I moved John Nott to Defence to replace Francis Pym. I was convinced that someone with real understanding of finance and a commitment to efficiency was needed in this department. I moved John Biffen to replace John Nott at Trade, and at Geoffrey Howe’s request appointed Leon Brittan as Chief Secretary. Leon Brittan was a close friend of Geoffrey’s. He was enormously intelligent and hard-working and he had impressed me with the sharpness of his mind, particularly in Opposition when he had been one of the Party’s spokesmen on the then vexed issue of Devolution. Two very talented new Ministers of State came into the Department of Industry to support Keith Joseph: Norman Tebbit and Kenneth Baker. Norman had worked closely with me in Opposition. I knew that he was totally committed to our policies, shared much of my own outlook and was a devastating Commons in-fighter. Ken was given special responsibility for Information Technology, a task in which he showed his talents as a brilliant presenter of policy. Francis Pym took over the task of disseminating government information, which he combined with the position of Leader of the House of Commons. But the first half of this appointment was to prove a source of some difficulty in the months ahead.

With this moderate Cabinet reshuffle, I had hoped that we would be able to face our economic difficulties with greater unity and determination. Certainly, both qualities were needed: the criticisms of our strategy were mounting. I counter-attacked. Both in my Weekend World interview on 1 February and a few days later in my speech in the Commons economic debate I replied to the arguments of those who believed that the real problem in Britain was lack of economic demand and who argued that we should remedy it by reflation. I told the House:

As governments tried to stimulate employment by pumping money into the economy they caused inflation. The inflation led to higher costs. The higher costs meant loss of ability to compete. The few jobs that we had gained were soon lost; and so were a lot more with them. And then, from a higher level of unemployment and inflation, the process was started all over again, and each time around both inflation and unemployment rose.

But the other side had important allies in the media. A leading article in the Sunday Times, usually a Conservative paper, carried the headline ‘Wrong, Mrs Thatcher, Wrong, Wrong, Wrong’. Indeed, the press was full of hostile comment. And that hit the morale of my supporters. On 27 February I received a memorandum from Ian Gow:

Prime Minister

1. I am sorry to say that there has been a noticeable deterioration in the morale of our back-benchers.

2. I attribute this to:-

(a) Increasing concern about the extent of the recession and unemployment.

(b) The perceived defeats for the Government on Coal and, to a lesser extent, in the pay settlement for the water workers.

(c) The size of the PSBR and the slowness with which interest rates are falling.

(d) The insatiable appetite of the Public Sector — notably BL, BSC, NCB.

(e) The Rate Support Grant.

Many of the critics inside and outside the Conservative Party felt that they had detected weakness, were determined to exploit it and saw their chance coming with the 1981 budget.

THE 1981 BUDGET

I shall never forget the weeks leading up to the 1981 budget. Hardly a day seemed to go by without the financial scene deteriorating in some way. At the end of January Geoffrey Howe was still hoping to make serious cuts in capital taxation and to provide substantial assistance for industry, but by the beginning of February the Treasury was already becoming more cautious and pessimistic about the outlook. The PSBR for the current year seemed likely to turn out between £4 and £6 billion more than the figure forecast in the 1980 budget. The current Treasury forecast, which assumed indexation of personal tax allowances and of specific duties and took account of the measures announced in November 1980, showed a PSBR for 1981–2 in the region of £11 billion (nearly 4.5 per cent of GDP), compared with a figure implied by the MTFS of around £7.5 billion (some 3 per cent of GDP). At this point the Treasury believed that we should aim for a PSBR somewhat below £10 billion. There was, therefore, a gap of £1 billion to £1.5 billion.

Personal incomes had been increasing while company profits had been shrinking, so it was clear that any extra taxation should be borne by the personal rather than the corporate sector. The Treasury were talking of raising personal allowances by a minimum of 6.5 per cent — they hoped for 9 or 10 per cent — rather than the full 1.5 per cent required to take account of inflation. They were planning to raise the specific duties on alcohol, tobacco and petrol by one and three-quarters or perhaps twice the rate necessary to take account of inflation. Business — especially the CBI — was pressing hard for a reduction in the National Insurance Surcharge (NIS), but there were problems with this proposal: the full year cost of each percentage point reduction was very large, the relief was indiscriminate and there was the risk that some of it might go quickly into wages. Other possible ways of helping industry — each of which had its own disadvantages — included a cut in Corporation Tax or in the Heavy Fuel Oil Duty. We had in November announced extra taxation on North Sea oil and gas profits. The question now was whether to levy a windfall tax on bank profits. Naturally, the banks strongly opposed this; but the fact remained that they had made their large profits as a result of our policy of high interest rates rather than because of increased efficiency or better service to the customer.

Yet these were essentially secondary issues — and on larger issues there were legitimate disagreements inside the ‘dry’ section of the Government. The main problem was to determine how tight the fiscal stance of the budget should be and the monetary policy which it would be supporting. On this question Alan Walters, who had now joined me at No. 10, had his own strong views. He argued for a larger cut in the PSBR than Geoffrey Howe was proposing. He also believed that the way in which the monetary policy was conducted was defective. But the Treasury were not prepared to move to the system of monetary base control which Alan favoured and to which I was attracted by his clear and persuasive analysis.

And this was much more than a technical disagreement. Alan Walters, John Hoskyns and Alfred Sherman had suggested that Professor Jurg Niehans, a distinguished Swiss monetary economist, should prepare a study on our monetary policy for me. Professor Niehans’s report which I read in early February, though framed in highly technical language, had a clear message. It was that North Sea oil had probably not been a major factor in sterling’s appreciation; rather, tight monetary policy had caused the pound to rise so high, imposing such pressure on British industry and deepening the recession. The report argued that we should use the monetary base rather than £M3 as the main monetary measure and suggested that we should allow it to rise in the first half of 1981. In short, Professor Niehans thought monetary policy was too tight and should quickly be loosened. Alan emphatically agreed with him.

My doubts at this time about the Treasury’s conduct of monetary policy, however, were more than matched by the concern I felt at the steady growth in its estimates of the PSBR — the target by which we steered our fiscal policy. On 10 February 1981 Geoffrey Howe and I met to discuss the budget strategy. Geoffrey now told me that the forecast for the PSBR had been updated and showed not £11 billion but £13 billion. He was now talking about raising income tax allowances by only 6 per cent rather than the 10 per cent he had earlier envisaged — though he still wanted a substantial enterprise package. I told him that our primary concern must be to boost industry and that this meant giving priority to a reduction in interest rates, which would also help get down the exchange rate. If there were to be a choice between cutting the NIS and a lower PSBR I preferred the latter.

I was worried by the prospect of a 2 per cent addition to the RPI as a result of the indirect tax increases which were being proposed. I was sure it would be better to achieve further public expenditure cuts. But I had to agree that the chance of achieving these, given Cabinet attitudes, was very slim indeed.

At this meeting Alan Walters continued to press the view that we should allow the monetary base to grow more quickly. We also discussed the timing of any interest rate cuts which we would be able to make.

The starkness of the choices before us was now becoming clear. Later that day Alan sent me a note which summed up the problem with the PSBR. We were confronted with rapid and huge changes in the figures which made the strategic planning of the budget very difficult. But one thing was clear. The trend of PSBR forecasts was upwards. The likelihood was that we would budget for too low a reduction in the PSBR, as we had in 1980–81. To repeat that mistake would either force us to introduce an additional budget in late summer or autumn, or put great strains on the funding of government borrowing. In the last resort it might lead to a funding crisis, and it would certainly force us to increase interest rates, keeping sterling high and increasing the already severe squeeze on the private sector. We had to avoid such an outcome. We might still get things right in time — but only if we made painful decisions now, and presented them effectively, as the only possible response to the costs of the last wage round and nationalized industry losses. What we needed was a budget for employment.

On Friday 13 February I had a further meeting with Geoffrey Howe. Alan Walters was also present. The latest forecast for the PSBR was between £13.5 billion and £13.75 billion. The tax increases Geoffrey was proposing would reduce it to something between £11.25 billion and £11.5 billion, but he did not believe it was politically possible to go below £11 billion, and in his view an increase in the basic tax rate had to be ruled out. But Alan argued strongly that the PSBR should be lower still. He told us that a PSBR of, say, £10 billion would be no more deflationary than one of £11 billion because the latter would actually be worse for City expectations and for interest rates. Alan concluded by arguing that we had no alternative but to raise the basic rates of income tax by 1 or 2 per cent.

Alan was the economist. But Geoffrey and I were politicians. Geoffrey rightly observed that introducing what would be represented as a deflationary budget at the time of the deepest recession since the 1930s would be difficult enough; doing so via an increase in the basic rate would make it a political nightmare. I went along with Geoffrey’s judgement about the problems of raising income tax, but I did so without much conviction and as the days went by my unease grew.

When Geoffrey and I had our next budget meeting on 17 February, he said that he too had been having second thoughts. He was now prepared to contemplate a basic rate increase. But his concern was whether it might not be better to raise the basic rate of income tax by 1 per cent and personal allowances by about 10 per cent, thus reducing the burden on people below average earnings. I confirmed that I in turn was prepared to contemplate this, but I also told him that I was coming to the view that it was essential to get the PSBR below £11 billion.

My advisers — Alan Walters, John Hoskyns and David Wolfson — continued to argue for this much lower PSBR with great passion. Keith Joseph also strongly backed this view. Alan, who knew that he could always have access to me more or less when he wished — as in my view any really close adviser should if a prime minister is not to be the prisoner of his (or her) in-tray — came in to my study to have one last attempt to get me to change my mind about the budget. He ran over again the reasons why we could never have lower interest rates — which was what the economy desperately needed — unless we had lower borrowing, which now meant higher taxes. I know today that he went away still believing that I was not persuaded. But the more I wrestled with the problem in my mind, the more accurate his analysis seemed. The budget he was arguing for would be unpopular with the public, mystifying to many of my strongest supporters in the Commons and the country and incomprehensible to those economists still stuck in post-war Keynesian orthodoxy. Its consequences for my administration were unpredictable. Yet I knew in my heart of hearts that there was only one right decision, and that it now had to be made.

Geoffrey Howe and I — without Alan who was engaged on some other business but with Douglas Wass, the Treasury’s Permanent Secretary — met for a further discussion of the budget on the afternoon of Tuesday 24 February. Geoffrey still envisaged a PSBR for 1981–2 of £11.25 billion. I said that I was dismayed by such a figure and that I doubted whether it would be possible to cut interest rates, which we badly needed to do, unless government borrowing was reduced to a figure around £10.5 billion. I said that I was even prepared to accept a penny on the standard rate. In the light of all the taxpayers’ money which had gone to coal and steel there would at least be a clear explanation for this.

Geoffrey argued against a penny on income tax — on which I was not too difficult to persuade for I was horrified at the thought of reversing even some of the progress we had made on bringing down Labour’s tax rates. But he also argued against the need to bring down the PSBR further, and on this last point I was not persuaded at all. We had further inconclusive discussion about alternative ways to raise tax. Time was growing very short. Geoffrey was still prepared to hope for the best as regards the effect of an £11.25 billion PSBR figure on interest rates. But he knew that I just could not accept this. He went away to think further about what should be done.

Early the following morning, Alan came in to see me when I was in the flat packing my hats into boxes for my trip to the United States that afternoon. I told him that I had insisted on the lower PSBR he wanted. But I still did not know quite how Geoffrey would react. Then shortly before I left for America Geoffrey came in to see me. Having consulted his ministerial colleagues in the Treasury that morning he had accepted that we should have a smaller PSBR, below £11 billion. Rather than increase the basic rate of income tax he proposed the less unpopular course of withholding any increase in tax thresholds — though this was still an extraordinarily bold move when inflation remained at 13 per cent. This was the turning point. I was glad that Geoffrey had accepted the argument and I was pleased that he had found a way of increasing tax revenues that did not run counter to our long-term strategy of reversing Labour’s high tax rates. Our budget strategy was now set. And it looked as if we would be able to announce a reduction of 2 per cent in MLR in the budget the following Tuesday.

There was one other change announced in the budget, apparently technical but of great significance: the change to planning public expenditure in cash rather than what were called ‘volume’ terms. Each minister would be given a cash budget within which to keep his expenditure. Since the spring of 1980 we had been considering how this should be done and I discussed it with Geoffrey Howe and others in the Treasury over lunch there on 28 January 1981. It would have seemed distinctly odd to any company finance director, or housewife for that matter, how the government in those days used to work out its annual expenditure. The Chancellor would make his assessment of government revenue in cash, but spending decisions were made in terms of the volume of services it was desired to deliver, and denominated in what commentators used to call ‘funny money’ — neither the prices at the time of the spending decision, nor those when the money was actually spent. The result was that the Treasury never knew until far too late in the day the cash consequences of decisions on spending. Cash limits on some government spending had already been introduced, but paradoxically, this increased the confusion as spending which had been planned in volume ran up against them. From now on everything was to be planned in cash — though, of course, departments would still have to estimate the volume of services which their cash limits would enable them to afford. This imposed the sort of financial discipline on government departments with which the private sector had to deal. The ‘cash limits’ approach had the valuable consequence of bearing down on real public expenditure. It also gave departments a much stronger interest in seeking out the most efficient way of delivering the services expected of them.

Unsurprisingly, however, it was not the adoption of cash planning which grabbed the budget headlines, but rather the severity of the tax increases. The budget was very unpopular. But some of the leader columns were more favourable than the headlines and no one could doubt that this was a coherent budget which had required a good deal of courage to introduce. In the eyes of our critics, of course, the strategy was fundamentally wrong. If you believed, as they did, that increased government borrowing was the way to get out of recession, then our approach was inexplicable. If, on the other hand, you thought, as we did, that the way to get industry moving again was above all to get down interest rates, then you had to reduce government borrowing. Far from being deflationary, our budget would have the reverse effect: by cutting government borrowing and over time easing the monetary squeeze, it would allow interest rates and the exchange rate to fall, both of which had created severe difficulties for industry. I doubt that there has ever been a clearer test of two fundamentally different approaches to economic management.

The economists themselves realized that this was so. At the end of March 1981 no fewer than 364 leading members of the profession published a statement taking issue with our policy. Samuel Brittan of the Financial Times defended us, and so did Professor Patrick Minford from Liverpool University, who wrote to The Times answering the 364; I in turn wrote to congratulate him on his brilliant defence of the Government’s approach. We had made our decision: the task now was to hold the political line and, where possible, to win the political argument while waiting for the strategy to work. I was confident that it would.

The dissenters in the Cabinet, meanwhile, had been stunned by the budget when they learnt its contents at the traditional morning Cabinet on budget day. The press was soon full of leaks expressing their fury and frustration. They knew that the budget gave them a political opportunity. Because it departed so radically from post-war economic orthodoxy, even some of our supporters would not wholly believe in the strategy until it started to yield results. That might not be for some time. So it was clear that the Party in the country must be mobilized in support of what we were doing. The forthcoming Central Council of the Conservative Party in Bournemouth provided an opportunity for me to do this. I had decided some time before that I would try not to go to every Central Council because the number of party political occasions I was under pressure to address each year was enormous: there were separate conferences of the English, Scottish and Welsh parties, the Women’s Conference, Local Government Conference and Conferences of Young Conservatives, Conservative Students and Conservative Trade Unionists. However, I soon learnt that Central Council provided an opportunity which I could never afford to miss. Certainly that was true on this occasion. John Hoskyns and I worked late on Friday night and early into Saturday morning on my speech, which I delivered later that day. In it I threw down the challenge:

In the past our people have made sacrifices, only to find at the eleventh hour their government had lost its nerve and the sacrifice had been in vain. It shall not be in vain this time. This Conservative Government, not yet two years in office, will hold fast until the future of our country is assured. I do not greatly care what people say about me: I do greatly care what people think about our country. Let us, then, keep calm and strong, and let us preserve that mutual friendship in which patriotism consists. This is the road I am resolved to follow. This is the path I must go. I ask all who have the spirit — the bold, the steadfast and the young in heart — to stand and join with me as we go forward. For there is no other company in which I would travel.

I got a good reception. For the moment at least, the Party faithful were prepared to take the heat and to back the Government. But that determination might erode over the summer unless the Government stuck together.

THE COAL STRIKE WHICH NEVER WAS

Thankfully, strikes occupied far less of our time during 1981 than they had in 1980, and the number of working days lost due to strike action was only a third of that in the previous year. But two disputes — one in the coal industry, which did not in the end result in a strike, and another in the civil service, which did[33] — were of great importance, both to budget decisions and to the overall political climate.

A foreigner unaware of the extraordinary legacy of state socialism in Britain would probably have found the threatened miners’ strike in January 1981 quite incomprehensible: £2.5 billion of taxpayers’ money had been invested in the coal industry since 1974; productivity at some of the new pits was high, and a slimmed-down and competitive coal industry could have provided employees with good, well-paid jobs. But this was possible only if uneconomic pits were closed, which the National Coal Board (NCB) wished to do. Moreover, the pits which the NCB was intent on closing in a programme it put forward in early 1981 were not just uneconomic but more or less exhausted. On 27 January the Energy Secretary, David Howell, told me about the closure plans. The following afternoon Sir Derek Ezra, NCB Chairman, visited Downing Street and briefed me in person. I agreed with him that with coal stocks piling up and the recession continuing there was no alternative to speeding up the closure of uneconomic pits. I had long regretted that past governments had made such an enormous commitment to coal: if we had spent more on nuclear power, as the French had done, our electricity would have been cheaper — and, indeed, our supplies more secure.

As in the cases of BSC and BL, it was the management which had to implement the agreed approach and, inevitably, the Government found itself dragged into a crisis we had neither sought nor predicted. The press was soon full of NCB plans to close 50 pits and a bitter conflict was predicted. The National Union of Mineworkers (NUM) was pledged to fight closures and although Joe Gormley, its President, was a moderate, the powerful left-wing faction of the union was bound to exploit the situation and it was well known that Arthur Scargill, the hard-left leader, was likely to succeed Mr Gormley as President in the near future.

At a meeting with the NUM on 11 February the NCB Board resisted pressure to publish a list of pits which it was proposing to close and denied the figure of 50. However, the Board failed to mention the idea of improved redundancy terms, which was already being discussed by the Government, and instead undertook to join the NUM in an approach to us seeking a lower level of coal imports, the maintenance of a high level of public investment and subsidies comparable to those allegedly being paid by other governments to coal industries abroad. Far from acting as management might be expected to do, the NCB Board was behaving as if it entirely shared the interests of the union representing its employees. The situation quickly deteriorated further. I was lucky to have a private, independent and knowledgeable source of advice in my press secretary, Bernard Ingham who, before working for me in Downing Street, had spent some years in the Department of Energy and was convinced from the start that the department was far too complacent about the threat posed by a strike.

On Monday 16 February I had a meeting with David Howell and others. Their tone had entirely changed. The department had suddenly been forced to look over the abyss and had recoiled. The objective had now become to avoid an all-out national strike at the minimum cost in concessions. David Howell would have to agree to a tripartite meeting with the NUM and the NCB to achieve this. The tone of the NCB Chairman had also changed in short order. I was appalled to find that we had inadvertently entered into a battle which we could not win. There had been no forward thinking in the Department of Energy about what would happen in the case of a strike. The coal stocks piled at the pit heads were largely irrelevant to the question of whether the country could endure a strike: it was the stocks at the power stations which were important, and these were simply not sufficient. I had by now even less confidence in the NCB management. It became very clear that all we could do was to cut our losses and live to fight another day, when — with adequate preparation — we might be in a position to win. When my attitude became clear one official could not prevent himself expressing disappointment and surprise. My reply was simple: there is no point in embarking on a battle unless you are reasonably confident you can win. Defeat in a coal strike would have been disastrous.

The tripartite meeting was due to take place on 23 February. In the interim, we were hoping that the NCB would be able to make a more effective presentation of their case and to prevent the NUM continuing to make all the running. Indeed, we were advised that unless we held the tripartite meeting earlier than planned the NUM Executive might vote for a strike ballot. On the morning of 18 February I met hurriedly with David Howell to agree on the concessions which would have to be offered to stave off a strike. There was still considerable confusion as to what the facts really were. Whereas the NCB had been reported to be seeking 50 or 60 pit closures, it now appeared that they were talking about 23. But the tripartite meeting achieved its immediate objective: the strike was averted. The Government undertook to reduce imports of coal to the irreducible minimum, with David Howell indicating that we were prepared to discuss the financial implications with an open mind. Sir Derek Ezra said that in the light of this undertaking to review the financial constraints under which the NCB was operating, the Board would withdraw its closure proposals and re-examine the position in consultation with the unions.

The following day David Howell made a statement to the Commons to explain the outcome of the meeting. The press reaction was that the miners had won a major victory at the expense of the Government, but that we had probably been right to surrender. This was not, however, the end of our difficulties. We agreed to improve the redundancy terms for coal miners, to finance a scheme for conversion from oil to coal in industry and to look again at NCB finances. As is always the case once corporatism takes a grip, it became extremely difficult to bring the tripartite discussions to an end without provoking a crisis and equally difficult to ensure that the whole question of government finance for the NCB did not come onto the agenda. It had already emerged at the tripartite meeting on 25 February that the NCB was in far deeper financial trouble than we had known. They were likely to overrun their external financing limit (EFL), which had already been set at some £800 million, by between £450 and £500 million and were expecting to make a loss of £350 million. We would need to challenge these figures and examine them in detail, but we could not do this — as the NCB Board undoubtedly realized — when the NUM knew almost as much about the NCB’s financial position as we did. Therefore, our aim must be to draw a ring fence around the coal industry by arguing that coal was a special case rather than a precedent. We must seek to avoid any commitment for the years beyond 1981–2. Above all, we must prepare contingency plans in case the NUM sought a confrontation in the next pay round.

We confirmed these decisions at a meeting of ministers on 5 March. David Howell skilfully handled the next tripartite meeting on 11 March, at which it was understood that we would not need another tripartite meeting until the NCB’s financial position had been resolved. Meanwhile, he had been instructed to prepare a memorandum on contingency plans and circulate it by Easter.

Having managed to ease the Government out of an impossible position — at what I knew to be a high political cost — I concentrated attention on limiting the financial consequences of our retreat and preparing the ground so that we would never be put in such an awful situation again. David Howell had been shaken by what had happened. He feared a repetition of the events of January. There was much argument between him and the Treasury about the new EFL for the NCB and the level of investment we ought to finance. We had to agree to an EFL of well over £1 billion. Similarly, the threat of strike action constrained what we could do immediately to increase our capacity to endure a future strike. It was clear that coal stocks at the power stations must be increased, but it was impossible to take this action without its becoming known, and the faster stocks were transferred the more visible it would be. Jim Prior advised that we should not even discuss the matter with the industries involved, on the ground that it would be provocative to do so. The Department of Energy was very slow in giving effect to the decision that 4–5 million tons should be moved by the time that the NUM pay negotiations took place in the autumn. We were told that the Central Electricity Generating Board (CEGB) would probably have to acquire extra land if higher stocks than this were to be built up. I held a meeting on 19 June to review the position. It seemed to me that the risks of moving coal stocks had been exaggerated. After all, stocks at the pits had increased from 13 million to 22 million tons over the past 12 months and it was natural that there should be some extra movement.

The real question in my mind was whether — even if we could substantially increase the rate of movement of coal to the power stations — we would in practice be able to resist a strike that winter. It was evident from the NUM Conference which took place in Jersey in July that the left wing of the union had become obsessed with the idea of taking on the Government and that Arthur Scargill, by this stage certain of the presidency, would make this his policy. Willie Whitelaw, as Home Secretary the minister in overall charge of civil contingency planning, had overseen a study of how to withstand a coal strike that winter. He sent me a report on 22 July, which concluded that a strike this year probably could not be withstood for more than 13–14 weeks. The calculations took account of the transfer of coal stocks which we had put in hand. In theory, endurance could be increased by power cuts or the use of troops to move coal to the power stations. But either option was fraught with difficulty. There would be huge political pressure to give in to a strike. The union might see what was up if we set about increasing oil stocks for power stations. In August I reluctantly concluded that no such action should be taken in advance of that year’s NUM pay settlement. We would have to rely on a judicious mixture of flexibility and bluff until the Government was in a position to face down the challenge posed to the economy, and indeed potentially to the rule of law, by the combined force of monopoly and union power in the coal industry.

THE URBAN RIOTS OF 1981

Over the weekend of 10–12 April, riots broke out in Brixton, South London. Shops were looted, vehicles destroyed, and 149 police officers and 58 members of the public were injured. Two hundred and fifteen people were arrested. There were frightening scenes, reminiscent of riots in the United States during the 1960s and ‘70s. I accepted Willie Whitelaw’s suggestion that Lord Scarman, the distinguished Law Lord, should undertake an enquiry into the causes of what had happened and make recommendations.

There was a lull; then on Friday 3 July a battle in Southall between white skinheads and Asian youths erupted into a riot in which the police quickly became the main victims, attacked with petrol bombs, bricks and anything else to hand. The mob even turned on firemen and ambulancemen. Over the weekend, Toxteth in Liverpool was also the scene of violence: once again there were outbreaks of arson, looting and savage attacks on the police. The Merseyside police reacted vigorously and dispersed the mob with CS gas.

On 8 and 9 July it was the turn of Moss Side in Manchester to experience two days of serious disorder. The police presence was initially kept deliberately low, in the hope that ‘community leaders’ could calm matters down. This they singularly failed to do and so the police had to move into the area in strength. Willie Whitelaw told me after his visits to Manchester and Liverpool that the Moss Side riots had taken the form of looting and hooliganism rather than direct confrontation with the police. In Liverpool, as I was to learn, racial tension and bitter hostility to the police — in my view encouraged by left-wing extremists — were more important.

The riots were, of course, a godsend to the Labour Opposition and the Government’s critics in general. Here was the long-awaited evidence that our economic policy was causing social breakdown and violence. In the Commons and elsewhere I found myself countering the argument that the riots had been caused by unemployment. Behind their hands, some Conservatives echoed this criticism, complaining that the social fabric was being torn apart by the doctrinaire monetarism we had espoused. This rather overlooked the fact that riots, football hooliganism and crime generally had been on the increase since the 1960s, most of that time under the very economic policies that our critics were urging us to adopt. A third explanation — that racial minorities were reacting to police brutality and racial discrimination — we took more seriously. Indeed, it was for this reason that we had invited Lord Scarman to investigate and report on the causes of the riots immediately after the Brixton riots in April. Following his report we introduced a statutory framework for consultation between the police and local authorities, tightened the rules on stopping and searching suspects, and brought in other measures relating to police recruitment, training and discipline.

Whatever Lord Scarman might recommend, however — and whatever Michael Heseltine might achieve later by skilful public relations when he had begun to investigate the problems of Merseyside — the immediate requirement was that law and order should be restored. I told Willie on Saturday 11 July that I intended to go to Scotland Yard and wished to be shown how they handled the difficulties on the ground.

After a briefing at Scotland Yard I was taken round Brixton. At Brixton Police Station I went into the canteen to thank the staff there — as I had thanked the police officers themselves — for all that they were doing. I also talked with the West Indian ladies in the canteen. They had gone into work throughout the disturbances, determined that the police should be supported with proper canteen facilities whenever they needed them at any hour of the day or night. They were clearly as disgusted as I was with those who were causing the trouble.

Later I returned to Scotland Yard where I had a long discussion with the Commissioner of the Metropolitan Police, Sir David McNee, his Deputy and Assistant. They had a number of worries: they told me that they wanted to see sentences administered quickly on the offenders — something which long delays at the Crown Courts often prevented; they were concerned that their powers of arrest were insufficient; and above all, they needed proper riot equipment, as a matter of urgency. I promised them every support. It was something of a shock to contemplate the kind of equipment the British police now required, which included a greater variety of riot shields, more vehicles, longer truncheons, and sufficient stocks of rubber bullets and water cannon. They had already received vital protective helmets from the MoD, but these had had to be altered because the visors provided inadequate protection against burning petrol. Afterwards I stressed to Willie the urgency of meeting these requirements.

On Monday 13 July I made a similar visit to Liverpool. Driving through Toxteth, the scene of the disturbances, I observed that for all that was said about deprivation, the housing there was by no means the worst in the city. I had been told that some of the young people involved got into trouble through boredom and not having enough to do. But you had only to look at the grounds around those houses with the grass untended, some of it almost waist high, and the litter, to see that this was a false analysis. They had plenty of constructive things to do if they wanted. Instead, I asked myself how people could live in such circumstances without trying to clear up the mess and improve their surroundings. What was clearly lacking was a sense of pride and personal responsibility — something which the state can easily remove but almost never give back.

The first people I talked to in Liverpool were the police, whose comments and requirements for equipment were similar to those in London. I also met councillors at Liverpool City Hall and then talked to a group of community leaders and young people. I was appalled by the latter’s hostility to the Chief Constable and the police. But I listened carefully to what they had to say. There were two people with them who appeared to be social workers, and who began by trying to speak on their behalf. But these young people did not need anyone to speak for them: they were articulate and talked about their problems with great sincerity. The press were rather confused when, contrary to what they had been expecting, the youngsters told them that I had indeed listened. But I did more than listen: I had something to say myself. I reminded them that resources had been poured into Liverpool. I told them that I was very concerned by what they had said about the police and that while the colour of a person’s skin did not matter to me at all, crime did. I urged them not to resort to violence or to try to live in separate communities from the rest of us. Before I returned to London I also talked to the Catholic Archbishop and the Anglican Bishop of Liverpool, who had jointly won national attention as great advocates for their city.

The whole visit left me in no doubt as I drove back that evening that we faced immense problems in areas like Toxteth and Brixton. People had to find once again a sense of respect for the law, for the neighbourhood, and indeed for themselves. Despite our implementation of most of Scarman’s recommendations and the inner city initiatives we were to take, none of the conventional remedies relying on state action and public spending was likely to prove effective. The causes went much deeper; so must the cures.

The rioters were invariably young men, whose high animal spirits, usually kept in check by a whole range of social constraints, had on these occasions been unleashed to wreak havoc. What had become of the constraints? A sense of community — including the watchful disapproval of neighbours — is the strongest such barrier. But this sense had been lost in the inner cities for a variety of reasons. Often those neighbourhoods were the artificial creation of local authorities which had uprooted people from genuine communities and decanted them into badly designed and ill-maintained estates where they did not know their new neighbours. Some of these new ‘neighbourhoods’, because of large-scale immigration, were ethnically mixed; on top of the tensions which might initially arise in any event, even immigrant families with a very strong sense of traditional values found those values undermined in their own children by messages from the surrounding culture. In particular, welfare arrangements encouraged dependency and discouraged a sense of responsibility, and television undermined common moral values that would once have united working-class communities. The results were a steadily increasing rise in crime (among young men) and illegitimacy (among young women).

All that was needed for these to flower into full-scale rioting was the decline of authority and the consequent feeling among potential rioters that they could probably get away with mayhem. Authority of all kinds — in the home, the school, the churches and the state — had been in decline for most of the post-war years. Hence the rise in football hooliganism, race riots and delinquency over that period. There had even been one or two cases when the nervous indecision of the police — for instance in withdrawing officers from riots until reinforcements arrived — had both encouraged the rioters and undermined the confidence of law-abiding members of the community. What perhaps aggravated the 1981 riots into a virtual saturnalia, however, was the impression given by television that, for all these reasons, rioters could enjoy a fiesta of crime, looting and rioting in the guise of social protest. They had been absolved in advance. These are precisely the circumstances in which young men riot, and riot again — and they have nothing whatever to do with £M3.

Once we had solved the problem of the British economy, however, we would need to turn to those deeper and more intractable problems. I did so in my second and third terms with the set of policies for housing, education, local authorities and social security that my advisers, over my objections, wanted to call ‘Social Thatcherism’. But we had only begun to make an impact on these by the time I left office.

MORE CABINET DISSENT AND THE SEPTEMBER 1981 RESHUFFLE

It was the 1981 budget, however, which throughout the summer continued to agitate the Cabinet. Some ministers were long-standing in their dissent. Others on whose support I had counted in the past began to fall away. The irony was that at the very time the opposition to the strategy was greatest, the trough of the recession had already been reached. Whereas in 1980 the dissenters in the Cabinet had refused to face up to the true seriousness of the economic situation and so had insisted on higher government spending than we could afford, in 1981 they made the opposite mistake by exaggerating the bleakness of the economic outlook and calling for even higher spending in a bid to reflate the economy out of recession. Surely there is something logically suspect about a solution which is always correct whatever the problem.

One of the myths perpetuated by the media at this time was that Treasury ministers and I were obsessively secretive about economic policy, seeking always to avoid debate in Cabinet. In view of past leaks that might indeed have been an understandable approach, but it was never one we adopted. Geoffrey Howe was anxious to have three or four full economic discussions in Cabinet every year, in the belief that it would help us to win greater support for the policy; I doubted whether discussions of this sort would achieve a meeting of minds, but I went along with Geoffrey’s suggestion as long as it generated practical results, and in particular greater realism about public expenditure.

At the Cabinet in mid-June there was a general discussion of the economy lasting two hours, based on several Treasury papers dealing with various elements in the debate. The main paper was a full survey of recent economic developments and the economic prospect. It showed that the public finances had been placed on a sounder basis: we had cut borrowing and repaid some international debt. Interest rates at 12 per cent in the UK were now substantially below those in the US and France, and lower than those of the major industrialized countries generally. Industrial production had ceased to fall, though unemployment — a lagging indicator, as always — was still rising. The tax burden was up; but we were at least financing that spending in a sound way — and honest money was essential to sustainable recovery.

Other ministers, however, saw little that was positive in this picture. They believed that unemployment over three million — the figure now predicted — was politically unacceptable and that higher government spending should be used to accelerate and strengthen economic recovery. My own analysis was entirely different: the way to achieve recovery was to ensure that a smaller proportion of the nation’s income went to government, freeing resources for the private sector where the majority of people worked.

All these arguments came to a head at the Cabinet discussion on Thursday 23 July. I had more than an inkling of what was coming. Indeed before I went down to the Cabinet Room that morning, I had said to Denis that we had not come this far to go back now. I would not stay as Prime Minister unless we saw the strategy through. Spending ministers had submitted bids for extra expenditure of more than £6.5 billion, of which some £2.5 billion was demanded for the nationalized industries. But in view of past overspending and of the tax increases which had taken place already, the Treasury urged reduced public spending for 1982–3, below the totals derived from the March white paper. The result was one of the bitterest arguments on the economy, or any subject, that I can ever recall taking place at Cabinet during my premiership. The ‘wets’, of course, argued their case with redoubled vigour, strengthened by the lack of any evidence that our policies had turned things round. Some argued for extra public spending and borrowing as a better route to recovery than tax cuts. There was talk of a pay freeze. Even those, like John Nott, who had been known for their views on sound finance, attacked Geoffrey Howe’s proposals as unnecessarily harsh. All at once the whole strategy was at issue. It was as if tempers suddenly broke. I too became extremely angry. I had thought that we could rely on these people when the crunch came. I just was not interested in this kind of creative accounting that enabled fair-weather monetarists to justify an about-turn. Others, though, were as loyal as ever, notably Willie, Keith and, of course, Geoffrey himself who was a tower of strength at this time. And indeed it was their loyalty that saw us through.

I had said at the beginning of the government ‘give me six strong men and true, and I will get through.’ Very rarely did I have as many as six. So I responded vigorously in defence of the Chancellor. I was prepared to have a further paper on the issue of tax cuts versus public spending. But I warned of the effects on international confidence of public expenditure increases or any departure from the MTFS. I was determined that the strategy should continue. But when I closed the meeting I knew that there were too many in Cabinet who did not share that view. Moreover, after what had been said it would be difficult for this group of ministers to act as a team again.

Much of this bitter disagreement found its way into the press — and not simply in reports of what had been said in Cabinet derived from nonattributable ministerial comments, but also in the form of scarcely coded public speeches and statements. There were particularly embarrassing comments from Francis Pym and Peter Thorneycroft, who between them were meant to be responsible for the public presentation of our policies. At Francis’s suggestion I had authorized the recreation of the ‘Liaison Committee’, at which ministers and Central Office were supposed to work together to achieve a coherent message. In August it became clear that these arrangements were actually being used to undermine the strategy.

Geoffrey Howe had said in the House of Commons that the CBI’s latest Industrial Trends Survey provided evidence that we were now at the end of the recession — a remark which may have been slightly imprudent, but which was strictly true. The following weekend Francis Pym in the course of a lengthy speech observed: ‘there are few signs yet of when an upturn will occur. And that recovery when it comes in due course may be slower and less pronounced than in the past.’ This forecast would have been bold even from an economist; coming from Francis it verged on the visionary. For good measure he added that ‘in our industrial policy we must work as partners with industry and with the trade unions to identify the key sectors of the economy and the most promising export markets’ — the kind of neo-corporatist incantation which signified total rejection of the economic strategy. Even Peter Thorneycroft, who had been a superb chairman of the Party in Opposition, joined the ‘wet’ chorus, describing himself as suffering from ‘rising damp’ and saying that ‘there [was] no great sign of [the economy] picking up.’ Given that these comments came from the two men in charge of presenting government policy, they were extremely damaging and easily seen (in that inevitable metaphor) as ‘the tip of the iceberg’.

Trade union reform was another subject of Cabinet disagreement. We had issued a green paper on trade union immunities on which comments were to be received by the end of June 1981. When they came in, these showed a desire among businessmen for further radical action to bring trade unions fully under the rule of law. But Jim Prior and I disagreed about what should be done. I wanted further action to restrict trade union immunities, which would make union funds liable to court action. Jim’s proposals would not have achieved this. His analysis was, indeed, fundamentally different from mine. In his reading, history showed that the unions could defeat any legislation if they wanted to. I believed that history showed nothing of the sort, but rather that governments in the past had failed the nation through lack of nerve — drawing back when the battle was nearly won. I was also convinced that on the issue of union reform there was a great reserve of public support on which we could draw. Indeed, as I told Jim, I thought that there was a real risk that people would consider that we had done very little to tackle trade union power.

The differences between Cabinet ministers over the economic strategy — and between myself and Jim Prior over trade union reform — were not just ones of emphasis but of fundamentals. If the goals I had set out in Opposition were to be achieved they must be reaffirmed and fought for by a new Cabinet. So it was quite clear to me that a major reshuffle was needed if our economic policy were to continue, and perhaps if I were to remain Prime Minister.

I preferred to have a Cabinet reshuffle during the recess if possible, so that ministers could get used to their departments before being questioned in the House. I also believed that as matters usually got fairly difficult at the end of July, it was better for all of us to have a holiday before decisions were taken. It was not, therefore, until September that I discussed the details with my closest advisers. Willie Whitelaw, Michael Jopling (the Chief Whip) and Ian Gow came over to Chequers on the weekend of 12–13 September. For part of the time Peter Carrington and Cecil Parkinson joined us. The reshuffle itself took place on the Monday.

I always saw first those who were being asked to leave the Cabinet. I began with Ian Gilmour and told him of my decision. He was — I can find no other word for it — huffy. He left Downing Street and denounced government policy to the television cameras as ‘steering full speed ahead for the rocks’ — altogether a flawless imitation of a man who has resigned on principle. Christopher Soames was equally angry — but in a grander way. I got the distinct impression that he felt the natural order of things was being violated and that he was, in effect, being dismissed by his housemaid. Mark Carlisle, who had not been a very effective Education Secretary and leaned to the left, also left the Cabinet — but he did so with courtesy and good humour. Jim Prior was obviously shocked to be moved from Employment where he had come to consider himself all but indispensable. The press had been full of his threats to resign from the Government altogether if he were asked to leave his present position. I wanted this post for the formidable Norman Tebbit, and Jim could not intimidate me by threatening himself. So I called his bluff, and offered him the post of Northern Ireland Secretary. He asked for time to consider, and after some agonizing and some telephoning he accepted my offer and became Secretary of State for Northern Ireland in place of the debonair Humphrey Atkins, who succeeded Ian Gilmour as the main Foreign Office minister in the Commons.

I moved David Howell from Energy to Transport. It gave me great pleasure to promote the immensely talented Nigel Lawson, the intellectual author of the MTFS, into the Cabinet to take his place. Nigel turned out to be a highly successful Secretary of State for Energy, vigorously promoting competition, taking a real grip on his department and building up coal stocks for the inevitable struggle with the miners.

Keith Joseph had told me that he wished to move from Industry. With his belief that there was an anti-enterprise culture which had harmed Britain’s economic performance over the years, it was natural that Keith should now wish to go to Education where that culture had taken deep roots. Accordingly, I sent Keith to my old department to replace Mark Carlisle. Norman Fowler returned to take up Health and Social Security, the portfolio he had held in Opposition, replacing Patrick Jenkin who took over at Industry from Keith. Janet Young, a friend for many years who had first become involved in politics as leader of Oxford City Council, became Leader of the House of Lords, the first woman to hold the post, taking over Christopher Soames’s responsibility for the civil service.

Perhaps the most important change was the promotion of Norman Tebbit to replace Jim Prior at Employment. Norman had had experience of dealing with industrial relations as a trade unionist himself. He had been an official of the British Airline Pilots’ Association and had no illusions about the vicious world of hard-left trade unionism, nor, by contrast, any doubt about the fundamental decency of most trade union members. As a true believer in the kind of approach Keith Joseph and I stood for, Norman understood how trade union reform fitted into our overall strategy. Norman was also one of the Party’s most effective performers in Parliament and on a public platform. The fact that the Left howled disapproval confirmed that he was just the right man for the job. He was someone they feared.

I had already agreed with Peter Thorneycroft that he should cease to be Party Chairman. I had been unhappy about some of Peter’s actions in recent months. But I would never forget how much he did to help win the 1979 election. He was one of an older school of political leaders — a man of force and character — and remained a friend. I appointed Cecil Parkinson to succeed him — dynamic, full of common sense, a good accountant, an excellent presenter and, no less important, on my wing of the Party.

The whole nature of the Cabinet changed as a result of these changes. After the new Cabinet’s first meeting I remarked to David Wolfson and John Hoskyns what a difference it made to have most of the people in it on my side. This did not mean that we would always agree, or that there would not be the regular arguments about public spending. There would always be some dissent and Jim Prior at his own request remained a member of ‘E’ committee, the economic committee of the Cabinet. But it would be a number of years before there arose an issue which fundamentally divided me from the majority of my Cabinet, and by then Britain’s economic recovery, so much a matter of controversy in 1981, had been accepted — perhaps all too easily accepted — as a fact of life.

The day after the reshuffle, The Times leader entitled Prima Inter Pares, summed up reaction to the changes I had made:

the final impression… left by this reshuffle is the indelible stamp and style of the Prime Minister herself. She has reasserted her political dominance and restated her faith in her own policies. She has rewarded those who do, and punished some of those who do not share that faith. If she succeeds — and by success we mean regenerating the British economy and winning the next election for the Conservative Party — it will be a remarkable personal triumph. If she fails, the fault will be laid at her door, though the damage and the casualties will spread wide through the political and economic landscape.

I could accept that.

THE 1981 CONSERVATIVE PARTY CONFERENCE

The ‘wets’ had been defeated, but they did not yet fully realize it, and decided to make a last assault at the 1981 Party Conference in Blackpool that October.

The circumstances on the eve of the conference were grim. Inflation, which had fallen sharply since 1980, remained stubbornly at between 11 and 12 per cent. Largely as a result of the US budget deficit, interest rates had been increased by 2 per cent in mid-September, temporarily wiping out the reduction made possible at such cost by the budget in March. Then, shortly after I arrived at Melbourne for the Commonwealth Conference on 30 September, I received a telephone call to say that we would have to make a second increase of 2 per cent. So interest rates now stood at an alarming 16 per cent.

Above all, unemployment continued its inexorable rise: it would reach the headline figure of three million in January 1982, but already in the autumn of 1981 it seemed almost inevitable that this would happen. Most people were unpersuaded, therefore, that recession was coming to an end and it was too soon for the new sense of direction in Cabinet — which I knew that the reshuffle would bring — to have had an effect on public opinion.

We were also in political difficulties for another reason. The weakness of the Labour Party, which had initially worked in our favour, had allowed the newly formed SDP to leap into political contention. In October the Liberals and SDP were standing at 40 per cent in the opinion polls: by the end of the year the figure was over 50 per cent. (At the Crosby by-election in the last week of November Shirley Williams was able to overturn a 19,000 Conservative majority to get back into the Commons.) On the eve of our Party Conference I was being described in the press as ‘the most unpopular prime minister since polls began’.

Of course, the statistics were misleading at this point. Interest rates would have been higher still had we not taken the action we did in the budget. We were able to begin reducing rates again within weeks. And demographic factors were as important as the recession in explaining the rise of unemployment. The low birth rates during the First World War meant that fewer people were retiring in the early 1980s than in the early 1970s. At the same time the number of young people entering the labour market reached record levels as a result of the 1960s ‘baby boom’. Between 1979 and 1981 the economy had to provide an extra 83,000 jobs a year just to stop unemployment rising.

But that was not how it seemed at the time — and the ‘wets’ determined to exploit our apparent difficulties to the full at Blackpool. I witnessed what seemed to be a concerted attempt to swing the Party against the Government’s policies both in the Conference Hall and at the fringe meetings outside. In a speech to the Selsdon Group the critics were brilliantly answered by Nigel Lawson. Nigel pointed out that it was no argument for them to take refuge in political generalities:

You cannot fight the war against inflation successfully unless you have economic policies that make sense. There is no point in deluding yourself that somehow politics can trump all that… What we are being offered [by the strategy’s critics] is little more than cold feet dressed up as high principle.

In the conference economic debate no less a figure than Ted Heath spearheaded the attack. He argued that there were alternative policies available but that we just refused to adopt them. The debate was well mannered in form, well versed in content and passionate in feeling. Both sides delivered serious economic analyses at a high level — and the stakes themselves were very high. A rebuff for the platform would have emboldened back-bench ‘wets’ to step up their attack when Parliament resumed, with unpredictable consequences; a rebuff for the critics, which is what they received, would strengthen our moral authority. In answer to Ted Heath, Geoffrey Howe, who summed up our case with a cool, measured and persuasive speech, reminded the conference of Ted’s own words in his introduction to the 1970 Conservative manifesto:

Nothing has done Britain more harm in the world than the endless backing and filling which we have seen in recent years. Once a policy has been established, the prime minister and his colleagues should have the courage to stick with it.

‘I agree with every single word of that,’ said Geoffrey. His speech won over some of the doubters and ensured that we had a comfortable win. Nevertheless, in my own speech later I felt the need to fasten down our victory by taking the arguments of Ted Heath and others head on:

Today’s unemployment is partly due to the sharp increase in oil prices; it absorbed money that might otherwise have gone to increased investment or to buy in the things which British factories produce. But that is not all. Too much of our present unemployment is due to enormous past wage increases unmatched by higher output, to union restrictive practices, to overmanning, to strikes, to indifferent management, and to the basic belief that, come what may, the government would always step in to bail out companies in difficulty. No policy can succeed that shirks those basic issues.

Even though the ‘wets’ would continue to be sceptics for another six months, our policy had already begun to succeed. The early signs of recovery in the summer of 1981 were confirmed by statistics in the following quarter, which marked the start of a long period of sustained economic growth. Political recovery followed in the wake of these early signs of improvement, with better poll figures in the spring of 1982. We were about to find ourselves in the Falklands War, but we had already won the second Battle of Britain.

CHAPTER VI

The Downing Street Years, 1979-1990

The West and the Rest

The early reassertion of western — and British — influence in international affairs in 1981–1982

We were not to know it at the time, but 1981 was the last year of the West’s retreat before the axis of convenience between the Soviet Union and the Third World. The year began with Iran’s release of US hostages in a manner calculated to humiliate President Carter and ended with the crushing, albeit temporarily, of Solidarity in Poland. The post-Vietnam drift of international politics, with the Soviet Union pushing further into the Third World with the help of Cuban surrogates, and the United States reacting with a nervous defensiveness, had settled into an apparently fixed pattern. Several consequences flowed from that. The Soviet Union was increasingly arrogant; the Third World was increasingly aggressive in its demands for international redistribution of wealth; the West was increasingly apt to quarrel with itself, and to cut special deals with bodies like OPEC; and our friends in Third World countries, seeing the fate of the Shah, were increasingly inclined to hedge their bets. Such countervailing trends as had been set in motion — in particular, the 1979 decision to deploy Cruise and Pershing in Europe — had not yet been given concrete effect or persuaded people that the tide had turned. In fact it had just begun to do so.

EARLY TALKS WITH PRESIDENT REAGAN

The election of Ronald Reagan as President of the United States in November 1980 was as much of a watershed in American affairs as my own election victory in May 1979 was in those of the United Kingdom, and, of course, a greater one in world politics. As the years went by, the British example steadily influenced other countries in different continents, particularly in economic policy. But Ronald Reagan’s election was of immediate and fundamental importance, because it demonstrated that the United States, the greatest force for liberty that the world has known, was about to reassert a self-confident leadership in world affairs. I never had any doubt of the importance of this change and from the first I regarded it as my duty to do everything I could to reinforce and further President Reagan’s bold strategy to win the Cold War which the West had been slowly but surely losing.

I heard the news of the American election result in the early hours of Wednesday 5 November and quickly sent my warmest congratulations, inviting the President-elect to visit Britain soon. I had met Governor Reagan twice before when I was Leader of the Opposition. I had been immediately struck by his warmth, charm and complete lack of affectation — qualities which never altered in the years of leadership which lay ahead. Above all, I knew that I was talking to someone who instinctively felt and thought as I did; not just about policies but about a philosophy of government, a view of human nature, all the high ideals and values which lie — or ought to lie — beneath any politician’s ambition to lead his country.

It was easy for lesser men to underrate Ronald Reagan, as many of his opponents had done in the past. His style of work and decision-making was apparently detached and broad-brush — very different from my own. This was in part the result of our two very different systems of government rather than differences of temperament. He laid down clear general directions for his Administration, and expected his subordinates to carry them out at the level of detail. These objectives were the recovery of the American economy through tax cuts, the revival of American power by means of a defence build-up, and the reassertion of American self-confidence. Ronald Reagan succeeded in attaining these objectives because he not only advocated them; in a sense, he embodied them. He was a buoyant, self-confident, good-natured American who had risen from poverty to the White House — the American dream in action — and who was not shy about using American power or exercising American leadership in the Atlantic alliance. In addition to inspiring the American people, he went on later to inspire the people behind the Iron Curtain by speaking honest words about the evil empire that oppressed them.

At this point, however, the policies of military, economic and technological competition with the Soviet Union were only beginning to be put in place; and President Reagan still had to face a largely sceptical audience at home and particularly among his allies, including most of my colleagues in the Government. I was perhaps his principal cheerleader in NATO.

So I was soon delighted to learn that the new president wished me to be the first foreign head of government to visit the United States after he took office. At 3.45 on the afternoon of Wednesday 25 February the RAF VC10 on which I travelled on such occasions took off for Washington. Peter Carrington was with me. He did not altogether share my view of the President’s policies and was intent on pursuing lines which I knew would in practice be quite fruitless, given the President’s unshakeable commitment to a limited number of positions. The US was already meeting opposition from its allies on a number of issues such as arms control, its support for the military government in El Salvador, and increasingly the size of the US deficit. We feared that the new Administration’s plans for tax cuts might widen the deficit — though at this stage we were still hopeful that the President would succeed in achieving the large expenditure cuts he had put before Congress. With so many important things to discuss, I could see no point in raising the issue of Namibia which Peter Carrington wanted to do. I knew that the Americans would not press the South Africans to withdraw from Namibia unless the 20,000 or so Cubans also withdrew from neighbouring Angola. What is more, I privately thought that they were fully justified in asserting this linkage. In any case, there is one principle of diplomacy which diplomats ought to recognize more often: there is no point in engaging in conflict with a friend when you are not going to win and the cost of losing may be the end of the friendship.

I spent the morning of my first day in Washington in meetings with the President — first tête-à-tête, then with the US Secretary of State, Alexander Haig, and Peter Carrington present, and finally with members of the US Cabinet. Two events which occurred on the eve of our discussions had a large impact on them.

First, the Assistant Secretary for European Affairs, Lawrence Eagleburger, had come to Britain and other European capitals to show us a dossier of evidence substantiating the US claim that arms from Cuba, acting as a surrogate for the Soviet Union, were pouring into El Salvador to support the revolution against the pro-western, if undoubtedly unsavoury, government there. There was still some difference of view about whether the threat was as serious as the US claimed. But the evidence which we now saw made it easier to expess support for the American objectives in the region and to resist the pressure from other lobbies. A statement was issued by the Foreign Office just before I left for America to this effect. President Reagan explained to me his determination to pursue a new policy to resist communist subversion via Cuba, which also involved closer US relations with what it saw as a vulnerable and important neighbour, Mexico. I understood all this and agreed with it: but I warned of the danger of losing the propaganda war on El Salvador — the reporting was very one-sided.

The second and much more important development was a speech by President Brezhnev, proposing an international summit and offering a moratorium on theatre nuclear forces (TNF) in Europe. Discussion about how the new Administration should respond dominated the hyperactive Washington media world. I had publicly expressed caution both about the prospect of an early summit meeting and about the Russian TNF proposals, which would have left them with overwhelming superiority since they had deployed and we had not. President Reagan turned out to be of the same mind. Both of us were well aware of Soviet tactics and of the likelihood that this was only part of their attempt to disorientate and divide their western opponents. This was the latest phase in a Soviet propaganda battle in which they proposed no further deployment of nuclear weapons just when they had completed stationing their own modernized weapon systems. This issue was to dominate alliance politics for the next six years.

When I arrived in Washington I was the centre of attention not just because of my closeness to the new president but for another less flattering reason. As I left for America, US readers were learning from a long article in Time entitled ‘Embattled but Unbowed’ that my Government was beset with difficulties. The US press and commentators suggested that given the similarity of economic approach of the British and US Governments, the economic problems we were now facing — above all high and rising unemployment — would soon be faced in the US too. This in turn prompted some members of the Administration and others close to it — but never for a moment the President himself — to explain that the alleged failures of the ‘Thatcher experiment’ stemmed from our failure to be sufficiently radical. Indeed, while I was in Washington Treasury Secretary Donald Regan spoke on similar lines to Congress before slipping away to join a lunch at which I was the main guest; this predictably received plenty of press coverage in Britain. I took every occasion to explain the facts of the case both to the press and to the Senators and Congressmen whom I met. Unlike the US, Britain had to cope with the poisonous legacy of socialism — nationalization, trade union power, a deeply rooted anti-enterprise culture. Labour’s prices and incomes policy, combined with lax monetary policies, had greatly increased the inevitable difficulty of transition, as the public sector pay explosion forced up state spending. At one meeting, Senator Jesse Helms said that some of the US media were playing a requiem for my Government. I was able to reassure him that news of a requiem for my policies was premature. There was always a period during an illness when the medicine was more unpleasant than the disease, but you should not stop taking the medicine. I said that I felt there was a deep recognition among the British people that my policies were right.

After another short talk over coffee with the President, at which we were joined by Nancy and Denis, my party left Washington for New York. In the afternoon I had talks with Dr Waldheim, the UN Secretary-General, and then that evening spoke to an audience on the subject of ‘the Defence of Freedom’. In my speech I summed up my feelings of cautious optimism about the decade now opening up before us:

We have long known that the 1980s will be a difficult and dangerous decade. There will be crises and hardships. But I believe the tide is beginning to turn in our favour. The developing world is recognizing the realities of Soviet ambitions and Soviet life. There is a new determination in the western alliance. There is new leadership in America, which gives confidence and hope to all in the free world.

VISITS TO INDIA AND THE GULF

On 20 May 1980 I had held a meeting to consider a subject which the Russian invasion of Afghanistan had belatedly placed near the top of the western international agenda — how to prevent Soviet expansion in the developing world. With a revivified United States, the possibilities had now been transformed. But I never doubted that, over and above the role of ally and friend to the United States, there was much that Britain could achieve and that no one else could. The Left would have it that the legacy of the British empire was one of bitterness and impoverishment in the former colonies: this was a grossly distorted and inaccurate view. Nor for the most part did those with whom I dealt in these countries see Britain in that light. Sweep away some of the rhetoric and with the exception of certain issues, like relations with South Africa, you will find that no country is as trusted in every continent as Britain. In 1981 I began to make more systematic use of these relationships to promote the interests of Britain and the wider objectives of the West.

On Wednesday 15 April 1981 I began a visit to India. I had visited the country twice and met Mrs Indira Gandhi, India’s Prime Minister, three times before. However, the strategic importance of India was now greater. India had been making economic progress, particularly in the crucial sector of agriculture. It was one of the leading countries in the non-aligned movement — still more so since the death of Marshal Tito. That group of nations was itself more important to us because of its attitude to the Soviet invasion of Afghanistan. India could be an even more powerful source of difficulty than benefit if she chose. Her traditionally closer relations with Russia and hostility to Pakistan, at a time when the latter was the main base for the Afghan anti-communist guerillas, meant that the West had to be sensitive to the Indian Government’s feelings and needs. As regards bilateral relations, there was also the thorny question of the new and much misrepresented British Nationality Bill, which was a part of our proposals to limit future large-scale immigration to Britain — not least immigration from the Indian sub-continent.

My talks with Mrs Gandhi were interesting, but largely inconclusive. Much of the time of the Indian Cabinet seemed to be spent in allocating contracts — not perhaps too surprising in a socialist country — whereas I was more concerned with international questions. I did not manage to persuade Mrs Gandhi to condemn the Soviet invasion of Afghanistan, as I would have liked. She put up the standard excuses, but she was clearly embarrassed by it. I never succeeded in drawing Mrs Gandhi or her successors away from India’s traditional alliance with the Soviet Union until the collapse of communism, or in drawing her closer to America. But we established a good Anglo-Indian working relationship in Commonwealth affairs, and on the practicalities of Third World aid, where she had a much more hard-headed grasp of what was required than most other Third World leaders. This good relationship was not soured for long by the dispute over the British Nationality Bill. She pressed strongly for amendments to it that would have permitted more Indian families to be admitted to Britain: I stood my ground in defence of the bill. My impression was that although the attack was pressed home privately and publicly — at the closing press conference I was faced with hostile questioning — Mrs Gandhi was herself largely responding to public pressure.

I liked and respected Mrs Gandhi. Her policies had been more than high-handed, but only a strong figure with a powerful personality could hope successfully to rule India. Mrs Gandhi was also — perhaps it is not just myth to see this as a female trait — immensely practical. For example, she always insisted that what India required was basic — what to some seemed primitive — means of assistance to allow its peasants to produce more food. Like me, she understood the immense benefits which science could bring and indeed was already bringing in new varieties of grain and techniques of cultivation. Her weak spot was that she never grasped the importance of the free market.

Apart from my talks with Mrs Gandhi and others, I saw three different aspects of the new India. On Thursday I addressed the Indian Parliament. On Friday I visited an Indian village where the efficiency of peasant agriculture was being transformed. On Saturday I walked around the Bombay Atomic Research Centre. The Indian visit was, I felt, not only predictably fascinating; slightly less predictably, though without any dramatic developments, it had been a success. I was sorry to leave India so soon: each visit makes me want to return for an extended stay.

On Sunday I left for Saudi Arabia and the Gulf. I had to have clothes specially made for this visit because it was important to conform to the customs of these conservative Muslim societies. Contrary to what one might have thought, they were in no way disconcerted to meet their first western woman prime minister. Later I discovered how important the wives of leading Arab figures are. Indeed, many of these women are highly cultivated, very well educated and well informed. Their influence is greatly underrated in the West and an evening’s conversation with them is a highly stimulating occasion.

I was the first ever British prime minister to visit these states. But Britain’s links with the area were traditionally strong, dating back to the days when we provided the defence of some of the Gulf states, long before oil was discovered. I always regretted, even at the time, the decision of Ted Heath’s Government not to reverse the Wilson Government’s withdrawal of our forces and the severing of many of our responsibilities east of Suez. Repeatedly, events have demonstrated that the West cannot pursue a policy of total disengagement in this strategically vital area. Britain has, however, continued to supply equipment, training and advice.

In Saudi Arabia and the Gulf states I sought to reassure my hosts that whatever decisions were made about a Rapid Deployment Force (RDF) then being discussed, which some of them feared might pave the way for direct military intervention in the Middle East, nothing of the sort would occur without their knowledge and consent. The Iraq-Iran conflict was continuing, though at a lower level of activity. No one knew how serious the threat of Islamic fundamentalism might become. Too overt a western presence might provide an excuse for it: too little support from the West might provide an opportunity. The Gulf Co-operation Council had been formed to bring together the states in the region to guarantee their mutual security: this was clearly a welcome development. It was also important that they should have the right military equipment and be trained to use it. In this our old defence links reinforced our commercial interest. Some British aeroplanes and tanks were eminently suitable for this area.

Abu Dhabi, where I arrived on Tuesday 21 April, is the largest of the members of the United Arab Emirates (UAE). Sheik Zaid, the Amir and President of the UAE, spoke for all the world like an Arab poet and was a man of great charm. He knew Pakistan well because like other Gulf Arabs he regularly went there to hunt with his hawks. The Gulf Arabs therefore learned much of interest about developments in Pakistan and Afghanistan. We supplied the UAE with a good deal of military equipment and advice, and we were keen to sell the excellent Hawk Trainer and Ground Attack aircraft throughout the Gulf.

The other main UAE state is Dubai, where I arrived on Wednesday. Its ruler was Sheik Rashid. When I arrived he was already on the airport tarmac to greet me, even though he had already seen me in Abu Dhabi. By this time he was elderly and unwell. But his powerful features, above all his eyes, still conveyed shrewdness and courage. There is a picture of the young Sheik on horseback, holding his sword aloft, marching in from the desert to claim his land: it struck me that the qualities of his generation would be difficult to repeat in the more comfortable conditions of today.

Dubai is enchanting. Like the other Gulf states that I visited, it is full of flowers, kept absolutely perfectly and tended every day. But it is also a thriving port. Like Bahrain, but unlike some other cities on the shores of the Gulf, it was established long before oil was discovered. From here Arab traders sailed to the Red Sea and to the Indian Ocean.

I also visited Muscat in Oman. Its leader, Sultan Qaboos, has always been one of Britain’s closest friends in the Gulf. Historic forts guard the entrance to the port of Muscat. As elsewhere in the Gulf, development has been very carefully controlled to blend in with the traditional style of buildings. I discussed with the Sultan Oman’s requirements for military equipment. Later when the price of oil fell and Oman’s finances were somewhat less healthy, we suggested that they should purchase the Ground Attack Hawk and Trainer rather than the more expensive Tornado. The Sultan and I discussed the situation in the Gulf and the Iran-Iraq War. He was always a source of valuable information about events in Iran. We too were concerned that the war remained confined to those two states and to the northern end of the Gulf. We had stationed the three ships of the Armilla Patrol in the area in 1980 to keep the sea lanes open. My talks with the Sultan and other Gulf rulers laid the groundwork for later co-operation when the Iran-Iraq War threatened Gulf shipping and, subsequently, when Iraq invaded Kuwait.

My final visit on this occasion was to see Sheik Khalifa, the Emir of Qatar. Qatar has the biggest natural deposits of gas anywhere in the world and the country is very wealthy. I discussed the involvement of British firms in the development of these resources.

The pattern of the visit, combining diplomacy, commerce and private discussion would be repeated on many occasions in the years ahead. Even on this busy trip I had not been able to visit all the important players in the ‘great game’ of the Gulf. I would return in September to do so, visiting Bahrain and Kuwait on my way to the Commonwealth Conference in Melbourne.

THE OTTAWA G7

My second G7 summit — President Reagan’s and President Mitterrand’s first — took place in Montebello, just outside Ottawa, where I arrived on the afternoon of Sunday 19 July to be met by Canada’s Prime Minister Pierre Trudeau. Montebello had been chosen as the site of the conference because the G7 heads of government were determined to try to avoid the relentless pressure from the media which increasingly disrupted proceedings. After each afternoon session Pierre Trudeau flew by helicopter back in to Ottawa to brief the journalists. We enjoyed a kind of splendid isolation at the Château Montebello, sometimes called the world’s biggest log cabin but in fact a very luxurious hotel. It had also been decided to try to inject rather more informality into discussions. Perhaps because of the presence of Ronald Reagan, with his effortless amiability, we all called one another by our Christian names. Something I liked less was the decision that everyone should dress informally. In my experience this kind of approach always presents more rather than fewer problems in choosing what to wear. The Japanese, for example, wore the smartest white ‘barbecue’ suits that I have ever seen — and looked all the more formal beside the westerners in open-neck shirts and slacks. For my part, like the Japanese, I made almost no concessions to informal dress. I believe that the public really likes its leaders to look businesslike and well turned out. I was glad that in retrospect this degree of informality was not thought a success and so was not repeated.

President Reagan was subject to some criticism at Montebello about the level of US interest rates. He explained that he had inherited these from his predecessor. ‘Give me time’, he said; ‘I want them down too.’ He was as good as his word on this. He also hoped to control the US deficit by cuts in public spending, but that proved more intractable. The deficit continued to rise until about 1985. The US deficit was to be the one topic on which the President and I continued to be at odds, until the latter half of his second term when it entered a sharply declining path. My own experience of getting down deficits was that you had to keep a very firm hand on the purse strings and say ‘no’ to much public spending. If you are controlling public spending, you can temporarily put up taxes because in those circumstances the revenue will help to cut the deficit (and therefore interest rates). But if you are increasing spending, then a tax increase will only serve to encourage even more spending and thus may even increase the deficit. Given the separation of powers in the US Constitution, which enabled Congress to spend over and above the president’s wishes, holding taxes down may be the only effective tool a president has to hold spending down. So I came to have some sympathy with Ronald Reagan’s position. Where the President and I were at one was when he argued for the greatest possible international free trade. Trade also figured in others’ contributions. The Japanese were, as usual, sound on the principle of free trade, but, in spite of pressure, definitely less willing to take practical measures to open up their own markets.

Helmut Schmidt, who was known to be privately critical of the policies of the new US Administration, argued for sound and orthodox public finance and open trade, and I did the same in quite a long off-the-cuff speech. My contribution was, I suspect, the more convincing because, as a result of the cuts in government borrowing in our 1981 budget, British interest rates had fallen by this time — even while we were continuing to fight inflation.[34]

Perhaps my most useful discussion at Ottawa was at a private meeting with President Reagan. Since we had met in Washington he had survived injuries from an assassination attempt which would have crippled many a younger man. But he looked fine. I briefed him on events in Britain, putting both our economic problems and the recent inner-city riots in perspective. As regards American relations with Europe, I was becoming increasingly worried about some of the Administration’s rhetoric: for example, I urged him to discourage talk about a ‘rising tide of neutralism’ in Europe: while I agreed with his underlying point, such warnings could all too easily prove self-fulfilling. I took this opportunity to thank him warmly for his tough stand against Irish terrorism and its NORAID supporters. It was good to know that, however powerful the Irish republican lobby in the USA might be, the Reagan Administration would not buckle before it.

MELBOURNE CHOGM AND VISIT TO PAKISTAN

Almost two months later the Commonwealth Heads of Government Meeting opened in Melbourne (on Wednesday 30 September).

The conference was overshadowed, as usual, by South African issues. Robert Mugabe, with whom I had a separate meeting, was there for the first time representing Zimbabwe. There was a good deal of hostility to the new American Administration’s attitude to the problem of Namibia. I was determined to hold the line so that the so-called ‘Contact Group’ of five nations, including the US, should continue to be the means by which pressure for a settlement was exerted. At one point Maurice Bishop, the Marxist Prime Minister of Grenada, delivered an eloquent plea that we should send a clear message of support to our brothers in Namibia, suffering under South African rule. One of the other heads of government later suggested to me that someone should ask Maurice Bishop about the number of his own people, especially his country’s professional and middle class, now held in Grenada’s prisons, put there by his Government. There was also one of those arguments, which so frequently afflicted the Commonwealth, about sporting ties with South Africa. The Springboks had played in New Zealand amid scenes of disorder and Robert Muldoon was bitterly condemned for his alleged breach of the Gleneagles Agreement, by which international sporting relations with South Africa were regulated. He put up a robust defence. At least with the Rhodesian issue now settled, Britain was less the focus of international criticism by the Commonwealth than on the previous occasion, and the serious pressure for sanctions against South Africa still lay in the future.

In my interventions during the conference, I acknowledged that conditions for the developing world were undoubtedly difficult. They had been hit hard both by the rise in the oil price and by the effects of the recession on the western markets on which they relied. However, I emphasized that wealth creation rather than international wealth redistribution still had to come first — indeed more so than ever. I also defended the British record on overseas aid, which was very good when you looked further than the narrowly defined aid programme and took into account both public and private sector loans and investment. With myself and the heads of government of six other Commonwealth countries due to attend the forthcoming international conference on ‘North-South’ issues in Cancún, I thought it would be well worth putting the facts on the record now.

While I was in Australia Ted Heath delivered a vitriolic speech in Manchester attacking my policies. Oddly, perhaps, in view of his record, Ted had become an advocate of the politics of ‘consensus’; or perhaps less oddly, since these policies seemed to come down to state intervention and corporatism. I was sent an advance copy of the speech and used my Sir Robert Menzies Lecture at Monash University to deliver a reply to him and to all the critics of my style of government. It was, unbeknown to him, President Forbes Burnham of Guyana who provided the inspiration for this in the course of the weekend retreat which the heads of government spent away from Melbourne in Canberra. In the course of this we were arguing about an issue to be reported in the final communiqué which we were drafting. At one point Forbes Burnham said that we must achieve a consensus. I asked him what he meant by ‘consensus’ — a word of which I had heard all too much — and he replied that ‘it is something you have if you cannot get agreement.’ This seemed to me an excellent definition. So in my lecture I inserted a passage which read:

To me consensus seems to be: the process of abandoning all beliefs, principles, values and policies in search of something in which no one believes, but to which no one objects; the process of avoiding the very issues that have to be solved, merely because you cannot get agreement on the way ahead. What great cause would have been fought and won under the banner ‘I stand for consensus’?

On the return journey I took the opportunity to visit Pakistan. I flew to Islamabad to be met by President Zia. The war in Afghanistan was at its height and it was arranged that I should visit one of the refugee camps set up in Pakistan for fleeing Afghans. We flew to the Nasir Bagh Afghan refugee camp by helicopter. It was large, but impeccably clean, orderly and obviously well run. I spoke under a huge tent, sheltered from the burning sun, while the refugees — men, women and children — sat cross-legged on the ground. I told them of my admiration for their refusal to ‘live under a godless communist system which [was] trying to destroy [their] religion and [their] independence’ and promised them my help. My speech was interrupted from time to time as people rose to their feet to express the words of approval, ‘Allah be praised’.

I had lunch in the garden of the beautiful old house of the Governor at Peshawar. There, in the grounds of the house, I addressed a very large meeting of tribal leaders from the surrounding areas. Then I went by helicopter up to the Khyber Pass. I had been warned in advance that, as an honoured guest, I would be presented with the traditional sheep: I patted it appreciatively on the head and asked them to keep it for me. From there I went up to the frontier with Afghanistan itself, always busy despite its new status as a kind of dividing line between communism and freedom. I gazed across into the Soviet dominated lands beyond. A line of lorries was waiting to come through from Afghanistan to Pakistan. Relations with the Russian border guards on the Afghan side at this time were friendly enough. They were taking a very close interest in everything that was happening on our side. I reflected that Pakistan’s was an unsung story of heroism, taking in hundreds of thousands of refugees and bordering the world’s greatest military power. Though it was not a rich country, as I later remarked to President Zia, all the Pakistani people I saw looked healthy and well dressed. He said ‘no one is short of clothes or food, thank God.’ Britain was already providing aid for the refugees. But if Pakistan was to stand as a bulwark against communism it would need still more help from the West.

CANCÚN NORTH-SOUTH SUMMIT

I had successfully persuaded President Reagan in the course of our discussions in Washington of the importance of attending the Cancún summit which was held that October in Mexico. I felt that, whatever our misgivings about the occasion, we should be present, both to argue for our positions and to forestall criticism that we were uninterested in the developing world. The whole concept of ‘North-South’ dialogue, which the Brandt Commission had made the fashionable talk of the international community, was in my view wrong-headed. Not only was it false to suggest that that there was a homogeneous rich North which confronted a homogeneous poor South: underlying the rhetoric was the idea that redistibution of world resources rather than the creation of wealth was the way to tackle poverty and hunger. Moreover, what the developing countries needed more than aid was trade: so our first responsibility was — and still is — to give them the freest possible access to our markets. Of course, ‘North-South’ dialogue also appealed to those socialists who wanted to play down the fundamental contrast between the free capitalist West and the unfree communist East.

The conference’s joint chairmen were President López-Portillo, our Mexican host, and Pierre Trudeau who had stepped in for the Chancellor of Austria, prevented by illness from attending. Twenty-two countries were represented. We were staying in one of those almost overluxurious hotels which you so often seem to find in countries where large numbers of people are living in appalling poverty. Cancün was built in the 1970s, on a site (it is said) chosen by computer as likely to have maximum appeal to foreign tourists. The city was badly damaged by Hurricane Gilbert in 1988. So much for information technology.

There is no immodesty in saying that Mrs Gandhi and I were the two conference media ‘personalities’. India had just received the largest loan yet given by the International Monetary Fund (IMF) at less than the market rate of interest. She and others naturally wanted more cheap loans in the future. This was what lay behind the pressure, which I was determined to resist, to place the IMF and the World Bank directly under United Nations control. At one point in the proceedings I engaged in a vigorous discussion with a group of heads of government who could not see why I felt so strongly that the integrity of the IMF and the World Bank would inevitably be compromised by such a move, which would do harm rather than good to those who were advocating it. In the end I put the point more bluntly: I said that there was no way in which I was going to put British deposits into a bank which was totally run by those on overdraft. They saw the point.

While I was at Cancün I also had a separate meeting with Julius Nyerere, who was, as ever, charmingly persuasive, but equally misguided and unrealistic about what was wrong with his own country and, by extension, with so much of black Africa. He told me how unfair the IMF conditions for extending credit to him were: they had told him to bring Tanzania’s public finances into order, cut protection and devalue his currency to the much lower level the market reckoned it worth. Perhaps at this time the IMF’s demands were somewhat too rigorous: but he did not see that changes in this direction were necessary at all and in his own country’s long-term interests. He also complained of the effects of droughts and the collapse of his country’s agriculture — none of which he seemed to connect with the pursuit of misguided socialist policies, including collectivizing the farms.

The process of drafting the communiqué itself was more than usually fraught. An original Canadian draft was in effect rejected; and Pierre Trudeau left it largely to the rest of us, making clear that he thought our efforts rather less good than his own. I spent much of this time seeking to sort out drafting points with the Americans, who continued until almost the last moment to have reservations about the text.

The summit was a success — though not really for any of the reasons publicly given. At its conclusion there was, of course, the expected general — and largely meaningless — talk about ‘global negotiations’ on North-South issues. A special ‘energy affiliate’ to the World Bank was to be set up. But what mattered to me was that the independence of the IMF and the World Bank were maintained. Equally valuable, this was the last of such gatherings. The intractable problems of Third World poverty, hunger and debt would not be solved by misdirected international intervention, but rather by liberating enterprise, promoting trade — and defeating socialism in all its forms.

Before I left Mexico, I had one more item of business to transact. This was to sign an agreement for the building of a huge new steel plant by the British firm of Davy Loewy. Like other socialist countries, the Mexicans wrongly thought that large prestige manufacturing projects offered the best path to economic progress. However, if that was what they wanted, then I would at least try to see that British firms benefited. The ceremony required my going to Mexico City the night before. I stayed at the residence of the British Ambassador, Crispin Tickell. While I was there at dinner the chandeliers started swinging and the floor moved; there was nowhere you could put your feet. At first I thought that I must have been affected by the altitude, even though I had had no difficulty in my earlier days on skiing holidays. But I was reassured by our ambassador who was sitting beside me: ‘No’, he said, ‘it’s just an earthquake.’

Other earthquakes were sending out tremors that year. Before I left for the international visits chronicled in this chapter, I had been all too aware of the significance for the Cold War of the stationing of Cruise and Pershing missiles in Europe. If it went ahead as planned, the Soviet Union would suffer a real defeat; if it was abandoned in response to the Soviet sponsored ‘peace offensive’, there was a real danger of a decoupling of Europe and America. My meetings with President Reagan had persuaded me that the new Administration was apprised of these dangers and determined to combat them. But a combination of exaggerated American rhetoric and the perennial nervousness of European opinion threatened to undermine the good transatlantic relationship that would be needed to guarantee that deployment went ahead. I saw it as Britain’s task to put the American case in Europe since we shared their analysis but tended to put it in less ideological language. And this we did in the next few years.

But there was a second front in the Cold War — that between the West and the Soviet-Third World axis. My visits to India, Pakistan, the Gulf, Mexico and Australia for the Commonwealth Conference brought home to me how badly the Soviets had been damaged by their invasion of Afghanistan. It had alienated the Islamic countries en bloc, and within that bloc strengthened conservative pro-western regimes against radical states like Iraq and Libya. Traditional Soviet friends like India, on the other hand, were embarrassed. Not only did this enable the West to forge its own alliance with Islamic countries against Soviet expansionism; it also divided the Third World and so weakened the pressure it could bring against the West on international economic issues. In these circumstances, countries which had long advocated their own local form of socialism, to be paid for by western aid, suddenly had to consider a more realistic approach of attracting western investment by pursuing free-market policies — a small earthquake as yet, but one that would transform the world economy over the next decade.

CHAPTER VII

The Downing Street Years, 1979-1990

The Falklands War: Follow the Fleet

The attempts by diplomacy and the sending of the task force to regain the Falkland Islands — to the end of April 1982

BACKGROUND

The Downing Street Years, 1979-1990

Nothing remains more vividly in my mind, looking back on my years in No. 10, than the eleven weeks in the spring of 1982 when Britain fought and won the Falklands War. Much was at stake: what we were fighting for eight thousand miles away in the South Atlantic was not only the territory and the people of the Falklands, important though they were. We were defending our honour as a nation, and principles of fundamental importance to the whole world — above all, that aggressors should never succeed and that international law should prevail over the use of force. The war was very sudden. No one predicted the Argentine invasion more than a few hours in advance, though many predicted it in retrospect. When I became Prime Minister I never thought that I would have to order British troops into combat and I do not think I have ever lived so tensely or intensely as during the whole of that time.

The significance of the Falklands War was enormous, both for Britain’s self-confidence and for our standing in the world. Since the Suez fiasco in 1956, British foreign policy had been one long retreat. The tacit assumption made by British and foreign governments alike was that our world role was doomed steadily to diminish. We had come to be seen by both friends and enemies as a nation which lacked the will and the capability to defend its interests in peace, let alone in war. Victory in the Falklands changed that. Everywhere I went after the war, Britain’s name meant something more than it had. The war also had real importance in relations between East and West: years later I was told by a Russian general that the Soviets had been firmly convinced that we would not fight for the Falklands, and that if we did fight we would lose. We proved them wrong on both counts, and they did not forget the fact.

Beginning in the summer of 1982, only weeks after the war, I wrote down my detailed recollection of events as I had lived through them at the centre of government. I finished the story at Chequers over Easter 1983. It was still etched in my mind, and I had all the records to hand. The task took some time to complete; it is a long and complicated story. Parts of it will have to remain secret for a considerable time to come, but it is upon my personal memoir that I have based this account.

The first recorded landing on the Falklands was made in 1690 by British sailors, who named the channel between the two principal islands ‘Falkland’s Sound’ in honour of the Treasurer of the Navy, Viscount Falkland. Britain, France and Spain each established settlements on the islands at various times during the eighteenth century. In 1770 a quarrel with Spain caused the British Government of the day to mobilize the fleet and a naval task force was prepared, though never sent: on this occasion, a diplomatic solution was found.

The islands had obvious strategic importance, possessing several good harbours within 500 miles of Cape Horn. In the event that the Panama Canal is ever closed their significance would be considerable. But it must be admitted that the Falklands were always an improbable cause for a twentieth-century war.

The Argentine invasion of the Falklands took place 149 years after the beginning of formal British rule there, and it seems that the imminence of the 150th anniversary was an important factor in the plotting of the Argentine Junta. Since 1833 there has been a continuous and peaceful British presence on the islands. Britain’s legal claim in the present day rests on that fact, and on the desire of the settled population — which is entirely of British stock — to remain British. The principle of ‘self-determination’ has become a fundamental component of international law, and is enshrined in the UN Charter. British sovereignty has strong legal foundations, and the Argentinians know it.

Some 800 miles to the south-east of the Falklands lies South Georgia, and 460 miles further out, the South Sandwich Islands. Here the Argentine claim is even more dubious. These islands are dependencies of the United Kingdom, though they are administered from the Falklands. Their climate is severe and they have no settled population. No state claimed them before British annexation in 1908 and there has been continuous British administration since that time.

My first involvement with the Falklands issue came very early in the life of the 1979 Parliament. It was clear that there were only two ways in which the prosperity of the Falkland Islanders could be achieved. The more obvious and attractive approach was by promoting the development of economic links with neighbouring Argentina. Yet this ran up against the Argentine claim that the Falklands and the dependencies were part of their sovereign territory. Ted Heath’s Government had signed an important Communications Agreement in 1971 establishing air and sea links between the islands and the mainland, but further progress in that direction had been blocked by the Argentinians unless sovereignty was also discussed. Consequently it was argued that some kind of accommodation with Argentina would have to be reached on the question of sovereignty. Arguments of this kind led Nick Ridley (the responsible minister) and his officials at the Foreign and Commonwealth Office (FCO) to advance the so-called ‘lease-back’ arrangement, under which sovereignty would pass to Argentina but the way of life of the islanders would be preserved by the continuation of British administration. I disliked this proposal, but Nick and I both agreed that it should be explored, subject always to the requirement that the islanders themselves should have the final word. We could not agree to anything without their consent: their wishes must be paramount.

There was, however, another option — far more costly and, on the face of it, at least as risky. We could implement the recommendations of the long-term economic survey produced in 1976 by the former Labour minister, Lord Shackleton, and one recommendation in particular — the enlargement of the airport and lengthening of the runway. Notwithstanding the cost, such a commitment would have been seen as evidence of the British Government’s determination to have no serious talks about sovereignty and it would have increased our capacity to defend the islands, since a longer runway would have allowed for rapid reinforcement by air. This in turn might have provoked a swift Argentine military response. Unsurprisingly, no government — Labour or Conservative — was prepared to act while there seemed any possibility of an acceptable solution and, accordingly, lease-back had become the favoured option.

However, as I rather expected, none of these diplomatic arguments in favour of lease-back had much appeal to the islanders themselves. They would have nothing to do with such proposals. They distrusted the Argentine dictatorship and were sceptical of its promises. But more than that, they wanted to remain British. They made this abundantly clear to Nick Ridley when he twice visited them to learn their views. The House of Commons too was noisily determined that the islanders’ wishes should be respected. Lease-back was killed. I was not prepared to force the islanders into an arrangement which was intolerable to them — and which I in their position would not have tolerated either.

However, what all this meant for the future of the Falklands in the longer term was less clear. The Government found itself with very little room for manoeuvre. We were keen, if we could, to keep talking to the Argentinians, but diplomacy was becoming increasingly difficult. The Argentinians had already shown that they were not above taking direct action. In 1976 they had established and had maintained since a military presence on Southern Thule in the South Sandwich Islands, which the Labour Government did nothing to remove and which ministers did not even reveal to the House of Commons until 1978.

Then, in December 1981, there was a change of government in Buenos Aires. A new three-man military Junta replaced the previous military government, with General Leopoldo Galtieri as President. Galtieri relied on the support of the Argentine Navy, whose Commander-in-Chief, Admiral Anaya, held particularly hardline views on the Argentine claim to the ‘Malvinas’.

Cynically, the new Junta continued negotiations for a few months. There were talks in New York at the end of February 1982 which seemed to go well. But then the Argentinian line hardened abruptly. With hindsight this was a turning point. But in judging our response to the new Junta it is important to remember how much aggressive rhetoric there had already been in the past, none of it coming to anything. Moreover, based on past experience our view was that Argentina was likely to follow a policy of progessively escalating the dispute, starting with diplomatic and economic pressures. Contrary to what was said at the time, we had no intelligence until almost the last moment that Argentina was about to launch a full-scale invasion. Nor did the Americans: in fact Al Haig later told me that they had known even less than we had.

A factor in all this was the American Administration’s policy of strengthening ties with Argentina as part of its strategy of resisting Cuban-based communist influence in Central and South America. It later became clear that the Argentinians had gained a wildly exaggerated idea of their importance to the United States. They convinced themselves on the eve of the invasion that they need not take seriously American warnings against military action, and became more intransigent when diplomatic pressure was applied on them afterwards to withdraw.

Could they have been deterred? It must be remembered that in order to take action to deter Argentina militarily, given the vast distance between Britain and the Falklands, we would have had to have some three weeks’ notice. Further, to send down a force of insufficient size would have been to subject it to intolerable risk. Certainly, the presence of HMS Endurance — the lightly armed patrol vessel which was due to be withdrawn under the 1981 Defence Review proposals — was a military irrelevance. It would neither deter nor repel any planned invasion. (Indeed, when the invasion occurred I was very glad that the ship was at sea and not in Port Stanley: if she had been, she would have been captured or blown out of the water.) Most important perhaps is that nothing would have more reliably precipitated a full-scale invasion, if something less had been planned, than if we had started military preparations on the scale required to send an effective deterrent. Of course with the benefit of hindsight, we would always like to have acted differently. So would the Argentinians. The truth is that the invasion could not have been foreseen or prevented. This was the main conclusion of the Committee of Inquiry, chaired by Lord Franks, which we set up to examine the way we had handled the dispute in the run-up to the invasion. The committee had unprecedented access to government papers, including those of the intelligence services. Its report ends with the words: ‘we would not be justified in attaching any criticism or blame to the present Government for the Argentine Junta’s decision to commit its act of unprovoked aggression in the invasion of the Falkland Islands on 2 April 1982.’

It all began with an incident on South Georgia. On 20 December 1981 there had been an unauthorized landing on the island at Leith harbour by what were described as Argentine scrap metal dealers; we had given a firm but measured response. The Argentinians subsequently left and the Argentine Government claimed to know nothing about it. The incident was disturbing, but not especially so. I was more alarmed when, after the Anglo-Argentine talks in New York, the Argentine Government broke the procedures agreed at the meeting by publishing a unilateral communiqué disclosing the details of discussion, while simultaneously the Argentine press began to speculate on possible military action before the symbolically important date of January 1983. On 3 March 1982 I minuted on a telegram from Buenos Aires: ‘we must make contingency plans’ — though, in spite of my unease, I was not expecting anything like a full-scale invasion, which indeed our most recent intelligence assessment of Argentine intentions had discounted.

On 20 March we were informed that the previous day the Argentine scrap metal dealers had made a further unauthorized landing on South Georgia, again at Leith. The Argentine flag had been raised and shots fired. Again in answer to our protests the Argentine Government claimed to have no prior knowledge. We first decided that HMS Endurance should be instructed to remove the Argentinians, whoever they were. But we tried to negotiate with Argentina a way of resolving what still seemed to be an awkward incident rather than a precursor of conflict, so we subsequently withdrew our instructions to Endurance and ordered the ship to proceed instead to the British base at Grytviken, the main settlement on the island.

WEEK ONE

Yet as March drew to a close with the incident still unresolved we became increasingly concerned. On Sunday evening, 28 March, I rang Peter Carrington from Chequers to express my anxiety at the situation. He assured me that he had already made a first approach to Al Haig, the US Secretary of State, asking him to bring pressure to bear. The following morning Peter and I met at RAF Northolt on our way to the European Council at Brussels, and discussed what further steps we should take. We agreed to send a nuclear-powered submarine to reinforce HMS Endurance and to make preparations to send a second submarine. I was not too displeased when the following day news of the decision leaked. The submarine would take two weeks to get to the South Atlantic, but it could begin to influence events straight away. My instinct was that the time had come to show the Argentines that we meant business.

In the late afternoon of Tuesday 30 March I returned from Brussels. By that time Peter Carrington had already left on an official visit to Israel; his absence was unfortunate. The Foreign Office and the Ministry of Defence had been working to prepare up-to-date assessments and review the diplomatic and military options. The following day — Wednesday 31 March — I made my statement to the House reporting on the Brussels summit, but my mind was focused on what the Argentinians were intending and on what our response should be. The advice we received from intelligence was that the Argentine Government were exploring our reactions, but that they had not contrived the landing on South Georgia and that any escalation they might make would stop short of full-scale invasion. However, we knew that they were unpredictable and unstable, and that a dictatorship might not behave in ways we would consider rational. By now I was deeply uneasy. Yet still I do not think that any of us expected an immediate invasion of the Falklands themselves.

I shall not forget that Wednesday evening. I was working in my room at the House of Commons when I was told that John Nott wanted an immediate meeting to discuss the Falklands. I called people together. In Peter Carrington’s absence Humphrey Atkins and Richard Luce attended from the Foreign Office, with FCO and MoD officials. (The Chief of Defence Staff was also away, in New Zealand.) John was alarmed. He had just received intelligence that the Argentinian Fleet, already at sea, looked as if they were going to invade the islands on Friday 2 April. There was no ground to question the intelligence. John gave the MoD’s view that the Falklands could not be retaken once they were seized. This was terrible, and totally unacceptable. I could not believe it: these were our people, our islands. I said instantly: ‘if they are invaded, we have got to get them back.’

At this dark moment comedy intervened. The Chief of the Naval Staff, Sir Henry Leach, was in civilian dress, and on his way to the meeting had been detained by the police in the Central Lobby of the House of Commons. He had to be rescued by a whip. When he finally arrived, I asked him what we could do. He was quiet, calm and confident: ‘I can put together a task force of destroyers, frigates, landing craft, support vessels. It will be led by the aircraft carriers HMS Hermes and HMS Invincible. It can be ready to leave in forty-eight hours.’ He believed such a force could retake the islands. All he needed was my authority to begin to assemble it. I gave it him, and he left immediately to set the work in hand. We reserved for Cabinet the decision as to whether and when the task force should sail.

Before this, I had been outraged and determined. Now my outrage and determination were matched by a sense of relief and confidence. Henry Leach had shown me that if it came to a fight the courage and professionalism of Britain’s armed forces would win through. It was my job as Prime Minister to see that they got the political support they needed. But first we had to do everything possible to prevent the appalling tragedy, if it was still humanly possible to do so.

Our only hope now lay with the Americans — friends and allies, and people to whom Galtieri, if he was still behaving rationally, should listen. At the meeting we drafted and sent an urgent message to President Reagan asking him to press Galtieri to draw back from the brink. This the President immediately agreed to do.

At 9.30 on Thursday morning, 1 April, I held a Cabinet, earlier than usual so that a meeting of the Overseas and Defence Committee of the Cabinet (OD) could follow it before lunch. The latest assessment was that an Argentine assault could be expected about midday our time on Friday. We thought that President Reagan might yet succeed. However, Galtieri refused altogether at first to take the President’s call. He deigned to speak to the President only when it was too late to stop the invasion. I was told of this outcome in the early hours of Friday morning and I knew then that our last hope had now gone.

But how seriously did the Argentinians take American warnings anyway? On the evening of Friday 2 April as the invasion was proceeding, the US Ambassador to the United Nations, Mrs Kirkpatrick, was attending a gala dinner given by the Argentinian Ambassador in her honour. As our ambassador later asked her: how would Americans have felt if he had dined at the Iranian Embassy the night that the American hostages were seized in Tehran? Unfortunately the attitudes of Mrs Kirkpatrick and some other members of the US Administration were at this point of considerable importance.

At 9.45 on Friday morning Cabinet met again. I reported that an Argentine invasion was now imminent. We would meet later in the day to consider once more the question of sending a task force — though to my mind the issue by this stage was not so much whether we should act, but how.

Communications with the Falklands were often interrupted due to atmospheric conditions. On Friday morning the Governor of the Falklands — Rex Hunt — sent a message telling us that the invasion had begun, but it never got through. (Indeed, the first contact I had with him after the invasion was when he reached Montevideo in Uruguay, where the Argentinians flew him and a number of other senior people, on Saturday morning.) It was, in fact, the captain of a British Antarctic Survey vessel who intercepted a local Falkland Island ham radio broadcast and passed on the news to the Foreign Office. My private secretary brought me final confirmation while I was at an official lunch.

By now discussion was taking place all over Whitehall about every aspect of the campaign, including the application of economic and other sanctions against Argentina. Feverish military preparations were under way. The army was preparing its contribution. A naval task force was being formed, partly from ships currently at Gibraltar and partly from those in British ports. The Queen had already made it clear that Prince Andrew, who was serving with HMS Invincible, would be joining the task force: his grandfather, King George VI, had fought at the Battle of Jutland and then as now there could be no question of a member of the royal family being treated differently from other servicemen.

Cabinet met for the second time that day at 7.30 in the evening when the decision was made to send the task force. What concerned us most at this point was the time it would take to arrive in the Falklands. We believed, rightly, that the Argentinians would pile in men and material to make it as difficult as possible for us to dislodge them. And all the time the weather in the South Atlantic would be worsening as the bitter winds and violent storms of the southern winter approached.

More immediate and more manageable was the problem of how to deal with public opinion at home in the intervening period. Support for the despatch of the task force was likely to be strong, but would it fall away as time went on? In fact, we need not have worried too much about that. Ships were constantly being chartered and negotiations — above all Al Haig’s shuttle diplomacy — continued. Our policy was one which people understood and endorsed. Public interest and commitment remained strong throughout.

One particular aspect of this problem, though, does rate a mention. We decided to allow defence correspondents on the ships who reported back during the long journey. This produced vivid coverage of events. But there was always a risk of disclosing information which might be useful to the enemy. I also became very unhappy at the attempted ‘even-handedness’ of some of the comment, and the chilling use of the third-person — talk of ‘the British’ and ‘the Argentinians’ on our news programmes.

It was also on Friday 2 April that I received advice from the Foreign Office which summed up the flexibility of principle characteristic of that department. I was presented with the dangers of a backlash against the British expatriates in Argentina, problems about getting support in the UN Security Council, the lack of reliance we could place on the European Community or the United States, the risk of the Soviets becoming involved, the disadvantage of being looked at as a colonial power. All these considerations were fair enough. But when you are at war you cannot allow the difficulties to dominate your thinking: you have to set out with an iron will to overcome them. And anyway what was the alternative? That a common or garden dictator should rule over the Queen’s subjects and prevail by fraud and violence? Not while I was Prime Minister.

While military preparations were in train the focus now turned to public debate in the United Nations Security Council. At the beginning of April we had one short-term and several long-term diplomatic objectives. In the short term we needed to win our case against Argentina in the UN Security Council and to secure a resolution denouncing their aggression and demanding withdrawal. On the basis of such a resolution we would find it far easier to win the support of other nations for practical measures to pressurize Argentina. But in the longer term we knew that we had to try to keep our affairs out of the UN as much as possible. With the Cold War still under way, and given the anti-colonialist attitude of many nations at the UN, there was a real danger that the Security Council might attempt to force unsatisfactory terms upon us. If necessary we could veto such a resolution, but to do so would diminish international support for our position. This remained a vital consideration throughout the crisis. The second long-term goal was to ensure maximum support from our allies, principally the US, but also members of the EC, the Commonwealth and other important western nations. This was a task undertaken at head of government level, but an enormous burden fell on the FCO and vast numbers of telegrams crossed my desk during those weeks. No country was ever better served than Britain by our two key diplomats at this time: Sir Anthony Parsons, Britain’s UN Ambassador and Sir Nicholas (Nico) Henderson, our ambassador in Washington; both possessed precisely those qualities of intelligence, toughness, style and eloquence that the situation required.

At the UN Tony Parsons, on the eve of the invasion, was busy outmanoeuvring the Argentinians. The UN Secretary-General had called on both sides to exercise restraint: we responded positively, but the Argentinians remained silent. On Saturday 3 April, Tony Parsons managed a diplomatic triumph in persuading the Security Council to pass what became Security Council Resolution (UNSCR) 502, demanding an immediate and unconditional withdrawal by the Argentinians from the Falklands. It had not been easy. The debate was bitter and complex. We knew that the old anti-colonialist bias of the UN would incline some Security Council members against us, were it not for the fact that there had been a flagrant act of aggression by the Argentinians. I was particularly grateful to President Mitterrand who, with the leaders of the Old Commonwealth, was among the staunchest of our friends and who telephoned me personally to pledge support on Saturday. (I was to have many disputes with President Mitterrand in later years, but I never forgot the debt we owed him for his personal support on this occasion and throughout the Falklands crisis.) France used her influence in the UN to swing others in our favour. I myself made a last-minute telephone call to King Hussein of Jordan, who also came down on our side. He is an old friend of Britain. I told him our difficulty; I did not have to go into lengthy explanations to persuade him to cast Jordan’s vote on our side. He began the conversation by asking simply: ‘what can I do for you Prime Minister?’ In the end we were delighted to have the votes we needed for the Resolution and to avoid a veto from the Soviet Union. But we knew that this was a fragile achievement, and we had no illusions as to who would be left to remove the aggressor when all the talking was done: it would be us.

The debate in the House of Commons that Saturday is another very powerful memory.

I opened the debate. It was the most difficult I ever had to face. The House was rightly angry that British territory had been invaded and occupied, and many members were inclined to blame the Government for its alleged failure to foresee and forestall what had happened. My first task was to defend us against the charge of unpreparedness.

Far more difficult was my second task: convincing MPs that we would respond to Argentina’s aggression forcefully and effectively. I gave an explanation of what had happened and made very clear what we intended to do. I said:

I must tell the House that the Falkland Islands and their dependencies remain British territory. No aggression and no invasion can alter that simple fact. It is the Government’s objective to see that the islands are freed from occupation and are returned to British administration at the earliest possible moment.

The people of the Falklands Islands, like the people of the United Kingdom, are an island race… They are few in number, but they have the right to live in peace, to choose their own way of life and to determine their own allegiance. Their way of life is British: their allegiance is to the Crown. It is the wish of the British people and the duty of Her Majesty’s Government to do everything that we can to uphold that right. That will be our hope and our endeavour and, I believe, the resolve of every Member of the House.

My announcement that the task force was ready and about to sail was greeted with growls of approval. But I knew that not everybody was cheering the same thing. Some saw the task force as a purely diplomatic armada that would get the Argentinians back to the negotiating table. They never intended that it should actually fight. I needed their support for as long as possible, for we needed to demonstrate a united national will both to the enemy and to our allies. But I felt in my bones that the Argentinians would never withdraw without a fight and anything less than withdrawal was unacceptable to the country, and certainly to me.

Others shared my view that the task force would have to be used, but doubted the Government’s will and stamina. Enoch Powell expressed this sentiment most dramatically when he looked directly across the Chamber at me and declared sepulchrally:

The Prime Minister, shortly after she came into office, received a soubriquet as the ‘Iron Lady’. It arose in the context of remarks which she made about defence against the Soviet Union and its allies; but there was no reason to suppose that the Right Hon. Lady did not welcome and, indeed, take pride in that description. In the next week or two this House, the nation and the Right Hon. Lady herself will learn of what metal she is made.[35]

That morning in Parliament I could keep the support of both groups by sending the task force out and by setting down our objectives: that the islands would be freed from occupation and returned to British administration at the earliest possible moment. I obtained the almost unanimous but grudging support of a Commons that was anxious to support the Government’s policy, while reserving judgement on the Government’s performance.

But I realized that even this degree of backing was likely to be eroded as the campaign wore on. I knew, as most MPs could not, the full extent of the practical military problems. I foresaw that we would encounter setbacks that would cause even some of a hawkish disposition to question whether the game was worth the candle. And how long could a coalition of opinion survive that was composed of warriors, negotiators and even virtual pacifists? For the moment, however, it had survived. We received the agreement of the House of Commons for the strategy of sending the task force. And that was what mattered.

I left the House, satisfied with the day’s results, prepared for more difficult debates in the future, and generally in a mood of solemnity. Indeed, from the moment I heard of the invasion, deep anxiety was ever present.

Almost immediately I faced a crisis in the Government. John Nott, who was under great strain, had delivered an uncharacteristically poor performance in his winding-up speech. He had been very harshly treated in the debate. He was held responsible by many of our backbenchers for what had happened because of the Defence Review which he had pioneered. This was unfair. The budget for conventional naval forces (that is excluding the Trident programme) was £500 million higher — and also higher as a share of the defence budget — than when we took office. Though the aircraft carrier HMS Invincible was to be sold, this would not take place until the end of 1983, by which time she would have been replaced by HMS Illustrious. Similarly HMS Hermes was due to be replaced by HMS Ark Royal, ensuring that the present aircraft carrier strength of the navy was continuously maintained. But there was no doubt that the Party’s blood was up: nor was it just John Nott they were after.

Peter Carrington defended the Government’s position that morning in the House of Lords and had a reasonably good reception. But Peter and John then attended a packed and angry meeting of Tory back-benchers shortly after the Commons debate. Here, Peter was at a distinct disadvantage: as a peer he had struck up none of those friendships and understandings with back-benchers on which all of us have to rely when the pressure builds. As Ian Gow reported to me afterwards, it was a very difficult meeting, and feelings had boiled over.

WEEK TWO

The press over the weekend was very hostile. Peter Carrington was talking about resigning. I saw him on Saturday evening, Sunday morning and again in the evening. Both Willie Whitelaw and I did all that we could to persuade him to stay. I felt that the country needed a Foreign Secretary of his experience and international standing to see us through the crisis. But there seems always to be a visceral desire that a disaster should be paid for by a scapegoat. There is no doubt that Peter’s resignation ultimately made it easier to unite the Party and concentrate on recovering the Falklands: he understood this. Having seen Monday’s press, in particular the Times leader, he decided that he must go. Two other senior Foreign Office ministers also resigned: Humphrey Atkins and Richard Luce. In a handwritten letter he wrote to me on Tuesday 6 April, Peter said:

I think I was right to go. There would have been continual poison and such advice as I gave you would have been questioned. The Party will now unite behind you as it should have done last Saturday.

It has been a crowded and enjoyable three years and the spirited debates we have sometimes had were productive and had no rancour.

Only one thing more. Though I have never pretended to agree with you about everything, my admiration for your courage and determination and resourcefulness is unbounded. You deserve to win through and if there is anything I can do to help you have only to ask.

It was a characteristically generous and encouraging letter — and these things matter when the skies are growing darker.

I also received a wonderful letter — one of a number over the years — from Laurens van der Post, who pointed out that there was one principle, more important even than sovereignty, at stake in the dispute:

To appease aggression and evil is to connive at a greater aggression and evil later on… If we fail to deal with the Fascist Argentine, the Russians will be even more encouraged than they are already to nibble away with more and more acts of aggression in what is left of a free world.

Of course, he was entirely right.

John Nott also wished to resign. But I told him straight that when the fleet had put to sea he had a bounden duty to stay and see the whole thing through. He therefore withdrew his letter on the understanding that it was made public that his offer to resign had been rejected. Whatever issues might have to be faced later as a result of the full enquiry (which I announced on 8 April), now was the time to concentrate on one thing only — victory. Meanwhile, I had to find a new Foreign Secretary. The obvious choice was Francis Pym, who had had the requisite experience of Foreign Affairs in Opposition and Defence in Government. And so I appointed him, asking John Biffen to take over his former position as Leader of the House of Commons. Francis is in many ways the quintessential old style Tory: a country gentleman and a soldier, a good tactician, but no strategist. He is a proud pragmatist and an enemy of ideology; the sort of man of whom people used to say that he would be ‘just right in a crisis’. I was to have reason to question that judgement. Francis’s appointment undoubtedly united the Party. But it heralded serious difficulties for the conduct of the campaign itself.

It was also on Monday that I was able to talk face to face at No. 10 with Rex Hunt and the two marine commanders who had just arrived from Uruguay. I asked him whether he had been aware that an invasion was in the offing and he replied, ‘No: I thought it was just another alarm of the kind we had had previously.’ He told me that when he had received our message on the previous Wednesday he had contacted one of the Argentine representatives of their airline on the island who had assured him that as far as he knew nothing was afoot. However, it seemed from what I was told by one of the marines that other Argentinians had been reporting back on every detail and movement from their airline office on the Falklands. Apparently the local Argentine commander of the invasion force knew almost every one of the names of the marines reinforcements who had been there only a few days. The operation had, it seemed, been very well planned with the first wave of Argentine troops coming from the landward side. They did not, however, come out and fight but waited for overwhelming armour and other forces to arrive. Our two marine commanders were very anxious to get back to the islands. They were subsequently flown to Ascension Island — the mid-Atlantic staging post for the task force, vital to our operation — and subsequently took the surrender at Government House when Port Stanley fell.

The Governor was superb throughout, dealing effectively with the media, which was not always an easy task. He repeated again and again that I had said in the House that our objective was the restoration of British sovereignty and the return of British administration and he was sure that I meant what I said. Of course, I did. But there were many times in the coming negotiations when I wondered whether I would indeed secure Rex Hunt’s return to the Falklands.

On Tuesday 6 April there was a long Cabinet discussion of the crisis. From the beginning, we were sure that the attitude of the United States would be a key element in the outcome. The Americans could do enormous damage to the Argentine economy if they wanted. I sent a message to President Reagan urging the US to take effective economic measures. But at the moment the Americans were not prepared to do this. Nico Henderson had his first discussions with Al Haig in which the main themes of their response over the next few weeks were already clear. They had stopped arms sales. But they would not ‘tilt’ too heavily against Argentina. To do so would deprive them of influence in Buenos Aires. They did not want Galtieri to fall and so wanted a solution that would save his face. There were clear signs that they were contemplating a mediation between the two sides. All of this was fundamentally misguided and Nico was very robust in his reply. But in practice the Haig negotiations, which flowed from all this, almost certainly worked in our favour by precluding for a time even less helpful diplomatic intervention from other directions, including the UN. In a crisis of this kind one finds any number of people lining up to act as mediators, some motivated by nothing more than a desire to cut a figure on the world stage.

That consideration lay in the future, however. At this stage the Americans were anxious to achieve a settlement that would prevent them having to choose between Britain, their natural ally, and their interests in Latin America. I should add, though, that from the first Caspar Weinberger, US Defence Secretary, was in touch with our ambassador emphasizing that America could not put a NATO ally and long-standing friend on the same level as Argentina and that he would do what he could to help. America never had a wiser patriot, nor Britain a truer friend.

It was at this Cabinet that I announced we were setting up OD(SA), which became known to the outside world as ‘the War Cabinet’. Formally, this was a sub-committee of OD, though several of its members did not serve on that committee. Its exact membership and procedure were influenced by a meeting I had with Harold Macmillan, who came to see me at the House of Commons after Questions on Tuesday 6 April to offer his support and advice as the country’s and the Conservative Party’s senior ex-Prime Minister. His main recommendation was to keep the Treasury — that is, Geoffrey Howe — off the main committee in charge of the campaign, the diplomacy and the aftermath. This was a wise course, but understandably Geoffrey was upset. Even so I never regretted following Harold Macmillan’s advice. We were never tempted to compromise the security of our forces for financial reasons. Everything we did was governed by military necessity. So the War Cabinet consisted of myself, Francis Pym, John Nott, Willie Whitelaw as my deputy and trusted adviser, and Cecil Parkinson, who not only shared my political instincts but was brilliantly effective in dealing with public relations. Sir Terence (now Lord) Lewin, Chief of Defence Staff, always attended. So did Michael Havers, the Attorney-General, as the Government’s legal adviser. Of course, we were constantly advised and supported by FCO and MoD officials and by the military. It met every day, and sometimes twice a day.

By the time of our first meeting the task force had already been despatched with a speed and efficiency which astounded the world. Millions watched on television as the two carriers sailed from Portsmouth on Monday 5 April, and on that day and the following two they were joined by a force of eleven destroyers and frigates, three submarines, the amphibious assault ship HMS Fearless (crucial to the landings), and numerous naval auxiliaries. Merchantmen of all kinds were ‘taken up from trade’. Three thousand troops were initially assigned to the operation — 3 Commando Brigade of the Royal Marines, the 3rd Battalion of the Parachute Regiment and a unit of the Air Defence Regiment. Several times in the course of the campaign we had to revise upwards our estimate of the number of troops required and send reinforcements. This first group left the UK, sailing on the cruise ship Canberra, on Friday 9 April. It was not always understood that to sail a large task force with troops halfway round the world, with the intention of making opposed landings, required an enormous logistical operation — both in the UK and at sea. In the end we sent over 100 ships, carrying more than 25,000 men.

The Commander-in-Chief, Fleet, was Admiral Sir John Fieldhouse; he took overall command of the task force from his base at Northwood in West London, choosing Rear Admiral Sandy Woodward as the operational commander of the surface ships in the force. (Our submarines were controlled directly from Northwood by satellite.) I have written elsewhere about Sandy Woodward: at that time I had not yet met him, but I knew of his reputation as one of the cleverest men in the navy. Admiral Fieldhouse’s land deputy was Major-General Jeremy Moore of the Royal Marines. General Moore began the campaign in Northwood, departing for the South Atlantic in May. His deputy, who sailed with HMS Fearless in the first wave of ships, was Brigadier Julian Thompson, of 3 Commando Brigade. Brigadier Thompson was to have charge of our forces on the Falklands for a vital period after the landing until General Moore’s arrival.

OD(SA) met twice on Wednesday 7 April. Throughout the war we were confronted with the problem of managing the intricate relationship between diplomatic and military requirements. I was determined that the needs of our servicemen should have priority over politics and it was on this day that we had to resolve our first problem of this kind. Our nuclear powered submarines were due in the area of the Falklands within the next few days. We would therefore shortly be in a position to set up a 200-mile Maritime Exclusion Zone (MEZ) for ships around the Falklands.[36] Should we announce it now? Or should we postpone the announcement until after Al Haig’s imminent visit the next day? In any case, for legal reasons we had to give several days’ notice before the MEZ could come into effect.

In fact Al Haig’s visit had to be postponed because of that day’s Commons debate. At the War Cabinet which met at 7 o’clock that evening there was a classic disagreement between the MoD and the FCO on the timing of the announcement. We decided to go ahead straight away, informing Al Haig of the decision shortly in advance.

John Nott made the announcement when he wound up the debate in a speech which restored his standing and self-confidence. Not a voice was raised against the MEZ and Jim Callaghan was heard to say ‘absolutely right’. It took effect in the early hours of Easter Monday morning 12 April, by which time our submarines were in place to enforce it. It is worth noting that never during the Falklands operation did we say we would take action until we were in a position to do it. I was determined that we should never allow our bluff to be called.

One other point in that day’s Commons debate is worth noting. Keith Speed, the former Navy minister, argued that we could enforce a blockade against the Argentinians on the Falklands. In fact, due to the terrible weather conditions and the problems of keeping the task force supplied and maintained so far from home, there was no way that this could have been done.

All this time we were bringing as much pressure to bear on the Argentinians as we could through diplomatic methods. I had sent messages on 6 April to the heads of state and heads of government of European Community countries, the US, Japan, Canada, Australia and New Zealand. I asked them to support us against Argentina by banning arms sales, banning all or some imports, ending export credit cover for new commitments and giving no encouragement or incentive to their banks to lend to Argentina. It had been suggested at first that I should ask for a total import ban, but though that is what we wanted I thought it bad tactics to press for too much at once. The responses were now coming through. I have already mentioned those of the United States and of France, and our success in the UN Security Council. Helmut Schmidt assured me personally of West Germany’s strong support. Not all the countries of the European Community were as positive. There were close ties between Italy and Argentina. Though opposing the use of force, the Spanish continued to support the Argentine case and — no great surprise — the Irish caused us some concern. Later it became clear that they were not to be relied upon. However, initially the EC gave us all that we asked for, imposing an embargo on Argentine imports from the middle of April for one month. When the embargo came up for renewal in mid-May there were considerable difficulties, but eventually a compromise was reached by which Italy and Ireland were able to resume links with Argentina while the other eight continued the embargo indefinitely.

The response of the Commonwealth, with the partial exception of India, had been very supportive. In particular, Malcolm Fraser in Australia banned all imports from Argentina, except those under existing contracts. Bob Muldoon and New Zealand were, if anything, even stronger in their support, later offering to lend us a frigate to replace our own guardship in the Caribbean so that we could deploy it where it was more urgently needed.

We were disappointed by Japan’s somewhat equivocal attitude. Predictably, the Soviet Union increasingly leaned towards Argentina and stepped up verbal attacks on our position. If we had returned to the UN to seek a sanctions resolution we had no doubt that they would have vetoed it.

Similarly, we were subject to a stream of vitriol from a number of Latin American countries — as was the US — though, because of its own long-standing disputes with Argentina, Chile was on our side. A number of others were quietly sympathetic, whatever their public stance: Argentina had made itself none too popular by its arrogance towards the rest of Latin America. In this way action on the diplomatic front supported the objectives of our task force as it sailed further into the South Atlantic. And, of course, effective diplomacy would have been impossible without the despatch of the task force. As Frederick the Great once remarked, ‘diplomacy without arms is like music without instruments.’

On Thursday 8 April Al Haig arrived in London for the first stage of his long and tiring diplomatic shuttle. I had had a concise and, as it turned out, extremely accurate account from Nico Henderson of the propositions Mr Haig was likely to advance. We made it quite clear to him — and he accepted that this was the line we would take — that he was not being received in London as a mediator but as a friend and ally, here to discuss ways in which the United States could most effectively support us in our efforts to secure Argentine withdrawal from the Falklands. Having had some initial discussions with Francis Pym, he arrived at No. 10 for talks followed by a working dinner. His team included Ed Streator from the US Embassy in London, General Vernon Walters, Mr Haig’s special assistant — a powerful personality and someone I particularly liked and respected — and Thomas Enders who dealt with South American Affairs in the State Department. I was joined by Francis, John, Terry Lewin, Sir Antony Acland (head of the Foreign Office) and Clive Whitmore (my principal private secretary). The discussions were lively and direct, to use the diplomatic jargon: there was too much at stake for me to allow them to be anything else.

It was apparent from the beginning that, whatever might be said publicly, Al Haig and his colleagues had come to mediate. He sought to reassure me about the position of the United States. He said that the US was not impartial but had to be cautious about its ‘profile’. The Argentine Foreign minister had indicated that they might accept Soviet assistance, which made the Americans extremely uncomfortable. In his judgement the next seventy-two hours would be the best time for negotiation as far as the Argentinians were concerned. He told us that he had decided to visit Britain first because he did not wish to go to Buenos Aires without a full understanding of our approach.

That was my cue. I told Mr Haig that the issue was far wider than a dispute between the United Kingdom and Argentina. The use of force to seize disputed territory set a dangerous precedent. In that sense, the Falklands mattered to many countries — to Germany, for example, because of West Berlin, to France because of its colonial possessions, to Guyana, a large part of whose territory was claimed by Venezuela. (Later the FCO prepared me a brief for the Versailles G7 summit listing current territorial disputes: it was a lengthy document.) We in Britain had experience of the danger of appeasing dictators. As regards the Soviet Union, I suspected that the Russians feared American involvement as much as the Americans feared the reverse. The West might be stretched, but so were the Soviets. I would be surprised if they intervened actively. I asked what pressure the Americans could bring to bear upon Galtieri? The reputation of the western world was at stake. We wished to solve the matter by diplomatic means but we would not negotiate under duress — withdrawal was a prior condition.

It became increasingly clear to me that Mr Haig was anxious not only to avoid what he described as ‘a priori judgements about sovereignty’ but that he was aiming at something other than the British administration which I was publicly pledged to restore. The whole of his approach rested on trying to persuade the two sides to accept some kind of neutral ‘interim administration’ after Argentine withdrawal to run the islands while their long-term future was decided. He talked of an American, or perhaps Canadian, presence while negotiations continued. I pointed out that this would mean that the Argentines had gained from the use of force. I told him that British sovereignty must continue and British administration be restored. Only after this had happened could there be the possibility of negotiations, and they would be subject to the overriding condition that the wishes of the islanders were paramount.

Discussion over dinner covered very much the same area. I probed what Mr Haig seemed to be proposing as regards the administration of the islands after Argentine withdrawal had been achieved. He was rather vague: but it still seemed to me that it would not be the British administration to which we were pledged.

Mr Haig would now go to Buenos Aires to assess the Argentinian position. He agreed a common line with us. We would both say to the press that we wanted UNSCR 502 to be implemented as quickly as possible and had discussed how the United States could help. He had heard the British view of the situation and knew how strongly we felt, but he should not give the slightest impression that our position had changed in any way or that we were showing any flexibility.

In fact, Mr Haig may have looked back on our friendly disagreements in London with something like nostalgia when he got to Buenos Aires and began trying to negotiate with the Argentine Junta. It became evident that the Junta itself was deeply divided and both General Galtieri and the Foreign minister Sr. Costa Mendez seemed to alter their position from hour to hour. At one stage Mr Haig thought that he had won concessions, but as he was about to leave for England on Easter Sunday, 11 April — indeed, as he was boarding the aeroplane — Sr. Costa Mendez handed him a paper which appeared to abrogate the concessions which, rightly or wrongly, he believed he had won.

I held talks at Chequers about the Falklands over the Easter weekend. On Good Friday Tony Parsons came to lunch and we discussed the negotiating strategy. The next day Francis Pym, John Nott, and Terry Lewin came down and we too had a working lunch. I am glad that Chequers played a large part in the Falklands story. Churchill had used it quite a lot during the Second World War and its atmosphere helped to get us all together.

WEEK THREE

By Easter Monday the first ships of the task force had begun arriving at Ascension Island, half way to the Falklands. The American team returned to London on the morning of that day, 12 April. The carpets were up at No. 10 for the annual spring clean and it looked a little as if someone was moving house. This was, however, a false impression.

Al Haig began by giving an oral account of his talks in Buenos Aires. He said that he had detected differences of view between the three Argentinian Armed Services. The navy were looking for a fight. However, the air force did not want a war, and the army were somewhere in between. Enthusiasm for a fight turned out to be in inverse proportion to fighting spirit. He had worked out a set of proposals which he thought the Argentinians might be brought eventually to accept. There were seven main elements:

• First, both Britain and Argentina would agree to withdraw from the islands and a specified surrounding area within a two-week period.

• Second, no further military forces were to be introduced and forces withdrawn were to return to normal duties. The Argentinians had wanted an undertaking from us to keep our task force out of the South Atlantic altogether, but Al Haig said that he had told them that this was impossible and believed that they might be satisfied if the agreement provided for British units to return to normal duties.

• Third, there would be a Commission, in place of the Governor, made up of United States, British and Argentine representatives who would act together (whether by unanimity or majority was not specified) to ensure compliance with the agreement. For that purpose they would each need to have observers. Each member of the Commission could fly his flag at headquarters.

• Fourth, economic and financial sanctions against Argentina would be lifted.

• Fifth, the traditional local administration of the islands would be restored, including the re-establishment of the Executive and Legislative Councils, to which Argentine representatives from the tiny Argentine population in the Falklands would be added. The Argentinians were adamantly opposed to the return of our Governor.

• Sixth, the Commission would promote travel, trade and communications between the islands and Argentina, but the British Government would have a veto on its operations.

• Finally, negotiations on a lasting settlement would be pursued ‘consistently with the Purposes and Principles of the United Nations Charter’. The United States had apparently insisted on this because of the references in it to the right of self-determination. It seemed that the Argentinians would only have been prepared to agree to this part of the proposals if they contained a date for the conclusion of negotiations, which was suggested as 31 December 1982.

At this time, I did not attempt to reply to Al Haig’s proposals point by point: I simply restated my belief in the principle of self-determination. If the Falkland Islanders chose to join Argentina, the British Government would respect their decision. But, equally, the Argentine Government should be prepared to accept an expressed wish of the islanders to remain British. The Americans then left us for ninety minutes, as we had agreed in advance, while we discussed the proposals with the other members of the War Cabinet.

Al Haig’s proposals were full of holes but they also had some attractions. If we could really get the Argentine forces off the islands by conceding what seemed a fairly powerless commission, very limited Argentine representation on each council — drawn from local residents and not nominated by the Junta — and an Argentine flag flown alongside others at Headquarters there was something to be said for these ideas. However, on closer inspection there were formidable difficulties. What security would there be for the islanders after the interim period? Clearly, the United States would have to be asked to guarantee the islands against renewed invasion. Then there were the inescapable geographical realities. The Argentinians would remain close to the Falklands; but if we had to withdraw to ‘normal areas’ where would our forces be? We must have the right to be at least as close as the Argentine forces. In spite of the general reference to the UN Charter, there was still nothing to make it clear that the islanders’ wishes must be paramount in the final negotiations. There must also be no possibility of the Argentinians steadily increasing the number of their people on the islands during the interim period so as to become the majority — a serious worry, particularly if our people started to leave, which they might well do in those circumstances.

At this point Francis Pym, John Nott and I rejoined Al Haig. I said that I was very grateful for the tremendous amount of work which he had done but that I had a number of questions. What did the Americans envisage would happen if no final settlement had been reached by 31 December 1982? My aim in asking was to discover whether the United States was prepared to give a guarantee. The answer was not entirely clear — nor did it become clearer with the passage of time. I emphasized again the importance attached by the House of Commons to the principle of self-determination for the islanders. We would have to have some specific reference to Article 1(2) and Article 73 of the UN Charter on this matter, which enshrined the principle of self-determination. We recognized, however, that Argentina would place a different gloss upon the agreement from the British Government. Al Haig accepted this.

On the matter of their flag, I told Al Haig that wherever else it flew, it must not fly over the Governor’s house. He said that for the Argentinians the governorship of the Falklands was a key issue: they wanted to keep the Governor they had appointed after the invasion on the island as a commissioner. I said that if they did that, the British Government would have to appoint Rex Hunt as our commissioner. I also raised the question of South Georgia where Britain had an absolute title, quite distinct from its claim to the Falklands. AI Haig saw no problem about this. (We regretted afterwards that we had ever put South Georgia into the first proposals. But at the time there seemed a possibility of getting the Argentines off without a battle and they had occupied the island shortly after their invasion of the Falklands themselves.)

However, the main issue was always bound to be the military one. I knew that the only reason the Argentinians were prepared to negotiate at all was because they feared our task force. I stressed that although British submarines in the proposed demilitarized zone would leave as the Argentine forces withdrew, the British task force must continue to proceed southwards, though it would not enter the demilitarized zone. This was essential: we could not afford to let the Argentinians invade a second time. One concession I might be prepared to make was that the task force could be stood off at a point no closer to the Falklands than Argentine forces were based. Anything less would be unacceptable to Parliament.

Shortly after this we adjourned for lunch and agreed to meet later in the afternoon after we had looked in detail at the proposals and, with advice from officials and the military, worked out our own detailed amendments. In the meantime the American team had made use of a direct secure line from No. 10 to the White House. As Al Haig’s memoirs reveal, he had also rung the Argentine Foreign minister, on hearing that the New York Times had just published the terms of the document which Sr. Costa Mendez had handed him at the airport in Buenos Aires, which were utterly inconsistent with the terms presented to us. Understandably, Mr Haig now wanted to know whether this document represented the Foreign minister’s suggestions or the final and official word of the Junta.

Our two teams met once more just before 6 p.m. There were a number of points to discuss; again, the single most important was the position of the task force. Al Haig said that President Galtieri would not survive if after the Argentinians had committed themselves to withdrawing from the Falkland Islands in two weeks the British newspapers continued to report that the task force was proceeding south. The Americans were not asking for our fleet to be turned around: but they were asking for it to be halted once an agreement had been reached. I replied that I would not survive in the House of Commons if I stopped the task force before Argentine withdrawal had been completed. Nor would I be prepared to do it. I was ready to let the troop ships proceed more slowly once an agreement had been signed. But the main task force must maintain its progress towards the Falklands Islands. I saw no reason to give Argentina the benefit of the doubt. I was prepared to halt the task force at the same distance from the Falklands as that between Argentina and the islands, but I could go no further than that.

We argued until late into the evening. Argentina, starting from the Communications Agreement of 1971, wanted their citizens to have the same rights to reside on the islands, own property and so on, as the Falklanders. They wanted the commission positively to promote that state of affairs and to decide upon such matters. We fought the proposal down on the grounds that the interim administration must not change the nature of life on the islands. We finally agreed that we would pursue further negotiations on a somewhat woolly text. There were, however, some conditions which had to be made absolutely clear — the withdrawal zones, the fact that the one Argentine representative per council must be local, and that Argentinians on the islands must have the same qualifying period for voting rights as the Falklanders.

This was not, however, quite the end of Easter Monday. Just before 10 o’clock that night Al Haig telephoned me to say that Sr. Costa Mendez had rung him to say that he saw no reason for the Secretary of State to go to Buenos Aires again unless any agreement about the Falkland Islands provided for the Governor to be appointed by the Argentine Government and for the Argentine flag to continue to be flown there. And if that was not possible, the Argentinians must have assurances that at the end of negotiations with Britain there would be a recognition of Argentine sovereignty over the Falkland Islands. Al Haig was shattered. I had mixed feelings about this news, but I was certainly not going to buckle under that sort of pressure. I told Mr Haig on the telephone:

If those are the conditions, you cannot return [direct to Buenos Aires]; but it has to be known publicly from your viewpoint that they’ve set those conditions and that was why you said ‘we cannot have those, we cannot therefore return.’ But it must be known from your viewpoint. Publicly.

Al Haig agreed; he was obviously very depressed.

Having decided not to go on to Buenos Aires, somewhat to our surprise the following morning the Americans sought another meeting with us. So our two teams met first thing. By this stage it was becoming obvious that the proposals the Americans had presented to us the previous day had no measure of Argentine approval. In fact, the status of all these proposals was doubtful. The more closely I questioned Al Haig on this point, the more uncertain it became. Since the proposals had not been agreed with the Argentinians, even if we accepted them, they might therefore not form the basis of a settlement.

This fact was made painfully clear at the meeting that morning when Mr Haig handed us a document embodying five points which he described as essential to the Argentine position. As he himself said, the practical effect of the Argentine tactics was to buy time. I always thought that this was their main purpose in negotiating.

I was becoming impatient with all this. I said that it was essentially an issue of dictatorship versus democracy. Galtieri wanted to be able to claim victory by force of arms. The question now was whether he could be diverted from his course by economic sanctions or, as I had suspected all along, only by military force. Mr Haig replied that he had made it abundantly clear to Argentina that if conflict developed the United States would side with Britain. But did we wish to bring the negotiations to an end today? He could say publicly that he was suspending his own efforts, making it clear that this was due to Argentine intransigence. But if he did so other less helpful people might try to intervene. I was keenly aware of that and I also felt that public opinion here required us not to give up on negotiations yet.

Later that day events took another bizarre turn. Al Haig told Francis Pym of the contents of a further discussion he had had on the telephone with Sr. Costa Mendez. Apparently, the Argentinians had now dropped their five demands and moved a considerable way from their previous position. Mr Haig thought there was a chance of a settlement on the lines we had been discussing, if we would agree to language about decolonization, subject to the wishes of the islanders, with perhaps one or two small changes in addition to make the proposals more palatable still. It was to turn out that this talk of decolonization held its own particular dangers, though we agreed to look at a draft. He also urged us not to be too rigid on the question of sovereignty. He had decided to return to Washington and would decide his next step there.

It was clear from all this that Mr Haig was very anxious to keep the negotiations going. But had there been a genuine change of heart on the part of the Argentinians, or was it just wishful thinking on his part?

Wednesday 14 April was the day scheduled for a further Commons debate on the Falklands. It was an opportunity for me to spell out our objectives in the negotiations and to demonstrate to the outside world the united support of the House of Commons. I told the House:

In any negotiations over the coming days we shall be guided by the following principles. We shall continue to insist on Argentine withdrawal from the Falkland Islands and dependencies. We shall remain ready to exercise our right to resort to force in self-defence under Article 51 of the United Nations Charter until the occupying forces leave the islands. Our naval task force sails on towards its destination. We remain fully confident of its ability to take whatever measures may be necessary. Meanwhile, its very existence and its progress towards the Falkland Islands reinforce the efforts we are making for a diplomatic solution.

That solution must safeguard the principle that the wishes of the islanders shall remain paramount. There is no reason to believe that they would prefer any alternative to the resumption of the administration which they enjoyed before Argentina committed aggression. It may be that their recent experiences will have caused their views on the future to change, but until they have had the chance freely to express their views, the British Government will not assume that the islanders’ wishes are different from what they were before.

There were serious concerns underlying my reference to the possibility of the islanders changing their views on the future government of the Falklands: we worried that morale might collapse and that large numbers might leave. We were able to find out a certain amount about daily life under the occupation from messages which reached London, but the picture was far from complete.

While the debate was still in progress, Al Haig was on the telephone. The Argentinians were complaining that the United States was not being even-handed between Argentina and Britain and in particular that it was supplying military aid to Britain. He wanted to make a statement which would allow him to return to Buenos Aires to continue the negotiations, ending with these three sentences:

Since the outset of the crisis the United States has not acceded to requests that would go beyond the scope of customary patterns of co-operation. That would continue to be its stand while peace efforts were under way. Britain’s use of US facilities on Ascension Island had been restricted accordingly.

While the debate continued, I discussed it with Francis Pym and, half an hour later, rang Al Haig back in Washington.

I was very unhappy about what he wanted to say and I told him so. Of course, a good deal was being done to help us. This was occurring within those ‘customary patterns of co-operation’ which applied between allies like the United States and Britain. But to link this with the use of Ascension Island was wrong and misleading. Moreover, to make such a statement would have a very adverse reaction on UK opinion.

I went on to point out that Ascension Island was our island, indeed the Queen’s island. The Americans used it as a base — but, as the Secretary of State well knew, this was under an agreement which made it clear that sovereignty remained with us. I am glad to say that Mr Haig agreed to remove all mention of Ascension Island from his statement.

The following day Al Haig flew from Washington to Buenos Aires for further talks. Back in London, however, it was the military realities which were most on my mind. The War Cabinet met that morning not in No. 10 but in the Ministry of Defence. We had important decisions to make. More troops were needed and had to be sent to join the task force. We had to look at the new draft we had agreed the previous day to consider. (Nothing came of it in the end.) We also had to prepare a message to the United States stressing the need for them to help enforce the agreement during that period and to ensure that when it ended the Argentinians did not attempt another invasion. I am afraid that we never got very far: the Americans were not keen to accept the role of guarantor.

However, our main business at the MoD was a thorough briefing on the military realities. It was important that we all knew precisely what forces were ranged against us, their capability, the effects of the Antarctic winter and, of course, the options available. Anyone who had harboured the idea that the task force could blockade the Falklands and mount raids in the case of the negotiations being unsuccessful was soon disabused. Quite apart from the likely losses of aircraft — the two aircraft carriers had only 20 Harriers between them — the difficulties of maintaining men and equipment in those stormy seas were huge. It was clear that we had a period of some two to three weeks in May during which we might land without terrible casualties. And then there were decisions to be made about how much more equipment, aircraft and troops to send, how to deal with the resulting prisoners of war, what to do about South Georgia and when. There was to be no respite at all. And these decisions must be made quickly. I looked from the Chiefs of Staff to my colleagues. It was a lot for them to take in. With the exception of John Nott, who of course was already briefed on the difficulties, they seemed somewhat taken aback. By this stage the press had learnt that we were at the MoD and I asked that everyone look confident as we left.

Our main task on Friday 16 April was to consider and approve the rules of engagement which would apply for transit from Ascension Island, for the 200-mile zone around South Georgia and for the purposes of South Georgia’s repossession. The rules of engagement are the means by which the politicians authorize the framework within which the military can be left to make the operational decisions. They have to satisfy the objectives for which a particular military operation is undertaken. They must also give the man on the spot reasonable freedom to react as is required and to make his decisions knowing that they will be supported by the politicians. So the rules have to be clear and to cover all possible eventualities. It was after very careful questioning of the Chiefs of Staff and the Attorney-General and after long discussion that they were approved. Many other rules of engagement would follow as each new phase of the operation had to be considered. This was the first time any of us had had to make such decisions.

I had received the day before a message from President Reagan who had been rung by Galtieri, who apparently said that he was anxious to avoid a conflict. There was no difficulty in replying to that. I told the President:

I note that General Galtieri has reaffirmed to you his desire to avoid conflict. But it seems to me — and I must state this frankly to you as a friend and ally — that he fails to draw the obvious conclusion. It was not Britain who broke the peace but Argentina. The mandatory Resolution of the Security Council, to which you and we have subscribed, requires Argentina to withdraw its troops from the Falkland Islands. That is the essential first step which must be taken to avoid conflict. When it has been taken, discussions about the future of the islands can profitably take place. Any suggestion that conflict can be avoided by a device that leaves the aggressor in occupation is surely gravely misplaced. The implications for other potential areas of tension and for small countries everywhere would be of extreme seriousness. The fundamental principles for which the free world stands would be shattered.

On Friday 16 April our two vital aircraft carriers HMS Hermes and HMS Invincible reached Ascension Island.

After a week of labyrinthine negotiations, I spent the weekend at Chequers. I found time to have a private lunch with friends and an artist who was going to paint a view of the house and its surroundings. However, I had to return to No. 10 briefly on Saturday evening to receive a telephone call from President Reagan — there is a direct line from Chequers to the White House, but there were technical problems that day. I was glad to have the chance to go over the issues with the President. I was gladder still that he agreed that it would not be reasonable to ask us to move further towards the Argentine position. Al Haig had found the Argentinians even more impossible than on his first visit. The White House had instructed him to tell the Junta that if they persisted in their intransigence this would lead to a breakdown of talks and the US Administration would make clear who was to blame.

After church on Sunday morning John Nott came to lunch and we discussed the military and diplomatic situation.

Far away in the Atlantic HMS Hermes, Invincible, Glamorgan, Broadsword, Yarmouth, Alacrity and the Royal Fleet Auxiliaries Olmeda and Resource left Ascension Island for the south.

That day I also telephoned Tony Parsons at home in New York to discuss what, if anything, we should do at the United Nations. We were in the happy position of having almost perfect backing for our position, in the form of UNSCR 502. But the problem was that as the Haig initiative was manifestly stalling and as military conflict loomed there was a risk that somebody else would take an initiative and that we would be placed in a difficult and defensive position in the Security Council. We could attempt to forestall that by tabling a resolution ourselves. But then it would be amended in ways which were simply not acceptable to us. Tony Parsons and I agreed that the best we could do for the moment was to hold our ground and seek to resist the pressure, which would undoubtedly mount.

WEEK FOUR

It was on Monday that I first read the details of the proposals discussed by Al Haig and the Argentinians in Buenos Aires. In conveying them to us, the Secretary of State said that his own disappointment with this text prevented him from attempting to influence us in any way. Indeed, the proposals were quite unacceptable. The closer one looked the clearer it was that Argentina was still trying to keep what it had taken by force. The Argentinians wanted to give themselves the military advantage and have our forces redeployed far from the islands. They were intent on subverting the traditional local administration by insisting that two representatives of the Argentine Government should serve on each of the Island Councils. They wanted to flood the islands with their own people to change the nature of the population. Finally, they were not prepared to allow the islanders to choose if they wished to return to the British Administration they had enjoyed before the invasion. This latter point was shrouded in obscure language but the intention was very clear. The wording of their proposal was:

December 31st 1982 will conclude the interim period during which the signatories shall conclude negotiations on modalities for the removal of the islands from the list of non-self-governing territories under Chapter XI of the United Nations Charter and on mutually agreed conditions for their definitive status, including due regard for the rights of the inhabitants and for the principle of territorial integrity applicable to this dispute…

The innocuous sounding reference to removing the islands from the list under Chapter XI ruled out a return to the status quo ante the invasion and so effectively denied the islanders the right to choose freely the form of government under which they were to live. A great many words to shroud the simple fact that the use of force would have succeeded, dictatorship would have prevailed and the wishes of the islanders would have been overridden. These proposals were so poor that we told Al Haig that we saw no need for him to come to London from Buenos Aires and promised to let him have detailed comments on the text when he returned to Washington.

On the same day I received a telegram from Buenos Aires which confirmed that there was no apparent let-up in the Junta’s determination to secure sovereignty over the islands. Every five minutes or so Argentine Radio would play the ‘Malvinas song’ which ran, ‘I am your fatherland and may need you to die for me.’ Soon that sentiment would be put to the test: it was on this day that the War Cabinet authorized the operation to repossess South Georgia — although the recovery was somewhat delayed because our ships arrived in a Force 11 gale which lasted for several days.

Al Haig asked that Francis Pym should go to Washington to discuss our views of the Argentine text and I agreed to this. Francis sent ahead our detailed comments and essential amendments to the Buenos Aires text. We agreed that he was to be guided by these counterproposals during his visit. He was also to seek an American guarantee for the security of the islands. Unfortunately during questions on a Commons statement the following day, Francis gave the impression that force would not be used as long as negotiations were continuing. This was an impossible position for us to take up, enabling the Argentinians to string us along indefinitely, and he had to return to the House later to make a short statement retracting the remark.

Also on Wednesday we notified Al Haig via Nico Henderson that a firm decision had been taken to recover South Georgia in the near future. Mr Haig expressed himself surprised and concerned. He asked whether our decision was final: I confirmed that it was. We were informing, not consulting him. Later he told our ambassador that he thought he would have to give the Argentine Junta advance notice of our intended operation. We were appalled. Nico Henderson persuaded him to think better of it.

Francis Pym spent Thursday in Washington discussing our proposals with Al Haig. He did not get very far in pressing the idea of an American guarantee. The Americans seemed unprepared to envisage anything going beyond the interim period. Nor, as I was shortly to learn, was he any more successful in putting across the rest of our ideas. My own thoughts, however, were elsewhere. I was desperately worried about what was happening in South Georgia.

That Thursday evening John Nott and the Chief of the Defence Staff came to Downing Street to give me urgent news. Our Special Forces had landed on the Fortuna glacier in South Georgia to carry out a reconnaissance. The first attempt to get them in had had to be abandoned because of high wind and heavy snow. During a temporary and slight improvement in conditions our men were successfully landed. But the weather then rapidly worsened with a south-west wind gusting over 70 knots. Their exposed position on the glacier became intolerable and they sent a message to HMS Antrim asking for helicopters to take them off. The first helicopter came in and, blinded by the snow, crashed. A second suffered the same fate. The MoD did not know whether lives had been lost. It was a terrible and disturbing start to the campaign.

My heart was heavy as I changed for a charity dinner at the Mansion House at which I was to be the main speaker. How was I to conceal my feelings? I allowed myself to wonder whether the task we had set ourselves was truly impossible. But just as I reached the foot of the stairs at No. 10 on my way out, Clive Whitmore, my principal private secretary, rushed out of his office with more news. A third helicopter had landed on the glacier and picked up all the SAS men and the other two helicopter crews. How that pilot managed it I do not know. Months later I met him — completely modest, quietly professional: his comment was that he had never seen so many people in his helicopter. As I carried on out of No. 10 and left for the dinner I walked on air. All our people had survived.

On Friday 23 April we gave a general warning to Argentina that any approach on the part of their warships, submarines or aircraft which could amount to a threat to British forces in the South Atlantic would be regarded as hostile and dealt with accordingly. Later that day I went to Northwood from where military operations and all the logistics were being directed. It was fascinating to see how the decisions were put into effect. I had lunch at the home of Admiral Fieldhouse and his wife, Midge, before returning to No. 10.

Francis Pym was now on his way back from the United States with new draft proposals.

Saturday 24 April was to be one of the most crucial days in the Falklands story and a critical one for me personally. Early that morning Francis came to my study in No. 10 to tell me the results of his efforts. I can only describe the document which he brought back as conditional surrender. Al Haig was a powerful persuader and anyone on the other side of the table had to stand up to him, not give ground. Mr Haig had clearly played upon the imminence of hostilities and the risk that Britain would lose international support if fighting broke out. I told Francis that the terms were totally unacceptable. They would rob the Falklanders of their freedom and Britain of her honour and respect. Francis disagreed. He thought that we should accept what was in the document. We were at loggerheads.

A meeting of the War Cabinet had been arranged for that evening and I spent the rest of that day comparing in detail all the different proposals which had been made up to that point in the diplomacy. The closer I looked the clearer it was that our position was being abandoned and the Falklanders betrayed. I asked for the Attorney-General to come to No. 10 and go through them with me. But the message went astray and instead he went to the Foreign Office. Less than an hour before the War Cabinet, he at last received the message and came to see me, only to confirm all my worst fears.

It is important to understand that what might appear at first glance to the untutored eye as minor variations in language between diplomatic texts can be of vital significance, as they were in this case. There were four main texts to compare. There were the proposals which Al Haig discussed with us and took to Argentina on 12 April. Our own attitude towards these had been left deliberately vague: though he had discussed them in detail with us, we had not committed ourselves to accept them. Then there were the totally impossible proposals brought back by Mr Haig after his visit to Buenos Aires on 19 April. On 22 April we amended those proposals in ways acceptable to us and it was on this basis that Francis Pym had been instructed to negotiate. Finally, there was the latest draft brought back by Francis from the United States, which now confronted me. The differences between the texts of 22 and 24 April went to the heart of why we were prepared to fight a war for the Falklands.

First, there was the question of how far and fast would our forces withdraw. Under the text Francis Pym had brought back our task force would have had to stand off even further than in the Buenos Aires proposals. Worse still, all of our forces, including the submarines, would have to leave the defined zones within seven days, depriving us of any effective military leverage over the withdrawal process. What if the Argentinians went back on the deal? Also the task force would have to disperse altogether after 15 days. Nor was there any way of ensuring that Argentine troops kept to the provision that they be ‘at less than 7 days’ readiness to invade again’ (whatever that meant).

Second, sanctions against Argentina were to be abandoned the moment the agreement was signed, rather than as in our counterproposals on completion of withdrawal. Thus we lost the only other means we had to ensure that Argentine withdrawal actually took place.

Third, as regards the Special Interim Authority the text reverted to the Buenos Aires proposal for two representatives of the Argentine Government on the Islands’ Councils, as well as at least one representative of the local Argentine population. Moreover, there was a return to the wording relating to Argentine residence and property which would effectively have allowed them to swamp the existing population with Argentinians.

Equally important was the wording relating to the long-term negotiations after Argentine withdrawal. Like the Buenos Aires document, Francis Pym’s ruled out the possibility of a return to the situation enjoyed by the islanders before the invasion. We would have gone against our commitment to the principle that the islanders’ wishes were paramount and would have abandoned all possibility of their staying with us. Did Francis realize how much he had signed away?

Despite my clear views expressed that morning, Francis put in a paper to the War Cabinet recommending acceptance of these terms. Shortly before 6 o’clock that evening ministers and civil servants began assembling outside the Cabinet Room. Francis was there, busy lobbying for their support. I asked Willie Whitelaw to come upstairs to my study. I told him that I could not accept these terms and gave him my reasons. As always on crucial occasions he backed my judgement.

The meeting began and Francis Pym introduced his paper, recommending that we concur in the plan. But five hours of preparation on my part had not been wasted. I went through the text clause by clause. What did each point actually mean? How come that we had now accepted what had previously been rejected? Why had we not insisted as a minimum on self-determination? Why had we accepted almost unlimited Argentine immigration and acquisition of property on an equal basis with the existing Falkland Islanders? The rest of the committee were with me.

It was John Nott who found the procedural way forward. He proposed that we should make no comment on the draft but ask Mr Haig to put it to the Argentinians first. If they accepted it we should undoubtedly be in difficulties: but we could then put the matter to Parliament in the light of their acceptance. If the Argentinians rejected it — and we thought that they would, because it is almost impossible for any military Junta to withdraw — we could then urge the Americans to come down firmly on our side, as Al Haig had indicated they would as long as we did not break off the negotiations. This is what was decided. I sent a message to Mr Haig:

This whole business started with an Argentine aggression. Since then our purpose together has been to ensure the early withdrawal by the Argentinians in accordance with the Security Council Resolution. We think therefore that the next step should be for you to put your latest ideas to them. I hope that you will seek the Argentine Government’s view of them tomorrow and establish urgently whether they can accept them. Knowledge of their attitude will be important to the British Cabinet’s consideration of your ideas.

And so a great crisis passed. I could not have stayed as Prime Minister had the War Cabinet accepted Francis Pym’s proposals. I would have resigned.

That difficult and decisive argument was followed the next day by the recapture of South Georgia. At Grytviken an Argentine submarine was spotted on the surface and was successfully attacked by our helicopters and immobilized. A certain Captain Astiz had been in charge of the Argentine garrison there. His capture was to present us with problems. He was wanted for murder by both France and Sweden. He was flown to Ascension and then brought to Britain, but refused to answer questions and, due to the provisions of the Geneva Convention on Prisoners of War eventually, reluctantly, we had to return him to Argentina.

Later that afternoon I learnt of our success in South Georgia. An audience was arranged with the Queen that evening at Windsor. I was glad to be able personally to give her the news that one of her islands had been recovered. I returned to Downing Street to await confirmation of the earlier signal and the release of the news. I wanted John Nott to have the opportunity of making the announcement and so I had him come to No. 10. Together, he, the MoD press officer, and I drafted the press release and then went out to announce the good news.

A remark of mine was misinterpreted, sometimes wilfully. After John Nott had made his statement journalists tried to ask questions. ‘What happens next Mr Nott? Are we going to declare war on Argentina Mrs Thatcher?’ It seemed as if they preferred to press us on these issues rather than to report news that would raise the nation’s spirits and give the Falklanders new heart. I was irritated and intervened to stop them: Just rejoice at that news and congratulate our forces and the marines… Rejoice’. I meant that they should rejoice in the bloodless recapture of South Georgia, not in the war itself. To me war is not a matter for rejoicing. But some pretended otherwise.

A worry for us at this point was that the press and probably some of the public began to assume that it would only be a matter of days before we retook the Falklands and that this would be as quick as the recapture of South Georgia. We knew that this was far from true. Indeed, it was only on that day that the last ships of the amphibious group necessary for the landing left Britain. Led by the assault ship HMS Intrepid, there were the ferries Norland and Europic carrying the 2nd Battalion of the Parachute Regiment, and — loaded with vital stores — the container ship Atlantic Conveyor.

WEEK FIVE

On Monday 26 April, the War Cabinet agreed the announcement of a Total Exclusion Zone (TEZ) of a 200-nautical-mile radius and the rules of engagement which were to apply to it. The military pressure on Argentina was steadily mounting. The TEZ went beyond the earlier MEZ by excluding aircraft as well as sea-going craft: the task force would shortly be close enough to the Falklands to be able to enforce it and to be at risk from air attack itself. One priority was to close down the airfield at Port Stanley.

At home the apparent imminence of full-scale military conflict began to shake the determination of those whose commitment to retaking the Falklands had always been weaker than it appeared. Some MPs seemed to want negotiations to continue indefinitely. I had to put the realities to the nation. At Prime Minister’s Questions I said:

I must point out that time is getting extremely short as the task force approaches the islands. Three weeks have elapsed since the Resolution SCR 502. One cannot have a wide range of choice and a wide range of military options with the task force in the wild and stormy weathers of that area.

I made the same point in a live interview that evening on Panorama:

I have to keep in mind the interests of our boys who are on those warships and our marines. I have to watch the safety of their lives, to see that they can succeed in doing whatever it is we decide they have to do at the best possible time and with minimum risk to them.

I also took the opportunity to say directly just what we were fighting for:

I’m standing up for the right of self-determination. I’m standing up for our territory. I’m standing up for our people. I’m standing up for international law. I’m standing up for all those territories — those small territories and peoples the world over — who, if someone doesn’t stand up and say to an invader ‘enough, stop’… would be at risk.

Unfortunately, the cracks now appearing in the Labour Party were likely to be widened by what was happening at the United Nations. The Secretary-General of the UN started to become more involved as the Haig mediation manifestly stalled. A low-key appeal from Sr. Perez de Cuellar to both sides — which appeared to imply that we, like Argentina, had failed to comply with UNSCR 502 — was seized upon by Denis Healey and Michael Foot. I had a serious clash with Mr Foot during Prime Minister’s Questions on Tuesday 27 April on the question of our returning to the United Nations. In fact, the Secretary-General very quickly took the point, but the damage was done. We ourselves had been exploring whether an offer from President López-Portillo of Mexico to provide a venue for negotiations might be productive. But Al Haig did not wish us to pursue this and I doubt whether the Mexicans would in fact have proposed the simpler and more satisfactory formula which we wanted.

Al Haig had had his own share of diplomatic problems. His speech to a meeting of the Organization of American States justifying the United States line on the Falklands and Argentina had been greeted with stony silence. The Argentine Foreign minister, furious at the retaking of South Georgia, had publicly refused to see him, though they had been in contact privately.

Al Haig could not under these circumstances go back to Buenos Aires, which from our point of view was probably all to the good. He had again modified the proposals discussed with Francis Pym in Washington and now transmitted these to the Argentine Government. Mr Haig told the Junta that no amendments were permissible and imposed a strict time limit for their reply, though he was subsequently unwilling to stick to this. For its part, the Junta was now determined to play for time. Al Haig telephoned Francis Pym in the afternoon of Wednesday 28 April to say that there was still no word from Buenos Aires. Both Francis and Nico Henderson continued to press him to say publicly that the Argentinians were to blame for the failure of his mediation and that the United States was openly supporting us.

At Cabinet on Thursday 29 April we discussed the continuing uncertainty. The deadline given to the Argentinians for their answer had passed, but now Mr Haig was talking of the possibility of the Argentinians amending his proposals. Where would all this end?

After Cabinet I sent a message to President Reagan saying that in our view the Argentinians must now be regarded as having rejected the American proposals. In fact, later that day the Argentinians did formally reject the American text. President Reagan now replied to my message in these terms:

I am sure you agree that it is essential now to make clear to the world that every effort was made to achieve a fair and peaceful solution, and that the Argentine Government was offered a choice between such a solution and further hostilities. We will therefore make public a general account of the efforts we have made. While we will describe the US proposal in broad terms, we will not release it because of the difficulty that might cause you. I recognize that while you see fundamental difficulties in the proposal, you have not rejected it. We will leave no doubt that Her Majesty’s Government worked with us in good faith and was left with no choice but to proceed with military action based on the right of self-defence.

This was very satisfactory. We wanted a clear statement that the Argentinians were to blame for the failure of negotiations. But we did not want to muddy the waters by revealing every detail of proposals which were in truth fundamentally unacceptable to us, nor did we want to imply that we had accepted the Haig proposals.

There was, though, one drawback. This was that once the Haig mediation had formally ended the pressure would sharply increase for us to go back to the UN where we would be faced by any number of difficulties. Indeed Tony Parsons advised us that once we were back in the Security Council there would be no way of avoiding an unacceptable call on us to halt military preparations and accept the good offices of the Secretary-General. This would mean that we would have to use our veto, which we wanted to avoid. In fact, although this assessment was correct it was not until the following month that all this came to a head. We were fortunate that it did not occur earlier.

Friday 30 April effectively marked the end of the beginning of our diplomatic and military campaign to regain the Falklands. The United States now came down clearly on our side. President Reagan told television correspondents that the Argentinians had resorted to armed aggression and that such aggression must not be allowed to succeed. Most important, the President also directed that the United States would respond positively to requests for military materiel. Unfortunately, they were not prepared to agree to place an embargo on imports from Argentina. However, the President’s announcements constituted a substantial moral boost to our position.

It was on this day that the TEZ came into force. And although diplomatic and military affairs remained inextricably intertwined, it is fair to say that from now on it was the military rather than the diplomatic which increasingly commanded our attention. At that morning’s War Cabinet it was the Argentine aircraft carrier, the 25 de Mayo, which concerned us. She could cover 500 miles a day and her aircraft a further 500. Her escorts carried Exocet missiles, supplied by France in the 1970s. We were well aware that the Exocet threat should be taken seriously. It increased the danger which the Argentine carrier group posed to our ships and their supply lines. We therefore authorized an attack on the carrier, wherever she was, provided it was south of latitude 35 degrees and east of longitude 48, and outside the 12-mile limit of Argentine territorial waters. Such an attack would be based upon the right of self-defence and be within Article 51 of the UN Charter; in accordance with the notification which had been given on 23 April no further warning was required.[37]

That evening I had to speak at a large rally in Stephen Hastings’s constituency at Milton Hall in Bedfordshire. Stephen and his predecessor Alan Lennox-Boyd spoke magnificently. I was given a wonderful reception. No one present had any doubt of the justice of our cause, nor that we would eventually win through. I felt proud and exhilarated: but I felt too an almost crushing burden of responsibility. I knew that the task force would enter the waters around the Falkland Islands the following day.

CHAPTER VIII

The Downing Street Years, 1979-1990

The Falklands: Victory

The battle for the Falklands in May and June 1982

From the beginning of May through to the recapture of the Falklands in mid-June military considerations loomed ever larger in my mind. But this did not mean that the pressure for negotiations eased — far from it. I was under an almost intolerable pressure to negotiate for the sake of negotiation and because so many politicians were desperately anxious to avoid the use of force — as if the Argentinians had not already used force by invading in the first place. At such a time almost everything and everyone seems to combine to deflect you from what you know has to be done.

Yet I could never afford to ignore the diplomatic effort because on its successful conduct rested our hard-won position of UN Security Council support for Resolution 502 and, still more important, the degree of support we might receive from our allies, above all the United States. And all this time there was constant, nagging fear of the unknown. Would we have sufficient air cover? Where were the Argentine submarines? Would we be able to reach the military and diplomatic position required for a successful landing within that narrow time-frame set by the onset of intolerable winter weather in the South Atlantic?

Over breakfast at Milton Hall I received a telephone call to say that our Vulcans had bombed the runway of Port Stanley airport. Our naval task force was also bombarding Argentine positions elsewhere on the Falklands. I was told that there had so far been no British casualties but it would still be many hours before the Vulcans — after their marathon flight involving five mid-air refuellings — would be back at Ascension Island. In fact they all returned safely. The refuelling seemed a stupendous feat at the time, although such is the way of things that later performances of this kind came almost to be taken for granted.

That day the Argentine Air Force mounted a major attack on our ships. The Argentinians were in a position to send photographs to the outside world, which we were not. They claimed that many of our aeroplanes had been shot down but in that famous broadcast Brian Hanrahan, the excellent BBC correspondent, put the record straight when he reported: ‘I counted them all out and I counted them all back.’ It was a great relief. But we had no illusions about the significance of the heavy attack and the vital question it raised about the sufficiency of our air cover.

The next day, Sunday, which I spent at Chequers, was one of great — though often misunderstood — significance for the outcome of the Falklands War. As often on Sundays during the crisis, the members of the War Cabinet, Chiefs of Staff and officials came to Chequers for lunch and discussions. On this occasion there was a special matter on which I needed an urgent decision.

I called together Willie Whitelaw, John Nott, Cecil Parkinson, Michael Havers, Terry Lewin, Admiral Fieldhouse and Sir Antony Acland, the Permanent Secretary at the Foreign Office. (Francis Pym was in America.) Admiral Fieldhouse told us that one of our submarines, HMS Conqueror, had been shadowing the Argentine cruiser, General Belgrano. The Belgrano was escorted by two destroyers. The cruiser itself had substantial fire power provided by 6 guns with a range of 13 miles and anti-aircraft missiles. We were advised that she might have been fitted with Exocet anti-ship missiles, and her two destroyer escorts were known to be carrying them. The whole group was sailing on the edge of the Exclusion Zone. We had received intelligence about the aggressive intentions of the Argentine fleet. There had been extensive air attacks on our ships the previous day and Admiral Woodward, in command of the task force, had every reason to believe that a full-scale attack was developing. The Argentine aircraft carrier, the 25 de Mayo, had been sighted some time earlier and we had agreed to change the rules of engagement to deal with the threat she posed. However, our submarine had lost contact with the carrier, which had slipped past it to the north. There was a strong possibility that Conqueror might also lose contact with the Belgrano group. Admiral Woodward had to come to a judgement about what to do with the Belgrano in the light of these circumstances. From all the information available, he concluded that the carrier and the Belgrano group were engaged in a classic pincer movement against the task force. It was clear to me what must be done to protect our forces, in the light of Admiral Woodward’s concern and Admiral Fieldhouse’s advice. We therefore decided that British forces should be able to attack any Argentine naval vessel on the same basis as agreed previously for the carrier.

Later we approved reinforcements for the Falklands which would be taken there in the QE2. It surprised me a little that the need for reinforcements had not been clear sooner. I asked whether it was really necessary or advisable to use this great ship and to put so many people in it, but as soon as I was told that it was necessary to get them there in time I gave my agreement. I was always concerned that we would not have sufficient men and equipment when the time came for the final battle and I was repeatedly struck by the fact that even such highly qualified professionals as advised us often underestimated the requirements. We broke up still desperately worried that the aircraft carrier which could have done such damage to our vulnerable task force had not been found.

The necessary order conveying the change of rules of engagement was sent from Northwood to HMS Conqueror at 1.30 p.m. In fact, it was not until after 5 p.m. that Conqueror reported that she had received the order. The Belgrano was torpedoed and sunk just before 8 o’clock that evening. Our submarine headed away as quickly as possible. Wrongly believing that they would be the next targets, the Belgrano’s escorts seem to have engaged in anti-submarine activities rather than rescuing its crew, some 321 of whom were lost — though initially the death toll was reported to be much higher. The ship’s poor state of battle readiness greatly increased the casualties. Back in London we knew that the Belgrano had been hit, but it was some hours before we knew that she had sunk.

A large amount of malicious and misleading nonsense was circulated at the time and long afterwards about the reasons why we sank the Belgrano. These allegations have been demonstrated to be without foundation. The decision to sink the Belgrano was taken for strictly military not political reasons: the claim that we were trying to undermine a promising peace initiative from Peru will not bear scrutiny. Those of us who took the decision at Chequers did not at that time know anything about the Peruvian proposals, which in any case closely resembled the Haig plan rejected by the Argentinians only days before. There was a clear military threat which we could not responsibly ignore. Moreover, subsequent events more than justified what was done. As a result of the devastating loss of the Belgrano, the Argentine Navy — above all the carrier — went back to port and stayed there. Thereafter it posed no serious threat to the success of the task force, though of course we were not to know that this would be so at the time. The sinking of the Belgrano turned out to be one of the most decisive military actions of the war.

However, the shocking loss of life caused us many problems because it provided a reason — or in some cases perhaps an excuse — for breaks in the ranks among the less committed of our allies: it also increased pressure on us at the UN. The Irish Government called for an immediate meeting of the Security Council, though after intense pressure from Tony Parsons and some from the UN Secretary-General, they were eventually persuaded to suspend their request — not, however, before the Irish Defence minister had described us as ‘the aggressor’. There was some wavering from the French and rather more from the West Germans, who pressed for a cease-fire and UN negotiations. Moreover, by the time of the sinking of the Belgrano, the diplomatic scene was already becoming more difficult and complicated.

I have already mentioned the peace plan which the President of Peru had put to Al Haig and which he in turn had put to Francis Pym in Washington on 1 and 2 May, though we had no sight of it until later. With the sinking of the Belgrano, Mr Haig was once again bringing pressure to bear, urging on us diplomatic magnanimity and, expressing his belief that whatever the course of the military campaign there must be a negotiated outcome to avoid open-ended hostility and instability. To add to the confusion, the UN Secretary-General was now seeking to launch a peace initiative of his own, much to the irritation of Mr Haig.

WEEK SIX

Both military and diplomatic pressures now mounted. On Tuesday 4 May the destroyer HMS Sheffield was hit by an Argentine Exocet missile with devastating effects. The loss of the Sheffield was the result of a number of mishaps and mistakes, but it was a terrible demonstration of the risks our forces faced. The Sheffield was a relatively old ship, with outdated radar: it was transmitting via satellite to London moments before the missile struck, interfering with its capacity to detect the attack sufficiently in advance to throw up chaff as a decoy. Also the fire doors were open and, as we learnt from the raging fire that followed the missile impact, there was too much aluminium in the structure. Although the ship did not sink at first, it proved impossible due to the rough seas to bring it back home, as I had wished, and eventually she went down. At first I was told that there were 20 casualties: then 40.

It was very difficult to know how to announce this sort of news. We would have liked to inform all next of kin first, and indeed sought to do so. But meanwhile the Argentinians would be putting out statements — some true, some false but all with a deliberate purpose — before we knew the real facts. As a result, wives and families spent some agonizing days and nights. That day we also lost one of our Harriers.

By this stage Francis Pym had returned from the United States. We did not like the US/Peruvian proposals he brought with him and sought to have important changes made, above all to ensure that the wishes of the islanders were respected. Al Haig, however, would not accept our changes or pass them to the Peruvians because he believed that the Argentinians would reject them out of hand. I received a message from President Reagan urging us to make further compromise.

On the morning of Wednesday 5 May I called first the War Cabinet and then the full Cabinet to consider the US/Peruvian proposals. Francis Pym believed that in view of the battle in the South Atlantic it would be damaging to reject what were in effect Al Haig’s proposals. Moreover, as I have noted, the countries of the European Community which had been very strong at first were beginning to weaken in their support. The sanctions which they had agreed were only for a month and there would be difficulty in getting everyone to approve their renewal.

I was deeply unhappy about the US/Peruvian proposals. Cabinet did not like them much either. But we had to make some response. I wanted to ensure that any interim administration would consult the islanders and that their wishes should be respected in the long-term settlement. I also wanted South Georgia and the other Falklands dependencies to be outside the scope of the proposals. Cabinet was firm about these objectives. We agreed to seek changes to meet them and in this we were successful.

I did not like this constant pressure to weaken our stance. I drafted a personal letter to President Reagan that revealed perhaps too much of my frustration, though I toned it down before it was sent. But I took comfort from the fact that I had never believed that the Argentine Junta would be prepared to withdraw on these or any other terms — and indeed the Argentinians turned down the US/Peruvian proposals. Attention now increasingly shifted to the proposals of the UN Secretary-General. The Argentinians sent their Foreign minister to New York. They hoped to capitalize on the sympathy they had gained as a result of the sinking of the Belgrano and their spirits had been lifted by the destruction of the Sheffield. There was no lack of candidates to suggest new ‘initiatives’ — not the least surprising or impractical of which was the suggestion of President López-Portillo that I should have a private meeting with General Galtieri in Mexico. But I was not going to sell out the islanders and I knew that the Argentine Junta could not withdraw and survive. Obviously there was little prospect of a diplomatic ‘breakthrough’, yet still the apparently endless negotiations continued.

Tony Parsons defended Britain’s position at the UN with great force and brilliance. The Argentinians were clearly determined to get the maximum propaganda advantage in the new discussions sponsored by the UN Secretary-General. He warned Sr. Perez de Cuellar of our past experiences of trying to deal with the Junta. The Secretary-General could expect that agreements apparently satisfactory to Argentine representatives would then be disowned by the Junta and that the Argentinians were intent on establishing sovereignty as a precondition of any settlement.

I was not prepared to hold up military progress for negotiations. We were all aware that we were coming to a critical period. If we were to land and repossess the islands it would have to be done some time between 16 and 30 May. We could not leave it later because of the weather. That meant that negotiations at the UN must be completed within ten days or so. If they were successful and our principles and minimum requirements were met, well and good. If not, or they were still dragging on, then — if the Chiefs of Staff so advised — we would have to go ahead.

I had mixed feelings about the negotiations. I shared the desire to avoid a further bloody conflict. I spoke about this to Tony Parsons on the telephone on Saturday 8 May. I asked Tony to tell the Secretary-General that we would be pleased to welcome him in London. I went on:

In the end you know we might have to go in. I say in the end — time is short. But I just feel deeply… first that our people there were living in self-determination and freedom before this started and one can’t hand them over to anything less. But secondly that it is going to be the most awful waste of young life if we really have to go and take those islands… I will do everything before the final decision has to be taken to see if we can uphold the rule of international law and the liberty and justice, in which I believe passionately for our people, to see if we can stop a final battle.

However, as the negotiations with the Argentinians in Washington continued it became ever more evident that they were not prepared to make the concessions we required. They were determined to include South Georgia and the dependencies. They wanted to deny the islanders any proper means of expressing their views during the interim period. They were pressing for the complete withdrawal of the British task force to its bases in the UK — which, now that the battle for the Falklands had begun, was of course even more unacceptable than it had been before. They also wanted to be able to move in their own people and acquire property so as to change the whole terms of the argument. It was clear that the negotiations would fail. We must ensure that when they did so the Argentinians did not manage to shift the blame on to us. Ideally, we should bring them to a definite conclusion before the landings took place. An ultimatum was obviously necessary.

On Sunday afternoon at Chequers (9 May) our regular meeting reviewed the diplomatic and military scene. We discussed the state of the negotiations and where they might lead. There was also a politically sensitive military matter. Argentine civilian aircraft were flying over our supply lines and doubtless communicating their findings direct to their submarines. We had every right to act to stop this. But could we be sure that if we shot at a civilian aircraft it would turn out to be an Argentine one? The radar characteristics and the typical flight path of an aircraft on surveillance would help to identify those on such reconnaissance missions. But there was an obvious risk that something could go wrong. We also had to consider the possibility of a commando raid against Ascension Island and our forces there — unlikely perhaps, but potentially devastating.

WEEK SEVEN

We now had to stand firm against the pressure for making unacceptable compromises while avoiding the appearance of intransigence. Specific instructions went to Tony Parsons about our position on withdrawal distances, interim administration, the issue of immigration and the acquisition of property during the interim period and to ensure that the Argentinians did not get away with prejudging the issue on sovereignty: that was for the islanders to decide. There were detailed discussions on the constitutional position of a United Nations administration of the islands. Our view was that the UN representative could only administer the law, not change it. If he wished to do so he would have to act through the islands’ Legislative Council. We also continued to press for a United States military guarantee of the security of the islands — but with very limited success. The UN Secretary-General was somewhat taken aback by the firmness of our stance. But Tony Parsons impressed on him the basic facts of the dispute. It was not we who had committed the aggression, though we had made a number of major concessions. Any arrangement which appeared to reward Argentine aggression would simply not be accepted in Britain.

The Argentinians could not be trusted. For example, on the issue of not prejudging sovereignty, their representative said one thing to the Secretary-General while their Foreign minister said quite the opposite in his public statements. Who was to be believed? The information we were receiving from the Americans about the attitude of the Argentine Junta confirmed our worst predictions. They were apparently not able to give way on sovereignty, even if they had wished, because of the political situation in which they now found themselves. This, however, was their problem not ours. My own views at this time were hardening because I was convinced that if anything we had already gone too far in making concessions. My feelings were echoed in the House of Commons. In the debate on Thursday 13 May Conservative back-benchers showed evidence of restlessness about our negotiations. Francis Pym continued to pursue a weaker line than I did and it was not liked.

Al Haig was now in Europe and his absence apparently gave those in the Administration who were favourable to the Argentinians an opportunity to persuade President Reagan that it was we who were being inflexible. President Reagan telephoned me at 6.40 that evening. He had gained the impression that the Argentinians and ourselves were now quite close in our negotiating positions. I had to tell him that unfortunately this was not the case. Major obstacles remained. As regards the interim arrangements, Argentina wanted greater Argentine participation than we could accept and there were substantial difficulties about ownership of property and freedom of movement. Secondly, there was the difficulty of South Georgia where our title was completely different and we were in possession. There was the added problem that we just did not know with whom we were really negotiating. The Argentinians were trying to arrange an interim administration which would lead inevitably to Argentine sovereignty. Finally, there was no guarantee that at a later stage they might not invade the islands again.

President Reagan had been talking to the President of Brazil who had been visiting Washington. There was some concern (entirely misplaced) that we were preparing an attack on the Argentine mainland: whether or not such attacks would have made any military sense, we saw from the beginning that they would cause too much political damage to our position to be anything but counter-productive. President Reagan wanted us to hold off military action. I said that Argentina had attacked our ships only yesterday. We could not delay military options simply because of negotiations. The truth was that it was only our military measures which had produced a diplomatic response, highly unsatisfactory as this was.

President Reagan was also concerned that the struggle was being portrayed as one between David and Goliath — in which the United Kingdom was cast as Goliath. I pointed out that this could hardly be true at a distance of 8000 miles. I reminded the President that he would not wish his people to live under the sort of regime offered by the military Junta and also of the length of time that many of the islanders had lived there and the strategic significance of the Falkland Islands if, for example, the Panama Canal were ever closed. I finished by seeking to persuade him — I believe successfully — that he had been misinformed about the Argentinians’ alleged concessions. It was a difficult conversation but on balance probably a useful one. The fact that even our closest ally — and someone who had already proved himself one of my closest political friends — could look at things in this way demonstrated the difficulties we faced.

On the morning of Friday 14 May there were two separate meetings of the War Cabinet. One consisted of a detailed assessment of the military position and options. The other was taken up with the diplomatic situation. We decided to prepare our own terms to put to the Argentinians as an ultimatum and Tony Parsons and Nico Henderson were summoned back from the United States to Chequers to discuss these for the weekend.

Two events that day and the next gave a great boost to my morale. First, there was the welcome I received from the Scottish Conservative Party Conference in Perth — an occasion which, as I have said before, I always enjoyed. In my speech I set out precisely what we were fighting for and why. I also said:

The Government wants a peaceful settlement. But we totally reject a peaceful sell-out.

The Leader of the Liberal Party, David Steel, accused me of ‘jingoism’. How remote politicians can seem at these times of crisis: neither the audience nor the nation would fall into the same trap of characterizing determination to secure justice and the country’s honour in terms like that.

Secondly, I also learned of the successful raid under cover of darkness by our SAS and Special Boat Service men on Pebble Island off the north of West Falkland, destroying all eleven Argentinian aircraft at the air strip. It was a daring venture and a significant, though unheeded, warning to the Argentinians of the professionalism of our forces.

That Sunday at Chequers was mainly spent in drafting our own final proposals, to be put to the Argentinians by the UN Secretary-General. The vital consideration was that we bring the negotiating process to an end — ideally, before the landings — but in such a way as to avoid appearing intransigent. It became clear that we would have to make a very reasonable offer. I accepted this because I was convinced that the Argentinians would reject it, and strictly on a take-it-or-leave-it basis: the Argentinians must accept the offer as a whole, or not at all, and once rejected, it would be withdrawn. We would set a time limit for their response.

Tony Parsons and Nico Henderson were both closely involved in the drafting. We went over every point in detail, working as usual around the oblong table in the Great Parlour upstairs, remodelling the draft clause by clause. At hand were voluminous reference sources on the UN and the law relating to the administration of the Falklands. We hardened our terms in respect of interim administration, ensuring something close to self-government for the islanders and denying any role to the Argentine Government. We excluded South Georgia and the other dependencies from the proposals altogether: South Georgia was back under British control and there could be no question any longer of including it in the negotiations. We made reference to Article 73 of the UN Charter, which implies self-determination, to make it clear that the wishes of the islanders would be paramount in long-term negotiations. The Argentine Government was required to give a response within 48 hours and there was to be no negotiation of the terms. This exercise also allowed me subsequently to explain each phrase to the House of Commons to allay their understandable fears that we might be prepared to yield too much.

To keep the US informed and supportive at the UN — which was crucial — I authorized Francis Pym to brief Al Haig about our proposals that evening. This was a wise decision; when Mr Haig read the text he described it as fair. The Secretary-General of the UN also seemed impressed by the flexibility which we had shown.

I myself was closely involved in our intense diplomatic effort to keep our support on the eve of what I knew would be decisive military action. It was most important that the European Community countries should continue their sanctions against Argentina, but a number of them were faltering. I telephoned the Italian Foreign minister on Sunday afternoon, though to little avail.

WEEK EIGHT

On Monday 17 May President Mitterrand was in London for talks and I was able to press the argument for sanctions with him. The same afternoon I telephoned Mr Haughey about the Irish position. I was not convinced that this would have much impact, but the effort had to be made. In fact the Community Foreign ministers, meeting in Luxemburg, decided to continue with sanctions on a ‘voluntary’ basis, which was less than ideal but much better than nothing.

On the morning of Tuesday 18 May the War Cabinet met with all the Chiefs of Staff. It was perhaps the crucial moment. We had to decide whether to go ahead with the landing on the Falklands; I asked each Service Chief to give his views. The discussion was very open and the difficulties were clear: we would be vulnerable on landing and, in particular, there were doubts whether we had enough air cover, given that British ships would be within easy range of Argentine attack from the mainland and their positions would be known. We had not been able to knock out as many Argentine ships or aircraft as we would have liked in the weeks before the landing. And always there was the fact that we had not been able to locate their submarines.

But it was also clear that the longer the delay, the greater the risk of losses and the worse the condition of our troops when they had to fight. The troops could not remain on board ship indefinitely. Of course, no one could quantify casualties, but the judgement was that the advantages of landing outweighed the risks of postponement. The rules of engagement had already been agreed. The attack would be by night.

None of us now doubted what must be done. We authorized the landing on the basis of the Force Commander’s plan, subject to the Cabinet’s final approval. It could be stopped any time until late on Thursday which would allow us thoroughly to consider any reply from the Argentinians to our proposals. The decision could thus be cancelled or reaffirmed after Cabinet on Thursday morning. Beyond that, the timing was for the Force Commander himself.

There was no lack of last-minute pressure for further diplomatic concessions. Michael Foot had written to me urging further negotiations. I replied that if we could not reach agreement with the Argentinians on terms we regarded as acceptable we would have to decide what further military action to take and we would answer for our decisions to the House of Commons. Mr Haig too had to be discouraged from bringing forward another set of proposals which would just have allowed the Argentines to go on buying time. In fact, on the next day, Wednesday, we received the Argentine response, which was in effect a comprehensive rejection of our proposals. I had never thought they would accept. Our proposals were now taken off the table. We had decided earlier — at Francis Pym’s suggestion — that following Argentine rejection we would publish them, and we did so on 20 May. This was the first time during the whole of the diplomatic manoeuvring that either side had made public their actual negotiating position and our terms created a good international impression.

The Secretary-General made a last-minute attempt in messages to me and General Galtieri to put forward his own proposals. On Thursday morning (20 May) the War Cabinet met before the full Cabinet. Once again, Francis urged a compromise, and this time at the eleventh hour. He suggested that the Secretary-General’s aide-mémoire was very similar to our own proposals and that it would not be understood if we now went ahead with military measures. But the fact was that Sr. de Cuellar’s proposals were sketchy and unclear; to have accepted would have put us right back at the beginning again. I summed up very firmly. There could be no question of holding up the military timetable. It could be fatal for our forces. If the weather was right the landing would go ahead. The War Cabinet and later the full Cabinet agreed.

The Secretary-General had received no reply from the Argentinians about his aide-mémoire — on which we, in spite of all our reservations, had offered serious comments. He admitted the failure of his efforts to the Security Council. We published our proposals and I defended them in the House of Commons that afternoon. The debate went well and provided a good background for what now had to happen.

I had a full day of engagements in my constituency on Friday 21 May and I knew how important it was to carry on with business as usual. Before lunch I had to open a large extension of Gersons’, a firm which specializes in storage, packaging and overseas removals. There was a military band and an audience of some 1200, including many ambassadors. I was deeply moved, partly by the pride and patriotism of the people there but also, of course, because I knew (as they could not) what was due to happen at that very moment 8000 miles away. I did all that one has to do on these occasions and even rode on a fork-lift truck. Then I rushed back to the constituency office to see if there was any news. Not yet. I never telephoned Northwood on this or any other occasion to find out about operations in progress. I knew that the commanders on the spot had more important things to do than answer unnecessary enquiries from London. I returned to the Finchley office again soon after 5 p.m. and learnt by telephone and in carefully obscure language that events were taking place, but no detail.

Later that evening, while I was at a reception in Woodhouse School, still in the constituency, the news came over on the television. The Union Jack was flying in San Carlos: we had returned to the Falklands.

But I was desperately anxious about casualties. Was it really possible that we could land on that hostile coast with a fleet full of troops and equipment without being detected?

Later that night I returned to No. 10 and John Nott brought me a full report. The actual landing had been achieved without a single casualty. But now it was daytime and fierce air attacks had begun. The frigate HMS Ardent was lost. Another frigate — HMS Argonaut — and the destroyer HMS Brilliant were badly damaged. How the Argentine pilots missed the huge, white painted Canberra, acting as a troopship, I will never know. But the commanders were determined to get her out of harm’s way as quickly as possible.

In fact, the main amphibious force had moved towards San Carlos Water, blessed with an overcast sky and poor visibility, while diversionary raids continued elsewhere on East Falkland. Under cover of naval gun fire, our troops had been taken ashore in landing craft, while helicopters moved equipment and stores. Five thousand men were safely landed, though we lost two helicopters and their crews. The beach-head had been established, though it would take several days for it finally to be secured.

At the Security Council, meeting in open session, Tony Parsons defended our position against predictable rhetorical attacks from Argentina’s allies. At the end of the debate the Irish tabled a totally unacceptable resolution. We were able to rely on some strange allies — and not on some of those who should have been our friends. It was the Africans who amended the Irish resolution to the point at which we could accept it. This became UNSCR 505, adopted unanimously on 26 May, giving the Secretary-General a mandate to seek an end to the hostilities and full implementation of UNSCR 502.

On Saturday afternoon I visited Northwood before going on to Chequers. By now the full scale of the Argentine air attacks was all too apparent. To protect the operation at San Carlos, there had to be several levels of defence. First, there were the Sea Harriers on combat patrol flying high above the landing sites, subject to direction from the ships below. Without the Harriers, with their extraordinary manoeuvrability, flown with superb skill and courage, and using the latest version of the Sidewinder air-to-air missile supplied by Caspar Weinberger, we could not have retaken the Falklands. Second, Rapier missile batteries had been landed with the troops and placed in the hills around the bay. There were problems with the Rapiers: in particular the long journey at sea had created problems for their electronics. Then there were the air defences of the ships themselves, some based in the bay itself and others outside in Falkland Sound — principally long-range Sea Dart missiles on the Type 42 destroyers and the shorter-range Sea Wolf and Sea Cat on Type 22s and other frigates, but also anti-aircraft guns and even small arms.

At Northwood I spent some time getting up to date in the Operations Room. I did my best to seem confident, but when I left with Admiral Fieldhouse and we were out of earshot of anyone else, I could not help asking him: ‘how long can we go on taking this kind of punishment?’ He was no less worried. But he also had the ability of a great commander to see the other side of things. And, terrible as our losses had been and would be in the future, the fact was that we had landed our forces successfully and that serious losses were being inflicted on the Argentine airforce.

I should note here that we were assisted throughout by three important weaknesses in the Argentine air offensive, though in some ways these were the result of deliberate action on our part. First, the Argentinians concentrated their attacks — with the later tragic exception of the losses at Bluff Cove — on the naval escorts rather than the troop ships and aircraft carriers. Of course, in part that was because the escorts succeeded in shielding these units: that was their job. Second, the Argentine aircraft were forced to fly at a very low level to escape our missiles, with the result that the bombs they dropped (fused for higher altitude) frequently failed to explode. (Sadly a bomb which lodged in HMS Antelope did go off, sinking the ship, when a brave bomb disposal expert was trying to defuse it.) Third, the Argentinians had only a limited number of the devastating French Exocet missiles. They made desperate attempts to increase their arsenal. There was evidence that arms from Libya and Israel were finding their way through South American countries to them. We for our part were equally desperate to interdict this supply. Later, on 29 May, I was to have a telephone conversation with President Mitterrand who told me that the French had a contract to supply Exocets to Peru, which he had already held up and which both of us feared would be passed on to Argentina. As always during the conflict, he was absolutely staunch.

The Americans too, however irritating and unpredictable their public pronouncements on occasion, were providing invaluable help. I have already mentioned the Sidewinder missiles. They also provided us with 150,000 square yards of matting to create a makeshift airstrip. On 3 May Caspar Weinberger even proposed sending down the carrier USS Eisenhower to act as a mobile runway for us in the South Atlantic — an offer that we found more encouraging than practical.

I was working in my room at the House of Commons on the evening of Tuesday 25 May when John Nott came in to say that the destroyer HMS Coventry had been attacked by a wave of Argentine aircraft. Six or more had repeatedly bombed her and she was sinking. She had, in fact, been one of the two warships on ‘picket duty’ outside the opening of Falkland Sound, providing early warning of air attack and an air defence screen for the supply ships unloading in San Carlos Water. She later capsized and sank. Nineteen members of her crew died in the attack. John had to appear on television within half an hour. Something of what had happened was already publicly known, although not the name of the ship. It was thought better not to reveal it until we had more details about the crew. Whether the decision was right or wrong I am still not sure: the effect of not announcing the name was that every navy family was full of anxiety. In fact, the details were announced by John in the House of Commons the next day.

Later the same evening I had more bad news. I had gone into the Private Office to find out the latest about Coventry, but instead, the No. 10 duty clerk told me that the 18,000 ton Cunard container ship Atlantic Conveyor had been hit by an Exocet missile; that the ship was on fire and that orders had been given to abandon it. Atlantic Conveyor was loaded with vital supplies for our forces on the Falklands. Unlike the warships, she was unable to defend herself against missile attack by sending up chaff. Four of those on board were killed and the captain was drowned, though I was told later that he survived the explosion and fires, and had been seen alive in the water. Thankfully, though, the great majority were saved.

I knew that the Atlantic Conveyor had been carrying nineteen more Harriers, sorely needed reinforcements. Had they still been on board? If so, would we be able to carry on? The ship was also carrying helicopters which were vital to the movement of troops and supplies in the land campaign. Their loss caused our land commanders many difficulties. Only one of the helicopters was saved. To add to our general dismay, there was also news, based on an Argentine claim, that HMS Invincible had been hit and damaged. And I knew that somewhere east of the Falklands was the QE2, carrying 3,000 troops. For me, this was one of the worst nights of the war.

Early next morning I learnt that the news was not quite so bleak. I was told of the remarkable rescue of most members of the crews of Coventry and the Atlantic Conveyor. The nineteen Harriers had previously been flown onto Hermes and Invincible. Relief flooded over me at the news: we were not fatally wounded after all, though we had lost eight helicopters and 4,500 winter tents. Moreover, the news that Invincible had been hit was totally false.

Stores were still being unloaded at San Carlos. Some landing and supply craft were attacked and hit and there were unexploded bombs, most of which were defused. Our hospital centre at San Carlos was also hit, but the doctors carried on.

It was, though, a frustrating time for us in London. All of us were concerned that there appeared to be little movement by our troops out of the bridgehead. It took many days to unload the stores, equipment and munitions. The loss of the helicopters meant that all of the earlier plans had to be revised.

There was another worry. Would the Argentine Navy, which had after all apparently been strongest in pressing for an invasion of our islands, really continue to skulk in Argentine ports or would they now come out to attack and disrupt our advance? Two British ships had been sunk in our territorial waters around the Falklands. Perhaps we should send our submarines to sink Argentine ships in theirs? But the Attorney-General, Michael Havers, would not have this. So our submarine commanders were left prowling up and down the Argentine twelve-mile limit.

The trouble was that we knew that their ships might break out and we might not find them quickly enough to stop them. Again, it was the Argentine aircraft carrier, 25 de Mayo, which was the main threat. I had been told that if possible we needed to deal with their aircraft carrier before the landing, but for most of the time we had not been able to find it. We feared that it had been held in reserve to oppose the landing and that it might well appear on the Argentine national day — 25 May. Several weeks before the landing one of our submarines had found it in the middle of a bay. It was a fine point of international law to determine the limit of Argentine territorial waters: although the centre of the bay was more than twelve miles from the shore, it might be argued that the whole bay was within the limit. In the end we decided that the ship could be attacked, but by that time she had moved closer to the shore. The same issue arose regarding other Argentine vessels hugging territorial waters in the south. On this occasion Michael Havers and I had all the relevant charts laid out on the floor in the Parlour at Chequers and did the measurements ourselves. But the Argentinians were too careful and, unlike them, we were determined to stay within the constraints of international law.

Somewhat to the dismay of the UN Secretary-General and Al Haig, we made it clear that having landed we were not now prepared to negotiate. We could no longer accept the idea of an interim administration or proposals for mutual withdrawal of Argentine and British troops. The Americans were again becoming worried. They had been under ferocious verbal attacks at a meeting of the OAS on 27 May. We were put under continual pressure from Washington to avoid the final military humiliation of Argentina, which they now seemed to see as inevitable. I wish I could have been as confident. I knew, as they could not, how many risks and dangers still faced us in the campaign to recapture the islands.

This was amply demonstrated by the battle to retake Darwin and Goose Green. The Argentinians were well prepared and dug into strong defensive positions which had to be approached by our troops across the open ground of a narrow isthmus. They faced heavy enemy fire. As is well known, Colonel ‘H’ Jones, the commander of 2 Para, lost his life in securing the way forward for his troops. His second-in-command took over and eventually took the surrender. At one point a white flag was waved from the Argentine trenches, but when two of our soldiers advanced in response they were shot and killed. Finally, our commander sent two Argentine PoWs forward with a message to surrender, saying that they could have a parade if they liked but that they must lay down their arms. This proved acceptable. The Argentine officers harangued their men about the justice of their cause, but they surrendered all the same. The people of Goose Green, who had been imprisoned inside the community hall for three weeks, were now released. A famous battle had been won. Today there is a memorial to the Paras near Goose Green itself and a special memorial to ‘H’.

The media had reported that our troops were about to take Goose Green the day before the attack. I had been furious when I learnt of this — as, I believe, had ‘H’. Too much talk was giving the Argentinians warning of what we intended, though the fault did not always lie with the media themselves but also with the media management at the MoD.

On the same day that 2 Para were battling for Darwin and Goose Green I had a meeting with Cardinal Casaroli, the Pope’s Secretary of State. We were all very pleased that the Pope had not postponed his visit to Britain — the first ever papal visit here — in spite of the fact that we were at war with a predominantly Catholic country. We recognized the difficulties which a visit at this time might cause him, however, and decided that it would be best if none of the Cabinet met him personally. I had, of course, already talked to the Pope on an earlier occasion and admired his principle and courage. I explained to Cardinal Casaroli what we were fighting for: I said that war was a terrible evil, but there were worse things, including the extinction of all that one believed in. We could not allow aggression to succeed. Nor could we bargain away the freedom, justice and democracy which the Falkland Islanders had enjoyed for so long and simply hand them over to Argentina, where these things were unknown. We made no public comment at the time, but I hoped that something of this message might be transmitted to the Argentinians: for the Pope was to visit Argentina after leaving Britain.

Unfortunately, the Americans now sought to revive diplomatic negotiation. Al Haig wanted to involve the Brazilians in a settlement which (contrary to what he had earlier suggested) must, he claimed, come before the final defeat of the Argentine forces on the island. These proposals were really the wrong ones at very much the wrong time. We had already made it clear that unconditional Argentine withdrawal and the return of British administration were now our goals. But I knew that we could not afford to alienate the United States, particularly at this stage. We kept in contact with Mr Haig both about the question of how to provide for and repatriate Argentine prisoners of war and more generally about our plans for the long-term future of the islands.

What would have been quite wrong was to snatch diplomatic defeat out of the jaws of military victory — as I had to tell President Reagan when he telephoned me late at night on Monday 31 May. It was not very satisfactory for either of us that I should not have had advance warning of what he was likely to say and as a result I was perhaps more forceful than friendly. The President had, it seems, again been speaking to the President of Brazil who shared his view that the best chance for peace was before the Argentinians suffered complete humiliation. As the UK now had the upper hand militarily, we should strike a deal. I could not accept this. I told him that we could not contemplate a cease-fire without Argentine withdrawal. Having lost ships and lives because for seven weeks the Argentinians refused to negotiate, we would not consider handing the islands over to a third party. I understood the President’s fears. But I asked him to put himself in my position. I was sure that he would have acted in the same way as I did if Alaska — part of his own country, inhabited by his own people — had been similarly threatened. Moreover, I agreed with an excellent television interview he had given in which he had said that if the aggressor were to win, some fifty other territories, affected by similar disputes, would be at risk. This conversation was a little painful at the time but it had a worthwhile effect. The Americans now clearly understood our position and intentions. I would have a further opportunity shortly to talk to President Reagan in person during the forthcoming G7 summit at Versailles.

In the meantime, we had to deal delicately with a five-point peace plan which had been advanced by the UN Secretary-General. The pressure for a cease-fire sponsored by the UN Security Council was growing. On Wednesday 2 June after the Secretary-General had announced that he had given up his own efforts, Spain and Panama, on behalf of Argentina, sought to press to the vote an apparently innocuous Draft Resolution on a cease-fire which would have had exactly the effect we were determined to avoid. It was touch and go whether the Spanish would even now manage to obtain the necessary nine votes which would force us to veto the resolution. We ourselves lobbied as hard as possible. The vote was postponed until Friday.

At noon that day I flew to Paris for the G7. My first and most important meeting was, of course, with President Reagan who was staying at the US Embassy. We talked alone, as he preferred it. I thanked him for the great help we had received from the United States. I asked him what the Americans could do to help repatriate the Argentine PoWs. I also requested that the American vote should support us at the Security Council.

The mood at Versailles seemed very different from that which was now prevailing at the UN in New York. The heads of government were staying in the Petit Trianon. After dinner we had a long discussion about the Falklands and the response was generally sympathetic and helpful. Later the British delegation and I withdrew to the sitting-room which we had been allocated. We had been talking for about fifteen minutes when a message came through from the Foreign Office and Tony Parsons that a vote was about to be taken in the Security Council and that the Japanese were voting against us. As theirs was the ninth vote required for the resolution to pass this was particularly irritating. So much for the previous undertakings of cooperation. I tried hard to contact Mr Suzuki, the Japanese Prime Minister, to persuade him to reverse the decision and at least abstain. He could not possibly have gone to bed in such a short time. But I was told that he could not be reached.

Attention was, in fact, somewhat diverted from our problems by the extraordinary behaviour of the US Ambassador to the United Nations, Mrs Kirkpatrick. Having cast her veto alongside ours, she announced only minutes later that if the vote could be taken again she would, on instructions just received, abstain. Ironically, this rather helped us by distracting media attention from our veto. However, that had not been the intention. Apparently, succumbing to pressure from the Latin American countries, Al Haig had telephoned her from Versailles telling her to withdraw her vote of support from us but she had not received the message in time. There was a still more embarrassing sequel to this event for the United States. Just before lunch in the Palace of Versailles, the television cameras were allowed in and an American journalist asked President Reagan what had lain behind the US confusion at the United Nations the previous evening. To my amazement, he said that he did not know anything about it. He had not been told. The journalist then turned to me. I had no intention of rubbing salt into a friend’s wounds, so all I said was that I did not give interviews over lunch.

That same morning the Japanese Prime Minister gave me an extremely lame explanation of Japan’s vote in support of the resolution, claiming that he believed that it would lead to Argentine withdrawal. However, President Mitterrand’s summing up at his press conference after the conclusion of the G7 was excellent and totally supportive.

Neither Tony Parsons nor I was particularly surprised that we had finally had to use our veto. In retrospect, we were very lucky — and it was a tribute also to Tony Parsons’s skill — that we had not had to veto such a resolution much earlier.

By now, my thoughts were again on what was happening in the Falklands. Our troops had struck out against other Argentine positions. There had been no Argentine counter-attack. Major-General Moore had arrived to assume command of all land operations and the 5th Infantry Brigade (5 Brigade), reinforcing our troops on the islands, had landed on 1 June. The main problem was to transport enough equipment and ammunition forward in preparation for the final assault on the ring of mountains which protect Port Stanley.

President Reagan arrived in Britain on Monday evening on an official visit and I met him at the airport. The next day he was due to speak to Members of both Houses of Parliament. But it is the terrible losses we suffered at Bluff Cove which are etched on my mind for that day. The landing ships, Sir Tristram and Sir Galahad, full of men, equipment and munitions, had been sent round to Bluff Cove and Fitzroy in preparation for the final assault on Port Stanley. The clouds cleared while the ships were still unloading the Rapier missiles which would protect them from air attack and the Argentinians scored hits on both. Sir Galahad had not discharged its troops and the result was great loss of life and many survivors were left with terrible burns. The Welsh Guards took the brunt of it. As on all these occasions, the natural reaction was ‘if only’ — above all, if only the men had been taken off and dispersed as soon as they arrived then nothing like this number of casualties would have been suffered. But the losses would have been even greater were it not for the heroism of the helicopter pilots. They hovered close to the burning oil slicks around the ship and used the draught from their rotors to blow life rafts full of survivors away from the inferno into which they were being drawn.

Again, there were almost insuperable problems in releasing news of casualties. Rumours of very large numbers were spread by the Argentinians. Families were frantically worried. But we decided to hold up details of the numbers lost — although of course (as always) relatives were individually informed. We knew from intelligence that the Argentinians thought that our casualties were several times worse than they were and that they believed this would hold up our attack on Port Stanley. The attack on Mount Longdon, Two Sisters and Wireless Ridge was due to begin on Friday night. Surprise was vital.

I hoped against hope that our worst losses were behind us. But early on the morning of Saturday 12 June the No. 10 duty clerk came up to the flat with a note. I all but seized it from him, expecting it to say that the attack on the mountains around Port Stanley had begun. But the news was very different. I kept the note, which reads:

HMS Glamorgan struck by suspected Exocet missile. Ship is in position 51/58 South. Large fire in vicinity of hangar and in gas turbine and gear room. Power still available. Ship making ten knots to the South.

— MoD as yet have no details of casualties and wouldn’t expect them for several hours. They will keep us informed.

Glamorgan had been bombarding the Argentine positions in Port Stanley and on the hills around before the forthcoming battle. She had in fact been hit by a land-based Exocet while on her way out of the area.

How bitterly depressed I was. At moments like this I felt almost guilty at the comfort, protection and safety in No. 10 while there was so much danger and death in the South Atlantic. That day was the Trooping of the Colour for the Queen’s birthday. For the only time that I can remember the ceremony was marred by a downpour of rain. It was unpleasant for the Guards, but with the news so bad and the uncertainty so great, it seemed appropriate. I wore black, for I felt that there was much to mourn. John Nott arrived shortly before I was to take my place on the stand. He had no further news. But he thought he would have been told if the attack had not started. Afterwards, dripping wet, the guests, including Rex and Mrs Hunt, dried out before the fires in No. 10 as best we could.

Shortly before 1 o’clock we heard that all our military objectives had been achieved. But there had been a stiff battle. Two Sisters, Mount Harriet and Mount Longdon had been secured. The plan had been to press on that night to take Mount Tumbledown, still closer to Port Stanley, but the troops were tired and more time was needed to bring up ammunition, so it was decided to wait. I went up to Northwood that afternoon to hear precisely what was happening. There was better news there about Glamorgan; her fires were under control and she was steaming at 20 knots.

More than ever, the outcome now lay in the hands of our soldiers on the Falklands, not with the politicians. Like everyone else in Britain, I was glued to the radio for news — strictly keeping to my self-imposed rule not to telephone while the conflict was underway. On my way back from Chequers to No. 10, that Sunday (13 June), I went via Northwood to learn what I could. What was to turn out to be the final assault was bitterly fought, particularly at Mount Tumbledown where the Argentinians were well prepared. But Tumbledown, Mount William and Wireless Ridge fell to our forces, who were soon on the outskirts of Stanley.

I visited the islands seven months later and saw the terrain for myself, walking the ground at first light in driving wind and rain, wending my way around those grim outcrops of rock which made natural fortifications for the Argentine defenders. Our boys had had to cover the ground and take the positions in thick darkness. It could only have been done by the most professional and disciplined of forces.

When the War Cabinet met on Monday morning all that we knew was that the battle was still in progress. The speed with which the end came took all of us by surprise. The Argentinians were weary, demoralized and very badly led — as ample evidence at the time and later showed. They had had enough. They threw down their arms and could be seen retreating through their own minefields into Stanley.

That evening, having learnt the news, I went to the House of Commons to announce the victory. I could not get into my own room; it was locked and the Chief Whip’s assistant had to search for the key. I then wrote out on a scrap of paper which I found somewhere on my desk the short statement which, there being no other procedural means, I would have to make on a Point of Order to the House. At 10 p.m. I rose and told them that it had been reported that there were white flags flying over Port Stanley. The war was over. We all felt the same and the cheers showed it. Right had prevailed. And when I went to sleep very late that night I realized how great the burden was which had been lifted from my shoulders.

For the nation as a whole, though the daily memories, fears and even the relief would fade, pride in our country’s achievement would not. In a speech I made in Cheltenham a little later, on Saturday 3 July, I tried to express what the Falklands spirit meant:

We have ceased to be a nation in retreat. We have instead a newfound confidence — born in the economic battles at home and tested and found true 8000 miles away… And so today we can rejoice at our success in the Falklands and take pride in the achievement of the men and women of our task force. But we do so, not as at some flickering of a flame which must soon be dead. No — we rejoice that Britain has rekindled that spirit which has fired her for generations past and which today has begun to burn as brightly as before. Britain found herself again in the South Atlantic and will not look back from the victory she has won.

CHAPTER IX

The Downing Street Years, 1979-1990

Generals, Commissars and Mandarins

Meeting the military and political challenge of communism from the autumn of 1979 to the spring of 1983 

PEACE AND ARMAMENTS

On Wednesday 23 June 1982 I travelled to New York to attend a special session of the General Assembly on disarmament, which the United Nations had called while the Falklands campaign was still in progress. The speech I made expressed my view of the role of defence and negotiations on disarmament with singular clarity. I had become increasingly unhappy about the language used on such occasions. Everyone talked about peace as if that in itself were the sole aim. But peace is not enough without freedom and justice and sometimes — as we were demonstrating in the Falklands — it was necessary to sacrifice peace if freedom and justice were to prevail. I was also convinced that much cant was spoken about the arms race, as if by slowing down the process of improving our defences we would make peace more certain. History had repeatedly demonstrated quite the opposite.

I began by quoting President Roosevelt: ‘We, born to freedom and believing in freedom, would rather die on our feet than live on our knees.’ I then went on to note that nuclear war was indeed a terrible threat, but conventional war a terrible reality. Since the atomic bombs dropped by the Americans on Hiroshima and Nagasaki there had been no conflicts in which nuclear weapons had been used — but some 140 conflicts fought with conventional weapons in which approaching 10 million people had died. In any case:

The fundamental risk to peace is not the existence of weapons of particular types. It is the disposition on the part of some states to impose change on others by resorting to force against other nations and not in ‘arms races’, whether real or imaginary. Aggressors do not start wars because an adversary has built up his own strength. They start wars because they believe they can gain more by going to war than by remaining at peace… I do not believe that armaments cause wars [nor that] action on them alone will… prevent wars. It is not merely a mistaken analysis but an evasion of responsibility to suppose that we can prevent the horrors of war by focusing on its instruments. They are more often symptoms than causes.

This was the analysis which underlay the defence and security policies I intended the Government to pursue. It provided me with a view of international power politics without which we would have had no clear sense of direction. But of course it did not of itself resolve particular problems. Throughout my first years in office I repeatedly found myself trying to reconcile five different objectives. First, there could only be strictly limited resources available for defence, particularly when the economy was growing slowly or not at all. This meant that although defence expenditure was increased, it was vital that better value for money be obtained. Second, we had regularly to assess the priority we would give to the demands of NATO policy and those other areas of British interest outside the NATO area. Third, Britain had to help ensure that NATO responded effectively to the steadily increasing Soviet military threat. Fourth, as part of this, it was vital to maintain western unity behind American leadership. Britain, among European countries, and I, among European leaders, were uniquely placed to do that. Finally, nowhere more than in defence and foreign policy does what I have come to consider ‘Thatcher’s law’ apply — in politics the unexpected happens. You have to be prepared and able to face it. There was to be no lack of examples in my years in office.

THE MILITARY BALANCE

Well before I entered Downing Street I was preoccupied with the balance of military power between the NATO alliance and the Warsaw Pact. NATO has always been a defensive alliance of western style democracies. It was founded in April 1949 in response to the growing aggression of Soviet policy, made plain by events such as the Soviet-backed communist takeover in Czechoslovakia and the Berlin blockade the previous year. Although the United States is the leading power in NATO, ultimately it can only seek to persuade not coerce. In such a relationship the danger of dissension always exists. The Soviet aim, only thinly disguised, right up until the time when a united Germany remained in NATO, was to drive a wedge between America and her European allies. I always regarded it as one of Britain’s most important roles to see that such a strategy failed.

There are other fundamental differences between NATO and its opponents. The democratic freedoms our peoples enjoy make it in practice impossible for the state to take more than a certain share of national income for military purposes. Moreover, the openness of our western societies, though they make us stronger perhaps when sacrifice is required in a manifest crisis, also make us slow to respond to insidious threats. Democracies do not, with very few exceptions, start wars. The only threat NATO ever posed to the Soviet bloc is the threat that ideas of freedom and justice pose to the masters of captive nations.

But from its foundation in May 1955 the Warsaw Pact was always an instrument of Soviet power. In 1956 in Hungary and 1968 in Czechoslovakia the Soviets had shown that any movement in eastern Europe which might threaten their own military interests would be crushed without mercy or apology. The experts might and did argue about the precise details of Soviet military doctrine. But what was clear to me and to anyone prepared to reflect on past events and present circumstances was that the Soviets and their Warsaw Pact ‘allies’ could not be trusted to refrain from adventurism in Europe any more than in the Third World.

Moreover, by the time we took office the Soviets were ruthlessly pressing ahead to gain military advantage. Soviet military spending, which was believed to be some five times the published figures, took between 12 and 14 per cent of the Soviet Union’s GNP.[38] The Warsaw Pact outnumbered NATO by three-to-one in main battle tanks and artillery and by more than two-to-one in tactical aircraft. Moreover, the Soviets were rapidly improving the quality of their equipment — tanks, submarines, surface ships and aircraft. The build-up of the Soviet Navy enabled them to project their power across the world. Improvements in Soviet anti-ballistic missile defences threatened the credibility of the alliance’s nuclear deterrent — not least the British independent deterrent — at the same time as the Soviets were approaching parity in strategic missiles with the United States.

INTERMEDIATE-RANGE NUCLEAR WEAPONS (INF)

It was, however, in what in the jargon are known as ‘long-range theatre nuclear forces’ (LRTNF) — usually called intermediate-range nuclear forces (INF) — that the most pressing and difficult decisions were required. The so-called ‘dual-track’ agreement to modernize NATO’s medium-range nuclear weapons, while engaging in talks with the Soviet Union on arms control, had been taken in principle by the previous Labour Government; whether they would have seen the decision through to deployment I somewhat doubt.

This agreement was needed to deal with the threat from new Soviet nuclear weapons. The Soviet SS-20 mobile ballistic missiles and their new supersonic Backfire bomber could strike western European targets from the territory of the Soviet Union. But the Americans had no equivalent weapons stationed on European soil. The only NATO weapons able to strike the USSR from Europe were those carried by the ageing UK Vulcan bombers and the F1–11s stationed in Britain. Both forces could be vulnerable to a Soviet first strike. Of course, the United States could be expected by an attacking Soviet army at some point to have recourse to its own strategic nuclear weapons. But the essence of deterrence is its credibility. Now that the Soviet Union had achieved a broad parity in strategic nuclear weapons, some thought that this reduced the likelihood of the United States taking such action. In any case, there were many in Europe who suggested that the United States would not risk its own cities in defence of Europe.

Why would the Soviets wish to acquire this new capability to win nuclear war in Europe? The answer was that they hoped ultimately to split the alliance.

For NATO, however, the possession of effective medium-range nuclear forces in Europe had a very different purpose. NATO’s strategy was based on having a range of conventional and nuclear weapons so that the USSR could never be confident of overcoming NATO at one level of weaponry without triggering a response at a higher level leading ultimately to full-scale nuclear war. This strategy of ‘flexible response’ would not be effective if there were no Europe-based nuclear weapons as a link between the conventional and strategic nuclear response. NATO knew that the Warsaw Pact forces would never be held for more than a short time if they attacked with all the strength at their disposal in central Europe. That is why NATO repeatedly pledged that although it would never use military force first, it could not play into the Soviet hands of renouncing first use of nuclear weapons once it had been attacked. So only by modernizing its intermediate-range nuclear weapons in Europe could NATO’s strategy retain its credibility. It was clear from the first that this would not be easy.

On the morning of Friday 11 May 1979 I discussed the issue with Helmut Schmidt in London. He was very concerned at the effect on German public opinion of stationing more nuclear missiles on German soil, although of course he had been one of the principal authors of the strategy. The Americans had developed a longer range equivalent of the Pershing missiles already stationed in West Germany and Cruise missiles, which could be launched from the air, sea or land. At this stage Helmut Schmidt still hankered after a sea-based system, though he later reluctantly accepted the advantages of the ground-launched Cruise missile (GLCM). He was under strong pressure from within his own party and placed equal emphasis on the second aspect of the ‘dual track’ approach — that is for the US to negotiate for the removal of the Soviet threat at the same time as we were preparing to deploy our own weapons. He also insisted that West Germany should not be the only recipient of these missiles which was a non-nuclear state.[39] In sharp contrast to future debate in Britain, the Germans were adamant that the nuclear weapons should have no ‘dual key’: they must be able to say to the rest of the world that they did not own or control nuclear weapons.

On the morning of Wednesday 13 June I saw Al Haig, who was at that time the outgoing Supreme Allied Commander in Europe. We discussed not only questions of nuclear policy but also what we knew of the threat posed by Soviet preparations for offensive chemical warfare, which I found deeply disquieting. I said that although my initial reaction to my first briefings on the East/West military balance had been one of concern, my considered conclusion was that the West’s superiority in human and material resources would enable us to respond to any challenge. But that did not diminish my worry about our immediate problems. On the evening of Tuesday 24 July I saw General Haig’s successor, General Bernard Rogers, and expressed my anxiety about the lead enjoyed by the Warsaw Pact forces in the matter of standardization of weapons and equipment and about the vulnerability of NATO’s own organization to Soviet penetration.

The deadline which NATO had set itself for achieving a firm decision on the new intermediate-range missiles was the end of that year, 1979. The longer we waited, the greater the opportunities for Soviet campaigns of propaganda and disinformation to do their work. On Wednesday 19 September the small group of ministers which I chaired to consider nuclear policy decided that the UK would accept the basing of our allotted 144 American owned GLCMs. I had received a telephone call from Helmut Schmidt asking if we could accept a further flight of 16 Cruise missiles. The Germans wished to reduce their own number and in order to prevent any further time being lost in argument I immediately agreed to the request. With Britain and West Germany remaining solid the West’s strategy could be accounted a success. But would others follow our lead?

A week earlier I had already seen Prime Minister Martens of Belgium for talks in Downing Street. The Belgians were looking over their shoulder at the Dutch, whose Government’s future was endangered by rifts and popular agitation against deployment of nuclear weapons. The Belgians were particularly important because if the Dutch, and possibly also the Italians, failed to go along with the decision which would soon be required, Chancellor Schmidt’s own position would become perilous and it was of crucial importance to the alliance to shore up West German commitment. I told M. Martens that I wondered whether western European leaders were giving a sufficiently effective lead to public opinion. My own experience was that audiences were always quick to respond when addressed about the extent of the Soviet threat and about the need for us to have credible defences. I thought it was all a matter of resolve.

By contrast, I felt reassured — and said so — by the resolute attitude of the Italian Prime Minister, Sig. Cossiga, when I talked with him in Rome on Friday 5 October. He told me that Italy would make a positive decision on deployment. He intended to exert maximum pressure at his forthcoming meeting with the Dutch Prime Minister, Mr Van Agt, and hoped that I would do the same.

However, during this time the Soviets were at work trying to undermine NATO’s unity. As I frequently pointed out in my discussions, they had been brilliantly successful in rousing popular feeling against the neutron bomb which President Carter had been considering deploying. In the months and years to come it would be clear that they had by no means lost their touch.

On Saturday 6 October, President Brezhnev made a speech in East Berlin containing a number of proposals. He announced the withdrawal of 20,000 Soviet troops and 1,000 tanks from East Germany in the next 12 months. He also offered to reduce Soviet intermediate-range nuclear systems if no ‘additional’ medium-range nuclear weapons were deployed in western Europe. Judged against the huge Soviet superiority in conventional forces the reductions, though of course welcome, were more cosmetic than of substance. But the proposals on theatre nuclear weapons were a good deal worse. We knew that the accuracy, ability to penetrate, mobility and the range of targets covered by these Soviet missiles and aircraft had increased enormously. Moreover, such missiles were targeted on western Europe from points beyond the Urals. Mr Brezhnev’s proposals — like those which followed them — would have left the Soviets in possession of a weapon which could strike at Europe and to which we had no equivalent effective response. However, such proposals inevitably increased the temptation, in the Netherlands for example, to put all the emphasis on arms control and delay the decision on modernization and deployment.

I discussed the situation with Chancellor Schmidt again — in Bonn this time — on Wednesday 31 October. How were we to help the Dutch take the right decision at the forthcoming NATO meeting? I suggested that the whole of the Dutch Cabinet, which appeared to be split, should see the impressive NATO presentation on the military balance in Europe. Helmut Schmidt was pressing for the United States to offer to withdraw unilaterally 1,000 obsolete nuclear warheads from the Federal Republic. The Americans agreed with this and President Carter wrote to me about it. All my instincts were against unilateral gestures of this sort. But I could see the practical arguments for it and with some reluctance supported the offer — not that it had much noticeable effect on Dutch opinion or the Dutch Government. In fact, the Germans at about this time seemed to become reconciled to the prospect of the Dutch failing to agree to deployment, though it was clear that they themselves would remain firm as long as the Italians and Belgians did so. On Friday 23 November Mr Gromyko visited Bonn and gave a press conference which was evidently intended to shake European and particularly German opinion, warning that arms control negotiations could not take place if the West pursued what he described as a ‘new arms race’.

On the evening of Thursday 6 December I met the Dutch Prime Minister for talks and dinner in Downing Street. I always got on well with him, but I did not envy his position. The notorious instability of coalition governments of the sort he led makes it immensely difficult to get clear decisions and stick to them. On this occasion, Mr Van Agt explained to me in some detail the difficulties he was facing. Apparently, half the sermons in Dutch churches were now dealing with nuclear disarmament and the issue of deployment was endangering his Government’s survival. I agreed with him that the fall of a NATO member government on a NATO issue would be a very serious development. But I added that NATO would have to go ahead with the decision to deploy theatre nuclear weapons or else the alliance would lose its credibility and its purpose. The Netherlands could reserve its position while waiting to see what the attitude of the Soviet Government was in arms control negotiations. The Russians were playing their traditional psychological game to discourage NATO from taking decisions and they must not be allowed to get away with it.

In fact, in an act of remarkable courage in the face of so much domestic and Soviet opposition, the NATO ministers made the required decision in Brussels on 12 December. The arms control proposals, including the American offer to withdraw 1,000 nuclear warheads from Europe, were agreed. Most important, the alliance agreed to the deployment in Europe of all the 572 new American missiles which had been envisaged. The reservations entered by the Belgian and Dutch Governments were less serious than at one time had seemed likely. The Belgians agreed to accept a share of these missiles, subject to reconsideration after six months in the light of the progress of arms control negotiations. The Dutch Government accepted the proposals as a whole but postponed the decision to take a share of the missiles in Holland until the end of 1981. The latter date was in any case well before any proposed deployment could in practice begin.

Of course, this was not the end of the matter. In June the following year we announced the sites of the Cruise missiles in Britain — Greenham Common in Berkshire and Molesworth in Cambridgeshire. From that time on Greenham was to be the focus for an increasingly strident unilateralist campaign.

The Soviet Union’s own alternating bribes and threats continued to work on European public opinion. I was asked in a Dutch television interview on 4 February 1981, when I was on a return visit to see Mr Van Agt, about resistance to stationing Cruise missiles in Holland and Germany. I replied:

I sometimes wish that those who do resist [Cruise missiles] would really turn all their effort to saying to the Soviet Union: ‘Look! You have the most modern, up-to-date theatre nuclear weapons in the SS-20… you have them targeted on every country in Europe. You increase their numbers at the rate of rather more than one a week. Do you really expect us to sit back and do nothing? If you want us not to have Cruise missiles in Europe, as a deterrent to your using yours, then dismantle yours! Take them down! Agree to be inspected so that we do know what you are doing!’… I know the worries. I do not like nuclear weapons either, but I value my freedom and my children’s freedom, and their children’s freedom and I am determined that it shall continue.

I learnt afterwards that such plain speaking as this was a rare thing in the Netherlands.

THE PURCHASE OF TRIDENT

Another early decision which we had to take, with the greatest long-term consequence for Britain, related to our independent nuclear deterrent. Britain had four nuclear-armed Polaris submarines. The previous Conservative and Labour governments had pressed ahead with a programme of improvement to our Polaris missiles. The programme, code-named Chevaline, had been paid for and managed by the United Kingdom in co-operation with the United States, using some of their facilities for trials and tests. The upgraded Polaris system would maintain the full effectiveness of our strategic deterrent into the 1990s, though at a cost which had alarmingly escalated as the development continued. However, for a variety of technical and operational reasons we could not responsibly plan for the continuance of this system much into the 1990s. If Britain was to retain its deterrent a decision would shortly have to be made about Polaris’s ultimate replacement, given the time required to design or obtain new strategic nuclear forces of the sophistication necessary.

We began to look at the options from almost the first days in government. These quickly proved a good deal narrower than they at first appeared, though inevitably they seemed wider to those without access to all the information. By late September 1979 we had discarded the option of a successor force of air-launched Cruise missiles because they would be too vulnerable to attack. The possibility of co-operation with France, which retained its own independent deterrent, was rejected for technological reasons. From an early stage the American Trident looked the most promising option.

We had received firm assurances that the SALT II Agreement, reached between Presidents Carter and Brezhnev in June 1979, would not affect the situation regarding our own deterrent. But our aim was, if possible, to conclude an agreement with the Americans on purchasing Trident before the end of that year, so that it could not get caught up in the argument in the run-up to the expected ratification by the US Senate of the treaty. We also wished to have the decision made before President Carter became too preoccupied with the 1980 presidential election. The Trident missile included the advanced and very important technology of multiple nuclear warheads, each separately targetted (MIRVs). Not only was this the most up-to-date and therefore credible system — as measured against Soviet anti-submarine warfare capability and anti-ballistic missile defences — but by purchasing it from the Americans we could hope to avoid immensely expensive improvement programmes like Chevaline. On 6 December 1979 the ministers concerned agreed that the best system to replace Polaris was the Trident I (C4) MIRV system if it could be purchased from the US, less the warheads and the submarines carrying the system which would be produced in Britain. The decision was later confirmed by Cabinet.

But at this point the most troublesome and annoying complications began. Although President Carter told me that he would supply us with whatever we needed he was desperately worried that news of his decision would cause him political difficulties. He had invested great political capital in the SALT II Agreement whose chances of being ratified by the Senate were already in doubt. He was worried that the Soviets might respond to his agreement to supply Trident with some action which would result in a failure to ratify. Consequently, I was not able to speak openly about the matter when I saw him with his colleagues in Washington. The Americans were also keen to ensure that the announcement on Trident did not occur before the scheduled 12 December meeting of NATO to decide on deploying Cruise and Pershing. I could see the sense of this. But in view of the problems which SALT II was facing I began to be anxious lest the decision on Trident be postponed well into 1980.

With the Soviet invasion of Afghanistan at the end of the year the prospects of ratifying SALT II immediately sharply receded. But at this point the US Administration said that it was reluctant to announce the Trident decision because it could be seen as an overreaction to events in Afghanistan. The Americans were similarly unduly worried about the attitude of Chancellor Schmidt to the Trident decision. More hard-headedly, the Carter Administration also pressed strongly for both political and financial returns on the decision to supply us with Trident. They wanted us to agree to a form of words which would commit us to expanding our defence efforts. They were also keen to develop their defence facilities at our island of Diego Garcia in the Indian Ocean — something for which I had a good deal of sympathy. There was the matter of a substantial levy which we would be charged for American research and development costs which they were not prepared to waive.

I was not happy about some of these demands: it seemed to me that it was as much in America’s interests as ours that we should have an independent strategic deterrent which would, like Polaris, be assigned to NATO and, except where the UK Government decided that supreme national interests were at stake, would be used for the purposes of international defence of the western alliance. As with the question of theatre nuclear weapons, it was the Soviet perception of the strategic threat which would ultimately determine its credibility — and whatever doubts they might have about America’s willingness to launch strategic nuclear weapons in defence of Britain, they would never doubt that a British Conservative Government would do so.

On the afternoon of Monday 2 June 1980, however, I finalized the terms in discussion with Dr Harold Brown, the able US Defence Secretary, in Downing Street. I said that Britain wanted to purchase the Trident I missile on the same terms as regards research and development as Polaris, that is paying a 5 per cent levy. Dr Brown would not agree to this and said that it would have been severely criticized in Congress. But he would accept it providing the British Government bore the cost of manning the Rapier Air Defence Systems which the US intended to purchase for their bases in Britain. I agreed. I also agreed with the objective of extending and increasing US use of the base at Diego Garcia; but this made sense on its own merits and had nothing to do with the Trident decision. Dr Brown accepted this. At last the decision was effectively made and I wrote formally to President Carter requesting purchase of Trident, simultaneously informing President Giscard, Chancellor Schmidt and Prime Minister Cossiga. The decision was announced to the House by Francis Pym on 15 July and at Francis’s suggestion fully debated and endorsed on 3 March 1981.

In the summer of 1980 we thought that we had made our final decision on the independent nuclear deterrent. But it was not to be. President Reagan came into office in 1981 with a programme of modernizing US strategic nuclear forces, including Trident. On 24 August the new US Defence Secretary, Caspar Weinberger, wrote to me to confirm that President Reagan had now decided to use the Trident II (D5) missile in the Trident submarines. The US Administration would make this missile available to us if we wished to buy it. On 1 October President Reagan formally told me of his decision.

I well understood and indeed supported President Reagan’s decision to improve the US strategic nuclear capability. I was worried about the advances which the Soviet Union had made both in their technology and in numbers of weapons. However, we now faced a new situation. If we were still to go ahead with Trident I we risked spending huge sums on a system that would be outdated and increasingly difficult to maintain as the Americans went over to Trident II. But if we were to accept President Reagan’s generous offer of the new technology represented by Trident II we risked the increasing costs of any new project. Moreover, a number of political difficulties arose.

In November 1981 a group of ministers met to discuss what we should do. We argued out all the questions between us; and all the arguments which would be raised in the outside world were discussed, including some feeble and unrealistic ones. One colleague was concerned at the impact on public opinion of choosing a still more powerful missile. Another raised the question whether it would be more difficult to keep a Trident II nuclear strategic force out of future arms control negotiations, as we had managed hitherto. A third was inclined to support the case for Trident II but with fewer missiles. Yet another, while accepting that Trident II was better than the alternatives, felt that the choice raised the more fundamental question of whether the UK could afford to continue to maintain an independent strategic nuclear deterrent at all. For my part I had two anxieties. One was, as I noted above, that the cost of a completely new missile now being developed was bound to be uncertain and on past performance was likely to escalate. The other was my unease about the implications for the strategic deterrent of Soviet developments in anti-ballistic missile defence, including particle beam and laser weapons — a possibility to which I had been alerted some years earlier but which became a matter of public debate only when President Reagan proposed his SDI initiative in March 1983.

In January 1982 we had a further and fuller discussion based on a presentation. The more we considered the question the more it seemed that if we were to maintain a credible deterrent, which I was utterly determined we should do, we must indeed have the Trident II. But we must get it on the best possible terms. The issue was put to Cabinet later that month and on 1 February I sent a message to President Reagan saying that I would send officials to Washington to discuss terms.

Again, as with President Carter’s Administration, there was plenty of hard bargaining. But I always knew that President Reagan and Caspar Weinberger would be conscious of Britain’s and the alliance’s long-term interests and would ultimately do what they believed to be right in defence terms, rather than just expedient or popular with the Congress. As before, the whole question of charges and levies arose. We for our part pressed hard for a fixed percentage of the work on the development of Trident to go to UK sub-contractors. The Americans who were building up their own navy were anxious to discourage us from reducing our surface fleet which we were intending to do following the Defence Review that year. We indicated the possibility of reprieving the amphibious landing ships HMS Fearless and HMS Intrepid, which pleased them. They also pressed for an extension of our armed forces’ engagement in Belize, which has now become a virtually permanent commitment.

In the end, we concluded an agreement with the United States to buy Trident II on more advantageous terms than Trident I. The missile was to be purchased by us at the same price as the United States Navy’s own requirements in accordance with the Polaris Sales Agreement. But the additional overheads and levies would be lower than would have been the case under the 1980 Agreement to purchase Trident I. In particular, the so-called R & D levy would be a fixed sum in real terms and there would be a complete waiver of the facilities charge which was part of the Trident I deal. The terms protected us completely from the escalation of the development cost. The United States would set up a liaison office in London to advise British industry on how to compete on equal terms with US industry for sub-contracts for the Trident II programme as a whole, including the American programme. We also decided to improve and increase the size of the submarines which would carry Trident, making them more efficient and less detectable, and by running longer between refits make them more available for patrol. The total cost of Trident II and the other changes over the whole period would be £7.5 billion, just over 3 per cent of the total defence budget over the same period. When I learnt of the terms now being offered I was delighted and I gladly authorized their acceptance.

THE DEFENCE REVIEW

It is sometimes forgotten, now that the map of Europe and indeed the world has been reshaped with the fall of communism, just how painful were the consequences of the West’s efforts to strengthen its defence effort in the 1980s. The United States was as a result unable to reduce its public spending, with the consequence that the world faced higher interest rates, threatening economic recovery. We in Britain, for our part, had to match the necessary commitment to strengthen our defence with rigorous evaluation of what we could afford and where resources could be best applied. Economic, strategic and technical arguments alike pointed towards a thorough review of our defence commitments and how they should be fulfilled — and not only ours but those of the other NATO allies. Yet, at the same time, I was conscious of the danger that the wrong signals might be given to left-wing opponents of strong defence at home and to our enemies abroad.

In early November 1980 I chaired a meeting of the Overseas and Defence Committee of the Cabinet (OD) to consider a paper from Peter Carrington and Francis Pym which argued that Britain should take the initiative in proposing a wide-ranging review of NATO to make it more relevant to western defence requirements and more cost effective. In the longer term the members of the alliance should move towards greater specialization. Attractive as the idea was from our viewpoint, it quickly became clear that Chancellor Schmidt was opposed to it, on the grounds that he believed that it would weaken not strengthen NATO. Moreover, with the election of President Reagan, committed to radically different policies from his predecessor, my main emphasis came to be on keeping the alliance together, united behind American leadership. However, whether matched by international action or not, Britain was forced by pressures of circumstance to conduct its own and — as it turned out — highly controversial defence review.

I appointed John Nott to Defence in January 1981 with the remit of getting better value for money from the huge sums spent on defence. In February John, Peter Carrington and I had an initial discussion about what would be our 1981 Defence Review. John had already concluded that the defence budget was hopelessly overextended both in the short and long term. The real cost of ever more sophisticated weapons was remorselessly increasing the pressure. More sales of defence equipment could help a little — particularly if we were able to produce equipment more suited to the needs of potential overseas customers. However, defence orders were running way ahead of budget and would have to be cut back if we were to keep within any kind of financial discipline. Some fundamental strategic issues also had to be faced. There was very little scope for reducing our commitment to West Germany. A policy of forward defence was crucial to the alliance’s strategy: moreover the political implications of cuts here for NATO as a whole could be very serious. Nor could savings be found in home defence: indeed the effort here would have to be increased, for example by strengthening the Territorial Army. There was no room for savings on the RAF: on the contrary, additional expenditure would probably be required. This left the navy. The navy needed more submarines and more minesweepers. But it is extremely expensive to keep up a large surface fleet and so that was plainly the area to look for cuts. None of us had any illusions about the sensitivities involved in the approach John proposed, but it was difficult to fault his analysis.

In early May I had another discussion with John about the options emerging clearly from his review. He believed that his proposals would provide the basis for a far more effective defence force for the needs of the future. But it was already clear that opposition within the armed forces and in the Conservative Party would be strong. I would have to see the Defence Chiefs of Staff to discuss with them their reactions to what was proposed. Moreover, many marginal seats would be involved, especially in dockyard closures. We would have to make every effort to explain our priorities both in the country and to our NATO allies, particularly the Americans.

What I had not expected was that the most public opposition would come from a Defence minister. On Friday 15 May Keith Speed, the Navy minister, made a speech which effectively disowned the whole strategy of the review. John Nott did not want him to resign at once and suggested that he should be moved to another department. I said that there was no question of this: if he was going to be disloyal to the Government in one department, he would in another. I saw him very late on the night of Monday 18 May and told him he must go.

In early June I met the Chiefs of the Defence Staff, at their request, with John and Peter Carrington. The press had been full of stories about my ‘fury’ at their lobbying against the review. But in fact I had found the behaviour of the Chiefs of Staff throughout impeccable, and I said so. No one at the meeting openly contested that the NATO central front was bound to be the decisive arena. Scenarios of conflict in the Third World might be more likely: but only on the central front could the war be lost in an afternoon. It was argued that we should again press for a full-scale NATO review. But we could not afford to postpone decisions in the hope that a NATO review might help us: moreover such a review at this time could itself destabilize the alliance.

On the morning of Monday 8 June John Nott and I met Sir Henry Leach, the First Sea Lord, who argued vigorously the importance of the surface fleet. I have the greatest respect for his judgement. He could well argue that the Falklands War proved him right. He could certainly argue today that with the end of the Cold War and events in the Gulf there is now a need for mobile forces and a strong navy. At that time I had to disagree with him because I could see no other way of meeting our NATO obligations within the financial constraints.

John announced the conclusions of the Defence Review to the House of Commons on the afternoon of Thursday 25 June. The decisions — particularly to cut the number of ships and to close the base and dockyard in Chatham — ran into fierce opposition, not least from Members of Parliament whose constituencies were affected. The closure of the dockyard went ahead. But after the Falklands campaign the following year some of the decisions of the Defence Review were altered. Certainly no one who lived through that campaign could be in any doubt about the importance of a country such as Britain with far-flung interests being able to project its military power swiftly and effectively across the globe.

THE POLISH CRISIS

No matter how effectively Britain managed its defence effort it was on the unity, strength and credibility of NATO that our security ultimately depended. It was of the utmost importance that American public opinion remained committed to western Europe. So the tensions and divisions which arose in the alliance at this time were of great concern to me. My view was that ultimately we must support American leadership: but that did not mean that the Americans could pursue their interests regardless of the opinion of their European allies.

The need to decide how to react to the imposition of martial law by General Jaruzelski’s Government in Poland on 13 December 1981 highlighted problems which had been growing throughout 1981. Some European countries, most importantly the Germans, were hostile to President Reagan’s economic policy and mistrustful of his rhetoric on defence and arms control. I, of course, did not share these attitudes, though I wanted tougher action to control the widening US budget deficit. What I found irritating and on occasion quite unjustified was the way in which the actions the Americans preferred inflicted a good deal more pain on their allies than on themselves and, one might argue, the communists in Poland and the Soviet Union. The first such issue was the Polish Government’s crackdown on Solidarity.

I was from the first acutely aware of the importance of the Polish question. Like most people in Britain, I have always liked and admired the Poles, many of whom settled in this country during and after the war. But there was more to it than that. On 9 December 1980 I talked quite frankly to the Polish Deputy Prime Minister who visited London. I said that I was conscious of witnessing a change in a socialist state of a kind that had not occurred in the last sixty years. A new group of people — the Solidarity movement — were challenging the communists’ monopoly on power on their own terms. I told him how closely we were watching events in Poland and how excited I was by what was happening. I said that the socialist system had succeeded in suppressing the human spirit for a surprisingly long time but that I had always been confident that there would be a breakthrough.

But these happy signs were not to last. The Soviets brought increasing pressure to bear on the Poles. From the end of 1980 the Americans became convinced that the Soviet Union was planning direct military intervention to crush the Polish reform movement, just as they had crushed the ‘Prague Spring’ of 1968.

From about the same time we began to draw up measures to punish the Soviet Union in such an eventuality. Peter Carrington and I agreed that we should respond in a measured, graduated way depending on the situation we faced. We foresaw four possibilities: a situation in which the use of force by the Polish Government against Polish workers was imminent, or had already taken place, or one in which Soviet intervention was imminent, or had already taken place. We agreed that ineffective sanctions would be worse than useless, but sanctions would have to hit the Soviets harder than they hit us. Meanwhile, we had to make a number of complex judgements about Soviet and the Polish Government’s intentions. Was the present ostentatious Warsaw Pact activity the prelude to armed intervention or a means of bringing political pressure to bear on the Polish Communist Party? If we continued to provide food aid and to proceed with plans for Polish debt relief would this benefit the Polish people or play into the hands of the hardliners in Poland who were struggling to survive the consequences of their own misgovernment? These were not easy judgements to make.

Suddenly the situation changed. Martial law was declared in Poland from midnight on 12–13 December 1981 and a ‘Military Council for National Salvation’ consisting of military leaders was set up under the Prime Minister, General Jaruzelski. The borders were sealed, telex and telephone links severed, a curfew imposed, strikes and assemblies banned, the broadcasting system brought under tight control. There was no doubt in my mind that all of this was morally unacceptable but that did not make it easier to gauge the correct response. After all, in order to warn off Soviet intervention, we had consistently said that the Poles must be allowed to decide on their own internal affairs. Were the Soviets themselves behind it, intending to use the crackdown as a means of turning the clock back to hardline communism and subordination to Moscow? Or was this really a temporary decision, as the Jaruzelski Government claimed, forced upon them to bring some kind of order to Poland, with the implication that this would prevent a Soviet takeover? At this early stage there was a severe shortage of information not just to illuminate these questions but even as to the whereabouts and safety of leading Polish dissidents.

The more we learnt of the background to what had happened, however, the worse it appeared. President Reagan was personally outraged by what had occurred, believed that the Soviet Union was behind it and was determined to take swift action. I received a message from him on 19 December to this effect. Al Haig sent a parallel message to Peter Carrington pointing out that the Americans were not proposing that the West should now implement the far-reaching measures to meet Soviet military intervention that had already been agreed in NATO. What they wanted were some political and economic measures at once and others in reserve if the situation worsened. Without any further reference to us, the Americans would be announcing sanctions against the Soviet Union later that day. These, we were were glad to note, rightly did not include abandonment of the disarmament talks going on in Geneva. But they did include measures such as the cancellation of Aeroflot landing rights, a halt to negotiations on a new long-term grain agreement (though an existing agreement would remain in place) and a halt to the export of material for the construction of the planned natural gas pipelines on which work had already begun.

It was this last point which was to be the cause of great anger in Britain and other European countries. British, German and Italian firms had legally binding contracts to provide equipment for the West Siberian Gas Pipeline, which involved components made in the United States or under United States licence. It was not clear at this stage whether the measures announced by President Reagan against the Soviet Union applied to existing contracts as well as new ones. If the ban extended to existing contracts this would deprive British firms of over £200 million of business with the Soviet Union. Worst affected would be a contract of John Brown Engineering for pump equipment for the pipeline project on which large numbers of jobs depended.

While pressing the Americans on this particular point, I ensured that we gave them the strongest possible backing both in NATO and the European Community for the general line they wanted to take. This was by no means easy. Initially, the Germans were reluctant to take any measures against the Polish Government, let alone against the Soviet Union. The French were pressing hard for continuing the sale of food at special subsidized prices by the European Community to the Soviet Union. But I still felt that if we could persuade the Americans to take a more reasonable line over the pipeline project we would be able to demonstrate a fairly impressive western unity. The trouble was that there were those in the American Administration whose opposition to the pipeline project had nothing much to do with events in Poland. These people believed that if it went ahead the Germans and the French would be dangerously dependent on Soviet energy supplies, which would have damaging strategic implications. There was some force in this argument; but it was exaggerated. Although Russia would be providing just over a quarter of Germany’s and just under a third of France’s gas, this would be no more than 5 per cent of either country’s total energy consumption. But in any case neither the Germans nor the French were going to accede to American pressure. Such pressure would therefore be counter-productive as well as irrelevant to the specific problem we faced in Poland. There was also American talk, which seriously worried the Bank of England, of forcing Poland to default on her international debts, which would have had severe effects on European banks.

At OD towards the end of January 1982 we discussed these possibilities. I said that there was a clear danger of the American Government’s present policy damaging western interests more than those of the East and provoking a major transatlantic quarrel of precisely the sort that it had long been the main objective of Soviet policy to bring about. Britain had already offered to do more to meet American wishes than our European partners were likely to accept. This was no longer a time for concessions but for some straight talking to our American friends. I decided to approach President Reagan. I also asked other ministers to try to influence their American counterparts. An urgent invitation would be extended to Al Haig to visit London on the way back from his current visit to the Middle East.

In fact, Al Haig joined me for a late lunch at Downing Street on Friday 29 January. I told him that the single most important aim must be to keep the western alliance together. The most recent meeting of the NATO Council had gone well. But the measures now being proposed by the United States were causing concern. Anything that the West did must be designed to harm the Soviet Union more than ourselves. The reports of possible steps by the US to bring about a default on Polish debts and indeed the debts of other East European countries were worrying: although this would doubtless bring about difficulties for the countries concerned it would also create incalculable problems for the western banking system, which was so important to the reputation of the western world as a whole. I also said that whatever the Americans felt about the matter we had to face the fact that the French and the Germans were never going to abandon their contracts for the Siberian Gas Pipeline. Nearer the bone, I noted that the Americans had not included a grain embargo in their first round of measures because this would clearly hurt their own people. Indeed, few of the measures adopted by the United States would have any serious effect at home — but they would hurt Europe. To say the least there was a certain lack of symmetry.

I gained the strong impression that Mr Haig basically agreed with my analysis. I also had the sense that he was feeling increasingly isolated and powerless in the American Administration, which indeed he was to leave later in the year. He said that he thought that it would be useful if I sent a message to President Reagan about these matters, which I did later that day. I believe that the pressure I applied had some effect, but unfortunately it proved to be temporary.

Meanwhile, the West’s response to events in Poland was becoming increasingly entangled with the wider question of our political and economic stance towards the Soviet Union. President Reagan sent a message to me on 8 March stressing the need to halt or at least restrict the grant of export credit to the Soviet Union, particularly credit subsidized by our Governments. The American argument was that not only was the USSR economically weak, it was suffering from an acute shortage of foreign exchange. European and other governments which provided the Soviet Union with subsidized credit were cushioning their failing system from economic realities which would otherwise have forced its reform. The Administration had a good argument here, though our assessment was that restricting credit would not have the dramatic impact which some US experts imagined. At this time we were receiving conflicting and confusing signals from the US Administration about its intentions. But I hoped that tighter controls by European governments on credit for the Soviet Union might allow us to secure the undertaking we wanted that the US restrictions on contracts for the Siberian Pipeline would not be retrospective.

Out of the blue, however, the Americans announced on 18 June that the ban on the supply of oil and gas technology to the Soviet Union was to apply not only to US companies but also to their foreign subsidiaries and to foreign companies manufacturing American-designed components under licence. I was appalled when I learnt of this decision. I condemned it in public. The reaction of the Europeans generally was still more hostile.

Britain took legislative action under the Protection of Trading Interests Act to resist what was in effect the extension of US extra-territorial authority. Then European irritation was increased still further by the news that the Americans were intending to renew grain sales to the USSR on the pretext that this would drain the USSR of hard currency — but transparently because it was in the interests of American farmers to sell their grain. The Administration was somewhat taken aback by the strength of opposition they faced and it was left to the excellent new Secretary of State, George Shultz, to find a way out of the difficulties, which he did later in the year, allowing the existing contracts for the pipeline to go ahead. But it had all been a lesson in how not to conduct alliance business.

THE VERSAILLES G7 SUMMIT

I like to think that my own relationship with President Reagan and the efforts I made to try to establish common ground between the United States and the Europeans helped to prevent disagreements over the pipeline and other trading issues from poisoning western co-operation at this critical juncture. Certainly, the summer of 1982 saw some useful international diplomacy. Between 4 and 6 June the heads of government of the G7 countries met amid the splendid opulence of Versailles. The rooms of the Palace itself were used for meetings and relaxation. There was a final banquet in the Hall of Mirrors followed by after-dinner entertainment of opera and fireworks. (In fact, I left early: it would not have been right to stay for all this while our troops were still fighting in the Falklands.)

President Mitterrand, who chaired the summit, had prepared a paper on the impact of new technology on employment. It quite often happened that the country in the chair at summit meetings felt that they must introduce some new initiatives even at the cost of extra government intervention and increased bureaucracy. This was no exception. For my part, I had no doubt about the attitude to take to technological innovation: it must be welcomed not resisted. There might be ‘new’ technology but technological progress itself was nothing new, and over the years it had not destroyed jobs but created them. Our task was not to make grand plans for technological innovation but rather to see how public opinion could be influenced in order to embrace not recoil from it. Fortunately, therefore, President Mitterrand’s paper was kicked into touch in the form of a working group.

I had a candid bilateral discussion with Helmut Schmidt while I was at Versailles about the European Community budget — to which West Germany and Britain seemed destined to remain net contributors — and about the CAP on which so much of our money was spent. This was a particularly sore point for me, because only a few weeks before Britain had been overridden in the Agriculture Council when we had sought to invoke the Luxemburg compromise against farm price rises. Helmut Schmidt said that he wanted to maintain the Luxemburg compromise, though he doubted whether it should be applied as we wished. But he added that the CAP was a price which had to be paid, however high, to persuade members like France and Italy to come into the Community from the beginning.

As it happened, this was Chancellor Schmidt’s last G7 summit. In September his governing coalition broke up when the liberal Free Democrats changed sides and put the Christian Democrat Leader, Helmut Kohl, in as Chancellor. Although I had had serious disagreements with him, I always had the highest regard for Helmut Schmidt’s wisdom, straightforwardness and grasp of international economics. Sadly, I never developed quite the same relationship with Chancellor Kohl, though it was some time before the implications of this became important.

But my most vivid recollection of the proceedings at Versailles is of the impression made by President Reagan. At one point he spoke for twenty minutes or so without notes, outlining his economic vision. His quiet but powerful words provided those who did not yet know him with some insight into the qualities which made him such a remarkable political leader. After he had finished, President Mitterrand acknowledged that no one would criticize President Reagan for being true to his beliefs. Given President Mitterrand’s socialist policies, that was almost a compliment.

From Paris President Reagan flew to London for an official visit where he addressed both Houses of Parliament in the Royal Gallery of the Palace of Westminster. The speech itself was a remarkable one. It marked a decisive stage in the battle of ideas which he and I wished to wage against socialism, above all the socialism of the Soviet Union. Both of us were convinced that strong defence was a necessary, but not sufficient, means of overcoming the communist threat. Instead of seeking merely to contain communism, which had been the West’s doctrine in the past, we wished to put freedom on the offensive. In his speech President Reagan proposed a worldwide campaign for democracy to support ‘the democratic revolution [which was] gathering new strength’. In retrospect, however, that speech had a larger significance. It marked a new direction in the West’s battle against communism. It was the manifesto of the Reagan doctrine — the very obverse of the Brezhnev doctrine — under which the West would not abandon those countries which had had communism forced upon them.

I remember the speech for another reason as well. I was full of admiration that he seemed to have delivered it without a single note.

‘I congratulate you on your actor’s memory,’ I said.

He replied, ‘I read the whole speech from those two perspex screens’ — referring to what we had taken to be some security device. ‘Don’t you know it? It’s a British invention.’ And so it was that I made my first acquaintance with Autocue.

THE BONN NATO SUMMIT, JUNE 1982

The NATO summit of heads of government in Bonn on 10 June was generally linked to the Versailles summit. At Versailles the G7 had demonstrated that with one or two exceptions, such as France, the major countries were committed to a return to sound economic policies. At Bonn the West was similarly able to demonstrate its commitment to strong defence.

Of course, all of us wanted both strong defence and successful negotiations with the Soviet Union to reduce the level of armaments. But there was a real question about which should come first. There continued to be a muted but important argument about the ‘dual track’ policy. Some countries hoped to be able to delay virtually indefinitely the implementation of the decision to deploy Cruise and Pershing missiles. For example, in the dying days of the Schmidt Government there were strong voices in Germany arguing that deployment would jeopardize the prospect of successful negotiations. By contrast, the Americans and we in Britain felt that a strong defence posture is an absolute prerequisite for any constructive relationship with the USSR and therefore deterrence is the condition for détente. Indeed, the original idea for the Bonn summit had come from us in Britain because we believed that it was vital to demonstrate the unity of purpose of NATO at this time. The result more or less fulfilled that intention.

But there continued to be Soviet pressure, supported by demonstrations by the so-called ‘peace movement’ and encouraged by the appeasement of the left-wing politicians in Europe right up to the moment when Cruise and Pershing were deployed. We were never able to rest our argument or relax our efforts.

HONG KONG AND CHINA

By the time I visited the Far East in September 1982 Britain’s standing in the world, and my own, had been transformed as a result of victory in the Falklands. But one issue on which this was, if anything, a drawback was in talking to the Chinese over Hong Kong. The Chinese leaders were out to demonstrate that the Falklands was no precedent for dealing with the Colony. I was well aware of that myself, both from the military and the legal viewpoints.

On the morning of Wednesday 22 September I and my party took off from Tokyo, where I had been visiting, for Peking. Fifteen years remained of the lease to Britain of the New Territories which constitute over 90 per cent of the land of the Colony of Hong Kong. The island of Hong Kong itself is British sovereign territory, but, like the rest of the Colony, dependent on the mainland for water and other supplies. The People’s Republic of China refused to recognize the Treaty of Nanking, signed in 1842, by which the island of Hong Kong had been acquired by Britain. Consequently, although my negotiating stance was founded on Britain’s sovereign claim to at least part of the territory of Hong Kong, I knew that I could not ultimately rely on this as a means of ensuring the future prosperity and security of the Colony. Our negotiating aim was to exchange sovereignty over the island of Hong Kong in return for continued British administration of the entire Colony well into the future. This I knew from my many consultations with politicians and business leaders of Hong Kong was the solution which would suit them best.

The immediate danger, which had already been illustrated by reaction in Hong Kong to the provisions of our Nationality Bill and to various remarks by the Chinese communists, was that financial confidence would evaporate and that money and in due course key personnel would flee the Colony, impoverishing and destabilizing it well before the lease of the New Territories came to an end. Moreover, it was necessary to act now if new investment was to be made, since investors would be looking some fifteen years or so ahead in judging what decisions to make.

I had visited Peking in April 1977 as Leader of the Opposition. The ‘Gang of Four’ had been deposed a few months before and Hua Guo Feng was Chairman. Deng Xiaoping, who had suffered so much during the Cultural Revolution, had been ousted by the ‘Gang of Four’ the previous year and was still in detention. But on the occasion of this, my first visit as Prime Minister — indeed the first visit of any British prime minister while still in office — Deng Xiaoping was indisputably in charge.

On the afternoon of Wednesday 22 September I had my first meeting which was with the Chinese Prime Minister, Zhao Ziyang — whose moderation and reasonableness proved to be a great handicap to him in his subsequent career. We had a discussion of the world scene in which, because of the Chinese hostility to Soviet hegemony, we found much to agree about. However, the Chinese Prime Minister and I were aware that the following morning’s meeting we were to have on Hong Kong would be a very different matter.

I began that meeting with a prepared statement setting out the British position. I said that Hong Kong was a unique example of successful Sino-British co-operation. I noted that the two main elements of the Chinese view concerned sovereignty and the continued prosperity of Hong Kong. Prosperity depended on confidence. If drastic changes in the administrative control of Hong Kong were to be introduced or even announced now there would certainly be a wholesale flight of capital. This was not something which Britain would prompt — far from it. But nor was it something we could prevent. A collapse of Hong Kong would be to the discredit of both our countries. Confidence and prosperity depended on British administration. If our two Governments could agree on arrangements for the future administration of Hong Kong; if those arrangements would work and command confidence among the people of the Colony; and if they satisfied the British Parliament — we would then consider the question of sovereignty.

I had hoped that this practical and realistic line of argument would prove persuasive. After all, China gained large amounts of foreign currency and investment by having a capitalist Hong Kong on her doorstep. Even at the height of the Cultural Revolution, though riots had been fomented in the Colony by the communists, the Red Guards had never been permitted to launch a full-scale attack on Hong Kong. I tried to persuade Mr Zhao that we should agree a fairly noncommittal joint public statement saying that our common objective was to maintain the prosperity of Hong Kong and that there would be early official talks between us about this.

However, it was quite clear from the Chinese Prime Minister’s opening remarks that they would not compromise on sovereignty and that they intended to recover their sovereignty over the whole of Hong Kong — the island as well as the New Territories — in 1997 and no later. The fundamental position underlying the Chinese position was that the people of Hong Kong were Chinese and not British. That said, Hong Kong could become a special administrative zone administered by local people with its existing economic and social system unchanged. The capitalist system in Hong Kong would remain, as would its free port and its function as an international financial centre. The Hong Kong dollar would continue to be used and to be convertible. In answer to my vigorous intervention about the loss of confidence which such a position, if announced, would bring, he said that if it came to a choice between sovereignty on the one hand and prosperity and stability on the other China would put sovereignty first. The meeting was courteous enough. But the Chinese refused to budge an inch.

I knew that the substance of what had been said would be conveyed to Deng Xiaoping whom I met the next day. Mr Deng was known as a realist. Indeed, it was he who effectively unlocked the way to a solution in Hong Kong. He had accepted that two different economic systems could exist in one country, a fact demonstrated by the setting up of special economic zones behind Hong Kong, within China itself. On this occasion, however, he was obdurate. He reiterated that the Chinese were not prepared to discuss sovereignty. He said that the decision that Hong Kong would return to Chinese sovereignty need not be announced now, but that in one or two years’ time the Chinese Government would formally announce their decision to recover it. I repeated that what I wanted was agreement in further talks that after 1997 British administration would continue with the same system of law, the same political system, and the same independent currency. If we could at a later stage reach such an agreement there would be a tremendous upsurge in confidence. I could then go to the British Parliament and have the whole question of sovereignty dealt with to China’s satisfaction.

But he was not to be persuaded. At one point he said that the Chinese could walk in and take Hong Kong later today if they wanted to. I retorted that they could indeed do so, I could not stop them. But this would bring about Hong Kong’s collapse. The world would then see what followed a change from British to Chinese rule.

For the first time he seemed taken aback: his mood became more accommodating. But he had still not grasped the essential point, going on to insist that the British should stop money leaving Hong Kong. I tried to explain that as soon as you stop money going out you effectively end the prospect of new money coming in. Investors lose all confidence and that would be the end of Hong Kong. It was becoming very clear to me that the Chinese had little understanding of the legal and political conditions for capitalism. They would need to be educated slowly and thoroughly in how it worked if they were to keep Hong Kong prosperous and stable. I also felt throughout these discussions that the Chinese, believing their own slogans about the evils of colonialism, just did not realize that we in Britain considered we had a moral duty to do our best to protect the free way of life of the people of Hong Kong.

For all the difficulties, however, the talks were not the damaging failure which they might have been. Although I failed to achieve my initial objective, I managed to get Deng Xiaoping to agree to a short statement which, while not pretending that we had reached agreement, announced the beginning of talks with the common aim of maintaining the stability and prosperity of Hong Kong. It was essential that something of the sort be said to bolster the fragile confidence back in Hong Kong. Neither the people of the colony nor I had secured all that we wanted, but I felt that we had at least laid the basis for reasonable negotiations. We each knew where the other stood.

The visit had been a full and tiring one. It was not all business, however, and there was time for a little sightseeing. While I was in China I had been able to visit the extraordinarily beautiful Summer Palace on the north-western outskirts of Peking, known in Chinese as the Garden of Peaceful Easy Life. I felt that this was a less than accurate description of my own visit to the Far East.

THE BERLIN WALL

The following month I visited another monument which, unlike the Summer Palace, has now crumbled into rubble and dust. After talks with Chancellor Helmut Kohl in Bonn, I flew to Berlin and gained my first sight of the Berlin Wall and of the grey, bleak and devastated land beyond it in which dogs prowled under the gaze of armed Russian guards. Chancellor Kohl accompanied me on this visit and, whatever difficulties would arise in the future, on matters like the evils of communism and commitment to our American allies we were as one. I suspect that the German press understood, as their comments later suggested, how powerfully moved I was by Berlin. The city was vibrant and exciting, larger than I had thought, surrounded by beautiful woods — yet uniquely scarred by the two totalitarian creeds of the twentieth century.

In my speech that afternoon — Friday 29 October — I said:

There are forces more powerful and pervasive than the apparatus of war. You may chain a man — but you cannot chain his mind. You may enslave him — but you will not conquer his spirit. In every decade since the war the Soviet leaders have been reminded that their pitiless ideology only survives because it is maintained by force. But the day comes when the anger and frustration of the people is so great that force cannot contain it. Then the edifice cracks: the mortar crumbles… one day, liberty will dawn on the other side of the wall.

My prophesy has been vindicated earlier than I could ever have expected.

CHAPTER X

The Downing Street Years, 1979-1990

Disarming the Left

Winning the arguments and formulating the policies for a second term — 1982–1983

THE POLITICAL SCENE, 1982–1983

It is no exaggeration to say that the outcome of the Falklands War transformed the British political scene. In fact, the Conservative Party had begun to recover its position in the opinion polls before the conflict, as people began to realize that economic recovery was underway. But the so-called ‘Falklands factor’, beloved of political commentators and psephologists, was real enough. I could feel the impact of the victory wherever I went. It is often said that elections are won and lost on the issue of the economy, and though there is some truth in this, it is plainly an oversimplification. In this case, without any prompting from us, people saw the connection between the resolution we had shown in economic policy and that demonstrated in the handling of the Falklands crisis. Reversing our economic decline was one part of the task of restoring Britain’s reputation; demonstrating that we were not the sort of people to bow before dictators was another. As I emerged from the strain of the period in which the Falklands dominated almost every moment, I found that people were starting to appreciate what had been achieved during the last three years. I drew attention in my speeches to the record and to the fact that none of it would have happened if we had followed the policies pressed upon us by the Opposition.

The Opposition itself was divided between Labour and the new ‘Alliance’ of the Liberal and Social Democratic parties. Though we were not to know it at the time, Alliance support had peaked and it would never be able to recapture the heady atmosphere of late 1981 when it had led in the opinion polls and its supporters had claimed they had truly ‘broken the mould’ of British two-party politics. In fact, of course, the one thing you never get from parties which deliberately seek the middle way between left and right is new ideas and radical initiatives. We were the mould-breakers, they the mould. The SDP and Liberals hankered after all the failed policies of the past — incomes policies, reflation by fiscal boosts to demand, shifting more power to a European bureaucracy and away from genuinely democratic national governments. The SDP’s instincts on defence were sound — as opposed to the Liberals, perpetually tempted by unilateralism — and they were contemptuous of Marxist dogma. But I always felt — and still do — that the leaders of the SDP would have done better to stay in the Labour Party and drive out the far Left. The risk was that by abandoning the Labour Party to its militant wing, while attracting support away from us, they might actually let into power the very people they were seeking to keep out.

As for Labour, the Party continued an apparently inexorable leftward shift. Michael Foot is a highly principled and cultivated man, invariably courteous in our dealings. If I did not think it would offend him, I would say he was a gentleman. In debate and on the platform he has a kind of genius. But the policies he espoused, including unilateral disarmament, withdrawal from the European Community, sweeping nationalization of industry and much greater powers for trade unions, were not only catastrophically unsuitable for Britain: they also constituted an umbrella beneath which sinister revolutionaries, intent on destroying the institutions of the state and the values of society, were able to shelter. The more the general public learned of Labour’s policies and personnel the less they liked them. I was not among those many Conservatives at the time who thought that Labour would be displaced by the Alliance. Socialism represents an enduring temptation: no one should underestimate Labour’s potential appeal. But there was no doubt that in the extreme form adopted under Michael Foot’s leadership it was easier to beat.

The opinion polls and by-election results confirmed what my own instincts told me — that the Falklands had strengthened our standing in the country. On the eve of the war we had already moved just ahead of the Alliance parties in the polls. Between April and May our support rose ten percentage points to 41.5 per cent, well ahead of all the other parties. It rose again in the wake of the recapture of the islands and then fell back a little during the second half of the year. However, on only one occasion between then and the election did it dip below 40 per cent. I never took much notice of what the polls said about me personally. Too much concentration on this sort of thing can be a distraction. But it was also true that my own standing in the polls had gone up substantially.

The ‘Falklands factor’ certainly punctured the Alliance: together with mounting optimism about the economic prospect, it helped us win back those Conservative supporters who had defected to what seemed a more comfortable, moderate option. Nor was there any joy in the polls for poor Michael Foot, whether one looked at Labour support as a whole, or his personal standing as leader.

However, by-election results in the last part of the Parliament confirmed that in some constituencies there was a real danger of the Alliance splitting the centre-right vote and letting Labour in. A good Alliance result always risked setting off the bandwaggon which its friends in the media longed to see rolling. In March 1982 Roy Jenkins had won a stunning victory over us in Glasgow Hillhead. Only two months later we held our vote — and the seat — in Beaconsfield and in June we actually gained Mitcham and Morden from a defector to the SDP. Yet on 28 October there were by-elections in Peckham and Birmingham (Northfield) in both of which the Conservative vote was badly squeezed by the Alliance. As a result, we lost the Birmingham seat to Labour. The risks were evident, though looking at the figures in detail, the news was not all good for Labour: we knew that they would have to do a great deal better to stand any chance of winning a general election.

The last two by-elections of the Parliament were at Bermondsey in February 1983, where a far-left Labour candidate was routed by the Liberals, and Darlington in March which was held by Labour. We did not do well, but neither of these by-elections really harmed us. Labour was the main competitor in London, so Bermondsey was not likely to do us much damage. And although Labour won at Darlington, they did not do well enough to threaten our position nationally. The commentators loved to speculate, but no one knew how much tactical voting there would be against us in a general election — that is, how many people would vote for the candidates who seemed best placed to beat those standing for the Government, rather than for their preferred party. In fact, this sort of behaviour occurs much more rarely than predicted.

I always took a close interest in by-elections. I was regularly briefed by the Party Chairman about the issues and tactics, and I also received a detailed statistical breakdown from Keith Britto, our resident psephological genius at Central Office, on swings and their implications. I myself never took part in by-election campaigns in case I caused the Government to run unacceptable political risks in the event of a bad result: and results usually are bad when you are in power, especially in mid-term when many people wish to register a protest, safe in the knowledge that the result will not bring about a change of government. But I always sent public messages of support to our candidates and spoke privately to them afterwards to congratulate or — more usually — to console.

DEFENCE AND UNILATERALISM

Inevitably, defence was the political issue on which the Falklands War had the greatest bearing. During the Falklands campaign itself the nuclear issue was almost entirely edged out of public debate, though my speech at the UN Special Session on disarmament in June 1982 was an attempt to show how the same fundamental principles underlay the whole of defence policy.[40] However, in the autumn of that year, I began to be more concerned about the presentation of our nuclear strategy. I was anxious that the unilateral disarmers were still making the running on nuclear issues. Although public opinion was with us on the principle of the nuclear deterrent and opposed to unilateralism, there was a good deal of opposition to Trident II, mainly on grounds of cost, and to the stationing of Cruise missiles. Underlying both was a disagreeable streak of anti-Americanism. Accordingly, on 20 October and 24 November I chaired meetings of the Liaison Committee of Ministers and Central Office officials to explore the facts and refine the arguments.

Unilateralism became the official policy of the Labour Party at the 1982 Party Conference, when the necessary two-thirds majority was secured. Michael Foot personally had long been committed to the unilateralist position. It had an appeal in the universities and among some intellectuals and received a good deal of covert support from those in the media, especially the BBC. Labour councils had adopted the gimmick of declaring their areas ‘nuclear free zones’. Although the Campaign for Nuclear Disarmament (CND) had begun to lose support from the high point it had reached in 1981, it remained dangerously strong.

Of the two specific aspects of nuclear policy at the centre of debate — the independent deterrent and the stationing of medium-range nuclear missiles — it was the second which was the more controversial. Cruise missiles would have to be deployed sometime in 1983 and we could expect a major campaign to prevent this.

Ultimate control of Cruise missiles was the most tricky issue. The decision to modernize medium-range nuclear missiles in Europe, it will be recalled, had been made under pressure from the Europeans, particularly the Germans, anxious to prevent any ‘decoupling’ of the American and European wings of NATO. The Americans had developed and paid for the missiles, and therefore owned them, massively reducing the cost to European governments. There was a strong feeling in the US Congress that any US-owned missiles should be subject to US control. However, American ownership obviously carried implications if it ever came to decisions about use.

In Britain, distrust of the United States surfaced on the question of whether there should be a ‘dual key’ — that is whether there should be a technical arrangement to ensure that the US could not fire these weapons without the consent of the British Government. That would go beyond the existing agreement that the US would not use nuclear weapons based in Britain without an Anglo-American ‘joint decision’.

The United States had offered us the possibility of dual key right at the start, but to exercise that option we would have had to buy the weapons ourselves, which would have been hugely expensive. John Nott, before he left his post as Defence Secretary, had been attracted by the dual key option. But neither Michael Heseltine, his successor, nor I shared his view. The UK had never exercised physical control over systems owned and manned by the US. It was in my view neither fair nor necessary to ask the US to break with that precedent now. Also the more the Soviets were told about how and in what conditions Cruise missiles would be fired, the less credible they would be as a deterrent. The Soviets might be persuaded — and for the purposes of deterrence it did not matter whether they were right or wrong — that at the last moment a British Government might not agree to their use. Finally, the use of a dual key in the United Kingdom would have raised the whole question of arrangements elsewhere in Europe. In West Germany both government and public opinion would, as I have noted, only agree to deploying Cruise and Pershing II missiles if there was no German finger on the trigger.

So for all these reasons I satisfied myself through discussions with Washington that the position in reality was satisfactory from the point of view of British security and defence, and on 1 May 1983 I cleared personally with President Reagan the precise formula we should use to describe it. But I knew that it would be difficult to defend our line: not only anti-nuclear protesters but a sizeable number of our own supporters in and out of Parliament had their doubts. Moreover, most of the newspapers were opposed to us on the question of dual key.

The timing of deployment was bound to be a sensitive matter, especially with an election campaign ahead. We were anxious to avoid very visible signs of deployment in the run-up to or during the 1983 general election campaign, with demonstrations stretching police resources. Until almost the last moment we had been planning an autumn election. But as events happened we had an election in June, so this was not the problem which it might have been. (The launchers and warheads duly arrived in November.)

Elsewhere in Europe the situation was still more difficult. There was already a good deal of public criticism in Germany and Italy of NATO’s offer of the zero-option, which was widely felt to be unrealistic. And the Soviets were mounting a major public relations campaign.

It was crucial that NATO’s policy on arms control be well presented and that the alliance should stick together. On Wednesday 9 February I had a meeting at Downing Street with George Bush to discuss these matters. The Vice-President had a special remit from President Reagan to keep in touch with European governments and he did this with great skill. He was always very well briefed and had a friendly, straightforward manner, the proof that this reflected personality rather than artifice being that his staff were well known to be devoted to him. I now urged the Vice-President that the American Administration should take a new initiative in the INF negotiations. The aim should be to seek an interim agreement whereby limited reductions on the Soviet side would be balanced by reduced deployments on the part of the United States, without abandoning the zero-option as our ultimate goal — that is the complete elimination of intermediate-range nuclear weapons.

Mr Bush reported my views back to President Reagan who replied in a message to me on Wednesday 16 February. The President was at this stage somewhat noncommittal about a new initiative but said that he would be willing to consider seriously any reasonable alternative idea for producing the same result as the zero-option. This did not seem to me to be sufficient. I replied two days later on the hot-line. I stressed the success of Vice-President Bush’s visit to Europe, but pointed out that one of its effects had been to raise expectations. I hoped that the speech which President Reagan was due to make shortly on these matters would go beyond a restatement of the US position and begin to indicate how it might be developed. As things turned out, the President’s statement contained nothing new. So I continued the private pressure for further movement, while remaining in public totally supportive of the American position.

Then on Monday 14 March President Reagan sent me another message. He said that he had directed that a prompt review of the US position on INF negotiations should be made as a basis for new instructions to the US arms negotiating team. In the meantime, he asked that there should be no European calls for US flexibility and specifically asked me to express confidence in the very close coordination of our policies. I replied warmly welcoming his decision. On Wednesday 23 March the President told me the results of his review. While sticking to the ultimate objective of the zero-option, the chief US negotiator, Paul Nitze, would tell the Soviets at Geneva before the end of the current round of negotiations that the US was indeed prepared to negotiate an interim agreement. The Americans would stop deployment of a (still to be specified) number of warheads, on condition that the USSR reduced the number of warheads on its mobile long-range INF missiles to one equal with the US on a global basis. The President said that it was his tentative judgement that they should not offer specific numbers at this time. Again, I welcomed his decision, but argued that he should consider giving specific figures. In fact the President’s proposal announced on 30 March did not do so. But his modest flexibility did have a beneficial effect on public opinion and incidentally helped us in Britain fighting the general election campaign soon be upon us.

ECONOMIC RECOVERY

In that election campaign, defence would be of great political importance. Yet I had no doubt that the result would ultimately depend on the economy. Our economic course had already been set in the 1981 budget. We now had to see the strategy through. It was a remarkable testament to the soundness of public finances by this stage that we managed to pay for the Falklands War out of the Contingency Reserve without a penny of extra taxation and with barely a tremor in the financial markets. The economy was already beginning to recover and would have done so more rapidly but for sluggish world conditions. Geoffrey Howe’s 1982 budget was designed to encourage that recovery by helping business, while keeping inflation and interest rates coming down by reducing government borrowing. The principal measure of direct assistance to industry in the 1982 budget was a reduction in the National Insurance Surcharge. We were able to make further reductions at the time of the 1982 Autumn Statement and again in the 1983 budget. These made a direct contribution to cutting industry’s wage-related costs and helped to increase employment.

Another means of strengthening industry without becoming involved in the futile task of ‘picking winners’ was to promote the application of the new ‘information technology’ (IT). This was something in which I took a particularly close interest. As a scientist, I was fascinated by the technology itself; as a passionate advocate of free enterprise capitalism I was convinced that, given the right framework of laws and an appropriately educated workforce, it could widen choice, generate wealth and jobs and improve the quality of people’s lives. Both Keith Joseph at Education and Ken Baker at Industry felt as I did. We designated 1982 Information Technology Year and we all made special efforts to widen understanding of what IT could do for business. Of course, it was the young people who found it easiest to learn the new skills and one of our most valuable and appreciated initiatives was to put a desk-top computer in every secondary school.

By now the question we were being asked was not whether economic recovery would come but rather how fast and how sustainable it would be, and also when unemployment would begin to fall. Since the whole basis of our approach to economic policy was that politicians and civil servants do not know all the answers, I never felt tempted to pick figures out of the air. But I did my best to encourage confidence because as long as the fundamentals — the public finances, monetary policy, tax levels and so on — are sound, confidence itself leads to higher investment and higher consumer spending and so helps recovery. For example, on Tuesday 19 April 1983 I addressed the CBI annual dinner at the London Hilton. We were only weeks away from the election, though neither the audience — nor even the guest speaker — knew it. I reminded them that when I had last been their guest two years earlier there was plenty to worry about in the state of the economy:

Indeed, we had just read an open letter which predicted doom and gloom indefinitely unless we changed our policies. It was signed by no fewer than 364 economists — enough… to provide me with bad advice for every day of the year except All Fools’ Day.

Since then, however, cuts in the NIS had put £2 billion a year back into the hands of private companies. Personal tax had also been cut by raising thresholds faster than inflation. Interest rates were seven percentage points below their peak, saving industry about another £2 billion. The exchange rate had fallen from a high point of $2.45 in October 1980 to $1.54 now. This was providing a boost for exporters. Industrial output, housing starts, and car sales were all up. There was plenty of evidence of recovery — above all, one that was soundly based.

The money supply and government borrowing had been brought under control. Public spending was at last expected to begin falling as a share of GDP, if only slightly, now that the economy was growing again. Our overseas debts had been virtually halved. Productivity in industry was greatly improved. Most dramatically, inflation had fallen from 20 to 4 per cent — its lowest level for 13 years. Success against inflation was the single achievement to which we drew most attention as we approached the election, not least because Labour looked set to promise huge increases in spending and borrowing which could never be honestly financed and which would have sent prices soaring again. The black spot in the record was, of course, unemployment, which was still well over three million. It would be vital in the campaign to explain why this was so and what we were doing about it. Our ability to deal with this issue successfully would be a test not only of our eloquence and credibility but also of the maturity and understanding of the British electorate.

TRADE UNIONS

Unlike some of my colleagues, I never ceased to believe that, other things being equal, the level of unemployment was related to the extent of trade union power. The unions had priced many of their members out of jobs by demanding excessive wages for insufficient output, so making British goods uncompetitive. So both Norman Tebbit, my new Secretary of State for Employment, and I were impatient to press ahead with further reforms in trade union law, which we knew to be necessary and popular, not least among trade unionists.

Norman wasted no time. Towards the end of October 1981 he sought Cabinet agreement for what was to become the Employment Act, 1982. There were to be six main areas covered.

We would raise substantially the levels of compensation for those unfairly dismissed in a closed shop.

In existing closed shops there would be periodic ballots to test support among employees for their continuation.

We would make unlawful what were called ‘union labour only’ requirements in contracts, which discriminated against companies not operating a closed shop.

Henceforth, employers would be able to dismiss those taking part in a strike or other industrial action without having to run the risk of claims for unfair dismissal, provided that all of those taking part in the strike were dismissed.

The definition of a lawful trade dispute was to be further restricted in a number of ways, closing loopholes in Jim Prior’s legislation to limit immunities in case of secondary action.

By far the most important of Norman’s proposals related to the immunity currently extended to trade union funds. By virtue of Section 14 of Labour’s Trade Union and Labour Relations Act, 1974, trade unions enjoyed virtually unlimited immunity from actions for damages, even if industrial action was not taken in contemplation or furtherance of a trade dispute. They could not be sued for their unlawful acts or for unlawful acts done on their behalf by their officials. This breadth of immunity was quite indefensible. As long as unions were able to shelter behind it they had no incentive to ensure that industrial action was restricted to legitimate trade disputes and that it was lawful in other ways. Norman therefore proposed that this immunity should be reduced to that enjoyed by individuals under our 1980 legislation.[41] Both of these immunities would be restricted further by our proposals on ‘union labour only’ requirements and changes to tighten the definition of a trade dispute, which removed the immunity for disputes not mainly about pay and conditions and for disputes between trade unions.

The unions were bound to put up fierce opposition to moves which would expose them to contempt proceedings and payment of damages. Undoubtedly, they would claim that we were seeking to prevent their defending their members’ interests. So it was vital for us to explain the fairness of our proposals, and to emphasize that trade unions would only be at risk if they acted in ways which were unlawful for everybody else. We believed that the general public would see this as reasonable. We proposed also to set limits on the damages which could be awarded against a trade union, though of course there would be no limit on the fines which a court could impose for contempt — a most important qualification.

There was at first some opposition in Cabinet to Norman’s proposals, not all of which came from predictable quarters. But most of us were full of admiration for his boldness. He went away to consider some of the points made in discussion, but the package agreed by Cabinet in November was more or less on the lines he wanted. Norman announced our intentions to the House of Commons later that month. The bill was introduced the following February and the act’s main provisions finally came into force on 1 December 1982.

Far from being unpopular, these proposals were soon being criticized in some quarters on the grounds that they did not go far enough. The SDP were trying to out-flank us by urging greater use of mandatory secret ballots. Many of our own supporters wanted to see action to stop the abuses connected with the ‘political levy’, a substantial sum extracted from trade unionists largely for the benefit of the Labour Party. There was continuing pressure to do something to prevent strikes in essential services — pressure which always increased when there was a threat of public sector strikes, as happened frequently during 1982. But it would not have been practical to deal with all of these issues at once in a single bill: each raised complicated questions and we could not afford to make mistakes in this vital area. I was convinced that the giant step being taken by Norman on the immunity of trade union funds was sufficient for the moment. I was glad, however, that the atmosphere had changed and that the dangers of trade union power were now so much more widely understood. We were winning that battle too.

Norman and I had further discussions in the summer of 1982. In September he came forward with a paper containing his thoughts for new industrial relations legislation which would be formally submitted to ‘E’ Committee, with a view to inclusion in the manifesto. Norman had already announced that we would undertake consultations with interested parties on legislation that would require trade unions to use secret ballots for the election of their leaders. There was strong support in both Houses for mandatory secret ballots before industrial action. But we were divided on this.

Ministers now discussed what should be the priorities for the forthcoming consultative green paper. We agreed to concentrate on ballots for the election of trade union leaders, mandatory strike ballots, and the political levy. Norman had reservations about the use of compulsory ballots before strikes. We had previously concluded that these should be voluntary. Moreover, there were doubts whether or not the use of ballots would actually reduce the frequency and length of strikes. But I was very aware of the great advantages of linking trade union reform to the unassailable principle of democracy, and I was keen to see that the proposals on strike ballots were expressed in a positive way in the green paper.

We published the green paper under the title Democracy in Trade Unions, in January 1983. Ministers discussed in April where we should go from there. We had no difficulty deciding in favour of proposals relating to trade union elections and strike ballots. Two other issues proved much more difficult: the prevention of strikes in essential services and the political levy.

Public sector strikes and consequent disruption to the lives of the general public had been a feature of life in post-war Britain. Nineteen eighty-two was a particularly difficult year. There were two rail disputes. There was also a long and distressing strike in the National Health Service over pay, which began when ancillary workers took action in May and ended in mid-December. And industrial action in the water industry intensified interest in the whole question of how to deal with the disruption of essential services. But the practical difficulties of tackling the problem were immense. How should one define an ‘essential service’? How much would it cost the taxpayer in extra pay to secure ‘no strike’ agreements? What should be the penalty for failure to observe a ‘no strike’ agreement?

The political levy was a second difficult subject. It was paid by trade unionists into political funds held by their unions, the principal use of which was, as I have noted, in fact to support the Labour Party. Payment was on the basis of ‘contracting out’: that is, trade unionists contributed automatically unless they specified otherwise. On the face of it, it would have been fairer to base the system on a principle of ‘contracting in’ and some argued for the change. But ‘contracting in’ would have wreaked havoc with the Labour Party’s finances because of its heavy dependence on the unions. Had we introduced such a measure, there would undoubtedly have been pressure to change the system by which some companies donated to political parties, from which, of course, the Conservative Party heavily benefited. I never believed that the cases were parallel: after all, trade unionists in a closed shop could find it very difficult to avoid paying the political levy, especially when the employer had an agreement with the union to just ‘check off’ the levy from the employee. By contrast, shareholders who did not approve of company donations to a political party could either hold the Board to account for their decisions or simply sell their shares. But the funding of political parties was a sensitive topic. If we brought forward radical proposals on the eve of a general election, we would be accused both of attempting to crush the Labour Party financially and of unfairness on the matter of corporate donations.

On Tuesday 10 May I held a meeting of ministers at which we decided our manifesto commitment. On essential services, the introduction of strike ballots would clearly help reduce the risk of strikes in these areas. But we would also consult further about the need for industrial relations in specified essential services to be governed by adequate procedure agreements, breach of which would deprive industrial action of immunity. On the question of the political levy, we had evidence from the consultations on the green paper that there was widespread disquiet about the operation of the system and we proposed to consult with the TUC to see what action they were prepared to take, failing which we would act ourselves. These were matters to which we would have to return after the election. But we had made substantial progress in reducing the overbearing power of trade unions — much more than the fainthearted had ever believed possible. And far from proving a political incubus it was one of our strongest appeals to the voters.

POLICY WORK

For all sorts of reasons it is much easier to prepare for an election when you are in government than in Opposition. You have more information available about forthcoming events and more power to shape them. But parties in government have disadvantages as well, and you face two risks in particular. First, ministers can get out of the habit of thinking politically and become cocooned in their departments. Having to face, as I did, rigorous cross-questioning from an often hostile House of Commons twice a week, there was little danger that I, personally, would succumb to this: but others might. The second risk is that having implemented its manifesto, a government may run out of ideas. It is part of the job of ministers to see that this does not happen in their own areas of responsibility, and the job of the prime minister to prevent it happening to the government as a whole.

One of the main obstacles to the kind of forward thinking which all governments should do is the unauthorized disclosure of information by disaffected ministers or civil servants. A particularly serious problem arose in the last half of the 1979–83 Parliament. In March 1982 Geoffrey Howe asked officials to undertake an examination of long-term public expenditure up to and including 1990 and its implications for levels of taxation: their report was presented to me on 28 July. Spending ministers were inclined to think that this was just another exercise to soften them up for cuts in public expenditure. But in fact it was intended to get us all to examine how the long-term momentum for the expansion of the state and public spending might be curbed and reversed. As it turned out the paper was excessively gloomy and its most likely scenario underestimated very substantially the economic growth rate for the 1980s. To make matters worse, the CPRS prepared its own paper to accompany the Treasury paper, which contained a number of very radical options that had never been seriously considered by ministers or by me. These included, for example, sweeping changes in the financing of the National Health Service and extensions of the use of charging. I was horrified by this paper. As soon as I saw it, I pointed out that it would almost certainly be leaked and give a totally false impression. That is exactly what happened.

When the papers were discussed at Cabinet in early September, they made no great impact on our thinking. Our main conclusions could have been reached without any such exercise: that there should be no major new expenditure commitments pending further consideration, and that we should generally examine the scope for changing policies in ways which would bring public spending under proper control. My separate meetings with Keith Joseph on education and Norman Fowler on Health and Social Security confirmed that neither of them felt in any way attracted to the particular proposals which had been put forward, many of which were neither desirable nor practicable. But that failed to stop the media frenzy. A fairly full account of the CPRS paper duly appeared in the Economist. The Observer developed the story. The Economist later gave a blow-by-blow account of discussions at Cabinet. The Observer and then The Times revealed still more information. Of course, the Opposition had a field day. We were to be plagued by talk of secret proposals and hidden manifestos up to polling day and beyond. It was all the greatest nonsense.

There were two lessons from this incident which I never forgot. The first was that we had political opponents about us who would stop at nothing to distort and thereby prevent our forward thinking on policy. The second lesson was of equal importance: it was unacceptable for highly controversial proposals to come before Cabinet without the prior knowledge and approval of the ministers responsible. This raised acutely what role there could be for the CPRS.

In earlier days, the CPRS had been a valuable source of sound long-range analysis and practical advice. But it had become a freelance ‘Ministry of Bright Ideas’, some of which were sound, some not, many remote from the Government’s philosophy. Moreover, as I have noted earlier, a government with a clear sense of direction does not need advice from first principles. Now, as this incident had shown, the CPRS could become a positive embarrassment. That was why, shortly after the election, I was to dissolve the ‘Think-Tank’, and ask two of its members to join the in-house Policy Unit which worked more closely with me.

Ferdy Mount was now head of my Policy Unit. I had long been a great admirer of Ferdy’s witty and thoughtful articles even when, as over the Falklands, I did not agree with his views; and I was delighted when in April 1982 he agreed to succeed John Hoskyns. Ferdy was particularly interested in all that goes under the heading of social policy — education, criminal justice, housing, the family and so on, to which, in the wake of the 1981 urban riots, I was increasingly turning my attention. In late May he prepared for me a paper which contained the outline of an approach to ‘renewing the values of society’:

This Government came to power asserting that it is the exercise of responsibility which teaches self-discipline. But in the early stages of life it is the experience of authority, when exerted fairly and consistently by adults, which teaches young people how to exercise responsibility themselves. We have to learn to take orders before we learn how to give them. This two-way relationship between obedience and responsibility is what makes a free, self-governing society. And in the breakdown of that relationship we can trace the origins of so much that has gone wrong with Britain.

If we can rebuild this relationship, we might begin to restore also respect for law and order, respect for property, and respect for teachers and parents. But the rebuilding itself has to be a two-way business. On the one hand, we need to restore effective authority to teachers and parents. On the other hand, we need to offer young people a taste of responsibility and a useful role in society.

At this stage it was the themes rather than the particular measures which needed to be worked out, and Ferdy and I discussed what these should be. In education, for example, we wanted to increase parent power, widen the variety within the state sector and see whether we could come up with workable proposals for education vouchers. We were concerned about the lack of knowledge displayed by many children about our country and society, and our history and culture. Of course, these and other topics — like all the really great issues — were never going to be amenable to instant action. But both Ferdy and I were convinced that at the heart of the Conservative mission is something more than economics — however important economics might be: there is a commitment to strengthen, or at least not undermine, the traditional virtues which enable people to live fulfilling lives without being a threat or a burden to others. This was the beginning of many of the themes and ideas which would dominate my third term of office.

Indeed, as early as June 1982 I set up an ad hoc group of ministers to see how this ambitious programme could be developed, comprising Keith Joseph, Willie Whitelaw, Geoffrey Howe, Norman Tebbit, Michael Heseltine, Norman Fowler and Neil Macfarlane (as Sports minister). I invited Janet Young to join us in October. The group was officially — though rather misleadingly — known as the Family Policy Group’; the first meeting was held in July 1982 and detailed work was now commissioned. All sorts of questions came within its remit, including the reform of the taxation of husband and wife, education vouchers, reducing crime and the widening of home ownership through increased discounts for the sale of council houses.

It is never easy to make the transition from policy-making in government to writing a party manifesto. In 1982 I used a special exercise to ease the problem. In September I wrote to Cabinet ministers requesting them to prepare a ‘Five-Year Forward Look’ for their departments. These papers were to summarize what had been achieved, what was under way and what still needed to be done. I received most of these papers just before Christmas and looked through them over the holiday. As someone once said of British Rail food, there was a considerable variation in quality. Relatively little new could be said on Treasury matters because the strategy was clear and the real test was to follow through the policies we already had. Similarly, as regards the Health Service the main priority at that stage was to defend our record and explain what had been achieved, rather than embark on politically difficult new initiatives.

By contrast, in both housing and local government there was more room for new thinking. The ‘Right to Buy’ had proved a huge success, but the wider we could extend home ownership in this way the more difficult it would be for Labour to oppose it. In employment, we were preparing for the introduction of the Youth Training Scheme and discussing the next step in trade union reform which would eventually result in the 1984 Employment Act.

In education, Keith Joseph had begun what would be a long process of reform. Falling school rolls had allowed us to increase to record levels public spending per pupil and to achieve the best ever pupil-teacher ratios. But extra resources only permit improved standards: they do not ensure them. So Keith was pressing for changes in teacher training. He was issuing new guidelines for the school curriculum. Keith and I were also anxious to do something more to increase parents’ power to choose by seriously investigating the possibilities of vouchers or at least a combination of ‘open enrolment’ and ‘per capita funding’, that is a kind of voucher applying just to the state sector.

There was a new momentum for fresh thinking at No. 10 and ministers had taken stock of their policies. By the end of 1982, although I was still not expecting an early general election, I felt that the Government was moving, as it should, into the run-up for the next campaign. There were plenty of possibilities for mishap, but our general political position was strong and the economic prospect was improving. Indeed, well before the end of the year I had authorized the setting-up of party policy groups to consider these and other proposals for the manifesto. Speculation about the date of the election soon began.

CHAPTER XI

The Downing Street Years, 1979-1990

Home and Dry

The background to and course of the 1983 general election campaign

THE MANIFESTO

The central importance of the manifesto in British general elections often strikes foreign observers as slightly odd. Party manifestos in Britain have acquired greater and greater significance over the years and have become increasingly detailed. In the United States and continental Europe, party ‘platforms’ have less authority and as a result they are not nearly as closely studied. Even in Britain it is only relatively recently that manifestos have been so full of detailed proposals.

The first Conservative manifesto was Sir Robert Peel’s 1835 address to his electors in Tamworth. The ‘Tamworth manifesto’, for all the obvious differences, has one basic similarity with the Conservative manifesto today: it was then and is now very much the party leader’s own statement of policies.

I was never encumbered with the ramshackle apparatus of committees and party rules which makes the drafting and approval of Labour’s manifesto such a nightmare. However, the party leader cannot dictate to senior colleagues: the rest of the government and parliamentary party need to feel committed to the manifesto’s proposals and consequently there has to be a good deal of consultation. I discussed the question with Cecil Parkinson and we agreed that Geoffrey Howe was the right person to oversee the manifesto-making process. There has never been a more devout believer in the virtues of consultation than Geoffrey. It had been necessary to exclude the Treasury from the Falklands War Cabinet and naturally he welcomed this chance to widen his role. As Chancellor of the Exchequer he had the seniority and experience to supervise the required policy work. Looking back, this arrangement was successful in one of its aims — that of reducing the burden on me — but, as we shall see, it turned out to have significant drawbacks. In 1987 I decided to oversee the preparation of the manifesto myself.

The whole process began almost a year before the election. On Saturday 19 June 1982 I approved the setting up of party policy groups with the remit of identifying ‘tasks for Conservative administration during the rest of this decade; to make proposals for action where possible; where not possible, to identify subjects for further study’. Eleven such groups were originally envisaged, though in fact two were never set up: we dropped the idea of a group on ‘constitutional reform’ because I felt that there was really nothing of note to say on that subject, and the terms of reference on ‘the extension of choice’ turned out to be too vague. (This was a theme better dealt with in detail by the other groups.) The nine we did set up covered unemployment, enterprise, family and women’s affairs, education, the cities and law and order, the poverty trap, the European Community, nationalized industries and urban transport. We decided that the chairman of each group should be a parliamentarian — an MP or peer — who would help to select members for their group from among the Conservative-minded in the worlds of business, academe, voluntary service and local government. To keep the Government informed, special advisers to the relevant Cabinet ministers would sit in on the meetings. (Special advisers are political appointees, and so free from the constraints of political neutrality which prevent the use of civil servants in such roles.) Secretarial and research work was done by members of the Conservative Research Department.

Essentially, the policy groups had two purposes. The first and more important was to involve the Party as a whole in our thinking for the future. In this I believe they were successful. The second was to come up with fresh ideas for the manifesto, and unfortunately in this purpose they failed. For one reason or another it took too long to find appropriate chairmen and the right balance of group members. It was not until October or November 1982 that the groups actually got down to work — originally, optimistically, we had thought that they might get started in July. The groups were due to report only at the end of March 1983, but by then of course we in government were all well advanced on our own policy work. Another problem is the human vanity of wanting to demonstrate that you are on the inside track. All too often their proposals trickled out through the press. Indeed, The Times published a detailed account of the report from the Education Policy Group.

The fact is that the really bold proposals in any manifesto can only be developed over a considerable period of time. Relying on bright ideas thought out at the last moment risks a manifesto that would be incoherent and impossible to carry out. So, in the end, the real work for the 1983 manifesto had to be done in No. 10 and by ministers in departments.

As head of my Policy Unit at No. 10, Ferdy Mount was ideally placed for manifesto drafting, and uniquely gifted for it too. He was able to see how ministers were thinking from the ‘Forward Look’ papers I received at the end of 1982. The next step was taken in February 1983, when Geoffrey Howe wrote to Cabinet colleagues, asking them to send him their suggestions for the manifesto not later than April. Their submissions would then be accepted, sharpened up or rejected by a smaller group of ministers and advisers directly responsible to me. The Treasury would keep a weather eye on the cost of proposals — another advantage of Geoffrey’s close involvement — with the result that we were able to say during the election that all of our proposals had been taken into account in the latest Public Expenditure White Paper. Since we expected the contrast between Tory prudence and Labour profligacy to be a central issue in the campaign, this made political as well as economic sense.

Ferdy, Geoffrey Howe, and Geoffrey’s special adviser, Adam Ridley, worked intensively together on Ferdy’s first draft during March and early April. Subsequently, they were joined by Cecil Parkinson, Keith Joseph, Norman Tebbit, David Howell and Peter Cropper (the director of the Conservative Research Department), over the weekend of 9–10 April at which departmental submissions were fully considered. By the end of April we had a fairly complete draft, on which I worked with Geoffrey, Cecil, Ferdy and Adam at Chequers on Sunday 24 April. Shortly afterwards, the Party’s Advisory Committee on Policy met under Keith Joseph’s chairmanship to give it the Party’s final seal of approval: interestingly, in the light of later events, the main criticism came from the two representatives of the ’22 Committee who thought that we were not doing enough to reform the rates. On Wednesday 4 May chapters of the draft manifesto were sent for checking and agreement to individual ministers. A few final changes were made later still at my last pre-election strategy meeting at Chequers the following Sunday, after which it was at last ready to go to the printers. It was finally submitted in proof to an unofficial meeting of Cabinet.

The most important pledges in the manifesto fell into three groups. First, we promised to accelerate privatization, which was fundamental to our whole economic approach. If elected, we committed ourselves to sell British Telecom, British Airways, substantial parts of British Steel, British Shipbuilders, British Leyland and as many as possible of Britain’s airports. The offshore oil interests of British Gas would also be privatized and private capital would be introduced into the National Bus Company. This was an ambitious programme — far more extensive than we had thought would ever be possible when we came into office only four years before.

The second important group of pledges concerned trade union reform. Building on the consultations on our Trade Union Democracy Green Paper, we promised legislation to require ballots for the election of trade union governing bodies and ballots before strikes, failing which unions would lose their immunities. As I have noted, there was also a cautious pledge to consider legislation on the trade union political levy and on strikes in essential services. The caution was justified: we legislated on the former. At a time when Labour was promising to repeal our earlier trade union reforms, we were moving ahead with new ones: the contrast was stark, and we were sure the voters would appreciate the fact.

The third significant group of manifesto proposals related to local government. In particular, we promised to abolish the Greater London Council (GLC) and the Metropolitan County Councils, returning their functions (which we had already limited) to councils closer to the people — the boroughs in London, and the districts in the other metropolitan areas. The proposal surprised most people and was subsequently portrayed as a last-minute measure, sketchily thought out. The truth was very different. The previous year a Cabinet committee had examined the issue very thoroughly and recommended abolition, though past experience of leaks led me not to put the question to Cabinet for final decision until shortly before the election. We also promised to introduce what came to be known as ‘rate-capping’ — legislation enabling us to curb the extravagance of high-spending councils, in the interests of local ratepayers and the wider economy.

Though the manifesto took our programme forward, it was somehow not an exciting document. The first years of Conservative administration had been dominated by the battle against inflation and by a different kind of warfare in the South Atlantic. Great as the achievements were, neither economics nor defence is the kind of issue that generates exciting material for manifestos. Social policy is very different, but we were only really starting to turn our attention to this area, which was to become increasingly important in the next two Parliaments. And on this occasion at least, perhaps Geoffrey Howe was too safe a pair of hands. I was somewhat disappointed, though tactically I could see that it made sense for us to produce a tame manifesto and to concentrate on exposing Labour’s wildness.

Perhaps the most important feature of the manifesto was what it did not contain. It did not promise a change of direction or an easing of the pace. It gave no quarter to the advocates of socialism and corporatism. In the foreword I stated my vision of Britain and the British:

…a great chain of people stretching back into the past and forwards into the future. All are linked by a common belief in freedom, and in Britain’s greatness. All are aware of their own responsibility to contribute to both.

Was I right in believing that this was the spirit of the time? Or was socialism what the people really wanted? The electorate would shortly give their answer.

PLANNING THE CAMPAIGN

On Wednesday 5 January 1983 I set aside a full day for discussion of our general election strategy. It was in the recess, so we held it at Chequers, always a relaxing place to think things out. The first half of the morning was spent with Cecil Parkinson, Michael Spicer (Deputy Chairman of the Party), Ian Gow and David Wolfson. We reached provisional decisions on a number of practical issues.

One of the most important things was to decide who would accompany me on my campaign tours. A coach had been hired and specially fitted out to take me around the country. We tried to keep the team as small as possible, though when the election was underway there always seemed to be a sizeable number on the bus. My PPS, Ian Gow, was a natural choice, with Michael Spicer taking his place on days when he had constituency engagements. At various times either Derek Howe or Tony Shrimsley would act as Press Officer. John Whittingdale, years later my political secretary and then only twenty-three, was chosen to do research. From Downing Street, Alison Ward and Tessa Gaisman would type the speeches, while one of the ‘Garden Room girls’ would keep me regularly in touch with No. 10 in case something happened which required my immediate attention. And last, but by no means least, we would be accompanied by my daughter Carol, who wrote and published a daily diary of the campaign. Harvey Thomas would go ahead to set up arrangements for meetings and reconnoitre for the press, while his wife typed text for the Autocue, which I now used for all big speeches. Travelling in the coach was bound to be tiring but we knew it would allow us to obtain better press and television pictures. Often it would be possible for me to fly or take the train to the spot at which the tour itself began, using the travel time to work on speech notes and briefing.

At this meeting we considered the arrangements for the manning of the correspondence unit which would be set up to deal with my mail during the election period. I decided to ask Sir John Eden, a former minister who was not standing again for Parliament, to take on this task. There was also the problem of deciding who should serve on the Questions of Policy Committee at Central Office, set up at each election to give authoritative answers to difficult questions put to our candidates. I concluded that Angus Maude, who was also standing down as a Member of Parliament, was the ideal person to chair this Committee.

Later that morning at Chequers we were joined by several other senior people from Central Office. They reported on their plans. One difficulty that came around at every election was to know when to produce the Conservative Research Department’s lengthy and rightly famous Campaign Guide — an encyclopaedia of political facts used by people of all political persuasions, including left-wing journalists too lazy to do their own research. The Campaign Guide’s appearance invariably triggered election speculation. We decided to aim at a publication date in July, though in the event the election came earlier and it had to be produced in a great rush to be ready for the start of the campaign in May. We discussed other literature which would be required for the constituencies. A Boundary Commission report was due and though the Party would benefit substantially from its proposals for the redistribution of seats, by the same token it was difficult to identify precisely the critical marginal seats in which the election would be won or lost. And it was vital that we focus our efforts on the marginals.

We discussed how to handle television: it was likely to be even more important than in earlier elections, though the new breakfast television would have less impact than had often been predicted. Gordon Reece had come over from the United States to help with this aspect of the campaign. Gordon was a former television producer with a unique insight into the medium. He had a much better grasp of popular taste than might have been expected from a man whose principal diet was champagne and cigars. He was always cheerful himself and he never failed to cheer others too. In fact, this was one of the few occasions when I can remember disagreeing with Gordon. He argued that we should be prepared to accept a series of televised debates between myself and Michael Foot, and (separately) with the Alliance leaders. This was an exceptional suggestion: British prime ministers have never accepted challenges to election debates of this kind. The calculation usually is that prime ministers have nothing to gain from them, and quite a lot to lose. But I stood so much better in the polls than Michael Foot that Gordon thought that on this occasion the orthodoxy was wrong and that I could only gain from such a confrontation. I rejected the idea. I disliked the way that elections were being turned into media circuses. And, as I have already said, I did not underrate Michael Foot as a debater. In any case, the arguments were too important to be reduced to a ‘sound bite’ or a gladiatorial sport.

One of our principal assets was the state of the Party’s organization. Cecil Parkinson had done wonders for Central Office. He had brought the Party’s finances into order in the year or so since he had become Chairman: this was essential, because it is only by husbanding resources in mid-term that you can afford to spend as heavily as required in a general election campaign. Cecil had also brought in some very able people. Peter Cropper had reintroduced rigorous standards in the Research Department. Tony Shrimsley, in charge of press relations, was a highly professional and talented journalist who shared my own outlook; sadly, this was to be his last campaign — he was probably already fatally ill. Cecil had placed Chris Lawson in charge of a new Marketing Department, which dealt with opinion research and publicity; Chris was that rare and useful animal, a businessman with acute political instincts.

In the afternoon Tim Bell presented a paper summarizing the strengths and weaknesses of our position, based upon opinion polls. Tim had a more sensitive set of antennae than most politicians. He could pick up quicker than anyone else a change in the national mood. And, unlike most advertising men, he understood that selling ideas is different from selling soap. Tim set out a communications strategy whose main theme was ‘keep on with the change’, an approach which I welcomed. Its wisdom lay in the perception that it was the Conservative Government rather than the Opposition parties which was the radical force in British society. As we ourselves had shown in 1979, there are few more potent slogans for an Opposition than that it is ‘time for a change’. Tim showed that we could deprive Labour of that slogan and turn the argument against them.

We held another all-day session on general election strategy at Chequers on Thursday 7 April. Manifesto work was in its final stages by then and I was worried that campaign planning seemed to be taking place in a separate compartment. However, that could not be helped. The key members of the Central Office team, along with Tim Bell, Ferdy Mount, David Wolfson, Ian Gow and myself ran over the style and content of the campaign and, in particular, my part in it. By now speculation about an early general election was feverish and there was little or nothing that I could do to prevent it, without firmly ruling out an early election, which of course would have been a very foolish thing to do. I had already stated in public that I would not go to the country before the end of our fourth year and at this meeting I made no secret of the fact that my own instincts were against an early election; I had in mind an election in October. Certainly, the argument was finely balanced. Were we to wait, there was a danger that if the polls started to turn in Labour’s favour the prospect of their grossly irresponsible economic policies being implemented would weaken sterling and hold back investment. It is also generally true, as Jim Callaghan learnt to his cost when he postponed the election in the autumn of 1978, that in politics the ‘unexpected happens’. However, on the other side of the argument, I was convinced that we were now seeing sustainable economic recovery, which would continue to strengthen the longer we waited: clearly, the more solid economic good news we could show the better.

But, of course, the overriding consideration in choosing an election date is whether or not you think you are going to win. On Sunday 8 May I had a final Chequers meeting with Cecil Parkinson, Willie Whitelaw, Geoffrey Howe, Norman Tebbit, Michael Jopling, Ferdy Mount, David Wolfson and Ian Gow. There had been local government elections on Thursday 5 May and we knew that the results would tell us a good deal about our prospects. Central Office staff had worked furiously to provide a detailed computer analysis by the weekend. We also had the evidence provided by private and public opinion polls.

Even when Cecil Parkinson took us through the information Central Office had brought together, I had some lingering doubt about whether the prospects really were good enough. I needed some convincing: calling an election is a big decision, and by constitutional convention it is a matter for the prime minister alone, however much advice is on offer. It was also, of course, a decision that I had never had to make before. Cecil and the others argued for June. It was pointed out that the main economic indicators would look slightly better then than in the autumn because inflation was due to rise slightly in the second half of the year. We would also probably face a by-election in Cardiff if we did not go soon: the Welsh Nationalists were threatening to move the writ and we had no way of stopping them. By-elections are unpredictable and there was the risk that the third-party bandwagon could be persuaded to roll if it went ahead. But the argument that told most with me was the level of election fever. The speculation was becoming impossible. Of course, I would be accused of ‘cutting and running’ if I went to the country in June, but the same critics would say I was ‘clinging to power’ if I put the election off; and probably the most damaging thing is to look as if you are afraid of testing your mandate.

By long-established custom, elections take place on a Thursday: if we were to go in June, which Thursday should it be? Again, Cecil and Central Office had done their homework, preparing a list of forthcoming events. From this it seemed that the second Thursday in June would be best, although this meant that the campaign would have to include a Bank Holiday — something electioneers prefer to avoid since it is almost impossible to campaign over that weekend. But Ascot began the following Monday and I did not like the idea of television screens during the final or penultimate week of the campaign filled with pictures of toffs and ladies in exotic hats while we stumped the country urging people to turn out and vote Conservative. Therefore, if we went in June it would have to be the 9th, rather than the 16th or 23rd.

These were persuasive arguments. But I did not make up mind finally that day, returning to No. 10 only provisionally convinced. When I am making a big decision, I always prefer to sleep on it.

UNFINISHED BUSINESS

The following morning just before 7 o’clock I rang down to the duty clerk asking my principal private secretary, Robin Butler, to see me as soon as he came in: Robin would arrange for an audience with the Queen later that morning. I had decided to seek a dissolution and go to the country on Thursday 9 June.

There was now much to be done. I saw the Chief Whip and the Party Chairman to tell them of my decision, summoned a special Cabinet for II.15 a.m. and went on to the Palace at 12.25 p.m. The rest of the day was spent discussing final election campaign preparations and the manifesto, and recording interviews. We had some important decisions to make about government business in Parliament. Two major bills — the Telecommunications and the Police and Criminal Evidence Bills — would have to be abandoned, though of course we would be able to reintroduce them if we formed the next government. The Finance Bill had to become law before Parliament dissolved — without it government authority to levy taxation would lapse — and to secure a quick passage for the bill we had to negotiate with the Opposition. Labour was inept: they gave us a parting gift by forcing the abandonment of a number of tax cuts proposed in the Finance Bill, including increases in the threshold at which the higher rate of income tax would begin and in the amount of tax relief for mortgages. They were quite happy to brand Labour the party of higher taxation: so were we.

I also had to make some decisions about my future engagements as Prime Minister, particularly meetings already arranged with foreign visitors: which, if any, should I see? A number of meetings were cancelled, but I carried on with as much of my diary schedule as I could. On Wednesday 11 May, I had talks and lunch with Robert Muldoon, Prime Minister of New Zealand, who had proved such a good friend to Britain in the Falklands crisis. That evening I also saw Alexander Solzhenitzyn and his wife. This courageous man sent a timely message to the British people at a press conference he gave, describing supporters of unilateral disarmament as ‘naïve’.

Another question was whether I should go to the United States for the forthcoming G7 summit at Williamsburg at the end of May. I decided immediately that I had to cancel my planned visit Washington on 26 May for pre-summit talks with President Reagan. As for the Williamsburg summit itself, I was minded to go but kept my options open for the moment. Politicians always have to be careful not to be seen spending more time with opposite numbers abroad than with their own people and that is never truer than in an election campaign. But the summit was important in its own right, not least because the President himself would be chairing it. Moreover, it would show Britain in a leading international role and lend international endorsement to the sort of policies we were pursuing.

We deliberately started our campaign later than the other parties. The electorate quickly becomes bored with incessant party politicking and it is important not to peak too soon: the ideal is to make an increasing impact in the last few days before polling day itself. Labour’s manifesto, all over the newspapers shortly before the dissolution of Parliament, was an appalling document. It committed the party to a non-nuclear defence, withdrawal from the European Community, enormously increased public spending and a host of other irresponsible policies and was dubbed by one of the wittier Shadow Cabinet ministers ‘the longest suicide note ever written’. We were very keen to publicize it and I understand that Conservative Central Office placed the largest single order for copies. But at my customary address to the ’22 that evening, I warned the Party against overconfidence: even a short election campaign is quite long enough for things to go badly wrong.

The next day I flew to Scotland to address the Scottish Conservative Party Conference in Perth. The hall in Perth is not large, but it has excellent acoustics. It is one of the best places to speak anywhere in Britain — perhaps only Blackpool Winter Gardens is better. In spite of a sore throat from the tail-end of a heavy cold, I enjoyed myself. Not only do I always recall that this is the nation of Adam Smith: the romantic strain of Scottish Toryism appeals to the non-economist in me too. As always after visits to the Scottish Conference, I returned to London encouraged and in fighting spirit. The atmosphere had been one of buoyant enthusiasm — a good omen for the campaign.

That weekend I was also able to study the results of our first major ‘state of battle’ opinion poll survey. It showed that we had a 14 per cent lead over Labour and that there had been a fall in support for the Alliance. This was, of course, very satisfactory. I was glad to note that there was no evidence that people thought I had been wrong to call the election; indeed, the great majority thought it was the correct decision. But the poll also showed that if the Alliance looked in with a chance there was considerable potential for an increase in its support from weakly committed Conservative and Labour voters. Obviously this was something we would have to guard against.

THE CAMPAIGN BEGINS

In 1983, as in 1979 and 1987, we usually began the morning with a press conference on a prearranged topic. Before the press conference I was briefed in Central Office — during this election by Stephen Sherbourne, who managed to be both quick and methodical and who would shortly join my team in Downing Street as political secretary. This briefing took place at 8.30 a.m. in a cramped room at Central Office. We would begin by approving the day’s press release and go on to consider questions likely to come up. Someone from the Conservative Research Department would come in part way through the briefing to report what had happened at Labour’s press conference — somewhat easier then than now, for at that time Labour headquarters was at Transport House, just across the road from Central Office in Smith Square. It was convenient too that Labour’s daily schedule ran ahead of ours. Our press conference would begin at 9.30 a.m. and was planned to last an hour. We had arranged my tours so that I spent very few nights away from London, and therefore I was nearly always available to chair it. I would field some of the questions myself, but try to give whichever ministers were appearing beside me that morning a chance to make their points. We were willing to change the subject of the day almost up to the last minute. In fact, during this campaign we were able to keep to the planned topics, though extra press conferences, which I did not attend, were arranged to deal with particular matters like Labour’s social security spending pledges.

Our main aim both in the press conferences and speeches was to deal with the difficult question of unemployment by showing that we were prepared to take it head on and prove that our policies were the best to provide jobs in the future. So successful were we in this that by the end of the campaign the opinion polls showed that we were more trusted to deal with this problem than Labour. People knew that the real reasons for the high level of unemployment were not Conservative policies but rather past overmanning and inefficiency, strikes, technological change, changes in the pattern of world trade and the international recession. Labour lost the argument when they tried to place the whole blame for this deep-seated problem on the callous, uncaring Tories.

Then there were the speeches. During the campaign I used Sundays — almost the only time available — to work on speeches for the forthcoming week with Ferdy Mount and others at Chequers. I often saw Ferdy for final revision when I arrived back in No. 10 from campaigning during the day. He had prepared about half a dozen speech drafts on different topics before the campaign. The actual speeches I delivered consisted of extracts from these, with additional material often provided by Ronnie Millar and John Gummer, and topical comment addressing the issue of the day. I would put on the finishing touches in the campaign coach, trains, aeroplanes, cars and just about anywhere else you can imagine along the campaign trail. There were a few big speeches during this election but a large number of short speeches on ‘whistle stops’, often delivered off the back of a lorry on a small mobile platform, always off the cuff. I preferred the whistle stops, particularly when there were some hecklers. People tell me that I am an old-fashioned campaigner; I enjoy verbal combat, though it has to be said that neither I nor the crowds derived much intellectual challenge from the monotonous chants of the CND and Socialist Worker protesters who followed me round the country.

Third, there were the tours themselves. The basic principle, of course, is that you should concentrate the Leader’s appearances in marginal seats. One day on the campaign bus David Wolfson chided me for waving too much to people watching us pass: ‘only wave in marginals, Prime Minister’. As the importance of television and the ‘photo-opportunity’ increases, the leader’s physical location on a particular day is rather less important than it once was. In this election, moreover, our objective was to hold our vote and our seats so that (with a limited number of exceptions) my task was to concentrate on campaigning in Conservative-held seats. But one thing you must do is to visit all the main regions of the country: nothing is more devastating to candidates and party workers than to think they have been written off.

Finally, there were the interviews. These came in quite different styles. Brian Waiden on Weekend World would ask the most probing questions. Robin Day on Panorama was probably the most aggressive, though in this campaign he made the mistake of plunging into detail on the problem of calculating the impact of unemployment on the public finances — a gaffe when cross-examining a former Minister of National Insurance. I made a gaffe of my own calling Sir Robin ‘Mr Day’ throughout. Alistair Burnet specialized in short, subtle questions which sounded innocuous but contained hidden dangers. One needed all one’s nimbleness of wit to make it unscathed through the minefields. Then there were the programmes on which members of the public asked questions. My favourite was always the Granada 500 when a large audience quizzes you about the things which really matter to them.

Our manifesto was launched at the first Conservative press conference on Wednesday 18 May. The whole Cabinet was there. I ran through the main proposals, and then Geoffrey Howe, Norman Tebbit and Tom King made short statements on their sections of the manifesto. After that I invited questions. Manifestos rarely make the headlines unless, as on this occasion, something goes wrong. The press will consign carefully thought-out proposals for government to an inside page and concentrate on the slightest evidence of a ‘split’. At the press conference a journalist asked Francis Pym about negotiations with Argentina. I felt that Francis’s reply risked being ambiguous, so I interrupted to make clear that while we would negotiate on commercial and diplomatic links, we would not discuss sovereignty. The press highlighted this: but there was in fact no split. That’s politics.

D-21 TO D-14

In Britain the general election campaign is only about four weeks long, usually less. For planning purposes during elections we always used the so-called ‘D- (minus)’ system, numbering each day in a countdown to ‘D-Day’ — polling day itself. The most intense period of the campaign is from D-21 on, which in this case fell on Thursday 19 May. We opened our campaign on D-20, Friday 20 May, two days after the launch of the manifesto. The first of our five Party Election Broadcasts (PEBs) had been shown on D-23.

It was not Francis Pym’s week. He told a questioner on BBC’s Question Time that in his opinion ‘landslides on the whole don’t produce successful governments.’ Naturally, people drew the inference that he did not want us to win a large majority. Of course, this was all very well for those with safe seats like Francis himself. But it was distinctly less good news for candidates in the Conservative marginals and those of our people hoping to win seats from other parties. And since complacency was likely to be our worst enemy in the campaign this remark struck a wrong note.

The first regular press conference on the campaign took place on Friday 20 May. Geoffrey Howe challenged Labour on the cost of their manifesto proposals and said that if they did not publish them we would. This was the first deployment of a very effective campaign theme. Patrick Jenkin, taking it up, drew attention to Labour’s plans for nationalization and regulation of industry. There were a number of questions about the economy. But, inevitably, what the press really wanted to know was what I thought about Francis’s remark. We had seen this coming and I had discussed what to say at the briefing session earlier that morning. Francis had been Chief Whip under Ted Heath and I made that the basis of my reply:

I think I could handle a landslide majority all right. I think the comment you’re referring to was natural Chief Whip’s caution. Ex-Chief Whip’s caution. You know there’s a club of Chief Whips. They’re very unusual people.

I left after the press conference for my first campaign tour, which was in the West Country. At 10.45 a.m. we drove from Central Office to Victoria Station, and from there went by train to Gatwick to catch the flight to St Mawgan in Cornwall. A group of around 40 or 50 journalists joined us, sitting together at the back of the plane. It was a pleasant rural day. I visited the fish market at Padstow Harbour and went on to Trelyll Farm, near Wadebridge. There I was caught out by the press. I was standing on a heap of cut grass and the Daily Mirror photographer asked me to pick some up. I saw nothing wrong with that, and so I obliged. He took his photograph — and the picture duly appeared the following day with the caption ‘Let them eat grass’. It does not do to be too co-operative.

It was on Monday 23 May (D-17) that my campaign began in earnest. We started as usual with a briefing meeting for that morning’s press conference where we spent some time discussing the Party’s advertising. Saatchi & Saatchi had devised some brilliant advertisements and posters in 1979. Most of those they produced in 1983 were not quite as good, although there were exceptions. One compared the Communist and Labour Party manifestos by printing side by side a list of identical commitments from each. It was a long list. A second poster set out 14 rights and freedoms that the voter would be signing away if Labour was elected and carried out its programme. Another poster aimed at winning us support from ethnic minorities with the slogan ‘Labour Think He’s Black, Conservatives Think He’s British’ caused some controversy. But I thought it was perfectly fair. I did, however, veto one showing a particularly unflattering picture of Michael Foot with the slogan: ‘Under The Conservatives All Pensioners Are Better Off’. Maybe that was a fair political point too: but I do not like personal attacks.

My speech that evening was at the Cardiff City Hall. It was a long speech, made a little longer but much more lively when I broke away from the text, which always seems to help the delivery. I covered all the main election issues — jobs, health, pensions, defence — but the lines I liked best related to Labour’s plans for savings:

Under a Labour government, there’s virtually nowhere you can put your savings where they would be safe from the state. They want your money for state socialism, and they mean to get it. Put your savings in the bank — and they’ll nationalize it. Put your savings in a pension fund or a life assurance company — and a Labour government would force them to invest the money in their own socialist schemes. If you put money in a sock they’d probably nationalize socks.

I had returned early to No. 10 from Tuesday’s daily tour in order to prepare for a Question and Answer session with Sue Lawley on Nationwide. This unfortunately degenerated into an argument about the sinking of the General Belgrano.

The Left thought it was scoring points by keeping the public’s attention focused on this, exploiting minor discrepancies to support its theory of a ruthless government intent on slaughter. This was not only odious; it was inept. The voters overwhelmingly accepted our view that protecting British lives came first. On the Belgrano, as on everything else, the Left’s obsessions were at variance with their interests. But I found the whole episode distasteful.

Wednesday 25 May was a difficult day for both the major parties, though we suffered far less damage than Labour. The Labour Party was so ineffective during the campaign that the newspapers, in desperation for stories, concentrated heavily on leaked documents. The main interest on this occasion was the leaking of a draft report of the Treasury and Civil Service Select Committee, which attacked our economic policies. Cecil Parkinson contacted Edward du Cann, the Committee Chairman, who promptly issued a statement drawing attention to the fact that the report had not been approved by the committee. It was typical of the Labour Party’s lack of grip that they completely missed this opportunity to embarrass us, preferring to spend their morning press conference talking about ‘women’s issues’. We were amazed. As we joked about it I said to my male colleagues at the briefing session: ‘if they have their way, you’ll soon be having the babies.’

Our press conference that day, though allegedly on defence, was in fact devoted to the revelation that our candidate at Stockton South had once been a member of the National Front. He had left the National Front some years before and now claimed to be an orthodox Conservative and regretted his past. As far as we were concerned this was a peripheral embarrassment but some left-wing journalists seemed to see themselves as Woodward and Bernstein, fighting the Establishment. Again, it served to distract the Labour Party from issues of genuine interest to the public.

The Labour Party was now in deep trouble. That same day — the very day we had chosen to devote to defence — Jim Callaghan made a speech in Wales rejecting unilateral nuclear disarmament. The newspapers were full of contradictory statements about Labour’s position on nuclear weapons. Even among Labour front-benchers there was disarray: you could choose between Michael Foot, Denis Healey and John Silkin — each seemed to have his own defence policy. Michael Heseltine at our press conference and throughout the campaign was devastating in his criticisms of Labour’s policy.

I always realized that there were a few issues on which Labour was especially vulnerable — issues on which they had irresponsible policies but ones to which the public attached great importance. They were the ‘gut issues’. Defence was one. Another was public spending, where the voters always have a suspicion that Labour will spend and tax too much. For that reason I was very keen that Geoffrey Howe do a more comprehensive costing of Labour’s manifesto promises than usual. He produced a superb analysis that ran to twenty pages. It showed that Labour’s plans implied additional spending in the life of a Parliament of between £36–43 billion — the latter figure almost equal to the total revenue of income tax at that time. Labour’s economic credibility never recovered. Indeed, Labour’s profligacy has been its Achilles heel in every election I have fought — all the more reason for a Conservative government to manage the nation’s economic affairs prudently.

That Wednesday my election tour took me to the East of England, travelling by aeroplane and coach. It was a beautiful day. I spent part of it campaigning in East Dereham in Norfolk for Richard Ryder. As I have noted, he had been my political secretary, and I was glad to be able to help. And, of course, his wife, Caroline, had also worked for me. Almost a family occasion. I addressed a crowd in the packed market square. There were a few hecklers which made it more fun. I let rip with an old-fashioned barnstorming speech. Later someone told me that above the platform where I had stood to deliver the speech there was a large cinema sign advertising a film called The Missionary.

D-14 TO D-7

On Thursday 26 May (D-14) the opinion polls reported in the press gave us anything between a 13 and 19 per cent lead over Labour. The principal danger from now on would be complacency among Conservative voters rather than any desperate Labour attempts at a comeback.

Thursday was to be another pleasant day of traditional campaigning, this time in Yorkshire. One highlight was lunch in Harry Ramsden’s Fish and Chip Shop — the ‘biggest fish and chip shop in the Free World’ — in Leeds. I thoroughly enjoyed myself but the occasion was quite chaotic, with cameramen crashing around among the startled diners.

That evening I spoke at the Royal Hall, Harrogate, dwelling on a theme which was central to my political strategy. The turbulence of politics in the 1970s and 1980s had overturned the set patterns of British politics. Labour’s own drift to the left and the extremism of the trade unions had disillusioned and fractured its traditional support. The SDP and the Liberals failed to grasp the significance of what was happening. They projected their appeal to the middle-class Left, especially those who worked in the public sector, probably, I suspect, because Roy Jenkins and Shirley Williams instinctively sought out their own kind and allowed that instinct to overcome their judgement. In fact, the more numerous and dissatisfied Labour supporters were in the rising working and lower-middle class — the same group that in America Ronald Reagan was winning over and who were known as ‘Reagan Democrats’. They were benefiting from the opportunities we had made available, especially the sale of council houses; more important, they shared our values, including a strong belief in family life and an intense patriotism. We now had an opportunity to bring them into the Conservative fold, and I directed my speech at Harrogate to doing just that:

In this country the things that most of us believe in are greater than the things that divide us. There are people in all walks of life who share our vision, but who have not voted for us in the past. At this election there is so much at stake that I feel I must say to them: the Labour Party today is not the party you used to support. It no longer stands for the traditions and liberties which made this country great. It is the Conservative Party that has stayed true to those traditions and those liberties.

Politicians generally dislike elections. But one advantage is that in the course of a campaign you see a great deal of the country that would otherwise be concealed in reports and memoranda. For example, no official report could convey the excitement of the advanced electronics factories around Reading that I visited on the Friday. It was also my first encounter with the portable telephone.

By the time that I arrived back in London there had been yet another extraordinary development in Labour’s campaign. Labour’s General Secretary, Jim Mortimer, reported to an astonished press corps that ‘the unanimous view of the campaign committee is that Michael Foot is the Leader of the Labour Party.’ With statements like that one wondered how long either of them would keep his job.

My own mind that evening was very much on the forthcoming G7 economic summit at Williamsburg, for which I would leave for the United States at midday on Saturday. President Reagan was keen to have me there. He had sent me a message on 10 May to say that he would perfectly understand if I was not able to come to Washington for a pre-summit bilateral meeting, but that he very much hoped I would go to Williamsburg. The message concluded:

I wish you every success in the election and in gaining another mandate to carry out the courageous and principled policies which you have begun.

Above all, he wanted me to win — just as I always wanted him to win. I received a report whose authenticity I had no reason to doubt that the President had said that no pressure was to be put on me one way or another about attending the summit. ‘Hell,’ he was reported to have said, ‘the main thing is for her to get re-elected.’ I shared his analysis.

Whatever its electoral implications for me, there was no doubt that the Williamsburg summit was of real international importance. President Reagan was determined to make a success of it. At previous G7 summits the scope for genuine discussion had been somewhat limited by the fact that a draft communiqué had been drawn up even before the leaders met. This time the Americans had insisted that we should discuss first and draft later, which, however inconvenient for officials, was far more sensible. But I took along a British draft just in case it was needed.

The atmosphere at Williamsburg was excellent, not just because of the President’s own radiant good humour but because of the place itself. In the surroundings of this restored Virginian town each head of government stayed in a separate house. We were welcomed by friendly townspeople in old-style colonial dress. There was a complete contrast with the perhaps overluxurious feel of Versailles.

I had a long tête-à-tête discussion with the President. It ranged over a wide field: from nuclear disarmament negotiations to the state of the American economy and the protectionist leanings of the US Congress — something which was giving us increasing concern. Later I had a short but important talk with Prime Minister Nakasone of Japan. I had met him when I visited his country as Leader of the Opposition. He was perhaps the most articulate and ‘western’ of Japan’s leaders in the period when I was Prime Minister, raising his country’s international profile and fostering close links with the United States. On this occasion, my main interest was to press for Nissan to finalize its decision to invest in Britain, which I hoped would create thousands of jobs. Understandably, Mr Nakasone’s line was that this was a decision for the company. I should add here that it had been reported in the British press that Nissan would not have gone ahead with their investment had Labour been elected. This was publicly denied by the company, but it was probably true.

The two main objectives which President Reagan and I shared for the summit were the reaffirmation of sound economic policies and a public demonstration of our unity behind NATO’s position on arms control, especially as regards the deployment of Cruise and Pershing II missiles. I introduced the discussion on arms control at dinner on Saturday. In fact, by that morning we had what most of us considered a satisfactory draft communiqué. France’s position — as a country outside the NATO command structure — required to be taken into account. But President Mitterrand said that he had no dispute with the substance of our proposal. In fact, he came up with an amendment that we were able to accept, because it strengthened it in the direction we wanted. It seems improbable that President Mitterrand realized this.

Pierre Trudeau of Canada did have a problem with a strong line on deterrence. He urged us all to ‘speak more softly’ to the Soviet Union. There followed some exchanges between the two of us which I later described in a letter to him as ‘on the lively side’. In the end, a thoroughly satisfactory text on arms control emerged.

The text on the economy was pretty satisfactory as well, except for a little misty language on exchange rate co-ordination. President Mitterrand had been tempted at one stage by grand talk of a ‘new Bretton Woods’, shorthand for the system of fixed exchange rates which had operated from 1944 to 1973. But he did not press this view at Williamsburg.

I came home by the overnight British Airways flight, confident that the outcome of the summit vindicated my approach to the crucial election issues of defence and the economy. This summit also marked a change in the relationship between President Reagan and the other heads of government. They might previously have admired his eloquence and devotion to principle: but they had sometimes been dismissive of his grasp of detail. I, myself, had felt some concern about this earlier. Not so on this occasion. He had plainly done his homework. He had all the facts and figures at his fingertips. He steered the discussions with great skill and aplomb. He managed to get all he wanted from the summit, while allowing everyone to feel that they had got at least some of what they wanted, and he did all this with an immense geniality. What President Reagan demonstrated at Williamsburg was that in international as in domestic affairs he was a master politician.

Monday 30 May was a Bank Holiday. That day Denis Healey released what the Labour Party claimed was the ‘real’ Conservative manifesto, a fantastical affair, full of lies, half-truths and scares culled from reports of leaked documents, especially the CPRS long-term public expenditure document, the whole thing imaginatively embellished. I was not surprised. Labour had tried this tactic in 1979: it had not worked then either. Once again, Labour was catering not to the interests of the voter but to its own obsessions. They failed to realize that propaganda can never persuade people of the incredible. Apparently, you can persuade the press of this, however.

On Tuesday evening I was to speak at George Watson’s College in Edinburgh. My idea was to use the occasion to report on Williamsburg and to defend our record on the social services. But looking at the material we already had written, I realized that we had a lot of work still to do and the whole thing was finished in a tremendous rush, as not infrequently happens with my speeches. Several of us spent the early evening before the speech crawling around the floor of my room at the Caledonian Hotel, sticking together bits of text with sellotape. After that we flew further north to Inverness, where we stayed the night. A large crowd of chanting protesters outside our hotel serenaded us to sleep.

The next day (Wednesday 1 June, D-8) I held a press conference, gave television interviews, visited two Scottish factories, flew to Manchester, visited a bakery in Bolton and a brewery in Stockport, and flew back to London to begin work on another speech. I am not usually much affected either by pressure of work or by attacks from opponents. But this day was a little different. Denis Healey made the tasteless remark that I had been ‘glorying in slaughter’ during the Falklands War. I was both angry and upset. We had deliberately decided not to raise the Falklands in the campaign and had done nothing whatsoever to make it an issue. The remark hurt and offended many people besides me — not all of them Conservatives — particularly the relatives of those who had fought and died in the war. Mr Healey later made a half-hearted retraction: he had meant to say ‘conflict’ rather than ‘slaughter’ — a distinction without a difference. Neil Kinnock returned to the subject a few days later, in an even more offensive form, if that were possible. These remarks were all the more revealing because they were politically stupid: indeed they did enormous harm to Labour. They were not made from political calculation, but can only have emerged from something coarse and brutal in the imagination.

D-7 TO D-Day

Nonetheless at Thursday morning’s press conference there was yet more about the General Belgrano and I could not conceal my irritation at the failure of some journalists to grasp the harsh reality of war. I said:

I think it is utterly astonishing that your only allegation against me is that I in fact changed the rules of engagement with the consent of the War Cabinet to enable a ship which was a danger to our task force to be sunk.

On Friday, after the press conference, Cecil and I had now to decide whether we needed a full-scale newspaper advertising campaign over the weekend. Two opinion polls that day showed us with leads of 11 and 17 per cent over Labour. We were being told that we were home and dry. But many voters make up their minds in the last week, some indeed as they are on their way to the polling station; so I have always been a wary campaigner. Cecil was an equally battle-scarred electioneer and we had planned to run expensive three-page advertisements in the Sunday newspapers. But we decided to take a risk and save the money, cutting the advertisements to a more economical two pages. On this my political calculations coincided with my instincts as a Grantham grocer’s daughter. Obvious extravagance is bad advertising.

I spent Saturday (D-5) campaigning in Westminster North, then going on to the constituencies in Ealing and Hendon close to my own. I campaigned in Finchley for most of the afternoon and then went to support our candidate in Hampstead and Highgate.

On my return to No. 10 work began almost at once on the speech I was to deliver the next day at our Youth Rally at Wembley Conference Centre. My speech writers and I worked late into the night, breaking for a hot meal which I served up in the kitchen from the capacious store of precooked frozen food I always kept there for such occasions. Shepherd’s pie and a glass of wine can do a great deal to improve morale. Speech writing was for me an important political activity. As one of my speech writers said, ‘no one writes speeches for Mrs Thatcher: they write speeches with Mrs Thatcher.’ Every written word goes through the mincing machine of my criticism before it gets into a speech. These are occasions for thinking creatively and politically and for fashioning larger themes into which particular policies fit. I often found myself drawing on phrases and ideas from these sessions when I was speaking off the cuff, answering questions at Prime Minister’s Question Time and for television interviews. This helped to preserve me from the occupational hazard of long-serving ministers: so I was never accused of thinking like a civil servant. (They had to think like me.) These occasions often continued long into the night and can perhaps be described as fraught but fun.

So was the Youth Rally. Some of the sourer critics chose to take offence at joke remarks made by the comedian who preceded my appearance on stage. What they really took offence at was the broad social appeal of the new Conservative Party demonstrated both by the unconventional people on the stage and in the audience. As one punk rocker told a journalist at the time: ‘Better the iron lady than those cardboard men.’

One of the opinion polls on Sunday put the Alliance ahead of Labour for the first time. This gave the last days of the campaign a new feel and a new uncertainty. But personally I never believed that the Alliance would beat Labour into third place — even though the Labour leaders were doing their best to ensure it did.

I chaired our last press conference of the campaign on Wednesday morning (D-1), accompanied by more or less the same team as had launched the manifesto. There was an end-of-term feeling among the journalists, which we felt confident enough to share. I said that the vital issues on which the voters must decide between the parties were defence, jobs, social services, home ownership and the rule of law. I was keen to answer the charge that a large Conservative majority would lead us to ditch our manifesto policies and pursue a ‘hidden agenda’ of an extreme kind. I argued that a large Conservative majority would in fact do something quite different: it would be a blow against extremism in the Labour Party. And that, I think, was the real underlying theme of the 1983 general election.

Election day itself is an oddly frustrating time. I always voted early and then visited the Finchley committee rooms, each of which would be receiving information as to which of our known supporters had voted: later in the day party workers would visit those who had not done so to urge them on to the polling stations. All the opinion polls suggested a Tory landslide. But I have seen too many electoral upsets in my life to take such things for granted.

The Finchley count takes place in Hendon Town Hall. The result was late in coming through because of the number of other candidates anxious to gain publicity for their cause by fighting against me. It was made later still on this occasion because one of them successfully demanded a re-count. (My eventual majority was 9314.) It was not until well into the early hours of the morning that my result was declared and I was safely returned for the eighth time.

While waiting for my own count to finish I watched the national results coming in on television. The first three were not particularly encouraging: in both Torbay and Guilford the Alliance vote was up substantially, though we held the seats. Then there was worse news: we lost Yeovil to the Liberals. But the turning point came soon after — the first Tory gain from Labour: Nuneaton. From then on the shape and size of our victory became clearer and clearer. It really was a landslide. We had won a majority of 144: the largest of any party since 1945.

I returned to Conservative Central Office in the early hours. I was greeted by cheering party staff as I entered and gave a short speech of thanks to them for their efforts. After that I returned to No. 10. Crowds had gathered at the end of Downing Street and I went along to talk to them as I had on the evening of the Argentine surrender. Then I went up to the flat. Over the previous weeks I had spent some time clearing things out, in case we lost the election. Now the clutter could build up again.

CHAPTER XII

The Downing Street Years, 1979-1990

Back to Normalcy

Politics, the economy and foreign affairs from the election to the end of 1983

Political success is a good deal pleasanter than political failure, but it too brings its problems. Conventional wisdom, reinforced by classical mythology, has it that this is all a matter of hubris or at least of complacency. But it is not always so. Nor was it in fact during the somewhat troubled six months which followed the 1983 general election. On this occasion there were subtler problems. One was that the media, having felt obliged during the election campaign to cover real political arguments about practical choices, soon reverted to the more amusing sport of scoring points off the Government. And there was a second problem, which we encountered increasingly over the years, that the less the socialist threat seemed, the more people were inclined to jib at the inevitable difficulties and disappointments of running a free enterprise economy.

In 1983 we also had two other problems to face — one of our own making and one not. The first was that the 1983 manifesto did not inspire the Government with the sort of crusading spirit which would have got us off to a good start in the new Parliament. Some of the main pledges were popular enough, such as the abolition of the GLC and Metropolitan Counties and the introduction of rate-capping, but they ran into a difficulty with which any reforming administration must bear: that the generalized approval of the silent majority is no match for the chorus of disapproval from the organized minority. The left-wing municipal socialists and their subsidized front organizations were astute campaigners, trained and adept at exploiting every weakness of presentation of the Government’s case. Much of the manifesto promised ‘more of the same’ — not the most inspiring of cries, although there is no doubt that a lot more was needed. We had not yet cut taxes anything like as much as we wished. There was more work to be done on trade union law and the privatization programme — which would perhaps constitute the really big advance of this Parliament — was barely under way; the bill to privatize British Telecom, which had fallen with the election, had to be reintroduced.

The second problem was one for which we could not be blamed — that there was still too much socialism in Britain. The fortunes of socialism do not depend on those of the Labour Party: in fact, in the long run it would be truer to say that Labour’ fortunes depend on those of socialism. And socialism was still built into the institutions and mentality of Britain. We had sold thousands of council homes; but 29 per cent of the housing stock remained in the public sector. We had increased parent’ rights in the education system; but the ethos in classrooms and teacher’ training colleges remained stubbornly left wing. We had grappled with the problem of bringing more efficiency into local government; but the Left’ redoubts in the great cities still went virtually unchallenged. We had cut back trade union power; but still almost 50 per cent of the workforce in employment was unionized, far more than our main competitors, and of them around 4 million were working in a union closed shop. Moreover, as the miner’ strike would shortly demonstrate, the grip of the hard Left on union power was still unbroken. We had won a great victory in the Falklands War, reversing the years in which British influence seemed doomed to an inexorable retreat; but there was still a sour envy of American power and sometimes a deeper anti-Americanism, shared by too many across the political spectrum.

In all this, my problem was simple. There was a revolution still to be made, but too few revolutionaries. The appointment of the first Cabinet in the new Parliament, which took place incongruously to the background accompaniment of traditional military music and the Trooping of the Colour, seemed a chance to recruit some.

THE NEW GOVERNMENT

I began by dropping one would-be pilot, whose sense of direction had on several occasions proved faulty. In following Peter Carrington with Francis Pym as Foreign Secretary I had exchanged an amusing Whig for a gloomy one. Even the prospect of a landslide during the election made him utter dire warnings. Francis and I disagreed on the direction of policy, in our approach to government and indeed about life in general. But he was liked in the House of Commons which always warms to a minister who is believed to be out of step with the Government,something which is often mistaken for independence of mind. I hoped he would consent to become Speaker and I still believe that he would have done the job well. (In fact, I am not at all clear that we would have been able to ensure Francis got the job for it is, of course, a decision for the House itself.) But in any case he was having none of it. He preferred to go to the back-benches where he was a not very effective critic of the Government.

I also asked David Howell and Janet Young to leave the Cabinet. David Howell’ shortcomings as an administrator had been exposed when he was at Energy and nothing I saw of his performance at Transport suggested to me that my judgement of him was wrong. He had the detached critical faculty which is excellent in Opposition or in the Chairman of a Select Committee, but he lacked the mixture of creative political imagination and practical drive to be a first-class Cabinet minister. I asked Janet Young to make way for Willie Whitelaw as Leader of the Lords. She was very well liked by their lordships, but had turned out not to have the presence to lead the Lords effectively and she was perhaps too consistent an advocate of caution on all occasions. She stayed on in the Government outside the Cabinet as a Minister of State at the Foreign Office. I regretted the loss of both David and Janet on personal grounds, for they had been close to me in Opposition.

Willie Whitelaw clearly fitted the bill as Janet’ successor. Willie had become, quite simply, indispensable to me in Cabinet. When it really mattered I knew he would be by my side and because of his background, personality and position in the Party he could sometimes sway colleagues when I could not. Yet Willie had not had an easy time as Home Secretary. In part, this is because Home Secretaries never do have an easy time; it is sometimes said that they possess a unique combination of responsibility without power, taking the blame for matters ranging from breaches of royal security, to the misdemeanours of police officers, prison break-outs and the occasional riot, when their power to prevent them is indirect or nonexistent. But there was more to it than that. Willie and I knew that we did not share the same instincts on Home Office matters. I believe that capital punishment for the worst murders is morally right as retribution and practically necessary as a deterrent: Willie does not. My views on sentencing in general and on immigration are a good deal tougher than his. And, flatteringly but often awkwardly, the great majority of the Conservative Party and the British public agreed with me and showed it regularly at our Party Conferences.

I chose Leon Brittan to be Willie’ successor at the Home Office.I never appointed a Home Secretary who shared all my instincts on these matters, but I thought that at least Leon would bring a keen lawyer’ mind and intellectual rigour to the job. He would have no time for the false sentimentality which surrounds so much discussion of the causes of crime. From the Treasury he brought with him a well-deserved reputation as a good administrator who worked hard. Leon was the best Chief Secretary to the Treasury during my premiership. His was a powerful mind and I thought he should be given his chance.

With hindsight, I think that I should have promoted him to head another department first. He needed the experience of running his own ministry before moving to one of the three great offices of state. Too rapid promotion can jeopardize politician’ long-term future. It turns press and colleagues against them; they become touchy and uncertain about their standing; and all this makes them vulnerable. Leon suffered in this way, but he also had great strengths. For example, he proved extremely capable in devising the package of measures to tighten up the sentencing of violent criminals which we introduced after the rejection of capital punishment by the House of Commons on a free vote in July. He was to prove tough and competent during the miner’ strike in 1984–5. Yet there were also weaknesses, which had nothing to do with the circumstances of his appointment. Like other brilliant lawyers I have known, he was better at mastering and expounding a brief than in drawing up his own. Moreover, everybody complained about his manner on television, which seemed aloof and uncomfortable. Of course, there have been plenty of complaints over the years about my manner too, so I had a good deal of sympathy with him. But that did not change the situation, particularly since I was shortly to lose from my Cabinet a really gifted presenter of policy.

I made Nigel Lawson Chancellor of the Exchequer — an enormous and to most people unexpected promotion. Whatever quarrels we were to have later, if it comes to drawing up a list of Conservative — even Thatcherite — revolutionaries I would never deny Nigel a leading place on it. He has many qualities which I admire and some which I do not. He is imaginative, fearless and — on paper at least — eloquently persuasive. His mind is quick and, unlike Geoffrey Howe whom he succeeded as Chancellor, he makes decisions easily. His first budget speech shows what good reading economics can make. Nigel was, I knew, a genuinely creative economic thinker. Unlike creative accountancy, creative economics is a rare and valuable thing. I doubt whether any other Financial Secretary to the Treasury could have come up with the inspired clarity of the Medium Term Financial Strategy, which guided our economic policy until Nigel himself turned his back on it in later years. As Chancellor, Nigel’ tax reforms had the same quality about them — a simplicity which makes everyone ask why no one thought to do this before.

Nigel was well aware of his own virtues. In January 1981 when I had appointed Leon Brittan as Chief Secretary to the Treasury over Nigel’ head, at Geoffrey Howe’ request, Nigel came to see me to complain: he felt slighted and was evidently cross. But I told him that his time for promotion would come and I would see that it did. Later as Secretary of State for Energy he showed that among his other qualities he was a first-class administrator. So I had by now come to share Nigel’ high opinion of himself. And for most of the 1983 Parliament I had no cause to revise that judgement; on most issues I never revised it.

But what to do with Geoffrey Howe? The time had come to move Geoffrey on. Four gruelling years in the Treasury was enough and it seems a kind of psychological law that Chancellors naturally incline towards the Foreign Office. Partly this is simply because that is the next logical step. But it is also because international finance is nowadays so important that Chancellors have to take a keen interest in the IMF, the G7 and the European Community and so the longing to tread the world stage naturally takes hold of them. I wanted to promote Geoffrey as a reward for all he had done. But I had doubts about his suitability for the Foreign Office. And, in retrospect, I was right. Geoffrey was, indeed, very good at the business of negotiation of a text line by line, for which his training as a lawyer and his experience at the Treasury fitted him. He was a perfect right-hand man for the European Councils I attended. But he fell under the spell of the Foreign Office where compromise and negotiation were ends in themselves. This magnified his faults and smothered his virtues. In his new department he fell into the habits which the Foreign Office seems to cultivate — a reluctance to subordinate diplomatic tactics to the national interest and an insatiable appetite for nuances and conditions which can blur the clearest vision. In the end Geoffrey’ vision became finding a form of words. To the extent that Geoffrey did have a cause to guide him in foreign affairs it was one on which the two of us were far apart, though I did not give this much thought at the time. For Geoffrey harboured an almost romantic longing for Britain to become part of some grandiose European consensus. I never heard him define this misty Europeanism, even in the last turbulent days of my Premiership, but it was for him a touchstone (along with liberal views on Home Office matters) of highmindedness and civilized values. It was to bring us all no end of trouble.

My first choice for the job of Foreign Secretary had been Cecil Parkinson. He and I agreed on economic and domestic policy. Neither of us had the slightest doubt that Britain’ interests must come first in foreign policy. He had served in the Falklands War Cabinet. He had just masterminded the most technically proficient general election campaign I have known. He seemed to me right for this most senior job.

However, my hopes were disappointed. In the early evening on election day after I had returned from my own constituency Cecil visited me in Downing Street and told me that he had been having an affair with his former secretary, Sara Keays. This gave me pause. But I did not immediately decide that it was an insuperable obstacle to his becoming Foreign Secretary. I was still thinking about the election. Indeed, I marvelled that with all this on his mind he had run such a magnificent campaign. I was even relieved that he had spared me the concern and distraction that it would cause at such a time. But the following day, shortly before Cecil was due for lunch at No. 10, I received a personal letter from Sara Keays’ father. It revealed that she was pregnant with Cecil’ child. When Cecil arrived I showed him the letter. It must have been one of the worst moments of his life.

It was immediately obvious that I could not send Cecil to the Foreign Office with such a cloud hanging over him. I urged him to discuss the personal questions with his family. Meanwhile I decided to make him Secretary of State for the newly combined Departments of Trade and Industry. It was a job I knew he would do well — and it was a less senior and less sensitive post than Foreign Secretary would have been.

In September I appointed John Gummer to succeed Cecil as Party Chairman (I would have appointed a new Chairman sooner or later in any case). John had been a Vice-Chairman of the Party under Ted Heath and so knew Central Office well. He is also a gifted speaker and writer. Nor was there any need for a leading minister, let alone a politician of Cecil’ stature, to be Chairman immediately after an election. Unfortunately, John Gummer was not a born administrator and when we ran into political trouble he did not carry the weight to help us get out of it.

An appointment that strengthened the Party, however, was that of John Wakeham who became Chief Whip. John would probably not dissent from his reputation as a ‘fixer’. He was on the right of the Party, a highly competent accountant, who had tried to make sense for me of British Leyland’ elliptical accounts. He had a manner which exuded self-confidence, a good deal of which was deserved. These talents made him a highly effective party manager.

Within months I had to make further important changes. At the beginning of October Cecil Parkinson, with the agreement of Sara Keays, issued a statement to the press revealing their affair and the fact that she was pregnant. I wanted if possible to keep Cecil — a political ally, an able minister and a friend. At first, it seemed that I might succeed. There was no great pressure from within the Party for him to go: on the whole his colleagues in government and on the back-benches were supportive. The Party Conference took place the week after Cecil’ statement and his ministerial speech was well received. However, very late on Thursday evening, as I was completing my own speech for the following day, the Press Office at No. 10 rang my hotel suite. They told my private secretary that Sara Keays had given an interview to The Times and that the story dominated Friday’ front page. I called a meeting immediately, with Willie Whitelaw, John Gummer and Cecil himself. It was clear that the story was not going to die down and, though I asked Cecil to hold back from resigning that evening, we all knew that he would have to go.

Early next morning Cecil came in to see me and said that he and Ann had decided that he should resign. There was only one problem. He had a public engagement to open the new Blackpool Heliport and to unveil a commemorative plaque. Clearly, it was impossible for him to go ahead with this. Denis stepped into the breach and unveiled the plaque, which poignantly had Cecil’ name on it.

Thankfully, this did not mean the end of Cecil’ political career. But he had to endure four years in the political wilderness and lost whatever chance he might have had of climbing to the very top of the political ladder.

In everything but the short term, Cecil’ resignation weakened the Government. He had proved an effective minister and, though he was only at the DTI a short time, had made a big impact, particularly on the City of London. It was Cecil who took the difficult but correct decision to introduce legislation to exclude the Stock Exchange from the operation of the Restrictive Trade Practices Act and so to terminate the court case which had been brought against it by the Director-General of Fair Trading. In return the Stock Exchange made a commitment to dismantle long-standing restrictions on trading and the process was begun that led to the Financial Services Act (1986) and the ‘Big Bang’ in October of that year. These reforms allowed the City to adapt to the highly competitive international markets in which it now operates and have been crucial to its continued success.

I asked Norman Tebbit to move from Employment to take over the DTI and shifted Tom King from Transport as Norman’ replacement. This enabled me to bring Nick Ridley into the Cabinet, as Transport Secretary. Nick’ arrival in Cabinet was a silver lining to the cloud that hung over us following Cecil’ departure. Like Keith Joseph, Nick was someone who wanted office in order to do what he believed was right. Although in my experience there are few politicians for whom doing the right thing is of no importance, there are fewer still for whom it is the only consideration. Nick and Keith were among them. Nick provided the Government (and me in particular) not only with a clear vision but also with technical solutions to policy problems. At Transport he pressed ahead with privatization and deregulation. And in the later years of the Government he was someone I could rely upon for complete loyalty and honest dealing. Indeed, it was an excess of honesty that ultimately brought him down. (The American journalist, Michael Kinsley, has defined a ‘gaffe’ as telling an inconvenient truth. I have to say that my own experience bears out the accuracy of his definition.)

Such was the team on which the success of the Government’ second term depended. I hoped that they would share the zeal and enthusiasm of their captain.

THE STUTTGART EUROPEAN COUNCIL

At the end of the week in which I formed the new Government I flew to Stuttgart for the postponed European Council, which was chaired by Chancellor Kohl. We had not ourselves asked for the postponement of the Council, which had originally been planned for 6–7 June, but once the proposal was made we welcomed it since it allowed more time to campaign. Probably our European partners thought that they might extract a few more concessions from a newly re-elected government than from one under the domestic pressures that elections pose.

The main issue at Stuttgart would, as usual, be money — ‘our money’ in particular — though I was discreet enough on this occasion not to use the phrase. I had to ensure a satisfactory refund for Britain in 1983 and to make as much progress as possible towards a long-term solution that would continue to cut our net contributions to the Community. This involved achieving long-term reform of the Community’ finances.

Had I had to argue my case on grounds of equity alone I would have been far from sanguine about the likely outcome. But by now the Community was on the edge of bankruptcy: the exhaustion of its ‘own resources’ was only months away and it was possible to increase them only by agreement of all the member states to raise the 1 per cent VAT ‘ceiling’. This had the effect attributed by Dr Johnson to the imminent prospect of the gallows: the minds of our European partners were beginning to concentrate wonderfully. The requirement of unanimity gave me a strong hand and they knew that I was not the person to underplay it. Of course, it would have been perfectly possible for the Community to live within the discipline imposed by the 1 per cent ceiling, if it had had the will to cut out the waste, inefficiency and plain corruption in its own programmes: after all, VAT revenues are remarkably buoyant. But I knew full well that the will was lacking and that profligacy and that particular degree of irresponsibility which is bred by unaccountable bureaucracy would continue for as long as difficult decisions could be postponed.

It was clear that West Germany’ attitude would be crucial. The Germans were the Community’ largest net contributors. Admittedly, West German farmers enjoyed the benefits of the extravagant Common Agricultural Policy, but at a certain point the interests of the West German taxpayer would become paramount. The Germans followed our lead in opposing an increase in ‘own resources’ until the Community’ finances had been put on a sounder footing. But we had some suspicions that they would waver when the pressure mounted. They also resented — and I do not blame them — having to contribute towards the funding of the British rebate which I had won. But my answer to that, of course, was to urge them to exercise leadership to sort out the fundamental imbalance of the Community’ finances once and for all. Chancellor Kohl was not usually the most energetic of Council participants unless some German domestic issue was directly involved, but I knew that he would want to make a success of the Stuttgart Council to crown his first European presidency. I hoped that this and the other circumstances I have described would work in favour of an outcome I could accept.

The Council decided to leave negotiations on the future financing of the Community to the Foreign and Finance ministers, initially at least; they would report to the next full Council in December. The Commission had already produced its own proposals, some of which we favoured and others we did not. A refund was agreed for Britain to cover the year 1983. But the real decisions were postponed for another six months — six months nearer the time when the Community would find itself broke.

I was not disappointed with this outcome and I subsequently took every opportunity to praise Chancellor Kohl’ handling of the Council. The results were rather better for Britain than they first appeared. The 1983 refund was less than we might have hoped. But when you took the four years to 1983 together we had obtained a refund of about two-thirds of our unadjusted net contribution, which was the goal we had publicly set ourselves. Considering the strong opposition we met from France, I felt that was a useful achievement. There was some speculation in the British newspapers that I had weakened the British position as regards the increase in the VAT ‘ceiling’, but this was only a negotiating ploy and a close reading of the communiqué — as well as any reading of my own mind — would demonstrate that I had done no such thing. (This was, indeed, to become very publicly apparent before the end of the year.)

There was one other aspect of the Stuttgart Council. The Council issued what was called — in the grandiloquent language which had been used about this subject since before we joined — a ‘Solemn Declaration on European Union’. I took the view that I could not quarrel with everything, and the document had no legal force. So I went along with it.

When I was questioned later about the declaration in the House of Commons, I replied: ‘I must make it quite clear that I do not in any way believe in a federated Europe. Nor does that document. ‘Certainly it did not transfer powers to a centralized Europe in the way that the Maastricht Treaty was to do. But the high-flown language of the declaration has become familiar from later developments: the linguistic skeleton on which so much institutional flesh would grow was already visible.

THE ECONOMY

It sometimes happens in politics that relatively small matters, with no obvious connection between them, combine to create a political atmosphere in which the Government seems to do nothing right. I have suggested earlier some underlying reasons why such an atmosphere developed at the start of our second term. But there were other problems. There continued to be misunderstanding and resentment of the new system by which the retirement pension was uprated in line with inflation. Many of our best supporters were angry that proposals to reintroduce capital punishment were thrown out on a free vote by a Conservative-dominated House of Commons, some of whose members had undoubtedly dissembled their views (or worse) to those who had selected them. Also, shortly afterwards Members of Parliament decided to vote themselves a pay rise considerably greater than the Government had recommended, at a time when unemployment was rising and many people could expect little or no increase.

But this malaise would have had little importance had it not been for the economy. The underlying economy was sound: indeed, as we pressed ahead with further structural changes, especially privatization, it would steadily become sounder still. When I spoke in the House of Commons on 22 June 1983, introducing the Queen’ Speech, I could point to the lowest rate of inflation since 1968, to higher output and to record levels of productivity. But part of the trouble was that after an election a government’ past achievements are immediately discounted. As one of my advisers put it, paraphrasing La Rochefoucauld: ‘the only gratitude in politics is for favours still to be received.’ And we had been so lucky in choosing the date of the election (though it was not all luck) that expectations about the rate of future progress had risen too high. Inflation started to move up from the low point of 3.7 per cent in May and June to reach 5.3 per cent in December, though it would stay at that level or lower for the next twelve months. Unemployment also began to rise again, remaining above three million, and it seemed very difficult to predict when the higher economic growth which was now apparent would begin to bring the total down. Although the interest rate actually fell, mortgage rates rose to meet the extra demand for mortgages — in itself a sign of the progress we were making towards a property-owning democracy, but naturally unpopular with borrowers. All this led to accusations that the Government had ‘cooked the books’ on the economy before the election.

It was public spending which became the focus of this attack. Indeed, there had been tell-tale signs of trouble in the weeks before the election. In April, the first month of the new financial year, the PSBR was well above target and it soon became clear that the provisional outturn for the PSBR for 1982–3 — a figure we regularly published — would be £9.2 billion, £1.7 billion higher than the budget estimate. It was possible that lower than expected revenues were part of the problem. But there had been an earlier misjudgement about the extent to which cash limits would be underspent, and much of the problem arose from the action we took to correct this. The previous winter we had had such strong evidence that capital programmes were being underspent that we had taken positive action to encourage spending up to target. (In principle, it is right to spend up to planned levels, otherwise you pile up spending for future years, damage the construction industry and increase unemployment.)

I had discussed the problem with the then Chancellor, Geoffrey Howe, on Thursday 21 April. As so often, it seemed that the Ministry of Defence had been the main villain. The last instruction from the Treasury to the MoD before the budget had been to minimize their underspending. The MoD had complied with unwonted energy. Having been predicting a substantial underspend, they turned out to be overspending with a vengeance. Geoffrey and I were appalled and decided to give the MoD a much-needed rebuke. But the damage had been done.

After the election the new Chancellor had another look at the borrowing figures. Nigel Lawson found himself in an unenviable position. The Treasury’ summer forecast had just been completed and it suggested that the PSBR for the current financial year would be overrun by &3 billion. Inevitably there was a large margin of error in these figures — as always with the PSBR which is constituted by the difference between two enormous sums of money, public sector income and expenditure. But the signs were bad. To add to the problem, the money supply figures for May were poor and we knew that sterling, though high at the time, might soon come under pressure if American interest rates kept on rising. In any case, if we were really on course for a huge overshoot in the PSBR, something had to be done.

When on Wednesday 29 June I received a note from Nigel setting out how he wished to act I too became distinctly worried and emerged no less so from the discussion I had with him the following evening. It is never an easy matter to rein back public spending part way through a fiscal year, but the argument for early action was overwhelming. The earlier you make a cut the less drastic it has to be and the more chance you have of sustaining your credibility with the markets, which is a useful bonus. The obverse of this, however, was that to announce further public expenditure cuts just weeks into a new Parliament would be extremely unpopular and politically embarrassing. The public would think that we had deceived them at the election and spending ministers would feel bounced. Nigel fully understood this and it was a mark of his courage that he recommended immediate action.

He made three proposals. The first was to raise more money for the Government by selling an extra tranche of BP shares. But while this might help fund the PSBR it did not allow escape from the need for real cuts in spending. It was not possible to take action on the non-cash-limited programmes in mid-year, so that we had to concentrate on cash-limited spending. But should the cash squeeze apply to all of this spending or just some of it? Nigel’ initial view was that it should only apply to the non-pay element of central government spending because pay was extremely difficult to hold down successfully. My advisers and I queried this and after Nigel and I talked the matter through at Chequers the following Saturday we settled on a package that included the pay bill within the squeeze. Alan Walters shared Nigel’ view that immediate action had to be taken and urged a 3 per cent reduction in cash limits, greater than Nigel originally proposed. In fact, we settled on a 1 per cent reduction in the pay bill and a 2 per cent reduction in other cash limits.

Nigel had one further ingenious proposal, originally suggested by Leon Brittan earlier in the year: the introduction of ‘end-year flexibility’. By Treasury convention, departments which failed to spend up to their allocation during the financial year were not allowed to carry over the unspent sum into the following year; they lost the money, in effect. The result, of course, was that departments which found themselves underspending as the end of the financial year approached tended to put on a spurt to use up their allocation and public spending would surge. ‘End-year flexibility ‘sought to diminish this effect by permitting them to carry over a proportion of that underspending into the next year.

Altogether these proposals for asset sales, public spending cuts and an improvement in the technique of public expenditure control would, we believed, reduce that year’ public expenditure by more than &1 billion.

Nigel and I expected trouble at Cabinet. It would have been helpful if we could have briefed ministers in advance, but we knew that if papers were circulated the proposals would probably leak. In the end some ministers were briefed individually, as were the Permanent Secretaries of their Departments, but despite our precautions when Cabinet met on Thursday 7 July to discuss the proposals, they had already appeared in print, splashed across the front pages that morning. This did not make the meeting any easier. But Cabinet faced up to what had to be done and Nigel was able to announce the decisions to the House of Commons that afternoon. We emphasized that these were not cuts in planned public spending but rather a package of savings necessary to remain within it. It was perhaps too much to hope that this distinction would be widely grasped.

DIPLOMACY: VISITS TO THE NETHERLANDS, WEST GERMANY, CANADA AND THE UNITED STATES

I spent most of August on holiday in Switzerland, getting over an awkward and painful eye operation that I had had at the beginning of the month. On Friday 29 July I had been at the passing out parade at the RAF College at Cranwell. When the parade and the fly-past were over I turned and walked up some steps into the College for lunch. All of a sudden something happened to my right eye: black spots floated across the field of vision. I rubbed, but they wouldn’t go away. Later when I was back at Chequers I bathed the eye. But it did not improve.

On Sunday I rang my doctor. I went over to his house, not far from Chequers, and he examined the eye — having heard my description of what had happened he already had an eye specialist there. He told me that he thought I had a torn and detached retina and suggested laser treatment, followed by two days lying down until we could be sure that it had worked. Lying still for very long was something I found difficult, but I filled part of the time enjoyably enough listening to novels on tape. On Wednesday I went to his surgery to receive the verdict. I had packed an overnight case, as an insurance policy, half-thinking that I would not need it. But the news was bad. He examined me again and said that there had been no improvement at all; if anything, my eye was worse. As a precaution he had already booked an operating theatre for later that day and I went straight to hospital where the operation was successfully performed.

By the time I returned to England from my Swiss holiday I felt fully recovered, which was all to the good since I had to make several important foreign visits in September.

The first of these was to the Netherlands and West Germany. The two issues which dominated my talks in both countries were the deployment of Cruise and Pershing missiles and the approaching European Council in Athens, which was due to be held in December. On Monday 19 September I arrived in the Netherlands to be met by the Dutch Prime Minister, Ruud Lubbers. I liked Mr Lubbers, a young practical businessman who now applied his talents to good effect in Dutch politics. Although his instincts were federalist, like the leaders of other small countries in the European Community, in day-to-day Community business we often found ourselves on the same side. This was very much a short working visit with no formal speeches. Over lunch, I discussed the general political scene with Mr Lubbers and his Foreign minister, Hans Van Den Broek — another Dutchman whose company and conversation I enjoyed, even when I did not agree with him. The Dutch Government, being a coalition, was in its usual somewhat fragile condition, with problems over its budget and in the background the question of nuclear arms exercising a general destabilizing influence.

The summit’ plenary session in the afternoon was entirely devoted to European Community matters. There was a large measure of agreement between us on the fundamental practical questions, but the Dutch urged compromise in the run-up to Athens and I was not going to give the impression that our stance was weakening. We seemed to be getting nowhere in our campaign for a tough guideline on future CAP expenditure. Moreover, I was concerned that the Community should not drift further into protectionism. As regards the future financing of the Community, there was no question of my agreeing at Athens to an increase in the Community’ ‘own resources’ in isolation from the other essential conditions we had laid down. I also sought to draw Dutch attention to something which is still not properly grasped: if the Community expected the Germans to go on paying an open-ended share of its costs this would store up political trouble for the future. He who paid the piper would eventually wish to call the tune.

From the Netherlands I flew on to West Germany, where I visited British forces. On Wednesday afternoon (21 September) I arrived in Bonn for talks and dinner with Chancellor Kohl. He and I discussed the approach to the Athens summit. I told him that it would be deplorable if the impetus he had given to reform at Stuttgart were now lost. So I was relieved when Herr Kohl said that sorting out the CAP and the system of financing the Community must take priority over new policies. He also told me that the European Community was ‘politically essential to Germany’ but it was ‘no good having the Community as a roof over Germany if the roof was leaking’ — an interesting metaphor, I thought; and anyone dealing with the European Community should pay careful attention to metaphors. We in Britain were inclined to minimize their significance — whether about ‘roofs’ or ‘trains’ — and to concentrate on the practicalities — mending the leaking roof, in Chancellor Kohl’ phrase. We had to learn the hard way that by agreement to what were apparently empty generalizations or vague aspirations we were later held to have committed ourselves to political structures which were contrary to our interests. But this is to anticipate a little.

However, I was already beginning to feel — I did so increasingly as the years went by — that there was an imbalance in western diplomacy. European Community heads of government and ministers met regularly, drawn together initially by Community problems, but at the same time discussing wider international issues. By contrast, there was not enough contact and understanding between the European countries and our transatlantic allies in NATO — the United States and Canada. I hoped that my visit to Canada and the United States at the end of September would do something to put this right.

The Canadian visit was, in fact, made on their initiative. The sensitive question of the patriation of the Canadian Constitution from the Westminster Parliament was now behind us.[42] My visit was an opportunity to emphasize the value of trade and investment links and, still more important, to try to persuade Canadians to take a larger and more vigorous part in the western alliance than they had under their present Prime Minister, Pierre Trudeau. It was common knowledge that Pierre Trudeau and his Liberal Government — who sometimes seemed more interested in the politics of the Third World than in the great East-West issues — were extremely unpopular. But I would also be meeting the Conservative prime ministers of the provinces of Ontario and Alberta, as well as the new Conservative leader at federal level, Brian Mulroney, who had just been elected to the Canadian Parliament and who was firm favourite to replace Pierre Trudeau as Prime Minister at the next election.

I flew into Ottawa on the evening of Sunday 25 September and had supper at the High Commission, one of the great historic buildings in Ottawa. Two of the paragraphs of the speech I was to deliver the following day to the Canadian House of Commons were in French and a French teacher had been specially laid on when I arrived so that I could get my pronunciation just right and avoid international incidents.

The following morning I had talks with Pierre Trudeau and his Cabinet. East-West issues provided the main point of contention, as I had thought they would. Mr Trudeau’ line was that technicians had taken over arms control negotiations from the politicians, and that this was why they were getting nowhere. I did not agree. After all, disarmament talks were bound to be highly technical: if we got the technicalities wrong we would be in trouble. However, Mr Trudeau developed his theme, arguing that the shooting down of the South Korean Airliner by the Soviets — with the loss of Canadian lives — on 1 September also demonstrated the dangers when politicians were not in command. He understood that the aircraft had been shot down on the orders of a local military commander without reference to Moscow. I replied that what this really showed was that the Soviet command structure and rules of engagement were unsound, because these should not have allowed an aircraft to be shot down without political direction. What liberal leftists like him seemed unable to grasp was that such acts of brutality as the shooting down of a civilian aircraft were by no means uncharacteristic of the communist system itself.

Later that morning I had a private meeting with Mr Trudeau. We discussed international affairs — Hong Kong, China, Belize — but most interesting for me was his impression of Mikhail Gorbachev, of whom I had heard but whom I did not yet know. Mr Gorbachev had visited Canada earlier in the year, under the pretext of examining Canada’ agricultural achievements but really with a view to discussing long term security questions. Pierre Trudeau had found him sticking to the conventional line as regards the INF negotiations, but without the blinkered hostility which characterized the other Soviet leaders. Mr Gorbachev had apparently been prepared to argue and make at least verbal concessions. I did not at this time foresee the importance of Mr Gorbachev for the future. The conversation served mainly to confirm my view that we must persuade the new Soviet leader, Yuri Andropov, to visit the West. How were we to make a proper assessment of the Soviet leaders if we did not have personal contact with them? Still more important, how were we to persuade them to see further than their own propaganda if we never showed them what the West was really like?

After lunch I had my first meeting with Brian Mulroney. Mr Mulroney was undergoing that most misleading of experiences — a political honeymoon. He was charming and charismatic but he lacked any real political experience. It was to his credit that he fully realized this and at his request I spent most of our time talking about my own experience of Opposition and government. Brian Mulroney and I were to become good friends, though we were very different sorts of politician and were to have some serious disagreements. As Leader of the Progressive Conservatives I thought he put too much stress on the adjective as opposed to the noun.

The speech I delivered to the Canadian Parliament that afternoon went very well. It was a more powerful defence of values and principles than they were used to hearing from their own Government and was interrupted by frequent applause. Apart from one or two MPs, I received a standing ovation which included members of the Diplomatic Corps. This itself provided an interesting vignette of attitudes behind the Iron Curtain: the Soviet, Czech and Bulgarian Ambassadors remained rooted to their seats, while the Hungarian and the Pole rose enthusiastically to join the applause.

That evening a dinner was given for me by Mr Trudeau in Toronto. A problem I was to find throughout this visit first surfaced acutely on this occasion. The dinner was preceded by a walkabout through a large crowd of Liberal Party supporters and the guests at the dinner itself seemed similarly partisan, though very welcoming. Although it was polite and friendly, Mr Trudeau’ speech emphasized the political differences between us. As he spoke, I took notes and used these as the basis of my off-the-cuff reply which took the form of a forthright defence of free enterprise. This brought cheers from the back of the hall though, as one of my party remarked, whether these came from Conservatives who had infiltrated the gathering or from Liberals who had been converted was unclear.

From Canada I flew to Washington for a meeting with President Reagan. Overall, the President’ domestic political position was strong. In spite of the difficulties which the US budget deficit was causing, the American economy was in remarkably good shape. It was growing faster with markedly less inflation than when he came into office and there was widespread appreciation of this. As he himself used to say: ‘now that it is working, how come they don’t call it Reaganomics any more?’ The President had also set his imprint on East-West relations. The Soviets were now definitely on the defensive in international relations. They were the ones who would have to decide how to react to the forthcoming deployment by NATO of intermediate-range nuclear weapons. And they were in the dock as a result of the shooting down of the Korean Airliner. In Central America the Government of El Salvador which the United States had been backing against communist insurgency was looking stronger. Perhaps only in the Middle East had the Administration’ policy not proved even a qualified success. Arab-Israeli peace talks were unlikely to be resumed and there was a growing danger of the US and its allies becoming irrevocably sucked into the turbulent politics of the Lebanon. The President had yet to announce whether he would stand for a second term, but I thought and hoped that he would and it looked as if he would win.

Our discussion that morning and over the lunch which followed covered a wide canvas. The President was optimistic about events in Central America. As he put it, El Salvador had not been in the news for a long time — because the Government there was winning and so the American media were deprived of their nightly stories told from the viewpoint of the guerillas. I raised the question of the US resuming the supply of arms to Argentina, telling him that a decision to do this would simply not be understood in Britain. The President said that he was aware of that, but there would be great pressure for the resumption of arms supplies if a civilian regime were established in Buenos Aires.

I also took the opportunity to explain our opposition, which hitherto the Americans had always supported, to the inclusion of the British and French independent nuclear deterrents in the arms talks between the United States and the Soviet Union. The Soviet insistence on the inclusion of our deterrents was simply a device to divert attention from the American proposal for deep reductions in strategic nuclear weapons. From the point of view of Britain, our deterrent constituted an irreducible minimum, but it was only 2.5 per cent of the Soviet strategic arsenal. I repeated what I had told the Senate Foreign Relations Committee that morning: the inclusion of the British deterrent would logically mean that the United States could not have parity with the Soviet Union. Would that really be acceptable to the United States? Or if, say, the French decided to increase their nuclear weapons, would the United States really be prepared to cut its by an equivalent amount? The President seemed to take my point, which I found reassuring. I for my part was able to reassure him as regards the timetable for deployment of Cruise and Pershing missiles in Europe. He had been concerned to learn that the crucial debate on this matter in the Bundestag had been delayed. He had no doubt about the firmness of Chancellor Kohl but he was not so sure about some of those around him. He was convinced that the whole Soviet strategy was still aimed at preventing deployment. I said that he should be in no doubt that Britain would deploy the intermediate-range nuclear missiles as planned, and I believed that West Germany would do the same.

However, our discussion turned on the strategy we should pursue towards the Soviet Union generally over the years ahead. I had been giving a good deal of thought to this matter and had discussed it with the experts at a Chequers seminar.[43] I began by saying that we had to make the most accurate assessment of the Soviet system and the Soviet leadership — there was plenty of evidence available about both subjects — so as to establish a realistic relationship: whatever we thought of them, we all had to live on the same planet. I congratulated the President on his speech to the UN General Assembly after the shooting down of the Korean Airliner and said how right he was to insist that despite this outrage the arms control negotiations in Geneva should continue. The President agreed that now was not the time to isolate ourselves from the Soviet Union. When the USSR failed to prevent NATO’ INF deployment they might start to negotiate seriously. Like me, he had clearly been considering the way in which we should deal with the Soviets once that happened.

The President argued that there were two points on which we had to form a judgement. First, the Russians seemed paranoid about their own security: did they really feel threatened by the West or were they merely trying to keep the offensive edge? The second question related to the control of Soviet power itself. He had always assumed that in the Soviet Union the Politburo controlled the military. But did the fact that the first public comments on the Korean Airliner incident had come from the military indicate that the Politburo was now dominated by the generals? As regards negotiation with the Soviets, we should never forget that the main reason why they were at the negotiating table in Geneva at all was the build-up of American defences. They would never be influenced by sweet reason. However, if they saw that the United States had the will and the determination to build up its defences as far as necessary, the Soviet attitude might change because they knew they could not keep up the pace. He believed that the Russians were now close to the limit in their expenditure on defence: their internal economic difficulties were such that they could not substantially increase the proportion of their resources devoted to the military. The United States, on the other hand, had the capacity to double its military output. The task was to convince Moscow that the only way it could remain equal was by negotiations because they could not afford to compete in weaponry for very much longer. The President recalled a cartoon which had Mr Brezhnev saying to a Russian general, ‘I liked the arms race better when we were the only ones in it.’

Now that the Soviet system has crumbled along the lines he envisaged, his words seem prophetic. It may be that one reason why President Reagan and I made such a good team was that, although we shared the same analysis of the way the world worked, we were very different people. He had an accurate grasp of the strategic picture but left the tactical detail to others. I was conscious that we must manage our relations with the communists on a day-to-day basis in such a way that events never got out of control. This was why throughout my discussion with the President I kept on coming back to the need to consider precisely how we should deal with the Soviets when they faced up to reality and returned to the negotiating table in a more reasonable frame of mind.

That evening I made a speech at a dinner held by the Winston Churchill Foundation of the United States in which I set out my views on these questions:

We have to deal with the Soviet Union. But we must deal with it not as we would like it to be, but as it is. We live on the same planet and we have to go on sharing it. We stand ready therefore, if and when the circumstances are right, to talk to the Soviet leadership. But we must not fall into the trap of projecting our own morality on to the Soviet leaders. They do not share our aspirations; they are not constrained by our ethics; they have always considered themselves exempt from the rules that bind other states.

I also had a slightly different message which I wanted those who did not share all of President Reagan’ and my analysis to heed:

Does it need saying that the Soviet Union has nothing to fear from us? For several years after the war the United States had a monopoly of nuclear weapons, but it was a threat to no one. Democracies are naturally peace-loving. There is so much which our people wish to do with their lives, so many uses for our resources other than military equipment. The use of force and the threat of force to advance our beliefs are no part of our philosophy.

The speech was widely reported and generally well received in the United States. But I was soon to feel, in the light of America’ response to a political crisis in a small island in the Caribbean, that at least part of the message had not been understood.

PROBLEMS IN THE TRANSATLANTIC RELATIONSHIP: LEBANON AND GRENADA

Unexpectedly, the autumn of 1983 turned out to be a testing time for Anglo-US relations. This was because we adopted different attitudes towards crises in the Lebanon and in Grenada.

These events took place against the background of great strategic decisions for the West. November 1983 was the time we had agreed for the deployment of intermediate-range missiles in Britain and West Germany: I had to ensure that nothing interfered with it. Doing so depended to a large degree on demonstrating that the United States could indeed be relied upon as a trustworthy ally.

I had wider objectives as well. I needed to ensure that whatever short-term difficulties we had with the United States, the long-term relationship between our two countries, on which I knew Britain’ security and the free West’ interests depended, would not be damaged. I was equally determined that international law should be respected and that relations between states should not be allowed to degenerate into a game of realpolitik played out between contesting power blocs. Britain had fought the Falklands War in defence of a principle of international law — as well as to defend our people.

This is not the place to describe the full tragedy of the Lebanon. That formerly prosperous and democratic state has been shattered by civil war since the early 1970s and made to serve as the battleground for the competing ambitions of Syrians, Palestinians, Islamic fundamentalists, Israelis and local warlords.

Shortly before the end of the Falklands War Israel had launched a full-scale invasion of Lebanon, which led in August 1982 to the deployment of a mainly American Multi-National Force (MNF) in Beirut. The MNF was withdrawn after a brief period but returned in September following the massacres that took place in the Palestinian refugee camps in the suburbs of Beirut which shocked the world. At this point it consisted of American, French and Italian forces. The Lebanese Government asked Britain to make a contribution too. I was reluctant, and explained that in my view we were overextended as it was. But they sent a special envoy to see me who told me that Britain held a unique position and that it was vital that it be represented in the Force. So I agreed, with the support of Michael Heseltine and Geoffrey Howe, that about 100 of our men currently stationed in Cyprus with the UN should join the MNF. In practice, the British contingent had a slightly different role from the others, manning no substantial fixed positions. The mandate of the MNF was to assist the Lebanese Government and the Lebanese Armed Forces to restore their authority over the Beirut area and so help to ensure the safety of the population there.

I am always uneasy about any commitment of British forces if it is made without very clear objectives. The original limited mandate of the MNF was indeed clear, at least on paper. But later in September we came under strong pressure from the Americans and the Italians to increase our commitment and to extend the mandate. The doubt in everyone’ mind was whether the current force would be sufficient to allow the Lebanese Government and Army to restore their authority. But if it was not sufficient, that fact was, of course, as much an argument for withdrawing the MNF as for expanding it. I held a meeting to discuss these matters with ministers and advisers at Chequers on Friday 9 September. I was alarmed by reports that the US seemed determined to take a much tougher line with the Syrians than seemed sensible. Although Syria was certainly an obstacle to progress, its support for any solution to the Lebanese crisis would be essential.

The military and political situation in the Lebanon was deteriorating. In the Chouf mountains south of Beirut, the forces of the Druze minority, historically friendly to Britain, were locked in a conflict with the Lebanese Army which neither side seemed able to win: it looked like a military stalemate. The Druze were under pressure from their Syrian backers to secure wider objectives than they themselves probably wanted. Certainly, they had no quarrel of their own with the British and sought to avoid firing on our position. On one occasion during a small lunch party at Downing Street I was told that a Druze shell had fallen close to our troops. Michael Heseltine was at the lunch, so I asked him to telephone the Druze leader, Walid Jumblatt, to have the shelling stopped — and it was. Our force was small, exposed and isolated, and I was becoming increasingly concerned about what might happen.

For their part, the Lebanese Government and the Christian President Amin Gemayel were unable to free themselves from their identification with the old Phalange movement and so could not draw on wider Lebanese support. As a result they had to lean increasingly on the Americans. Three-quarters of the Lebanon was now occupied by the Syrians or the Israelis and the prospects for peace and stability for the remainder seemed bleak.

Then on Sunday 23 October a suicide bomber drove a lorry laden with explosives into the basement of the US Marine headquarters in Beirut. The building was totally destroyed. A second bomb shortly afterwards did the same to the headquarters of the French Paratroopers. Altogether 242 American and 58 French troops were killed — in total more than Britain had lost in the Falklands War. Responsibility was claimed by two militant Shia Muslim groups. My immediate reaction was one of shock at the carnage and disgust at the fanatics who had caused it. But I was also conscious of the impact it would have on the position and morale of the MNF. On the one hand, it would be wrong to give the terrorists the satisfaction of seeing the international force driven out. On the other, what had happened highlighted the enormous dangers of our continued presence and the question arose about whether we were justified in continuing to risk the lives of our troops for what was increasingly no clear purpose.

At this point my attention was abruptly diverted by events on the other side of the world. The humiliation inflicted on the United States by the Beirut bombing undoubtedly influenced its reaction to the events which were taking place on the island of Grenada in the eastern Caribbean.

On Wednesday 19 October 1983 a pro-Soviet military coup had overthrown the Government of Grenada. The new regime were certainly a vicious and unstable bunch. With the exception of General Austin, who led the coup, they were all in their twenties and a number of them had a record of violence and torture. Maurice Bishop, the overthrown Prime Minister, and five of his close supporters were shot dead. There was outrage at what had happened among most of the other Caribbean countries. Jamaica and Barbados wanted military intervention in which they would have liked the Americans and us to take part. My immediate reaction was that it would be most unwise of the Americans, let alone us, to accede to this suggestion. I was afraid that it would put foreign communities in Grenada at severe risk. There were some 200 British civilians there and many more Americans. The main organization of Caribbean States, CARICOM, was not prepared to agree to military intervention in Grenada. However, the Organization of Eastern Caribbean States, the OECS, decided unanimously to put together a force and called on other governments to help in restoring peace and order in the island. Clearly, the American reaction would be crucial.

It was easy to see why the United States might be tempted to go in and deal with the thugs who had taken over in Grenada. But as I always pointed out to the Americans afterwards, though apparently to little effect, Grenada was not transformed from a democratic island paradise into a Soviet surrogate overnight in October 1983. The Marxist Maurice Bishop had already come to power there through an earlier coup in March 1979: he had suspended the Constitution and put many of his opponents in gaol. He was, indeed, a personal friend of Fidel Castro. The Americans had had hostile relations with his Government for years. Bishop was, admittedly, something of a pragmatist and had even made a visit to the United States at the end of May 1983. It seems that it was, in part, a dispute about the Grenada Government’ attitude to private enterprise which brought about the clash with his colleagues in the Marxist ‘New Jewel Movement’ that ultimately led to his fall.

The new ‘hemispheric’ strategy which President Reagan’ Administration was pursuing, combined with experience of living beside the Soviet satellite of Cuba, in our view led the United States to exaggerate the threat which a Marxist Grenada posed. Our intelligence suggested that the Soviets had only a peripheral interest in the island. By contrast, the Government of Cuba certainly was deeply involved. A new airfield was being constructed as an extension to the existing airport. It was due to open in March 1984, though aircraft would be able to land there from about January. The Americans saw this as having a military purpose. It did indeed seem likely that the Cubans, who were providing the workforce for the project — and an uncertain number of Cuban military personnel also — regarded it in this light. For them, it would be a way of managing more easily the traffic of their thousands of troops in Angola and Ethiopia back and forth to Cuba. It would also be useful if the Cubans wished to intervene closer to home. But our view remained that the Grenada Government’ main purpose was, as they claimed, a commercial one, planning to cater for the undoubtedly exaggerated projections of their currently minimal tourist industry. So the position on the eve of the overthrow of Maurice Bishop was that Grenada had an unsavoury and undemocratic regime with close and friendly relations with Cuba. On such an analysis, the coup of 19 October 1983, morally objectionable as it was, was a change in degree rather than in kind.

On Saturday 22 October — the day before the Beirut bomb outrages — I received a report of the conclusions of the United States National Security Council meeting about Grenada. I was told that it had been decided that the Administration would proceed very cautiously. An American carrier group based on the USS Independence, which had been heading for the Mediterranean, had been diverted south to the Caribbean; it was now east of the southern tip of Florida and due north of Puerto Rico. An amphibious group with 1900 marines and two landing craft was 200 miles further east. The Independence would reach the area the following day but would remain well to the east of Dominica and well to the north of Grenada. The amphibious group would reach the same area later on the following day. The existence of this force would give the Americans the option to react if the situation warranted it. It was emphasized, however, that they had made no decision going beyond these contingency deployments. They had received a firm request from the east Caribbean heads of government to help them restore peace and order in Grenada. Jamaica and Barbados were supporting the request. If the Americans took action to evacuate US citizens they promised to evacuate British citizens as well. We were also assured that there would be consultation if they decided to take any further steps.

That evening I spent a good deal of time talking it all over on the telephone from Chequers. I spoke with Richard Luce, now back in the Foreign Office as Minister of State (Geoffrey Howe was in Athens), Willie Whitelaw and Michael Heseltine. I approved the order that HMS Antrim should sail from Colombia to the area of Grenada, remaining beyond the horizon. In public it should be made clear that this was a precautionary move designed to help with the evacuation of British subjects from Grenada should this be required. In fact, it did not seem necessary. The Deputy High Commissioner in Bridgetown (Barbados) reported after a day’ visit to Grenada that British citizens were safe, that the new regime in Grenada was willing to allow arrangements to be made for them to leave if they wished and that Sir Paul Scoon, the Governor-General (the Queen’ representative on the island) was well and in reasonably good heart. He did not request our military intervention, either directly or indirectly.

Suddenly the whole position changed. What precisely happened in Washington I still do not know, but I find it hard to believe that outrage at the Beirut bombing had nothing to do with it. I am sure that this was not a matter of calculation, but rather of frustrated anger — yet that did not make it any easier for me defend, not least to a British House of Commons in which anti-American feeling on both right and left was increasing. The fact that Grenada was also a Commonwealth member, and that the Queen was Head of State, made it harder still.

At 7.15 in the evening of Monday 24 October I received a message from President Reagan while I was hosting a reception at Downing Street. The President wrote that he was giving serious consideration to the OECS request for military action. He asked for my thoughts and advice. I was strongly against intervention and asked that a draft reply be prepared at once on lines which I laid down. I then had to go to a farewell dinner given by Princess Alexandra and her husband, Angus Ogilvy, for the outgoing American Ambassador, J. J. Louis, Jnr. I said to him: ‘Do you know what is happening about Grenada? Something is going on.’He knew nothing about it.

I received a telephone call during the dinner to return immediately to No. 10 and arrived back at 11.30 p.m. By then a second message had arrived from the President. In this he stated that he had decided to respond positively to the request for military action. I immediately called a meeting with Geoffrey Howe, Michael Heseltine and the military and we prepared my reply to the President’ two messages, which was sent at 12.30 a.m. There was no difficulty in agreeing a common line. My message concluded:

This action will be seen as intervention by a western country in the internal affairs of a small independent nation, however unattractive its regime. I ask you to consider this in the context of our wider East-West relations and of the fact that we will be having in the next few days to present to our Parliament and people the siting of Cruise missiles in this country. I must ask you to think most carefully about these points. I cannot conceal that I am deeply disturbed by your latest communication. You asked for my advice. I have set it out and hope that even at this late stage you will take it into account before events are irrevocable.

I followed this up twenty minutes later by telephoning President Reagan on the hot-line. I told him that I did not wish to speak at any length over the telephone but I did want him to consider very carefully the reply which I had just sent. He undertook to do so but said, ‘we are already at zero.’

At 7.45 that morning a further message arrived, in which the President said that he had weighed very carefully the considerations that I had raised but believed them to be outweighed by other factors. In fact, the US military operation to invade Grenada began early that morning. After some fierce fighting the leaders of the regime were taken prisoner.

At the time I felt dismayed and let down by what had happened. At best, the British Government had been made to look impotent; at worst we looked deceitful. Only the previous afternoon Geoffrey had told the House of Commons that he had no knowledge of any American intention to intervene in Grenada. Now he and I would have to explain how it had happened that a member of the Commonwealth had been invaded by our closest ally, and more than that, whatever our private feelings, we would also have to defend the United States’ reputation in the face of widespread condemnation.

The international reaction to American intervention was in general strongly adverse. It certainly gave a propaganda boost to the Soviet Union. In its early reports, Soviet television news apparently thought that Grenada was a province of southern Spain. But soon their propaganda machine began firing on all cylinders. The Cubans were portrayed as having played an heroic role in resisting the invasion. When I went to the Commonwealth Heads of Government Meeting in New Delhi the following month it was still Grenada which was the most controversial topic of discussion. President Mugabe claimed that American action in Grenada would provide a precedent for South Africa in dealing with her neighbours. My own public criticism of American action and refusal to become involved in it also led to temporarily bad relations with some of Britain’ long-standing friends in the Caribbean. It was an unhappy time.

In Britain we had to face strong pressure, not least in the House of Commons, to renegotiate the arrangements for the deployment of Cruise missiles. The argument was that if the Americans had not consulted us about Grenada, why should they do so as regards the use of Cruise missiles. Similarly, the new leader of the SDP, David Owen, wrote in the Daily Mail on 28 October that ‘British public opinion will simply not accept any longer the Prime Minister’ refusal to insist on a dual mechanism to cover the launching procedures for any Cruise missiles that are deployed in Britain before the end of this year.’

So when President Reagan telephoned me on the evening of Wednesday 26 October during an emergency House of Commons debate on the American action I was not in the sunniest of moods. The President began by saying, in that disarming way of his, that if he was in London and dropped in to see me he would be careful to throw his hat through the door first. He said he very much regretted the embarrassment that had been caused and wanted to explain how it had all happened. It was the need to avoid leaks of what was intended which had been at the root of the problem. He had been woken at 3 o’clock in the morning with an urgent plea from the OECS. A group had then convened in Washington to study the matter and there was already fear of a leak. By the time he had received my message setting out my concerns the zero hour had passed and American forces were on their way. The military action had gone well and the aim was now to secure democracy.

There was not much I felt able to say and so I more or less held my peace, but I was glad to have received the telephone call. At that Thursday’ Cabinet there was a long discussion of what had happened. I told my colleagues that our advice against US intervention had, I believed, been sound. But the US, for its part, had taken a different view on an issue which directly touched its national interests. Britain’ friendship with the United States must on no account be jeopardized.

Just as events in the Lebanon had affected American action in Grenada, so what I had seen in the crisis over Grenada affected my attitude to the Lebanon. I was concerned that American lack of consultation and unpredictability might be repeated there with very damaging consequences.

Naturally, I understood that the United States wanted to strike back after the terrorist outrage against its servicemen in Beirut. But whatever military action now took place, I wanted it to be a lawful, measured and effective response. I sent a message to President Reagan on 4 November welcoming assurances which Geoffrey Howe had received from George Shultz that there would be no hasty reaction by the Americans in retaliation and urging that a more broadly based Lebanese Government be constructed. The President replied to me on 7 November, emphasizing that any action would be a matter of self-defence, not of revenge, but adding that those who committed the atrocity must not be allowed to strike again if it was possible to prevent them. A week later he sent me a further message saying that although he had not yet made a final decision he was inclined to take decisive but carefully limited military action. The US had reports of planning for other terrorist acts against the MNF and he intended to deter these. He added that, because of the need for absolute secrecy, knowledge of his current thinking was being severely limited within the US Government.

I quickly replied to the President. I said that I well understood all the pressures upon him to take action but I wanted to give him my frank views about the decision which only he could take. Any action must in my view be clearly limited to legitimate self-defence. It would be necessary to ensure the avoidance of civilian casualties and minimize the opportunities for hostile propaganda. Surprise was likely to be difficult because a range of possible targets had been publicly discussed by the media for days past. I was glad that he did not envisage involving Israel or targetting Syria or Iran, action against either of which would be very dangerous. I hoped that my message was as clear as it could be: I did not believe that retaliatory action was advisable. However, in the end France did launch air strikes — at American urging, as President Mitterrand told me later. And in response to attacks on its aircraft, the United States struck at Syrian positions in central Lebanon in December.

These retaliations in the Lebanon failed to have any effect. The position there continued to deteriorate. The real question was no longer whether there should be a withdrawal but how to effect one. In February 1984 the Lebanese Army lost control of West Beirut and the Lebanese Government collapsed. The time had clearly come to get out and a firm joint decision with the United States and other members of the MNF was accordingly made to do so and detailed plans for this tricky operation were drawn up. I left it to the British commander on the ground to make the final decision as to what time of the day to move. He decided that it should be done by night. But I suddenly learned that President Reagan would be making a broadcast that evening to tell the American people what would be happening and why. Obviously it became necessary to alert our men to be ready to move as soon as they could. Then, at the last minute, while I was at Buckingham Palace for an audience with the Queen, I received a message that the President was reconsidering the decision and would not after all broadcast. As it turned out — not greatly to my surprise — the postponement decision promptly leaked and the President had to make his broadcast in any case. Clearly, we could not carry on like this, putting the safety of British troops at risk: so I refused to countermand the planned withdrawal of our men to British naval vessels lying offshore, which was duly effected with the British Army’ usual professionalism. In fact, all the MNF forces were shortly withdrawn to ships away from the perils they would have faced on shore. Nothing could now be done to save the Lebanon; the reconstituted Lebanese Government increasingly fell under the control of a Syria whose hostility to the West was now reinforced; and in March the MNF force returned home.

The American intervention in the Lebanon — well intentioned as it was — was clearly a failure. It seemed to me that what happened there contained important lessons which we should heed. First, it is unwise to intervene in such situations unless you have a clear, agreed objective and are prepared and able to commit the means to secure it. Second, there is no point in indulging in retaliatory action which changes nothing on the ground. Third, one must avoid taking on a major regional power, like Syria, unless one is prepared to face up to the full consequences of doing so.

By contrast, American intervention in Grenada was, in fact, a success. Democracy was restored, to the advantage not only of the islanders themselves but also of their neighbours who could look forward to a more secure and prosperous future. No one would weep any tears over the fate of the Marxist thugs whom the Americans had dislodged. Yet even governments acting on the best of motives are wise to respect legal forms. Above all, democracies have to show their superiority to totalitarian governments which know no law. Admittedly, the law on these matters is by no means clear, as was confirmed for me during a seminar I held after the Grenada affair to consider the legal basis for military intervention in another country. Indeed, to my surprise, I found that the lawyers at the seminar were more inclined to argue on grounds of realpolitik and the politicians were more concerned with the issue of legitimacy. My own instinct was — and is — always to found military action on the right of self-defence, which ultimately no outside body has the authority to question.

THE EUROPEAN COUNCIL AT ATHENS

Grenada was still very much on my mind when I went to Bonn for one of my regular Anglo-German summits with Chancellor Kohl on Tuesday 8 November. Like me, Chancellor Kohl was worried about the impact of the American action on European public opinion in the run-up to the deployment of Cruise and Pershing missiles later that month. The West German Government had originally been very critical of the Grenada operation but had since toned this down. Helmut Kohl was showing a good deal of courage as well as political cunning in handling West German public opinion at this crucial time, and I admired him for it.

The main purpose of my visit, however, was to seek German support for the line I would take at the European Council in Athens, now just a few weeks away. So Athens was the principal topic of my discussion with him, in which we were later joined by Geoffrey Howe and the German Foreign minister, Hans-Dietrich Genscher. I began by making what I hoped would be the welcome suggestion that the next President of the European Commission should come from Germany, if the German Government wished to put forward a candidate. As I had rather expected, it appeared that they did not. Chancellor Kohl said that he agreed with me that the Commission was too big and tended to create unnecessary work. Then a little more diplomacy: I said that our aim was to build on the excellent foundation laid under the German presidency. After this we got down to business. I stressed the need for firm control of spending on the CAP if there was to be anything left of the Community’ ‘own resources’ for other purposes, such as the development of the electronics industry, which the Germans wanted. I also warned against allowing growing protectionism to create another area of disagreement with the United States. The Germans were most interested in the future level of MC As,[44] which affected German farmers’ incomes, and the steel industry where they considered that they were receiving a raw deal and that the Italians were using subsidies to undercut German producers. I hoped that at the end of this discussion each side had understood the areas on which we would stand firm and those where compromise was possible. In particular, I hoped that the Germans realized how serious I was about achieving my objectives on the budget question at Athens.

As usual before European Councils I held a number of preparatory meetings with ministers and officials. This was partly to ensure that I was thoroughly briefed, but also to sort out with colleagues our precise objective on each issue. It was not enough to decide what was ideal for us: I had also to establish and fully master the least bad alternatives. All too often the ideal was not attainable.

In the meetings for Athens on the budget question both Nigel Lawson and I felt that we had to be really tough in pressing for the required package if there were to be any question of our agreeing to an increase in the Community’ ‘own resources’. We had to be satisfied with the way the burden on Britain was measured. The result must reflect our ability to pay. And whatever system was finally agreed must be able to be relied upon to work over time and without significant damage to the UK position. Above all, to take into account relative prosperity, we decided to press the view that if a member state’ GDP per head was 90 per cent or less of the Community average it should make no net contribution at all, with states above that threshold making progressively higher contributions the richer they were. (This scheme was known as ‘the safety net’ or ‘threshold’ system.)

I wanted to ensure that at Athens I was given a proper opportunity to have the budget discussed early on, because the talks would be long and hard. So I wrote to the Council President, the Greek Prime Minister Andreas Papandreou, asking that we start the Council by dealing with the budget imbalances and linked issues. My letter, however, crossed with one from him in which he said that he wanted to deal with agriculture first. It was not a good start.

Yet when I left for Athens there did seem grounds for reasonable optimism. The Germans appeared to understand our position and there had even been encouraging signs from the French. It was to be a somewhat longer summit than usual and I hoped the time would be used productively.

The Community heads of government met in the magnificent Zappeion Hall, a classical Greek building adapted to the needs of a modern conference centre. At the first session of the Council that afternoon I was sitting opposite President Mitterrand and Chancellor Kohl. I noticed that whereas my own table was covered with piles of heavily annotated briefing on different complex agricultural and financial issues, no such encumbrance appeared in front of my French and German counterparts. This doubtless made for an impression of appropriately Olympian detachment, but it also suggested that they had not mastered the detail. And this turned out to be the case. Throughout the meeting Chancellor Kohl seemed unwilling or unable to make much effective contribution. Worse, President Mitterrand appeared not only badly briefed on the issues but strangely — I think genuinely — misinformed about his own Government’ position, as it had previously been set out by French ministers and officials.

The Greek Presidency did not assist much either. Mr Papandreou always proved remarkably effective in gaining Community subsidies for Greece but he was less skilful in his present role as President of the European Council. As his earlier letter to me had proposed, he insisted on trying to reach agreement on agriculture before moving on to the question of finance and the British budget contribution. Obviously, it would have been made better sense to face the Community countries with the financial realities first and then deal with the agricultural issues, from which so much of the financial problem derived and on which different countries had sharply opposing national interests. And we never seemed to get by without a tear-jerking homily on the predicament of Ireland from the Irish Prime Minister, Dr Garret FitzGerald, who was determined if he could to exempt his country from the disciplines on agricultural spending. I made it clear that any preferential treatment for the Republic would have to be matched by similar treatment for Northern Ireland. The first day was more or less a write-off.

I was, therefore, already pessimistic by the time I returned that night to the British Ambassador’ Residence to discuss with my officials how we should conduct ourselves the following day (Monday). But it was only on the Monday that it became obvious that the summit would indeed fail. When the Council met, to my astonishment President Mitterrand made it clear that France’ position on the budget had completely changed. France was no longer prepared to support us in pressing for a long-term settlement of the British budget problem. In repeated interjections, I said that I would not agree to an increase in the Community’ ‘own resources’ unless spending on the CAP was contained and decreased as a share of the total budget and unless member states’ contributions were fair and in line with the ability to pay. The argument continued, but I was clearly getting nowhere.

On Tuesday I had a working breakfast with President Mitterrand. We were so far apart that there was no point in spending much time discussing Community issues at all and we largely concentrated instead on the Lebanon. The French President seemed blissfully unaware of the damage his own turnabout had done. He said jokingly that unless we demonstrated that discussions between Britain and France were continuing, the press would soon be talking about a return to the Hundred Years’ War. So in what I hoped was a suitably nonbelligerent way I told him how his attitude at the Council had taken me by surprise, given the fact that I was going along with the proposals on the budget which the French Finance minister, one M. Jacques Delors, had been advancing. The President asked me precisely what I meant and I explained. But I received no very satisfactory or clear response.

Where we did see eye to eye — at least in private — was about Germany. I said that even though the Germans were willing to be generous because they received other political benefits from the Community, a new generation of Germans might arise who would refuse to make such a large contribution. This would risk a revival of German neutralism — a temptation which, as President Mitterrand rightly said, was already present.

The meeting had been an amicable one and I tried to keep the atmosphere relatively friendly after the Council broke up, as in press interviews I avoided being too harsh about France’ performance. After all, M. Mitterrand was to be the next President of the Council and so it would fall to him to chair the crucial meetings as we at last approached the time when the Community’ money ran out. It did cross my mind that he might have wished to delay a settlement until he could take credit for it in his own presidency.

No communiqué was issued at the end of the Athens Council: we had had no time in plenary sessions to discuss any of the wider international issues and agree a line on them. The Council was widely and accurately described as a fiasco. But my frustration was diminished by the fact that I knew that time was on my side.

CHAPTER XIII

The Downing Street Years, 1979-1990

Mr Scargill’s Insurrection

The background to and course of the year-long miners’ strike of 1984 — 1985

PRELUDE

The 1983 general election result was the single most devastating defeat ever inflicted upon democratic socialism in Britain. After being defeated on a manifesto that was the most candid statement of socialist aims ever made in this country, the Left could never again credibly claim popular appeal for their programme of massive nationalization, hugely increased public spending, greater trade union power and unilateral nuclear disarmament. But there was also undemocratic socialism, and it too would need to be beaten. I had never had any doubt about the true aim of the hard Left: they were revolutionaries who sought to impose a Marxist system on Britain whatever the means and whatever the cost. Many of them made no effort to conceal their purpose. For them the institutions of democracy were no more than tiresome obstacles on the long march to a Marxist Utopia. While the electoral battle was still being fought their hands had been tied by the need to woo more moderate opinion, but in the aftermath of defeat they were free from constraint and thirsting for battle on their own terms.

The hard Left’s power was entrenched in three institutions: the Labour Party, local government and the trade unions. From all three bases they now proceeded to challenge our renewed mandate. Predictably, it was the National Union of Mineworkers (NUM), led by its Marxist president, Arthur Scargill, who were destined to provide the shock troops for the Left’s attack. The intention was plain. Within a month of the 1983 election Mr Scargill was saying openly that he did not ‘accept that we are landed for the next four years with this Government’. And this would be an attack directed not only against the Government, but against anyone and anything standing in the way of the Left, including fellow miners and their families, the police, the courts, the rule of law and Parliament itself.

After the experience of the Conservative Government of 1970 — 74 I hardly doubted that one day we would have to face another miners’ strike. From the time of Mr Scargill’s election to the leadership of the NUM in 1981 I knew it. I had no desire for such a strike. There was no economic rationale for it. The National Coal Board (NCB), the Government and the great majority of miners wanted a thriving, successful, competitive coal industry. But history intertwined with myth seemed to have made coal mining in Britain a special case: it had become an industry where reason simply did not apply. Britain’s industrial revolution was to a large extent based on the easy availability of coal. At the industry’s height on the eve of the First World War it employed more than a million men to work over 3,000 mines. Production was 292 million tons. Thereafter decline was continuous, and relations between miners and owners frequently bitter. Conflict in the coal industry precipitated Britain’s only general strike in 1926. (Prefiguring later developments, the miners’ union split during the year-long coal strike that followed the general strike, and a separate union was set up in Nottinghamshire.) Successive governments between the wars found themselves dragged ever deeper into the task of rationalizing and regulating the industry, and in 1946 the post-war Labour Government finally nationalized it outright. By that time production was down to 187 million tons at 980 pits, with a workforce of just over 700,000.

Government now began setting targets for coal production and investment in a series of documents inaugurated by the ‘Plan for Coal’ in 1950. These consistently overestimated both the demand for coal and the prospects for improvements in productivity within the industry. The only targets that were met were those for investment. Public money was poured in, but two problems proved insoluble: overcapacity and union resistance to the closure of uneconomic pits. As the industry declined miners relied more and more on industrial muscle to keep themselves in work.

By the 1970s the coal mining industry had come to symbolize every thing that was wrong with Britain. In February 1972 mass pickets led by Arthur Scargill forced the closure of the Saltley Coke Depot in Birmingham by sheer weight of numbers. It was a frightening demonstration of the impotence of the police in the face of such disorder. The fall of Ted Heath’s Government after a general election precipitated by the 1973 — 4 miners’ strike lent substance to the myth that the NUM had the power to make or break British Governments, or at the very least the power to veto any policy threatening their interests by preventing coal getting to the power stations.

I have already described the threat of a miners’ strike which we faced in February 1981 and the way in which this was averted.[45] From then on it was really only a question of time. Would we be sufficiently prepared to win the fight when the inevitable challenge came? A milestone was reached when Mr Scargill won the union presidency at the end of 1981 and the power of the NUM and the fear it inspired came into the hands of those whose objectives were openly political.

It fell mainly to Nigel Lawson who became Secretary of State for Energy in September 1981 to build up — steadily and unprovocatively — the stocks of coal which would allow the country to endure a coal strike. We were to hear a lot of the word ‘endurance’ over the next few months. To maximize endurance it was vital that coal stocks be in place at the power stations and not at the pit heads, from which miners’ pickets could make movement impossible. But coal stocks were not the only element determining power station endurance. Some Central Electricity Generating Board (CEGB) power stations were oil fired. Ordinarily they were used only part of the time, to meet peak demand, but if needed they could be run continuously to help meet the ‘base load’ — that element of electricity demand that is more or less constant. ‘Oilburn’ was expensive, but would add significantly to the system’s ability to withstand a strike. An additional advantage was that oil supplies to the power stations were relatively secure. Nuclear-powered stations, providing about 14 per cent of supply, were mostly some distance away from the coal fields and of course their primary fuel supply was also secure. Over the next few years more Advanced Gas-cooled Reactors (AGRs) would be coming on stream and would steadily reduce our dependence on coal-fired power. We were still building a cross-Channel link which would allow us to buy power from France, though we already had a link in operation between the English and Scottish systems (‘the Scottish interconnector’). We also did our best to encourage industry to hold more stocks.

Danger began to loom in the autumn of 1983. Peter Walker was now Secretary of State for Energy, a job to which I had appointed him after the general election in June. As he had shown at Agriculture in our first Parliament, he was a tough negotiator. He was also a skilled communicator, something which I knew would be important if we were to retain public support in the coal strike which the militants would some day force upon us. Peter regularly telephoned newspaper editors in person to put over our case. This was never my preferred way, but I recognized its effectiveness during the strike. Unfortunately, Peter Walker never really got on with Ian MacGregor, and this sometimes created tensions.

Ian MacGregor took over as Chairman of the NCB on 1 September. He had been an excellent Chairman of the British Steel Corporation, turning the Corporation around after the damaging three-month steel strike in 1980. If Britain’s coal industry was ever to become a successful business rather than a system of outdoor relief, he had the experience and determination to make this happen. Unlike the militant miners’ leaders, Ian MacGregor genuinely wanted to see a thriving coal industry making good use of investment, technology and human resources. Perhaps his greatest quality was courage. Within the NCB itself he often found himself surrounded by people who had made their careers in an atmosphere of appeasement and collaboration with the NUM and who greatly resented the changed atmosphere he brought with him. Yet it transpired that Ian MacGregor was strangely lacking in guile. He was quite used to dealing with financial difficulties and hard bargaining. But he had no experience of dealing with trade union leaders intent on using the process of negotiation to score political points. Time and again he and his colleagues were outmanoeuvred by Arthur Scargill and the NUM leadership. During the strike Peter Walker and I followed with constant anxiety every phase of the battle for public opinion. The NUM leadership used every device to distort the truth and misinform the public and their own members.

On Friday 21 October 1983 an NUM delegate conference voted for a ban on overtime in protest at the Board’s 5.2 per cent pay offer and at prospective pit closures. In itself, with coal stocks as high as they were, an overtime ban was unlikely to have much effect. It probably had an ulterior purpose: to increase tension among the miners and so make them more prepared for a strike when the NUM leadership thought that one could successfully be engineered. We always knew that it was pit closures that were more likely to ignite a strike than a dispute about pay. The case for closures on economic grounds remained overwhelming. Even Labour had acknowledged it: thirty-two pits had been closed under the Labour Government between 1974 and 1979. Mr Scargill, however, denied the economic case for closure. His line was that no pit should be closed unless it was physically exhausted. Indeed, he denied the existence of ‘uneconomic pits’: in his view a pit that made a loss — and there were many — simply required further investment. Called to give evidence before a Select Committee, he had been asked whether there was any level of loss that he would deem intolerable. He replied memorably: ‘As far as I am concerned, the loss is without limit.’

During the autumn and winter of 1983 — 4 Ian MacGregor formulated his plans. At that time manpower in the industry was 202,000. The Monopolies and Mergers Commission had produced a report into the coal industry in 1983 which showed that some 75 per cent of the pits were making a loss. Faced with this, Mr MacGregor began with the aim of bringing the industry to break-even point by 1988. In September 1983 he told Government that he intended to cut the workforce by some 64,000 over three years, reducing capacity by 25 million tons. There was, though, never any secret ‘hit list’ of pits due for closure: decisions as to which pits were to be closed would be made on a pit-by-pit basis under the existing colliery review procedure. He came back to us in December 1983 indicating that he had decided to accelerate the programme, aiming to cut the workforce by 44,000 over the next two years; to achieve this he urged us to extend the existing redundancy scheme to include miners under the age of fifty. The terms we agreed in January 1984 were extremely generous: £1,000 for each year of service, paid as a lump sum, the scheme to operate for two years only, so that a man who had been in the pits all his working life would get over £30,000. In the coming year, 1984 — 5, Mr MacGregor proposed 20,000 redundancies. We were confident that this figure could be achieved without anyone being forced to leave the industry against their will. Around twenty pits would close and annual capacity would be reduced by 4 million tons a year.

As discussions continued accusations began to fly about a ‘hit list’ of pits. The rhetoric of the NUM leadership took ever greater leave of reality — in particular, of the economic reality that the industry was receiving £1.3 billion of subsidies from the taxpayer in 1983 — 4. It sounded as if Mr Scargill was preparing to lead his troops into battle. At the end of February there was an early intimation of the violence which would characterize the strike when Ian MacGregor — then 70 years old — was knocked to the ground at a Northumberland colliery by demonstrating miners. I was shocked and wrote to convey my sympathy. Far worse was to come.

Obviously we realized that a strike was always possible, but we doubted whether it would happen before the end of 1984, when winter set in and the demand for coal was at its annual peak. To begin a strike in the spring would be the worst possible tactic for the NUM. But this was a point on which Mr Scargill misled his own members: in February he was making wild claims, saying that the CEGB had only eight weeks of coal stocks. In fact stocks were far higher — something that could have been deduced from figures in the public domain. However, the union had a tradition of balloting its members before strike action took place, and there was good reason to think that Mr Scargill would not get the necessary majority (55 per cent) to call a national strike at any point in the immediate future. Since he had become President the NUM membership had voted against strike action three times already. We could not have foreseen the desperate and self-destructive tactics he chose to adopt.

THE STRIKE BEGINS

On Thursday 1 March the NCB announced the closure of the Yorkshire colliery of Cortonwood. The announcement was not particularly well handled by the local NCB: the impression was given that the colliery review procedure was being by-passed, whereas in fact the NCB had had no such intention. But the executive of the radical Yorkshire area of the NUM — Mr Scargill’s home ground — announced a strike in protest at the decision, relying on a local ballot held two years previously to provide authority for their action.

Cortonwood may have triggered the strike, but it was not the cause. The truth is that once the NUM leadership had become determined to resist the closure of any pit on economic grounds the strike was inevitable, unless the NCB had been prepared to abdicate effective control of the industry. Even if Cortonwood had never happened, a meeting between the NCB and the mining unions on 6 March might have had the same result. Ian MacGregor outlined his plans for the coming year and confirmed the figure of twenty closures. The reaction from the NUM was swift. That same day the Scottish NUM called a strike from 12 March. Two days later, on Thursday 8 March, the national executive of the NUM met and gave official support to the Yorkshire and Scottish strikes.

Under rule 43 of the NUM constitution a national strike could only be called if the union held a national ballot and a majority of 55 per cent voted in favour. The militant majority on the executive doubted whether they could win such a national ballot, but they found a procedural way round the problem. Under rule 41 of the constitution, the national executive could give official sanction to strikes declared by the constituent areas that made up the union. If all the areas could be pushed into action individually, this would have the effect of a national strike without the need for a national ballot. If any proved difficult, pickets could be sent from striking areas to intimidate them into joining the dispute. This ruthless strategy very nearly worked. But in the end it proved to be a disaster for its authors.

The strike began on Monday 12 March. Over the following two weeks the brutal weight of the militants’ shock troops descended on the coal fields and for a moment it seemed as if rationality and decency would go under. At the beginning of the first day of the strike 83 pits were working and 81 were out. Ten of these, I was told, were not working due to heavy picketing rather than any positive desire to join the strike. By the end of the day the number of pits not working had risen to about 100. The police were fighting a losing battle to ensure that those who wished to work could do so. The Home Office — both ministers and officials — gave them the fullest support, but the situation worsened. On Tuesday morning the flying pickets again descended. On that day it so happened that I was due to see Ian MacGregor about the Channel Tunnel — a quite separate matter in which he had an interest. Peter Walker joined us afterwards and we discussed the situation in the coal fields. Mr MacGregor told me that he had applied for and obtained a civil injunction in the High Court against the NUM executive to restrain the use of flying pickets, using our new trade union law. However, his impression was that the police were failing to uphold the criminal law and that pickets had been able to prevent people going to work. The threat of violence had already resulted in the postponement of plans to hold a strike ballot in the Lancashire area. The Nottinghamshire and Derbyshire areas were due to vote on Thursday but there was a real danger that the vote would be frustrated or that intimidation would force miners to stay at home. I told him that I was dismayed at this news. It was a repetition of what had happened in Saltley in 1972. The criminal law had to be upheld. I said that helping those who wished to work was not enough: intimidation must be stopped.

I went straight out of this meeting and asked to speak to Leon Brittan. As luck would have it the next meeting that day had originally been called to discuss the issue of strikes in essential services, on which we had a manifesto commitment, and Leon and other relevant ministers were already on their way. At the meeting I repeated that we must uphold the criminal law as it related to picketing. Leon shared my unease at what was happening. His view was that the police already had all the powers they needed to deal with the problem, including the power to turn pickets back and to disperse them if they assembled in excessive numbers. He told us that he had made this position clear in public and would repeat the message. But, of course, there were tight constitutional limits on what he, as Home Secretary, could do to instruct the police on their duties. We agreed that Michael Havers would set out the legal position to the House. I was determined that the message should go out from government loud and clear: there would be no surrender to the mob and the right to go to work would be upheld.

Mass picketing continued. By Wednesday morning only twenty-nine pits were working normally. The police were by now drafting in officers from around the country to protect the miners who wanted to work: 3000 police officers from seventeen forces were involved. At this point in the dispute the violence centred on Nottinghamshire, where the flying pickets from Yorkshire were determined to secure a quick victory. However, the Nottinghamshire men went ahead with their ballot and the result that Friday showed 73 per cent against the strike. Area ballots the following day in the Midlands, the North-West and the North-East coalfields also gave heavy majorities against strike action. Altogether, of the 70,000 miners balloted, over 50,000 voted to work.

Early though it was, this was one of the turning points of the strike. The huge police operation was highly effective and together with the moral force of the ballot results it reversed the trend towards a shut down of the pits. The first, crucial battle had been won. On Monday morning the latest information was telephoned through to me in Brussels, where I was attending a European Council. Forty-four pits were now working, compared with just eleven on Friday. In the areas which had voted for a return to work the great majority of pits had gone back. The militants knew that if it had not been for the courage and competence of the police the result would have been very different and from now on they and their mouthpieces in the Labour Party began a campaign of vilification against them.

On the day the NUM executive met, I told Cabinet that I would set up a committee of ministers under my chairmanship to monitor the strike and to decide what action should be taken. Willie Whitelaw was a member, of course, and deputized for me when I could not be present, though this was rarely necessary. Peter Walker, as Energy Secretary, and Leon Brittan, as Home Secretary, were crucial figures. The Chancellor, Nigel Lawson, was directly concerned as the issue was of vital importance to the economy; he also brought to bear his experience as former Energy Secretary. Norman Tebbit (Trade and Industry), Tom King (Employment) and Nick Ridley (Transport), all had obvious contributions to make. We sought to minimize the impact of the strike on industry to prevent the strike spreading by sympathy action and to keep coal stocks moving by road and rail. In Scotland, George Younger had responsibility both for Scottish mining and for Scotland’s police. All these ministers or their deputies regularly attended. When issues of law arose the Attorney-General, Michael Havers, also joined us. The group met about once a week, though more frequently when conditions required it. In practice the large membership sometimes proved unwieldy and so Peter Walker and I made some important decisions in smaller meetings, called ad hoc to deal with developments as they arose, particularly when notice was short.

There was a wider question relating to the work of this committee, however: to determine the proper role of government in the strike. I repeatedly made it clear that prime responsibility for dealing with the strike lay with the managements of the NCB and those other nationalized industries involved (the CEGB, BSC and British Rail (BR)). They operated within financial and other constraints set by government and by statute. But so much was at stake that no responsible government could take a ‘hands-off’ attitude: the dispute threatened the country’s economic survival. Consequently, I tried to combine respect for their freedom of action with clear signals as to what would or would not be financially and politically acceptable. The Opposition never seemed to be able to make up their mind whether we were intervening too much or too little. Their uncertainty, combined with the successful outcome, suggests to me that perhaps we got the delicate balance about right.

The Government’s relationship with the police and the courts was an even more sensitive issue during the strike. Britain had no national police force: the police were organized into fifty-two local forces, each headed by a Chief Constable who had operational control. Authority was divided between the Home Secretary, local police authorities (made up of local councillors and magistrates) and Chief Constables. Inevitably during the miners’ strike this tripartite system of policing was put under considerable strain: challenges to the rule of law posed by violence on the scale that took place during this strike clearly needed to be dealt with, swiftly and efficiently, at national level. Accordingly, the National Reporting Centre (NRC) — originally set up in 1972 — was activated in Scotland Yard, allowing the police to pool intelligence and to co-ordinate assistance from one force to another under the ‘mutual aid’ provisions of the 1964 Police Act. However, the tripartite system survived a good deal better than the Labour Party’s hysterical denunciations might have suggested. Problems did arise in financing the extra police costs under this system, but these were resolved by steadily taking more and more of the burden on to the Exchequer.

Mob violence can only be defeated if the police have the complete moral and practical support of government. We made it clear that the politicians would not let them down. We had already given them the equipment and the training they would need, learning the lessons of the 1981 inner-city riots. More recently the police had shown themselves skilled in tackling violence masquerading as picketing when pickets from the National Graphical Association (NGA) had tried to close down Eddie Shah’s newspaper in Warrington in November 1983. On that occasion the police had made it clear that force of numbers would not be allowed to prevent people from going to work if they wished to do so. They had also for the first time made effective use of powers to prevent a breach of the peace by turning back pickets before they arrived at their destination.

Another prerequisite of effective policing is that the law should be clear. Early in the strike Michael Havers made a lucid statement in a written answer to the Commons, setting out the scope of police powers to deal with mass picketing, including the power (mentioned above) to turn back pickets on their way to the picket line when there are reasonable grounds to expect a breach of the peace. These common law powers long predated our trade union legislation, and were matters of criminal rather that civil law. In the second week of the strike the Kent NUM challenged those powers in court, but they lost the case. The prevention of large numbers of pickets assembling to intimidate those who wished to work would be vital to the outcome of the dispute.

The relationship between government and the courts was, if anything, more sensitive still. It is right that people should have been vigilant on this question. The independence of the judiciary is a matter of constitutional principle, though the administration of the courts falls properly within the sphere of government responsibilities. As the incidents of violence accumulated it became a real concern to us that so few of those charged had been brought to court and convicted. It is vital if the rule of law is to prevail that criminal actions as visible as those during the strike be punished quickly: people need to see that the law is working. A backlog of cases built up, stemming partly from the delaying tactics of offenders and their solicitors, partly from the obstruction of some magistrates in areas where there was sympathy with the strikers’ cause. The sheer number of cases also imposed a sudden strain on the system. In time we made available more buildings and professional stipendiary magistrates and the backlog began to be cleared. Stipendiary magistrates get through many more cases than their lay counterparts, but the Lord Chancellor could only respond to requests for help and had no power to make appointments unasked. Another problem was that policemen trying to defend themselves against hails of missiles and other assaults have little time to assemble detailed evidence. Cases were difficult to sustain. In the end all too many of the men of violence went unpunished.

By the last week of March the situation was fairly clear. The strike was unlikely to be over quickly. At the majority of pits Mr Scargill and his colleagues had a tight grip, which it would not be easy to break. But in our planning over the previous two years we had not allowed ourselves to assume that any coal would be mined during a strike, whereas in fact a substantial section of the industry was still working. If we could move this coal to the power stations then the prospects for endurance would be transformed. This calculation had an enormous impact on our strategy. We had to act so that at any one time we did not unite against us all the unions involved in the use and distribution of coal. This consideration meant that we all had to be very careful when and where the civil law was used and the NCB suspended — though it did not withdraw — its civil action.

Although Mr Scargill had been very anxious to avoid a ballot before the strike began, it was clear to us that he wanted to keep the possibility open. Indeed the following month an NUM Special Delegate Conference voted to reduce the majority required for a strike from 55 per cent to 50 per cent. Also at the beginning of the strike we had hopes that moderates on the NUM executive might succeed in forcing a ballot. This made it even more important to keep the balance of opinion among miners favourable to our cause because it seemed that much of the opposition to the strike came from miners angry not to have been allowed to vote. Would a ballot held during a strike, with emotions raised, produce a majority for or against Mr Scargill? I was not entirely sure.

The NUM leadership was desperate to prevent the movement of coal by rail, by road or by sea. Although at times during the dispute there were problems in the docks and they had some limited success in slowing rail traffic, the lorry drivers refused to be intimidated by the dockers or anyone else. Increasingly, and to a degree that we had not anticipated, road haulage firms were able to keep coal moving to the power stations and other main industrial customers. The steel workers had endured their own long and damaging strike and they were not keen to see plant destroyed and jobs lost in their own industry simply in order to demonstrate sympathy with the NUM — a union which had earlier shown remarkably little sympathy towards them. However, it was the power workers whose attitude was most crucial. If they struck, or acted in sympathy with the miners to prevent us moving to maximum oilburn, we would have had great difficulties. But their attitude was simply that they were not a party to the strike and that their job was to see that the people of Britain had light and power. Nor were their leaders prepared to be browbeaten by other trade union bosses into doing what they regarded as fundamentally wrong.

Everything turned on maximizing endurance. I received weekly reports from the Department of Energy setting out the position and I read them very carefully indeed. Early in the strike the power stations were consuming coal at the rate of about 1.7 million tons a week, though the net reduction in stocks was smaller because some deliveries were getting through. The CEGB estimated endurance at about six months but this assumed a build-up to maximum oilburn — that is, using oil-fired stations at full capacity — which had not yet begun. We had to judge when this should be set in train because it would certainly be described as provocative by the NUM leadership. We held off while there seemed a prospect that NUM moderates might force a ballot. However, I decided on Monday 26 March that this nettle must now be grasped.

Industrial stocks were, of course, much lower than those at the power stations: the cement industry was particularly vulnerable and important. But it was BSC whose problems were most immediate. Their integrated steel plants at Redcar and Scunthorpe would have to close in the next fortnight if supplies of coke and coal were not delivered and unloaded. Port Talbot, Ravenscraig and Llanwern had stocks sufficient for no more than three to five weeks. Not surprisingly, BSC was extremely concerned as the position changed from day to day.

This was the state of uncertainty as we ended the first month of the strike. Perhaps the only thing one could be sure of was Mr Scargill’s intentions. He wrote in the Morning Star on 28 March that ‘the NUM is engaged in a social and industrial Battle of Britain… what is urgently needed is the rapid and total mobilization of the Trade Union and Labour movement.’ It was still unclear whether he would get it.

The stalemate continued during April. There still seemed the possibility of a ballot for a national strike whose result no one could guess. In spite of continuing heavy picketing, there were some signs of a drift back to work, particularly in Lancashire — though it was only a drift. The leaders of the rail unions and the seamen promised to support the miners in their struggle: there were many declarations of this kind during the strike, but their members were less enthusiastic. The first court cases against the NUM began: two coke hauliers began legal action against the South Wales NUM picketing of Port Talbot steelworks.

From early in the dispute we were worried that the NCB was failing to put across its case, both to its own employees and to the general public. This was not something that government could do for them, though later (as will be seen) we pressed them to improve their presentation. But on the question of upholding the law it was our role to speak, and we did so vigorously. When I was interviewed on Panorama by Sir Robin Day on Monday 9 April I strongly defended the police handling of the dispute:

The police are upholding the law. They are not upholding the Government. This is not a dispute between miners and government. This is a dispute between miners and miners… it is the police who are in charge of upholding the law… [they] have been wonderful.

A few days later, the police were on a different front line. On 17 April WPC Yvonne Fletcher was killed by machine-gun fire from the Libyan Embassy in St James’s Square while policing a peaceful demonstration. The whole country was shocked. In spite of which, Mr Scargill was to open contacts with Libyan officials, and an NUM official even met Colonel Gaddafi in the hope of raising money to continue the strike. It was as if there was a preternatural alliance between these different forces of disorder.

A LONG SLOG

In May there were brief but revealing contacts between the NCB and the NUM leadership — the first since the strike began. The talks took place on Wednesday 23 May; I had a full report the next day. Mr Scargill would allow no one to speak for the NUM side but himself: the other members of his executive had clearly been told to keep quiet. The NCB had given two presentations, one on the marketing prospects of the coal industry and another on the physical condition of the pits, some of which were now in danger of becoming unworkable because of the strike. At the end of each presentation the NUM representatives declined to comment or to ask questions. Mr Scargill then made a prepared statement. He insisted that there could be no discussion of pit closures on grounds other than exhaustion — certainly no question of closing pits on economic grounds. Ian MacGregor made some brief remarks to the effect that he saw no purpose in continuing the meeting in the light of this, but nevertheless he suggested further talks between two senior members of the NCB and two senior representatives of the NUM. Mr Scargill again insisted that the withdrawal of all closure plans was a precondition for any talks. There the meeting ended. But at that point the NUM sprung a trap. They asked to be allowed to stay in the room in which the meeting had just taken place for a discussion among themselves. Ian MacGregor saw this as a perfectly innocent request and readily agreed. The NCB representatives left the room. But later we discovered that the NUM had managed to persuade the press that this was a ‘walkout’ by the NCB. Many people seized on the episode as evidence that Ian MacGregor was unwilling to talk. It was a classic example of the dangers of negotiating with people like Mr Scargill.

Week by week the strike grew more bitter. There was evidence that many miners were losing their early enthusiasm for it and questioning Mr Scargill’s forecasts of limited power station endurance. The NUM leadership responded by increasing the allowances they paid to pickets — they paid nothing at all to strikers who did not turn out to picket — recruiting non-miners to the task. There was a general escalation of the level of violence. Their tactic evidently was to achieve maximum surprise by concentrating large numbers of pickets at a particular pit at the shortest possible notice. Perhaps the most shocking scenes of violence were those which took place outside Orgreave Coke Works in an attempt to prevent coke convoys reaching the Scunthorpe steelworks. On Tuesday 29 May over 5,000 pickets engaged in violent clashes with the police. The police were pelted with all kinds of missiles, including bricks and darts, and sixty-nine people were injured. Thank goodness they at least had proper protective riot gear, I thought, as, like so many millions of others, I watched the terrible scenes on television.

Speaking in Banbury the next day I said:

You saw the scenes… on television last night. I must tell you that what we have got is an attempt to substitute the rule of the mob for the rule of the law, and it must not succeed. There are those who are using violence and intimidation to impose their will on others who do not want it. They are failing because of two things. First, because of the magnificent police force, well trained for carrying out their duties bravely and impartially. And secondly, because the overwhelming majority of people in this country are honourable, decent and law-abiding and want the law to be upheld and will not be intimidated. I pay tribute to the courage of those who have gone into work through these picket lines… the rule of law must prevail over the rule of the mob.

Over the next three weeks there were further violent clashes at Orgreave, but the pickets never succeeded in halting the road convoys. The battles at Orgreave had an enormous impact and did a great deal to turn public opinion against the miners.

It was at about this time that we had the first clear evidence of large-scale intimidation in the mining villages. This problem grew steadily worse as th strike went on. Working miners were not the only targets: their wives and children were also at risk. The sheer viciousness of what was done provides a useful antidote to some of the more romantic talk about the spirit of the mining communities. In its very nature intimidation is extremely difficult for the police to combat, though as time went on officers in uniform and teams in plain clothes were specially deployed to tackle it.

There was a good deal of public criticism of the failure of the nationalized industries to use the civil remedies which our trade union laws had provided. As the violence continued and the problems of BSC in particular increased, the ministerial group frequently discussed whether to encourage the use of the civil law against the NUM and other unions involved in secondary action. Failure to take civil action against the unions and their funds put all the pressure on to the criminal law and onto the police whose duty it was to uphold it. It was also pointed out that, if successful, legal action against union funds would restrict their ability to finance mass pickets and to engage in unlawful action. People were saying openly that our trade union reforms were being discredited by the failure of the nationalized industries involved to use the legal remedies. Instinctively, I had a good deal of sympathy with this view, as did my advisers.

However, Peter Walker persuaded us that use of the civil law might alienate the support we had among working miners or moderate trade unionists. The chairmen of the BSC, NCB, BR and CEGB agreed with him, at least for the present: they met towards the end of June and decided that in all the circumstances this was not the time to apply for an injunction. Nor were the police convinced that civil action would make their job on the picket lines any easier. Of course, that did not prevent others — whether businessmen or working miners — making use of the new laws. The fact was that throughout this dispute there was much to be said for emphasizing the point that it was the basic criminal law of the country which was being flouted by the pickets and their leaders, rather than ‘Thatcher’s laws’.

Peter Walker’s argument won the day, and the NCB went on to win the strike. In a sense, therefore, the outcome justified the tactic. But could the same result have been achieved earlier through civil action leading, by way of the NUM’s defiance, to sequestration of union funds? Such ‘might-have-beens’ are always impossible to resolve. Looking back, however, we might reasonably have urged the nationalized industries to take action against the NUM and at an earlier stage. When the working miners actually did so on their own initiative — the best possible outcome but not something on which we should have relied — this put enormous pressure on Mr Scargill and severely circumscribed the ability of the NUM to keep the strike going. Since then, however, the use of ‘Thatcher’s laws’ has become standard in Britain’s industrial relations and the number of strikes and industrial disputes has plummetted.

Meanwhile, we kept a very close watch on the number of pits reopening and men working. In July and August many pits close to take their annual holidays and we had some hopes that there would be a large-scale return to work when the holiday period ended, though there were fears too that pits that had been working before the holidays would fail to reopen due to renewed efforts by the pickets. The cost of being on strike to miners and their families was one consideration in estimating what would happen. But perhaps psychology was more important. A really large return to work after the holiday might create its own momentum. For his part, Mr Scargill would try to persuade his troops that with autumn approaching there was hope of the NCB being forced to back down by a government unwilling to impose winter power cuts.

It was clearly very important that the NCB should do everything possible to get its case over to those tempted to give up the strike and return to work. On my recommendation, Tim Bell, who had given me so much good advice on presentation in the past, had begun to advise Ian MacGregor. There was certainly a powerful positive case to deploy: massive new investment was available for the pits under existing plans, though this was now being held up, and if work resumed there was the promised pay rise for miners to look forward to. There was also the negative side: pits might never reopen because of deterioration which occurred while the strike continued. Customers were being lost, probably permanently: no one in industry tempted by our subsidies to change from other fuels to coal was likely to have much faith in the reliability of coal supplies from now on. It would also have been possible to go ahead with pit closures on economic grounds while the strike was still on, and we debated this. But on balance the risk of alienating moderate miners was too great. We also had to consider whether to encourage more miners to take the uniquely generous redundancy terms on offer. There were two problems with respect to redundancy: first, even if large numbers of miners took up the offer, there was no guarantee that they would be from the pits we needed to close. And the savings lay in closing uneconomic pits. Second, there was a real risk that it was the moderate miners, sickened by the violence and intimidation, who would find redundancy most attractive, leaving the hardliners in a majority in particular areas or even nationally. So again we held fire.

July proved to be one of the most difficult months of the strike. On Monday 9 July almost out of the blue the TGWU called a national dock strike over a supposed breach of the National Dock Labour Scheme (NDLS). The NDLS had been established by the Attlee Government with the aim of eliminating casual labour in the docks. Based on statute, it operated in the majority of British ports, establishing a closed shop and giving the union extraordinary powers. The occasion for the strike was BSC’s use of contract labour to move iron ore by road from stockpiles in the docks at Immingham to the Scunthorpe steelworks. In fact, BSC were satisfied that neither the scheme nor local agreements had been breached. Under the scheme’s absurd provisions ‘shadow’ labour consisting of registered dock workers was required to stand and watch the work as it was being done by contractors. This had been complied with in the ‘normal way’. We hoped that the National Dock Labour Board, which included union representatives, would give an early ruling to this effect. But the TGWU leadership was strongly committed to supporting Mr Scargill and plainly welcomed the opportunity to call a strike.

We had already made an extensive study of the implications of a national dock strike in 1982. It seemed likely that the strike — which would probably only seriously affect those ports which were part of the NDLS — would have little direct impact on the outcome of the coal strike. We were not importing coal for the power stations, because it would have risked losing us the support of working miners. But a dock strike would have serious implications for BSC by disrupting its imports of coal and iron ore. Indeed, it looked as if a major motive for the strike had been the desire of the left-wing TGWU leadership to assist the miners by tightening their grip on the major steel plants, counteracting BSC’s success in by-passing secondary action on the railways by organizing road deliveries. The general effect on trade would be very serious — particularly on imports of food — though about a third of non-bulk cargo was carried by roll-on — roll-off ships (known as ‘RO-RO’), much of which was driver-accompanied and passed through ‘non-scheme’ ports such as Dover and Felixstowe. Everything would depend on how well the strike was supported and whether it was confined to the NDLS ports.

Our regular meetings of the ministerial group on coal now had to deal with two strikes rather than one. I told the group on the day after the dock strike began that it was vital to make a major effort to mobilize opinion over the next forty-eight hours. We should urge the port employers to adopt a resolute approach and use all available means to strengthen opposition to the strike among workers in industries likely to be damaged by it, and indeed among the public. It must be clearly demonstrated that the pretext for the strike was false and that those taking this action already enjoyed extraordinary privileges. We should make the point that it was estimated that 4,000 out of the 13,000 dockers registered under the NDLS were surplus to the requirements of the industry. Of course, this was not the right time to abolish the NDLS — in the middle of a coal strike — but we should aim for the present to solve the dispute without ruling out future change. We mobilized the Civil Contingencies Unit to prepare to meet the crisis but avoided proclaiming a state of emergency, which might have meant the use of troops. Any sign of overreaction to the dock strike would have given the miners and other union militants new heart. Our strategy had to be to end the dock strike as quickly as possible, so that the coal dispute could be played as long as was necessary.

The earliest indications were that the dock strike would prove extremely difficult. On Monday 16 July I met the General Council of British Shipping for lunch and I found them in defeatist mood. This was an instance of something I came to know well: employers were always advising me to be tough except in their own industry. They told me that the strike was of greater extent than anything they had seen before in the docks.

I had called an ad hoc ministerial meeting that evening to review the overall position and we ran though the options. We recognized that if picketing spread to ‘non-scheme’ ports there was a high probability that civil action would be taken against the TGWU, and that there would be a strong case for activating the NCB’s suspended injunction against the NUM. The conflict seemed to be on the verge of a significant escalation.

My recognition of the importance of presentation, however, did lead me to take a specific initiative, which was to set up a group of junior ministers from the departments concerned to co-ordinate government statements during the crisis, under the chairmanship of Tom King, then Employment Secretary. Peter Walker was not particularly pleased. He always liked to play his cards very close to his chest and although he did so with consummate skill there was a risk that one branch of government would lose confidence or lack proper information about what we were trying to do. In the end it was a great success: for once all of us in government contrived to sing the same song day after day.

In the event the dock strike proved far less of a problem than we had feared. Whatever the views of their leaders, the ordinary dockers were simply not prepared to support action which threatened their jobs: even those at the NDLS ports were less than enthusiastic, fearing that a strike would hasten the demise of the scheme itself. But the decisive role was played by the lorry drivers who had an even greater direct interest in getting goods through and were not prepared to be bullied and threatened. By 20 July the TGWU had no alternative but to call off the strike. It had lasted only ten days.

The end of the dock strike was only one of a number of important developments at this time. Following the fruitless meeting between the NCB and NUM on 23 May, talks had resumed at the beginning of July. Our hope was that they would end quickly and that the NCB would succeed this time in exposing the unreasonableness of Mr Scargill’s position. There would then be a chance that striking miners would realize that they had no hope of winning and a return to work would begin.

However, the talks had drifted on, and there were indications that the NCB was softening its negotiating position. One problem was that each new round of negotiations naturally discouraged a return to work: few would risk going back if a settlement seemed to be in the offing. More troubling still, there was a real danger that the talks would end by fudging the issue on the closure of uneconomic pits: a formula was being developed based upon the proposition that no pit should be closed if it was capable of being ‘beneficially developed’. The NCB was also prepared to give a commitment to keep open five named pits that the NUM had claimed were due for closure. We were very alarmed. Not only were there ambiguities in the detailed wording of the proposals, but (far worse) a settlement on these lines would have given Mr Scargill the chance to claim victory.

But on 18 July, two days before the end of the dock strike, negotiations collapsed. I have to say I was enormously relieved.

A week later we reached what was for me a very important moment in the history of the strike, though this was something very few people knew about at the time. On Wednesday 25 July I held a meeting in conditions of strict security to discuss power station endurance with Peter Walker and Sir Walter Marshall, Chairman of the CEGB. That very day Norman Tebbit had written to me expressing anxiety that time was not on our side in the coal strike. He had seen estimates of power station endurance that suggested stocks would be exhausted by mid-January: if this were so, he argued that we needed as soon as possible to consider measures to win the strike by the autumn, since he thought we could not afford to go on to the very brink of endurance.

I perfectly understood Norman’s concern and it was partly because I shared his instinctive distrust of the figures — and could not quite believe Peter Walker’s laid-back optimism — that I had asked for the meeting with Peter and Walter Marshall. The message I received at the meeting was extremely encouraging. Walter Marshall confirmed the position as Peter had previously described it. If supplies of coal from Nottinghamshire and other working areas to the power stations were maintained at the present level the safe date for endurance would be June 1985. In fact, the CEGB believed they could keep the power stations running until November 1985. He showed me a chart which demonstrated that coal, nuclear and oil generation taken together almost exactly matched the (lower) summertime demand. Indeed, if endurance could be extended into the spring of 1986 — which we might manage by getting more miners back to work for example — it would then be possible to go on into the following winter.

However, all these predictions were extremely sensitive to variations in the supply of coal from the Nottinghamshire pits. Walter Marshall stressed how important it was to maintain their output. Small improvements in supplies from these pits increased endurance dramatically: small shortfalls curtailed it equally dramatically. It would be essential to maintain transport from the Nottinghamshire pits and although road transport had made a great contribution, deliveries by rail could not be dispensed with. Enormous quantities of coal had to be moved, and pithead stockyards in many of the working pits were comparatively small — they had been built on the ‘merry-go-round’ system, by which trains ran directly to the power stations and back again on a daily basis. Accordingly, it was vital that we keep the rail unions working, if necessary at the price of concessions in pay talks.

Walter Marshall confirmed that importing coal for the power stations would be a mistake. This would annoy even the Nottinghamshire miners. It would be better to dedicate imports to industry and avoid getting the CEGB embroiled in the argument. Looking to the longer term, he also set out his programme for increasing endurance to at least twelve months rather than the six months provided for in the current plans. We never forgot the possibility of a second strike after the present one was finished.

The combination of Walter Marshall’s natural ebullience, his mastery of detail and the determination he showed to avoid power cuts raised my spirits enormously. Over the next couple of days I spoke individually to Norman Tebbit and several other colleagues to give them the message. We were all able to take our holidays in a better frame of mind than we would otherwise have done.

On Tuesday 31 July I spoke in a debate in the House of Commons on a Censure Motion which the Labour Party had been ill-advised enough to put down. The debate went far wider than the coal strike. But the strike was on everyone’s minds and inevitably it was the exchanges on this matter which caught the public attention. I did not mince my words:

The Labour Party is the party which supports every strike, no matter what its pretext, no matter how damaging. But, above all, it is the Labour Party’s support for the striking miners against the working miners which totally destroys all credibility for its claim to represent the true interests of working people in this country.

I went on to deal with Neil Kinnock:

The Leader of the Opposition went silent on the question of a ballot until the NUM changed its rules to reduce the required majority. Then he told the House that a national ballot of the NUM was a clearer and closer prospect. That was on 12 April — the last time that we heard from him on the subject of a ballot. But on 14 July he appeared at an NUM rally and said, ‘there is no alternative but to fight: all other roads are shut off.’ What happened to the ballot?

Answer came there none.

Neil Kinnock had succeeded Michael Foot as Leader of the Labour Party in October 1983. I faced him across the despatch box of the House of Commons for seven years. Like Michael Foot, Neil Kinnock was a gifted orator; but unlike Mr Foot he was no parliamentarian. His Commons performances were marred by verbosity, a failure to master facts and technical arguments and, above all, a lack of intellectual clarity. This last drawback reflected something deeper. Mr Kinnock was entirely a product of the modern Labour Party — left-wing, close to the unions, skilful at party management and political manipulation, basically convinced that Labour’s past defeats resulted from weaknesses of presentation rather than errors of policy. He regarded words — whether speeches or the texts of manifestos and policy documents — as a means of concealing his and the Labour Party’s socialism rather than of converting others to it. So he forcefully — and on occasion courageously — denounced Trotskyists and other left-wing troublemakers, not for their brutal tactics or their extreme revolutionary objectives but because they were an embarrassment to his and Labour’s ambitions. Being Leader of the Opposition, as I well remembered, is not an easy assignment. Leading the Labour Party in Opposition must be a nightmare. But I found it difficult to sympathize with Mr Kinnock. He was involved in what seemed to me a fundamentally discreditable enterprise, that of making himself and his party appear what they were not. The House of Commons and the electorate found him out. As Opposition Leader he was out of his depth. As Prime Minister he would have been sunk.

As we entered August we had some reason to hope that the worst of the strike was behind us. Arthur Scargill and the militants were becoming increasingly isolated and frustrated. The dock strike had collapsed. The Government’s attitude and the NCB’s stance were now generally perceived in a more sympathetic light. The Labour Party was in disarray. Although the return to work remained a trickle — about 500 during July — there was no sign of any weakening of determination at the working pits. Finally, on Tuesday 7 August two Yorkshire miners began a High Court action against the Yorkshire NUM for striking without a ballot. This proved to be a vital case and led eventually to the sequestration of the whole of the NUM’s assets.

One sign of the militants’ frustration was an increase in violence against working miners and their families. The situation appeared to be under control in Nottinghamshire, but things were getting worse in Derbyshire, partly because it was more deeply divided and also because it was closer to the Yorkshire coal fields from which the flying pickets largely came. Ian MacGregor was in touch with us in No. 10 and with the Home Office. He feared that such intimidation, appalling in itself, might also slow the return to work and could frighten miners currently working into staying away. The police thought that there might have been a change of tactics on the part of the NUM: frustrated by the failure of mass picketing, perhaps they were taking to guerilla warfare based on the intimidation of individuals and companies. The police stepped up their measures to protect the Derbyshire miners: ‘freephone’ lines to police stations were installed; detective squads set out to counter intimidation; and uniformed policemen patrolled the villages.

There was also the threat of another dock strike. A tense situation had developed at Hunterston, the deep-water port in Scotland which supplied BSC’s Ravenscraig plant. An important cargo of coal, of the kind necessary for Ravenscraig’s coke ovens, was aboard the bulk carrier Ostia, presently moored in Belfast Lough. BSC told us that if it were not landed quickly they would have to start to run down Ravenscraig. Steel furnaces cannot be shut down fully without irreversible damage and there was every likelihood that the whole plant would have to close for good if coal supplies were halted. As with the earlier dock strike, absurd restrictive practices were the pretext for the strike threat. The normal operation at Hunterston for BSC-destined cargo was divided between work done aboard ship by TGWU registered dockers and work done on-shore by members of the steel union, the ISTC. But 90 per cent of the cargo could be unloaded even without ‘trimming’. BSC wanted to use its employees to unload this coal, but the TGWU was likely to claim that such action was contrary to the National Dock Labour Board agreement in order to provoke a new docks dispute. BSC told us that they were prepared to go to court if the cargo could not be unloaded.

This was a very delicate question and Norman Tebbit stayed in close contact with BSC. The National Dock Labour Board was asked to offer a ruling but delayed and, finally, funked the issue altogether. BSC began the rundown of Ravenscraig on 17 August; they told us that unless the coal was landed by 23 — 4 August, their furnaces would have to be ‘banked’ on 28 — 9 August — that is, kept running at a minimum level, without production. Total closure would follow if coal supplies did not resume.

In the end, after putting off the decision as long as possible, BSC had its employees start unloading the Ostia on the morning of Thursday 23 August. Although BSC acted in conformity with a local port agreement of 1984, TGWU dockers immediately walked out and the union called a second national dock strike.

But in Scotland public opinion was strongly opposed to any action that threatened the future of Ravenscraig. So we had doubts whether the union could sustain a strike across the whole of Scotland, let alone in the United Kingdom as a whole. And we were right. This strike was to cause us much less worry than the first. Though to begin with the strike received considerable support from registered dockers, a majority of ports remained open. Finally, the TGWU called it off on 18 September.

On holiday in Switzerland and Austria between 9 and 27 August I followed the story of the Ostia by telex. In my absence, Peter Walker took effective charge of day-to-day policy in the coal strike. But a prime minister is never really on holiday. I found myself accompanied by the local ambassador, who had previously been one of my private secretaries, five ‘Garden Room girls’ on duty round the clock, a technician to superintend communications with Downing Street and the usual roster of detectives. Red boxes came through the ‘diplomatic bag’. The telex chattered constantly. At least one important decision was demanded of me by Willie Whitelaw over the telephone. Clarissa Eden once said that she sometimes felt that the Suez Canal flowed through her dining-room at No. 10. I sometimes thought at the end of the day that I would look out of the window and see a couple of Yorkshire miners striding down the Swiss slopes. And somehow neither the beautiful mountain scenery nor even my favourite reading — thrillers by Frederick Forsyth and John Le Carré — provided a distraction.

On my return I found the situation much as I had left it, though with one — as it was to turn out — fateful exception. There was a good deal of violence and intimidation still going on. By now 5,897 arrests had been made in the course of the dispute; there had been 1,039 convictions, the most severe sentence being nine months’ imprisonment. Stipendiary magistrates would sit for the first time in early September at Rotherham and Doncaster. Others were ready elsewhere. Labour’s Energy spokesman, Stan Orme, was trying to mediate in the coal strike, which served perhaps more to minimize Labour embarrassment than to bring the end of the dispute any closer. Robert Maxwell was also trying to muscle in. He announced in early September that he was holding himself ready to mediate, but the whole thing collapsed in recrimination before the two sides had even met. The NUM blamed the Government.

FROM THE JAWS OF VICTORY?

The most serious development, however, had been a circular issued on 15 August by the NCB to members of the National Association of Colliery Overmen, Deputies and Shotfirers (NACODS). By law coal could only be mined in the presence of suitably qualified safety personnel — the great majority of whom were members of NACODS. In April, NACODS members voted to strike, but the margin was less than the two-thirds required by union rules. Up to mid-August the NCB had varied in its policy towards NACODS: in some areas members were being allowed to stay away from striking pits where no work was being done, in others they were being required to cross picket lines. The NCB circular now generalized the latter policy, threatening to withhold pay from NACODS members who refused to comply.

The NCB circular played into the hands of those leaders of NACODS, particularly its president, who were strongly sympathetic to the NUM. Here at last was an issue on which they could persuade their members to strike. It was easy to understand why the NCB acted as they did. But it was a major error, subsequently compounded by their failure to perceive the swing in favour of a strike among NACODS members, and it almost precipitated disaster.

September and October were always likely to be difficult months. The miners would be looking forward to the winter when demand for electricity was at its highest and power cuts most likely. At the TUC Conference in early September a majority of trade unions — strongly opposed by the electricity and power workers — pledged support for the miners, though in most cases they had no intention of giving it. When the forthright electricians’ leader Eric Hammond made a powerful speech pointing this out, he was heavily barracked for his pains. Neil Kinnock also spoke at the conference, coming as near as he ever did to outright condemnation of picket line violence, but without taking any action to expel from his party those who supported it. Meanwhile, Mr Scargill reaffirmed his view that there was no such thing as an uneconomic pit, only pits which had been starved of the necessary investment.

Negotiations between the NCB and the NUM were resumed on 9 September. As arguments continued about forms of words, it was difficult for the general public to work out precisely what separated the two parties. I was always concerned that Ian MacGregor and the NCB team would unwittingly give away basic principles for which the strike was being fought. In the July talks he had already moved from the principle of closing ‘uneconomic’ pits to the much more dubious concept of closing pits which could not be ‘beneficially developed’. Thankfully, Mr Scargill had not been prepared to adopt this ambiguous objective. Peter Walker and I felt throughout that Ian MacGregor did not fully comprehend the devious ruthlessness of the NUM leaders he was arguing with. He was a businessman, not a politician, and thought in terms of reasonableness and reaching a deal. I suspect that Mr MacGregor’s view was that once he got the miners back to work he would be able to restructure the industry as he wished, whatever the precise terms on which a settlement had been reached. The rest of us, from long experience, understood that Arthur Scargill and his friends would exploit a fudged formula and that we should be back where we started. It was crucial for the future of the industry and for the future of the country itself that the NUM’s claim that uneconomic pits should never be closed should be defeated, and be seen to be defeated, and the use of strikes for political purposes discredited once and for all.

It was also in September that I first met in person members of the ‘Miners’ Wives Back to Work Campaign’, whose representatives came to see me at 10 Downing Street. I was moved by the courage of these women, whose families were subject to the abuse and intimidation. They told me a great deal and confirmed some of my suspicions about the NCB’s handling of the strike. They said that the majority of miners still did not understand the full extent of the NCB’s pay offer and plans for investment: more needed to be done to put across the NCB’s case to striking miners, many of whom relied on the NUM for their information. They confirmed that while talks between the NCB and the NUM were going on, or were in prospect, it was extremely difficult to persuade men to return to work. They explained to me how small shops in the coalfields were being blackmailed into supplying food and goods for striking miners and withholding them from working miners. But perhaps the most shocking thing they had to say was that local NCB management in some areas were not anxious to promote a return to work and in one particular area were actively siding with the NUM to discourage it. In this overunionized industry I found that all too likely.

Of course, the vital thing for these women was that the NCB should do everything it could to protect miners who had led the return to work, if necessary transferring them to pits where there were fewer militants and giving them priority in applications for redundancies. I said that we would not let them down, and I think I kept my word. The whole country was in their debt.

One working miner’s wife, Mrs McGibbon from Kent, spoke at the Conservative Party Conference, describing the harrowing experiences which she and her family had undergone. The vile tactics of the strikers knew no limit. Even her small children were targets: they were told that their parents were going to be killed. Shortly after she had spoken the Morning Star published her address. A week later her home was attacked.

On 11 September the National Working Miners’ Committee was formed. This was an important development in the history of the working miners’ movement. I heard a good deal informally about what was happening on the ground through David Hart, a friend who was making great efforts to help the working miners. I was eager to learn everything I could.

On Wednesday 26 September I went to York. I visited the Minster, which had recently been struck by lightning and badly damaged in the fire which followed — divine punishment, some suggested, for the wayward theology of leading Anglican clerics. I also discussed with the Yorkshire police and local people the damage the strike was doing to the local community. At lunch with Conservative Party activists, some of those from Barnsley confirmed the impression that we had received throughout the strike: that the NCB’s publicity of its case was truly dreadful. There were, too, the accounts of intimidation with which I had become all too familiar. Nor could one doubt the economic hardship which Mr Scargill’s obduracy was imposing on his own supporters. I was told that miners were digging up rootcrops from the fields to feed themselves and their families.

One positive result of the visit was my meeting with Michael Eaton, Director of the NCB’s North Yorkshire area and the man who had developed the new pit at Selby.

I heard again in York, as I had from advisers previously, how effective he was. He has a wonderful soft Yorkshire voice and a good way of explaining things, so I suggested his appointment as a national spokesman to help improve NCB’s presentation. Mr Eaton did a fine job, though unfortunately his position was made difficult as a result of jealousy and obstruction elsewhere in the NCB’s ranks.

Meanwhile the threat from NACODS crept up on us. The leadership of NACODS was now clearly intent on a strike and announced that a strike ballot was to be held on 28 September. An agreement on the outstanding issues seemed within reach at one point but was repudiated by the union president on his return from holiday. At first the NCB was optimistic about the result of the ballot, but ominously as the days went by their assessments grew less and less hopeful. I had a meeting with Ian MacGregor and Peter Walker at Chequers on Sunday 23 September and we discussed what would happen if the two-thirds majority required for a strike was obtained. It was possible that NACODS might just use the result to put pressure on the NCB management to resolve their grievances. Alternatively, they might call a strike. We thought that in that event NACODS men in areas where the mines were working would themselves remain at work. But there was little chance of this happening in borderline areas like Derbyshire and it was clear that a NACODS strike would make it even more difficult to bring about a return to work by miners in the more militant areas. NACODS men were not the only NCB employees with the necessary safety qualifications. Many members of the British Association of Colliery Managers (BACM) were also qualified, but it would be difficult to persuade them to go underground and perform these tasks in the face of NACODS hostility. And while there were some NUM members who had passed the requisite examinations and were awaiting promotion to safety work grades, they too could provide only limited cover.

On Tuesday 25 September Peter Walker told the ministerial group on coal that it now looked likely that NACODS would vote for a strike. He was right: when the result came through on Friday we discovered that 82.5 per cent had voted in favour.

This was very bad news. Throughout the coal strike events swung unpredictably in one direction then another — suddenly things would move our way, then equally suddenly move against us — and I could never let myself feel confident about the final outcome.

Apart from the initial few days of the strike in March, this was the time when we felt most concern. Some in Whitehall feared that a bandwaggon might begin to roll in Mr Scargill’s favour. We could not know what effect the TUC resolution of support for the NUM would have. We were now approaching the autumn and the militants might gain new heart. And there was the threatened NACODS strike.

It was suggested to us that most members of NACODS had voted for a strike in order to strengthen their leadership’s negotiating hand and that the vote did not mean that a strike would inevitably take place. After the ballot the NACODS executive had announced a nine-day delay before industrial action would actually begin, lending some plausibility to this interpretation. But for most of the leadership itself the original dispute about crossing picket lines was a secondary matter; their real aim was to secure an end to the miners’ strike on the NUM’s terms. Our best chance of avoiding a strike by NACODS — or of minimizing its effects if one could not be avoided — would be to drive a wedge between the union leaders and their members. It was therefore vital that the NCB should be as conciliatory as possible on the points of substance.

The NCB and NACODS held talks on Monday 1 October. Agreement was reached on pay and on guidelines as regards crossing picket lines, the NCB withdrawing its circular of 15 August. The following day there were discussions on machinery for the review of pit closures and the possibility of some form of arbitration in cases of disagreement. This was to remain the most difficult question. No matter how elaborate the process of consultation, the NCB could not concede to a third party the right of ultimate decision over pit closures. This, although generally understood, was best not set out too starkly.

All this time we were faced with hostile outside comment and pressure. The Labour Party Conference wholeheartedly backed the NUM and condemned the police. Worst of all, perhaps, was Neil Kinnock’s speech in which, under pressure from the left wing and trade unions, he retreated from the tougher line he had taken at the TUC Conference. He took refuge in a general condemnation of violence which made no distinction between the use of violence with the aim of breaking the law and the use of force to uphold it. He even contrived to equate violence and intimidation with the social ills from which he claimed Britain was suffering: ‘the violence of despair… of long-term unemployment… loneliness, decay and ugliness’. No wonder that the Labour Party lost so much support in Nottinghamshire, where miners and their families knew what violence really was, even if the Leader of the Labour Party did not.

As always, the Conservative Party Conference followed straight on from Labour’s. Much of my time at Brighton was spent following as best I could the course of negotiations between the NUM and the NCB at the Advisory, Conciliation and Arbitration Service (ACAS). A delegation from NACODS was also present at ACAS, though not directly involved in the negotiations. It was clear that NACODS was trying to win terms for the NUM which would have allowed Mr Scargill to claim victory. NACODS leaders were making threats with this in mind, claiming that their members could not be restrained much longer from beginning their strike and so on. Tactics became at this stage of the greatest importance. The NCB tabled a paper which accepted an independent review body on pit closures and they committed themselves to give proper consideration to its views, though obviously they would retain the right to take management decisions. ACAS then put forward a variation on this which the NCB immediately accepted and the NUM promptly rejected. We were still not to know how NACODS would react. But for once the NCB had obtained an important tactical advantage in negotiations.

These discussions spanned our Party Conference. Leon Brittan and Peter Walker both delivered powerful defences of our position during it. But the event which dominated our thoughts at that time was the IRA bomb at the Grand Hotel which killed five of our friends and came near to killing me, members of the Cabinet and many others.[46]

Among the messages I received afterwards was one from Mrs Gandhi, whom I knew well and admired. Within three weeks she was the victim of a brutal assassination by two of her own bodyguards.

THE TIDE TURNS

Towards the end of October the situation changed sharply once again. Three events within a week were particularly hopeful for us and must have come as hammerblows to Mr Scargill. First, on Tuesday 24 October the NACODS executive agreed not to strike after all. Precisely what happened is unclear. In all probability the moderates on the executive convinced the hardliners that their members simply would not act as stooges for Mr Scargill.

Second, it was at this point that the civil law at last began to bite. I have already mentioned a case which had been brought against the NUM by two Yorkshire miners: the High Court had ruled in the two miners’ favour that the strike in Yorkshire could not be described as ‘official’. The NUM had ignored the ruling and as a result a writ had been served on an astonished Mr Scargill actually on the floor of the Labour Party Conference. On 10 October both he and the union had been found in contempt of court and fined £1,000 and £200,000 respectively. Mr Scargill’s fine was paid anonymously, but the NUM refused to pay and the High Court ordered its assets to be sequestrated. It soon became evident that the NUM had prepared for this event, but the financial pressure on the union was now intense and its ability to organize was greatly hampered.

Finally, on Sunday 28 October — only three days after the sequestration order — the Sunday Times revealed that an official of the NUM had visited Libya and made a personal appeal to Colonel Gaddafi for his support. This was astonishing news and even Mr Scargill’s friends were dismayed. At the beginning of October, Mr Scargill (travelling under an alias as ‘Mr Smith’) had visited Paris with his colleague Mr Roger Windsor to meet representatives of the French communist trade union, the CGT. Present at the meeting was a Libyan whom Mr Scargill later claimed to be a representative of Libyan trade unionists — a rare breed, in fact, since Colonel Gaddafi had dissolved all trade unions when he came to power in 1969. It seems likely that Colonel Gaddafi made a donation to the NUM, though the amount is uncertain. The sum of £150,000 has been suggested. Mr Windsor’s visit to Libya was a follow-up to the Paris meeting.

A further sum was certainly received from an equally unlikely source: the nonexistent ‘trade unions’ of Soviet-controlled Afghanistan. And in September reports had begun to surface that the NUM was receiving assistance from Soviet miners — a group whose members would have looked with envy on the freedoms, incomes and working conditions of their British equivalents. There was further confirmation in November. It was quite clear that these initiatives had the support of the Soviet Government. Otherwise the Soviet miners would not have had access to convertible currency. Our displeasure at this was made very clear to the Soviet Ambassador and I raised the matter with Mr Gorbachev when he visited Britain for the first time in December, who claimed to be unaware of it.[47]

All this did the NUM’s cause great harm, not least with other trade unionists. The British people have plenty of sympathy for someone fighting for his job, but very little for anyone who seeks help from foreign powers out to destroy his country’s freedom.

In November the ground continued to slip from under the NUM leadership. The NCB seized the moment to launch a drive to encourage the return to work. It was announced that miners who were back at work on Monday 19 November would qualify for a substantial Christmas bonus. The NCB mounted a direct mail campaign to draw the attention of striking miners to the offer. Combined with the growing disillusionment with Mr Scargill, this had an immediate effect. In the first week after the offer 2,203 miners returned to work, six times more than in the previous week. The most significant return to work was in North Derbyshire. Our strategy was to let this trend continue without trying to take any explicit political credit for it, which could have been counter-productive. I told ministers that the figures should be allowed to speak for themselves, but that we should continue to emphasize just how much was on offer. I was keen to bring it home to the public that, in spite of all Mr Scargill’s efforts, the trend was now firmly in the right direction.

Speaking at the Lord Mayor’s Banquet on Monday 12 November I said:

The Government will hold firm. The Coal Board can go no further. Day by day, responsible men and women are distancing themselves from this strike. Miners are asserting their right to go to their place of work. Those in other unions now see clearly the true nature and purpose of those who are leading this strike.

This has been a tragic strike but good will emerge from it. The courage and loyalty of working miners and their families will never be forgotten. Their example will advance the cause of moderate and reasonable trade unionism everywhere. When the strike ends it will be their victory.

In fact, I remained in touch with representatives of the working miners. I was keen to see them but there appeared to be some rivalry between two groups: to have seen one without the other would have caused resentment and to have seen both together would have been undiplomatic. I accepted Peter Walker’s advice to this effect, but I told my Private Office that when the strike was over I would have representatives of all the working miners and their wives to No. 10 for a reception — which indeed I did. (I met some also at a private buffet hosted by Woodrow Wyatt at the end of March the following year.)

Like many others, I suspect, I had been impelled to reflect a great deal in the course of the strike on the threats to democracy. Back in July I had addressed an eve of recess meeting of the ‘22 Committee on the subject of the ‘enemy within’. The speech had attracted a good deal of hostile comment: critics had tried to distort my meaning by suggesting that the phrase was a reference to the miners at large rather than the minority of Marxist militants, as I had intended. I returned to the theme in the Carlton Lecture, which I delivered in the traditional home of Conservatism — the Carlton Club — on the evening of Monday 26 November. I was the second Carlton lecturer: the first had been Harold Macmillan, who had recently attacked our handling of the miners’ strike in a characteristically elegant maiden speech in the Lords. Of course, in contemplating the threat of anti-democratic extremism I had in mind not only the NUM leadership but also the terrorists, who had demonstrated their murderous intent at the Brighton Grand Hotel just weeks before. I reflected:

There has come into existence a fashionable view, convenient to many special interest groups, that there is no need to accept the verdict of the majority: that the minority should be quite free to bully, even coerce, to get the verdict reversed. Marxists, of course, always had an excuse when they were outvoted: their opponents must have ‘false consciousness’: their views didn’t really count. But the Marxists, as usual, only provide a bogus intellectual top-dressing for groups who seek only their own self-interest.

…Now that democracy has been won, it is not heroic to flout the law of the land as if we still struggled in a quagmire where civilization had yet to be built. The concept of fair play — a British way of saying ‘respect for the rules’ — must not be used to allow the minority to overbear the tolerant majority. Yet these are the very dangers which we face in Britain today. At one end of the spectrum are the terrorist gangs within our borders, and the terrorist states which finance and arm them. At the other are the hard Left operating inside our system, conspiring to use union power and the apparatus of local government to break, defy and subvert the laws.

The return to work continued. But so did the violence. Violence and intimidation well away from the pitheads were more difficult for the police to prevent and required fewer people to perpetrate: consequently it was on such tactics that the militant miners now concentrated. There were many incidents. One that particularly struck me took place on Friday 23 November when Michael Fletcher, a working miner from Pontefract in Yorkshire, was attacked and beaten by a gang of miners in his own home. No fewer than nineteen men were arrested for the crime. Then a week later came one of the most appalling events of the strike: a three-foot concrete post was thrown from a motorway bridge onto a taxi carrying a South Wales miner to work. The driver, David Wilkie, was killed. I wondered whether there was any limit to the savagery of which these people were capable.

With the passing of the 19 November deadline for the Christmas bonus the return to work slowed somewhat. One of the wives of the working miners sent me a message explaining that there were two additional reasons. First, some striking miners who intended to go back to work would only return after Christmas, to avoid intimidation of their families over the holiday. Second, there was news of fresh talks being planned between the NUM and the NCB, and talks always had a negative effect on the movement back to work.

But further talks were difficult to avoid, although Mr Scargill’s intransigence would probably ensure that they went nowhere. Using Robert Maxwell as an intermediary, key figures in the TUC were anxious to find some way of concluding the strike which would allow Mr Scargill and the militants to save face. In fact, of course, it was only by ensuring that they lost face and were seen to be defeated and rejected by their own people that we could tame the militants. I suspect that some of the union leaders knew this. Certainly, some of them had reason to know it. Norman Willis, General Secretary of the TUC, had pursued a thoroughly honourable line throughout, unlike the leaders of the Labour Party. Earlier that month he had spoken at an NUM rally in South Wales. Attempts were made to shout him down when he condemned violence on the picket line and in a chilling moment, which I and millions of others watched on television, a noose was lowered from the ceiling and suspended just above his head.

David Basnett, General Secretary of the GMWU, and Ray Buckton, General Secretary of ASLEF, had a private meeting with Peter Walker in which they revealed their desire for the TUC to play a role. I considered how we should respond. On the one hand, the last thing I wanted was to bring the TUC into No. 10 in their old capacity as power brokers. On the other hand, a clumsy rebuff could alienate moderate opinion among the unions.

So Peter Walker and Tom King had a lengthy meeting with seven of the main union leaders on the evening of Wednesday 5 December. It was clear that none of the seven really had any idea how to end the strike. I discussed how to deal with the TUC initiative with Peter Walker and officials on the morning of Thursday 13 December at Downing Street. Apparently the TUC were proposing to put to the NUM and the NCB the idea of a return to work followed by discussion of a new Plan for Coal, the talks to have a time limit of perhaps eight to twelve weeks. The TUC wanted to know whether we would endorse this approach. Peter Walker saw some advantages in it. I was more conscious of the difficulties. There were three principles, I said, to which we must adhere. First, any talks on the future of the industry must take place after the return to work. Second, nothing should be agreed which would undercut the position of the working miners. Third, it was essential to prevent the NUM claiming that the programme of pit closures had been withdrawn or even that there would be no pit closures while talks continued. It should be clearly seen that the NCB was free to operate the existing colliery review procedure, as modified by the provisions of the agreement with NACODS. However, I agreed that Peter should meet the TUC on Friday morning to tell them that the Government would go along with their efforts to bring the strike to an end on the basis of a return to work followed by talks on the future of the industry. The colliery review procedure, modified by the NACODS agreement, would remain in place.

Peter and Tom met the TUC delegation the following day. Nothing came of the meeting. The TUC had no authority from Mr Scargill to negotiate and they concluded that no initiative to end the strike was now possible before Christmas.

As the year ended, our main objective was to encourage a further return to work from 7 January, the first working Monday in the New Year. Though the NCB’s bonus offer had expired, there was still a strong financial incentive for strikers to return to work in the near future because they would pay little, if any, income tax on their wages if they went back before the end of the tax year on 31 March. The great strategic prize would be to get more than 50 per cent of NUM members back to work: if we could secure that, it would be equivalent in practical and presentational terms to a vote in a national ballot to end the strike. This would require the return of a further 15,000 to work, which the NCB were busily preparing a new campaign of letters and press advertising to achieve.

It was also vital that the miners and the public at large should be told that there would be no power cuts that winter, contrary to Mr Scargill’s ever more desperate and incredible predictions. We held off making such an announcement until we could be absolutely certain, but finally on 29 December Peter Walker was able to issue a statement saying that he had been informed by the Chairman of the CEGB that at the level of coal production that had now been achieved there would be no power cuts during the whole of 1985.

THE STRIKE BEGINS TO CRUMBLE

The question now was what the effect of all this would be on the return to work in January. The rate of return was initially affected in some areas by bad weather, which also had some negative effects on the movement of coal. (I had been worried earlier that we would have a cold winter, but fortunately the weather was generally good.) But as January continued the rate of return increased. By the middle of the month there were almost 75,000 NUM members not on strike and the rate of return was running at about 2,500 a week. Plainly the end was near.

The pattern which seemed to be emerging was for working miners to establish a ‘bridgehead’ at a strike-bound pit: fifty or more of those most anxious to return would go in together, often on a Thursday or Friday when their action attracted least attention. After that things could move quite fast. The increase in production was bound to be slower than the rate of return to work, but the trend there was also clearly in the right direction.

The one thing which could be relied upon to slow down the progress was further negotiations: and so it proved. When news broke of ‘talks about talks’, which were arranged between the NCB and the NUM on Monday 21 January, the effect was to cut the rate of return to rather less than half that of the previous week.

Meanwhile, public attention increasingly focused on the attempts of the sequestrators to trace and recover NUM funds which had been transferred abroad. In early December further legal action by working miners had led to the removal of the NUM’s trustees and the appointment of an official receiver. These were, of course, principally questions for the courts. However, even with the full armoury of the law, there were such difficulties in tracing the funds that the sequestrators might not even have been able to cover their costs. Accordingly, Michael Havers told the Commons on Tuesday 11 December that the Government would indemnify them against the loss. We could not stand by and see the intention of the court frustrated. We were also involved in trying to ensure maximum co-operation from foreign governments — Ireland and Luxemburg — in whose jurisdictions the NUM had lodged its money. Towards the end of January some £5 million was recovered.

If the position of Mr Scargill looked hopeless, that of the Labour Party looked ridiculous. There was another Censure Debate in the House of Commons at this time in which I spoke for the Government. As on the previous occasion I challenged Mr Kinnock to tell us where he stood, even if belatedly:

Throughout the strike the Rt. Hon. Gentleman has had the choice between standing up to the NUM leadership and keeping silent. He has kept silent. When the leadership of the NUM called a strike without a ballot, in defiance of union rules, the Rt. Hon. Gentleman stayed silent. When pickets tried by violence to close down pits in Nottinghamshire and elsewhere, against the democratically expressed wishes of the local miners, the Rt. Hon. Gentleman stayed silent. When the NUM tried to impose mob rule at Orgreave, the Rt. Hon. Gentleman stayed silent. Only when the General Secretary of the TUC had the courage to tell the leadership of the NUM that its tactics were unacceptable did the Rt. Hon. Gentleman take on the role of Little Sir Echo… I challenge the Leader of the Opposition. Will he urge the NUM to accept that agreement or will he not? [Hon. Members: ‘Answer!’] He will not answer, because he dare not answer.

The real question now was how and when would the strike end. In early February the numbers returning to work were again down because of the prospect of a resumption of talks. The TUC continued to seek to act as an intermediary between the NCB and the NUM. By this time, the NCB had rightly deduced that in negotiations they should put everything on paper so that there was less chance of the NUM leadership distorting it for their own tactical advantage. For his part, Mr Scargill continued to confirm in public that he would not agree to the closure of pits on economic grounds. Not surprisingly, working miners and their families were worried and perplexed by the continuing talk of negotiations. On Monday 4 February I wrote to the wife of a working miner to reassure her:

I do understand your fear that the NUM leadership may yet evade responsibility for the misery they have caused — but I believe that the Coal Board have been, and are being, resolute about their position. For my part, I have made clear that there can be no fudging of the central issue, and no betrayal of the working miners to whom we owe so much…

By this time, the NUM leadership could have no doubt about how far events had swung against them since the NACODS dispute the previous autumn. The NACODS leaders now began to press the NCB to resume negotiations and so assist the NUM. But, learning from past mistakes, the NCB avoided giving NACODS any excuse for a renewed threat of industrial action.

The TUC leaders also remained anxious to save the militants from humiliating defeat. But Mr Scargill clearly had no intention of budging: indeed he had already stated publicly that he would prefer a return to work without an agreement to acceptance of the NCB’s proposals. For its part, the NCB had told the TUC that there was no basis for negotiation on the terms still demanded by the NUM. I recognized that, although their motives were decidedly mixed, the TUC leaders and particularly the General Secretary had been acting in good faith. They must have realized by now that there was no possibility of doing business with Mr Scargill. Consequently, when a delegation from the TUC asked to see me, I agreed.

I met Norman Willis and other union leaders at No. 10 on the morning of Tuesday 19 February. Willie Whitelaw, Peter Walker and Tom King joined me on the Government side. The meeting was good natured. Norman Willis put as fair a construction on the NUM’s negotiating stance as anyone could. In reply I said that I appreciated the TUC’s efforts. I too wanted to see the strike settled as soon as possible. But this required a clear resolution of the central issues of the dispute. It was in no one’s interest to end the strike with an unclear formula: arguments about interpretation and accusations of bad faith could provide the basis for another dispute. I could not agree with Mr Willis that there was evidence of a significant shift in the NUM executive’s position. I gave an assurance that the NACODS agreement would be fully honoured and that I saw no difficulties about implementing it. An effective settlement of the dispute required clear understandings about procedures for closure, acknowledgement of the NCB’s right to manage and to make the final decisions, and an acknowledgement that the Board would take the economic performance of pits into account when those decisions were made.

THE END OF THE STRIKE

It was now evident to the miners and to the public that the TUC were neither willing nor able to stop events taking their course. Large numbers of miners were going back to work and the rate of return was increasing. On Wednesday 27 February the magic figure was reached: more than half the members of the NUM were now not on strike. On Sunday 3 March an NUM Delegates’ Conference voted for a return to work, against Mr Scargill’s advice, and over the next few days even the most militant areas returned. That Sunday I gave an interview to reporters outside No. 10. I was asked who if anyone had won. I replied:

If anyone has won, it has been the miners who stayed at work, the dockers who stayed at work, the power workers who stayed at work, the lorry drivers who stayed at work, the railwaymen who stayed at work, the managers who stayed at work. In other words, all of those people who kept the wheels of Britain turning and who, in spite of a strike, actually produced a record output in Britain last year. It is the whole working people of Britain who kept Britain going.

And so the strike ended. It had lasted almost exactly a year. Even now we could not be sure that the militants would not find some new excuse to call a strike the following winter. So we took steps to rebuild coal and oil stocks and continued to watch events in the coal industry with the closest attention. I was particularly concerned about the dangers faced by the working miners and their families now that the spotlight had moved away from the pithead villages. In May I met Ian MacGregor to emphasize how vital it was that they should receive the necessary consideration and support.

As an industrial dispute the coal strike had been wholly unnecessary. The NUM’s position throughout the strike — that uneconomic pits could not be closed — was totally unreasonable. Never while I was Prime Minister did any other group make a similar demand, let alone strike for it. Only in a totalitarian state with a siege economy — with nationalization, the direction of labour and import barriers — could the coal industry have functioned, even for a time, irrespective of financial realities and the forces of competition. But for people like Mr Scargill these were desirable things. The impossibility of the NUM’s policy on pit closures is a further clue — as if public statements were not enough — to the real nature of the strike itself.

The strike certainly established the truth that the British coal industry could not remain immune to the economic forces which applied elsewhere in both the public and private sectors. In spite of heavy investment, British coal has proved unable to compete on world markets and as a result the British coal industry has now shrunk far more than any of us thought it would at the time of the strike.[48]

Yet the coal strike was always about far more than uneconomic pits. It was a political strike. And so its outcome had a significance far beyond the economic sphere. From 1972 to 1985 the conventional wisdom was that Britain could only be governed with the consent of the trade unions. No government could really resist, still less defeat, a major strike; in particular a strike by the miners’ union. Even as we were reforming trade union law and overcoming lesser disputes, such as the steel strike, many on the left and outside it continued to believe that the miners had the ultimate veto and would one day use it. That day had now come and gone. Our determination to resist a strike emboldened the ordinary trade unionist to defy the militants. What the strike’s defeat established was that Britain could not be made ungovernable by the Fascist Left. Marxists wanted to defy the law of the land in order to defy the laws of economics. They failed, and in doing so demonstrated just how mutually dependent the free economy and a free society really are. It is a lesson no one should forget.

CHAPTER XIV

The Downing Street Years, 1979-1990

Shadows of Gunmen

The political and security response to IRA terrorism — 1979–1990

THE BRIGHTON BOMB

As usual, by the end of the week of our 1984 Party Conference in Brighton I was becoming frantic about my speech. A good conference speech cannot just be written in advance: you need to get the feel of the conference in order to achieve the right tone. I spent as much time as I could working on the text with my speech writers on Thursday afternoon and evening, rushed away to look in at the Conservative Agents’ Ball and returned to my suite at the Grand Hotel just after 11 o’clock.

By about 2.40 a.m. the speech… at least from my point of view… was finished. So while the speech writers themselves, who had been joined for a time by Norman Tebbit, went to bed, my long-suffering staff typed in what I was (fairly) confident would be the final changes to the text and prepared the Autocue tape. Meanwhile, I got on with some government business.

At 2.50 a.m. Robin Butler asked me to look at one last official paper… it was about the Liverpool Garden Festival. I gave Robin my view and he began to put away the papers. At 2.54 a.m. a loud thud shook the room. There was a few seconds’ silence and then there was a second slightly different noise, in fact created by falling masonry. I knew immediately that it was a bomb… perhaps two bombs, a large followed by a smaller device… but at this stage I did not know that the explosion had taken place inside the hotel. Glass from the windows of my sitting-room was strewn across the carpet. But I thought that it might be a car bomb outside. (I only realized that the bomb had exploded above us when Penny, John Gummer’s wife, appeared a little later from upstairs, still in her night clothes.) The adjoining bathroom was more severely damaged, though the worst I would have suffered had I been in there were minor cuts. Those who had sought to kill me had placed the bomb in the wrong place.

Apart from the broken glass and a ringing fire alarm, set off by the explosion, there was a strange and, as it turned out, deceptive normality. The lights, thankfully, remained on: the importance of this played on my mind for some time and for months afterwards I always kept a torch by my bed when I was staying the night in a strange house. Denis put his head round the bedroom door, saw that I was all right and went back inside to dress. For some reason neither of us quite understands he took a spare pair of shoes with him, subsequently worn by Charles Price, the American Ambassador, who had lost his in the confusion of leaving the hotel. While Crawfie gathered together my vanity case, blouses and two suits…one for the next day…Robin Butler came in to take charge of the government papers. I went across the landing to the secretaries’ room to see if my staff were all right. One of the girls had received a nasty electric shock from the photocopier. But otherwise all was well. They were as concerned about my still only partly typed-up speech as they were for themselves. ‘It’s all right,’ they assured me, ‘we’ve got the speech.’ A copy went straight into my briefcase.

By now more and more people were appearing in the secretaries’ room with me…the Gummers, the Howes, David Wolfson, Michael Alison and others, unkempt, anxious but quite calm. At this stage none of us had any clear idea about the extent of the damage, let alone injuries. While we talked, my detectives had been checking out as best they could our immediate security. There is always a fear of a second device, carefully timed to catch and kill those fleeing from the first explosion. It was also necessary for them to find a way out of the hotel which was both unblocked and safe.

At 3.10 a.m., in groups, we began to leave. It turned out that the first route suggested was impassable and we were turned back by a fireman. So we went back and waited in the office. Later we were told that it was safe to leave and we went down by the main staircase. It was now that I first saw from the rubble in the entrance and foyer something of the seriousness of the blast. I hoped that the porter had not been injured. The air was full of thick cement dust: it was in my mouth and covered my clothes as I clambered over discarded belongings and broken furniture towards the back entrance of the hotel. It still never occurred to me that anyone would have died.

Ten minutes later Denis, Crawfie and I arrived in a police car at Brighton Police Station. We were given tea in the Chief Constable’s room. Soon friends and colleagues started to arrive to see me. Willie Whitelaw came in. So did the Howes, accompanied by their little dog ‘Budget’. But it was Leon Brittan, as Home Secretary, and John Gummer, as Party Chairman, with whom I had most to discuss. At this stage none of us knew whether the conference could continue: had the conference hall itself been attacked? But I was already determined that if it was physically possible to do so I would deliver my speech. There was discussion about whether I should return to No. 10; but I said, ‘No: I am staying.’ It was eventually decided that I would spend the rest of the night at Lewes Police College. I changed out of evening dress into a navy suit and, as I left the Police Station with Denis and Crawfie, I made a brief statement to the press. Then we were driven at great speed to Lewes.

Nobody spoke during the journey. Our thoughts were back at the Grand Hotel. Whether by chance or arrangement, there was no one staying at the College. I was given a small sitting-room with a television and a twin-bedded room with its own bathroom. Denis and the detectives shared rooms further down the corridor. Crawfie and I shared too. We sat on our beds and speculated about what had happened. By now I was convinced that there must have been casualties. But we could get no news.

I could only think of one thing to do. Crawfie and I knelt by the side of our beds and prayed for some time in silence.

I had brought no night clothes with me and so I lay down fully clothed and slept fitfully for perhaps an hour and a half. I awoke to the sound of the breakfast television news at 6.30 a.m. The news was bad, much worse than I had feared. I saw pictures of Norman Tebbit being pulled out of the rubble. Then came the news that Roberta Wakeham and Anthony Berry MP were dead. I knew that I could not afford to let my emotions get control of me. I had to be mentally and physically fit for the day ahead. I tried not to watch the harrowing pictures. But it did not seem to do much good. I had to know each detail of what had happened…and every detail seemed worse than the last.

I bathed quickly, changed and had a light breakfast with plenty of black coffee. It was soon clear that the conference could go ahead. I said to the police officer in charge that I must get back to Brighton to open the conference on time.

It was a perfect autumn day and as we drove back into Brighton the sky was clear and the sea completely calm. I now had my first sight of the front of the Grand Hotel, a whole vertical section of which had collapsed.

Then we went on to the Conference Centre itself, where at 9.20 a.m. the conference opened; and at 9.30 a.m. precisely I and the officers of the National Union[49] walked on to the platform. (Many of them had had to leave clothes in the hotel, but Alistair McAlpine had persuaded the local Marks & Spencer to open early and by now they were smartly dressed.) The body of the hall was only about half full, because the rigorous security checks held up the crowds trying to get in. But the ovation was colossal. All of us were relieved to be alive, saddened by the tragedy and determined to show the terrorists that they could not break our spirit.

By chance, but how appropriately, the first debate was on Northern Ireland. I stayed to listen to this but then left to work on my speech which had to be completely revised. Michael Alison (my Parliamentary Private Secretary) and I retired to an office in the Centre where we removed most of the partisan sections of the speech: this was not a time for Labour-bashing but for unity in defence of democracy. Whole new pages had to be written, though there were tough sections on law and order which could be used as they stood. Ronnie Millar then polished the text as he and I went through it. All the while, and in spite of attempts by my staff to minimize the interruptions, I was receiving messages and fleeting visits from colleagues and friends. I knew that John Wakeham had not yet been freed from the rubble and several people were still missing. A steady stream of flowers arrived which later were sent on to the hospital where the injured had been taken.

As in earlier days, I delivered the speech from a text rather than Autocue and ad libbed a good deal as well. But I knew that far more important than what I said was the fact that I, as Prime Minister, was still able to say it. I did not dwell long in the speech on what had happened. But I tried to sum up the feelings of all of us.

The bomb attack… was an attempt not only to disrupt and terminate our conference. It was an attempt to cripple Her Majesty’s democratically elected government. That is the scale of the outrage in which we have all shared. And the fact that we are gathered here now, shocked but composed and determined, is a sign not only that this attack has failed, but that all attempts to destroy democracy by terrorism will fail.

I did not linger after my speech but went immediately to the Royal Sussex County Hospital to visit the injured. Four people had already died. Muriel McLean was on a drip feed: she would die later. John Wakeham was still unconscious and remained so for several days. He had to be operated on daily for some time to save his legs which had been terribly crushed. By chance we all knew the consultant in charge, Tony Trafford, who had been a Conservative MP. I spent hours on the telephone trying to get the best advice possible from experts in dealing with crush injuries. In the end it turned out that there was a doctor in the hospital from El Salvador who had the expertise required. Between them they managed to save John’s legs. Norman Tebbit regained consciousness while I was at the hospital and we managed a few words. His face was bloated as a result of being trapped for so long under the rubble: I scarcely recognized him. I also talked to Margaret Tebbit who was in the intensive care unit. She told me she had no feeling below the neck. As a former nurse, she knew well enough what that meant.

I left the hospital overcome by such bravery and suffering. I was driven back to Chequers that afternoon faster than I have ever been driven before, with a full motorcycle escort. As I spent that night in what had become my home I could not stop thinking about those unable to return to theirs.

THE IRISH DILEMMA

What happened in Brighton shocked the world. But the people of Northern Ireland and the security forces face the ruthless reality of terrorism day after day. There is no excuse for the IRA’s reign of terror. If their violence were, as the misleading phrase often has it, ‘mindless’ it would be easier to grasp as the manifestation of a disordered psyche. But that is not what terrorism is, however many psychopaths may be attracted to it. Terrorism is the calculated use of violence…and the threat of it…to achieve political ends. In the case of the IRA those ends are the coercion of the majority of the people of Northern Ireland, who have demonstrated their wish to remain within the United Kingdom, into an all-Ireland state. Along with the political objective go crimes of other kinds… robbery, protection, fraud to name but a few.

There are terrorists in both the Catholic and Protestant communities, and all too many people prepared to give them support or at least to acquiesce in their activities. Indeed, for a person to stand out against the terrorists carries great personal risk. The result is that it is impossible to separate entirely the security policy, required to prevent terrorist outrages and bring the perpetrators to book, from the wider political approach to the long-standing ‘Northern Ireland problem’. For some people that connection implies that you should make concessions to the terrorist, in particular by weakening the Union between Ulster and Britain. But it never did so for me. My policy towards Northern Ireland was always one aimed above all at upholding democracy and the law: it was always therefore determined by whatever I considered at a particular time would help bring better security.

The IRA are the core of the terrorist problem; their counterparts on the Protestant side would probably disappear if the IRA could be beaten. But the best chance of beating them is if three conditions are met. First, the IRA have to be rejected by the nationalist minority on whom they depend for shelter and support.[50] This requires that the minority should be led to support or at least acquiesce in the constitutional framework of the state in which they live. Second, the IRA have to be deprived of international support, whether from well-meaning but naïve Irish Americans, or from Arab revolutionary regimes like that of Colonel Gaddafi. This requires constant attention to foreign policy aimed at explaining the facts to the misinformed and cutting off the weapons from the mischievous. Third, and linked to the other two, relations between Britain and the Republic of Ireland have to be carefully managed. Although the IRA have plenty of support in areas like West Belfast within Northern Ireland, very often it is to the South that they go to be trained, to receive money and arms and to escape capture after crimes committed within the United Kingdom. The border, long and difficult to patrol, is of crucial significance to the security problem. Much depends on the willingness and ability of the political leaders of the Republic to co-operate effectively with our intelligence, security forces and courts. So it was that throughout my time in office security issues and political initiatives were intertwined.

My own instincts are profoundly Unionist. There is therefore something of a paradox in that my relations with the Unionist politicians were so uncomfortable most of the time. Airey Neave and I felt the greatest sympathy with the Unionists while we were in Opposition. I knew that these people shared many of my own attitudes, derived from my staunchly Methodist background. Their warmth was as genuine as it was usually undemonstrative. Their patriotism was real and fervent, even if too narrow. They had often been taken too much for granted. From my visits to Northern Ireland, often after terrible tragedies, I came to have the greatest admiration in particular for the way in which the little rural Protestant communities would come together, looking after one another, after some terrible loss. But, then, any Conservative should in his bones be a Unionist too. Our Party has always, throughout its history, been committed to the defence of the Union: indeed on the eve of the First World War the Conservatives were not far short of provoking civil disorder to support it. That is why I could never understand why leading Unionists… apparently sincerely… suggested that in my dealings with the South and above all in the Anglo-Irish Agreement, which I shall discuss shortly, I was contemplating selling them out to the Republic.

But what British politician will ever fully understand Northern Ireland? I suspect that even the most passionate English supporters of Ulster do so less than they imagine. Certainly, time and again I found that apparently innocuous words and phrases had a special significance in the overheated political world of Ulster… indeed the mere use of that term to describe the province is an example, allegedly denoting a ‘Protestant’ bias. In the history of Ireland… both North and South… which I tried to read up when I could, especially in my early years of office, reality and myth from the seventeenth century to the 1920s take on an almost Balkan immediacy. Distrust mounting to hatred and revenge is never far beneath the political surface. And those who step onto it must do so gingerly.

I started from the need for greater security, which was imperative. If this meant making limited political concessions to the South, much as I disliked this kind of bargaining I had to contemplate it. But the results in terms of security must come through. In Northern Ireland itself my first choice would have been a system of majority rule…devolved government on the same lines as Westminster, and subject to its supremacy… with strong guarantees for the human rights of the minority, and indeed everyone else. That is broadly the approach which Airey and I had in mind when the 1979 manifesto was drafted. But it was not long before it became clear to me that this model was not going to work, at least for the present. The nationalist minority were not prepared to believe that majority rule would secure their rights…whether it took the form of an assembly in Belfast, or more powerful local government. They insisted on some kind of ‘power sharing’… that in some way both sides should participate in the executive function…as well as demanding a role for the Republic in Northern Ireland, both of which proposals were anathema to the Unionists.

I had always had a good deal of respect for the old Stormont system.[51] When I was Education Secretary I was impressed by the efficiency of the Northern Ireland education service. The province has kept its grammar schools and so has consistently achieved some of the best academic results in the United Kingdom. But majority rule meant permanent power for the Protestants, and there was no getting away from the fact that, with some justice, the long years of Unionist rule were associated with discrimination against the Catholics. I believe the defects were exaggerated, but Catholic resentment gave rise to the civil rights movement at the end of the 1960s, which the IRA was able to exploit. By early 1972 civil disorder existed on such a scale that Stormont was suspended and replaced by direct rule from London. At the same time the British Government gave a guarantee that Northern Ireland would remain a part of the United Kingdom so long as the majority of its people wished, and this has remained the cornerstone of policy under governments of both parties.

The political realities of Northern Ireland prevented a return to majority rule. This was something that many Unionists refused to accept, but since 1974 they had been joined in the House of Commons by Enoch Powell, who helped to convert some of them to an altogether different approach. His aim was that of ‘integration’. Essentially, this would have meant eliminating any difference between the government of Northern Ireland and that of the rest of the UK, ruling out a return to devolution (whether majority rule or power sharing) and any special role for the Republic. Enoch’s view was that the terrorists thrived on uncertainty about Ulster’s constitutional position: that uncertainty would, he argued, be ended by full integration combined with a tough security policy. I disagreed with this for two reasons. First, as I have said, I did not believe that security could be disentangled from other wider political isssues. Second, I never saw devolved government and an assembly for Northern Ireland as weakening, but rather strengthening the Union. Like Stormont before it, it would provide a clear alternative focus to Dublin… without undermining the sovereignty of the Westminster Parliament.

FIRST ATTEMPTS AT DEVOLUTION

Such were my views about Northern Ireland’s future on entering office. My conviction that further efforts must be made on both the political and security fronts had been strengthened by the events of the second half of 1979.[52] In the course of that October we discussed in government the need for an initiative designed to achieve devolution in Northern Ireland. I was not very optimistic about the prospects but I agreed to the issue of a discussion document setting out the options. A conference would be called of the main political parties in Northern Ireland to see what agreement could be reached.

On Monday 7 January 1980 the conference opened in Belfast. Since the traumas of the late 1960s and early 1970s the forces of Unionism in Northern Ireland have been divided, adding factional rivalry to all the other problems faced by Ulster. On this occasion the largest Unionist group, the Official Unionist Party (OUP), refused to attend. Dr Paisley’s more militant Democratic Unionist Party (DUP), the mainly Catholic nationalist Social Democratic and Labour Party (SDLP) and the moderate middle-class Alliance Party did attend but, not altogether surprisingly, there was no real common ground.

We adjourned the conference later in March and began to consider putting forward more specific proposals ourselves in the form of a white paper. Ministers discussed a draft paper from Northern Ireland Secretary Humphrey Atkins in June. I had various changes made in the text in order to take account of Unionist sensitivities. I was no more optimistic than earlier that the initiative would succeed, but I felt that it was worth the effort and agreed that the white paper should be published in early July. It described areas…not including security…in which powers might be transferred to an executive chosen by an assembly in the province. It also spelt out two ways of choosing that executive, one inclining towards majority rule and the other towards power sharing. Discussions with the Northern Irish parties went on during the summer and autumn. But by November it was clear that there would not be sufficient agreement among them to go ahead with the assembly.

In any case, by now Republican prisoners inside the Maze Prison had begun the first of their two hunger strikes. I decided that no major political initiative should be made while the hunger strike was continuing: we must not appear to be bowing to terrorist demands. I was also cautious about any high-profile contacts with the Irish Government at such a time for the same reason.

Charles Haughey had been elected leader of his Fianna Fail Party and Taoiseach in mid-December 1979. Mr Haughey had throughout his career been associated with the most Republican strand in respectable Irish politics. How ‘respectable’ was a subject of some controversy: in a famous case in 1970 he had been acquitted of involvement while an Irish minister in the importing of arms for the IRA. That very fact, however, might inhibit his Republicanism. I found him easy to get on with, less talkative and more realistic than Garret FitzGerald, the leader of Fine Gael. Charles Haughey was tough, able and politically astute with few illusions and, I am sure, not much affection for the British. He had come to see me in May at No. 10 and we had had a general and friendly discussion of the scene in Northern Ireland. He kept on drawing the parallel, which seemed to me an unconvincing one, between the solution I had found to the Rhodesian problem and the approach to be pursued in Northern Ireland. Whether this was Irish blarney or calculated flattery I was not sure. He left me a gift of a beautiful Georgian silver teapot, which was kind of him. (It was worth more than the limit allowed for official gifts and I had to leave it behind at No. 10 when I left office.) By the time that I had my next talk with Mr Haughey when we were attending the European Council in Luxemburg on Monday 1 December 1980 it was the hunger strike which was the Irish main concern.

THE HUNGER STRIKES

To understand the background to the hunger strikes it is necessary to refer back to the ‘special category’ status for convicted terrorist prisoners in Northern Ireland which had been introduced, as a concession to the IRA, in 1972.[53] This was, and quickly appeared, a bad mistake. It was ended in 1976. Prisoners convicted of such offences after that date were treated as ordinary prisoners… with no greater privileges as regards clothing and association than anyone else. But the policy was not retrospective. So some ‘special category’ prisoners continued, being held apart and under a different regime from other terrorists. Within the so-called ‘H blocks’ of the Maze Prison where the terrorist prisoners were housed, protests had been more or less constant, including the revolting ‘dirty protest’, consisting of fouling cells and smashing up furniture. On 10 October a number of prisoners announced their intention of beginning a hunger strike on Monday 27 October unless certain demands were met. Of these, the most significant were that they should be able to wear their own clothes, associate freely with other ‘political’ prisoners and refrain from prison work.

There were several discussions among ministers in the interim to see what concessions might be made to avert the strike. All my instincts were against bending to such pressure, and certainly there could be no changes in the prison regime once the strike had begun. There was never any question of conceding political status. But the RUC Chief Constable believed that some concessions before the strike would be helpful in dealing with the threatened public disorder which such a strike might lead to and though we did not believe that they could prevent the hunger strike, we were anxious to win the battle for public opinion. Accordingly, we agreed that all prisoners… not just those who had committed terrorist crimes… might be permitted to wear ‘civilian type’ clothing… but not their own clothes… as long as they obeyed the prison rules. As I had foreseen, these concessions did not in fact prevent the hunger strike.

To the outside world the issue at stake must have seemed trivial. But both the IRA and the Government understood that it was not. The IRA and the prisoners were determined to gain control of the prison and had a well-thought-out strategy of doing this by whittling away at the prison regime. The purpose of the privileges they claimed was not to improve prisoners’ conditions but to take power away from the prison authorities. They were also keen to establish once again, as they felt they had in 1972, that their crimes were ‘political’, thus giving the perpetrators a kind of respectability, even nobility. This we could not allow. Above all, I would hold fast to the principle that we would not make concessions of any kind while the hunger strike was continuing. The IRA were pursuing with calculated ruthlessness a psychological war alongside their campaign of violence: they had to be resisted at both levels.

As the hunger strike continued and the prospect approached of one or more of the prisoners dying we came under a good deal of pressure. When I met Mr Haughey in the margins of the Luxemburg European Council on Monday 1 December 1980 he urged me to find some face-saving device which would allow the strikers to end their fast, though he said that he fully accepted that political status was out of the question. I replied that the Government could not go on making offers. There was nothing left to give. Nor was I convinced, then or later, that the hunger strikers were able to abandon the strike, even if they had wanted to, against the wishes of the IRA leadership. I had no objection to restating what we had already said, but there would be no more concessions under duress.

We met again exactly a week later for our second Anglo-Irish summit in Dublin. This meeting did more harm than good because, unusually, I did not involve myself closely enough in the drafting of the communiqué and, as a result, allowed through the statement that Mr Haughey and I would devote our next meeting in London ‘to special consideration of the totality of relationships within these islands’. Mr Haughey then gave a press briefing which led journalists to write of a breakthrough on the constitutional question. There had of course been no such thing. But the damage had been done and it was a red rag to the Unionist bull.

The Catholic Church was also a factor in dealing with the hunger strike. I explained the circumstances personally to the Pope on a visit to Rome on 24 November. He had as little sympathy for terrorists as I did, as he had made very clear on his visit to the Republic the previous year. After the Vatican brought pressure on the Irish Catholic hierarchy, they issued a statement calling on the prisoners to end their fast, though urging the Government to show ‘flexibility’.

Talk of concessions and compromises continued and intensified as we approached the point where one or more of the prisoners was likely to die. It was impossible to predict exactly when this would happen. But then on Thursday 18 December one of the prisoners began to lose consciousness and the strike was abruptly called off. The IRA claimed later that they had done this because we had made concessions, but this was wholly false. By making the claim they sought to excuse their defeat, to discredit us, and to prepare the ground for further protests when the nonexistent concessions failed to materialize.

I had hoped that this would see the end of the hunger strike tactic, and indeed of all the prison protests. But it was not to be so. In January 1981 we tried to bring an end to the ‘dirty protest’, but within days prisoners who had been moved to clean cells had begun to foul them. Then we received information in February that there might be another hunger strike. It was begun on 1 March 1981 by the IRA leader in the Maze, Bobby Sands, and he was joined at intervals by others. Simultaneously the ‘dirty protest’ was finally ended, ostensibly to concentrate attention on the hunger strike.

This was the beginning of a time of troubles. The IRA were on the advance politically: Sands himself in absentia won the parliamentary seat of Fermanagh and South Tyrone, at a by-election caused by the death of an Independent Republican MP. More generally, the SDLP was losing ground to the Republicans. This was a reflection not just of the increasing polarization of opinion in both communities, which it was the IRA’s objective to achieve, but also of the general ineffectiveness of the SDLP MPs. There was some suggestion, to which even some of my advisers gave credence, that the IRA were contemplating ending their terrorist campaign and seeking power through the ballot box. I never believed this. But it indicated how successful their propaganda could be.

Michael Foot, then Leader of the Opposition, came to see me, asking for concessions to the strikers. I was amazed that this thoroughly decent man could take this line and told him so. I reminded him that the conditions in the Maze Prison were among the best in any prison anywhere, well above the general standards prevailing in Britain’s overcrowded gaols. We had since gone even further in making improvements than the European Commission on Human Rights had recommended the previous year. I told Michael Foot that he had shown himself to be a ‘push-over’. What the terrorist prisoners wanted was political status, and they were not going to get it.

Bobby Sands died on Tuesday 5 May. The date was of some significance for me personally, though I did not know it at the time. From this time forward I became the IRA’s top target for assassination.

Sands’s death provoked rioting and violence, mainly in Londonderry and Belfast, and the security forces came under increasing strain. It was possible to admire the courage of Sands and the other hunger strikers who died, but not to sympathize with their murderous cause. We had done everything in our power to persuade them to give up their fast.

So had the Catholic Church. I realized that the Church might be able to bring pressure to bear on the hunger strikers, which I could not. So I went as far as I could to involve an organization connected with the Catholic hierarchy (the Irish Commission for Justice and Peace (ICJP)), hoping that the strikers would listen to them…though our reward was to be denounced by the ICJP for going back on undertakings we had allegedly made in the talks we had had with them. This false allegation was supported by Garret FitzGerald who became Taoiseach in place of Mr Haughey at the beginning of July 1981. I wrote to the new Taoiseach to say that he should not be misled into thinking that the problem of the hunger strike was susceptible to an easy solution, wanting only a little flexibility on our part. The protesters were trying to secure a prison regime in which the prisoners…and not the prison officers…determined what went on.

I also saw the Catholic Primate of All-Ireland, Cardinal O’Fiaich, in No. 10 on the evening of Thursday 2 July in the forlorn hope that he might use his influence wisely. Cardinal O’Fiaich was not a bad man; but he was a romantic Republican, whose nationalism seemed to prevail over his Christian duty of offering unqualifed resistance to terrorism and murder. He believed that the hunger strikers were not acting under IRA orders: I was not convinced. He made light of the demands of the prisoners for special category status, and it soon became clear why. He told me that the whole of Northern Ireland was a lie from start to finish. At the root of what the hunger strikers believed they were striking for was a united Ireland. He asked when the time would come that the British Government would admit that its presence was divisive. The only solution was to bring together all the Irish people under a government of Irishmen, whether in a federal or a unitary state. I replied that the course he advocated could not become the policy of the British Government because it was not acceptable to the majority of the population of Northern Ireland. The border was a fact. Those who sought a united Ireland must learn that what could not be won by persuasion would not be won by violence. We spoke bluntly, but it was an instructive meeting.

In striving to end the crisis, I had stopped short of force-feeding, a degrading and itself dangerous practice which I could not support. At all times hunger strikers were offered three meals a day, had constant medical attention and, of course, took water. When the hunger strikers fell into unconsciousness it became possible for their next of kin to instruct the doctors to feed them through a drip. My hope was that the families would use this power to bring an end to the strike. Eventually, after ten prisoners had died, a group of families announced that they would intervene to prevent the deaths of their relatives and the IRA called off the strike on Saturday 3 October. With the strike now over, I authorized some further concessions on clothing, association and loss of remission. But the outcome was a significant defeat for the IRA.

However, the IRA had regrouped during the strikes, making headway in the nationalist community. They now turned to violence on a larger scale, especially on the mainland. The worst incident was caused by an IRA bomb outside Chelsea Barracks on Monday 10 October. A coach carrying Irish Guardsmen was blown up, killing one bystander and injuring many soldiers. The bomb was filled with six-inch nails, intended to inflict as much pain and suffering as possible. I went quickly to the scene and with horrified fascination pulled a nail out of the side of the coach. To say that the people capable of this were animals would be wrong: no animal would do such a thing. I went on to visit the casualties at the three London hospitals to which they had been taken. I came away more determined than ever that the terrorists should be isolated, deprived of their support and defeated.

DEALINGS WITH THE IRISH REPUBLIC

After Garret FitzGerald had overcome his initial inclination to play up to Irish opinion at the British Government’s expense I had quite friendly dealings with him… all too friendly, to judge by Unionist reaction to our agreement after a summit in November 1981 to set up the rather grand sounding ‘Anglo-Irish Inter-Governmental Council’, which really continued the existing ministerial and official contacts under a new name. Garret FitzGerald prided himself on being a cosmopolitan intellectual. He had little time for the myths of Irish Republicanism and would have liked to secularize the Irish Constitution and state, not least… but not just… as a way of drawing the North into a united Ireland. Unfortunately, like many modern liberals, he overestimated his own powers of persuasion over his colleagues and countrymen. He was a man of as many words as Charles Haughey was few. He was also, beneath the skin of sophistication, even more sensitive to imagined snubs and more inclined to exaggerate the importance of essentially trivial issues than Mr Haughey.

How Garret FitzGerald would have reacted to the new proposals we made in the spring of 1982 for ‘rolling devolution’ of powers to a Northern Ireland Assembly it is difficult to know. But in fact by now the whirligig of Irish politics had brought Charles Haughey back as Taoiseach and Anglo-Irish relations cooled to freezing. The new Taoiseach denounced our proposals for devolution as an ‘unworkable mistake’ in which he was also joined by the SDLP. But what angered me most was the thoroughly unhelpful stance taken by the Irish Government during the Falklands War, which I have mentioned earlier.[54]

Jim Prior, who succeeded Humphrey Atkins as Secretary of State for Northern Ireland shortly before the end of the second hunger strike, was a good deal more enthusiastic and optimistic about the proposals in our white paper than I was. Ian Gow, my PPS, was against the whole idea and I shared a number of his reservations. Before publication, I had the text of the white paper substantially changed in order to cut out a chapter dealing with relations with the Irish Republic and, I hoped, minimize Unionist objections: although Ian Paisley’s DUP went along with the proposals, many integrationists in the Official Unionist Party were critical. Twenty Conservative MPs voted against the bill when it came forward in May and three junior members of the Government resigned.

If the aim of the white paper initiative was to strengthen the moderates in the nationalist community it certainly did not have this effect. In the elections that October to the Northern Ireland Assembly Sinn Fein won 10 per cent of the total, over half of the vote won by the SDLP. For this, of course, the SDLP’s own tactics and negative attitudes were heavily to blame: but they continued them by refusing to take their seats in the assembly when it opened the following month. The campaign itself had been marked by a sharp increase in sectarian murders.

The IRA were still at work on the mainland too. I was chairing a meeting of ‘E’ Committee in the Cabinet Room on the morning of Tuesday 20 July 1982 when I heard (and felt) the unmistakeable sound of a bomb exploding in the middle distance. I immediately asked that enquiries be made, but continued the meeting. As the morning wore on I noticed, looking out of the window, that the soldiers had not arrived on Horse Guards for their parade. When the news finally came through it was even worse than I feared. Two bombs had exploded, one two hours after the other, in Hyde Park and Regent’s Park, the intended victims being in the first case the Household Cavalry and in the second the band of the Royal Green Jackets. Eight people were killed and 53 injured. The carnage was truly terrible. I heard about it first hand from some of the victims when I went to the hospital the next day.

The return of Garret FitzGerald as Taoiseach in December 1982 provided us with an opportunity to improve the climate of Anglo-Irish relations with a view to pressing the South for more action on security. But I was wary about allowing the Irish to set the pace: Dr Fitz-Gerald’s understanding of Unionist sensibilities was no greater than Mr Haughey’s and I had plenty of experience already of the exaggerated construction which both nationalists and Unionists placed on even bland pledges of Anglo-Irish co-operation.

I had a meeting with Dr FitzGerald at the European Council at Stuttgart in June 1983. I shared the worry he expressed about the erosion of SDLP support by Sinn Fein. However uninspiring SDLP politicians might be…at least since the departure of the courageous Gerry Fitt…they were the minority’s main representatives and an alternative to the IRA. They had to be wooed. But Dr FitzGerald had no suggestions to make about how to get the SDLP to take part in the Northern Ireland Assembly, which was pointless without their participation. He pressed me to agree talks between officials on future co-operation.

I did not think there was much to talk about, but I accepted the proposal. Robert Armstrong, head of the civil service and Cabinet Secretary, and his opposite number in the Republic, Dermot Nally, became the main channels of communication. Over the summer and autumn of 1983 we received a number of informal approaches from the Irish, by no means consistent or clear in content. It became apparent that Dr FitzGerald’s Government did not speak with a single voice. At various times and with various degrees of specificity they seemed to be offering to amend Articles 2 and 3 of the Irish Constitution, by which the Republic claims sovereignty over Northern Ireland. We became increasingly sceptical of their ability to deliver this, since it would involve a referendum and divide the Irish Government. We also had well-justified doubts about talk of a more helpful line from the SDLP. On the security side the Irish were offering better cooperation, but proposing also a direct role for the Irish police (the Garda), and possibly the Irish Army, in Northern Ireland itself, as well as a Southern involvement in the Northern courts. They urged another attempt at devolution and, surprisingly, appeared ready to contemplate a return to majority rule.

Most of these ideas were impossible, implying some kind of joint sovereignty over Northern Ireland. Moreover, I disliked intensely this kind of bargaining about security. It seemed to me that to withhold full co-operation to catch criminals and save lives because one wanted some political gain was fundamentally wrong. But the Irish side did not see it like that.

I allowed the talks between the two sides to continue. I also had in mind the political danger of seeming to adopt a negative reaction to new proposals. This in turn meant that I had, within limits, to treat seriously the Republic’s so-called ‘New Ireland Forum’. This had originally been set up mainly as a way of helping the SDLP at the 1983 general election but Garret FitzGerald was now using it as a sounding board for ‘ideas’ about the future of Northern Ireland. Since the Unionist parties would take no part in it the outcome was bound to be skewed towards a united Ireland. For my part I was anxious that this collection of nationalists, North and South, might attract international respectability for moves to weaken the Union, so I was intensely wary of them.

BACKGROUND TO THE ANGLO-IRISH AGREEMENT, 1983–1985

I saw Garret FitzGerald at Chequers on the morning of Monday 7 November 1983 for our second bilateral summit. It was a modestly useful discussion, but the Irish always had difficulty understanding that joint sovereignty was a nonstarter. Immediately after the Irish team left I held a further meeting with ministers and officials. I felt that we must now come up with our own proposals and I asked Robert Armstrong to draw up an initial paper setting out the options. I laid special stress on the need for secrecy; a leak would destroy the prospects for a new initiative. This meeting, from our side, was the origin of the later Anglo-Irish Agreement.

The need for Irish help on security was again evident after the appalling murder by the Irish National Liberation Army (INLA) of worshippers at the Pentecostal Gospel Hall at Darkley in County Armagh on Sunday 20 November. In spite of all the fine words about the need to defeat terrorism which I had been hearing from the Taoiseach, the Irish Justice minister refused to meet Jim Prior to review security co-operation and the Garda Commissioner similarly refused to meet the Chief Constable of the RUC.

Then the IRA struck again on the mainland. After lunch on Saturday 17 December I left Chequers to attend a carol concert in the Royal Festival Hall. While I was there I received news that a car bomb had exploded just outside Harrods. I left at the first opportunity and went to the scene. By the time I arrived most of the dead and injured had been removed but I shall never forget the sight of the charred body of a teenage girl lying where she had been blown against the store window. Even by the IRA’s own standards this was a particularly callous attack. Five people including two police officers died. The fact that one of the dead was an American should have brought home to US sympathizers with the IRA the real nature of Irish terrorism.

The Harrods bomb was designed to intimidate not just the Government but the British people as a whole. The IRA had chosen the country’s most prestigious store at a time when the streets of London were full of shoppers in festive mood looking forward to Christmas. There was an instinctive feeling…in reaction to the outrage…that everyone must go about their business normally. Denis was among those who went to shop in Harrods the following Monday to do just that.

Two days after the bomb we received word that the Irish Cabinet was to meet the following day to consider proscribing Sinn Fein south of the border. I summoned a meeting of ministers straight away to consider our response. Clearly if the Irish proscribed, we would take similar action. But our tentative conclusion was that proscription would not directly affect the fight against Irish terrorism in Great Britain, and would probably lead to disorder and violence in Northern Ireland. In the event the Irish Cabinet decided not to go ahead.

On Christmas Eve I visited the province myself, meeting members of the security forces and the general public. I was all but mobbed by cheering well-wishers in the main street of Bangor, a seaside town in County Down, and added to my rapidly growing collection of Tyrone crystal, purchased on Ulster visits, while Denis acquired another tie.

By the end of the year the prospects for some kind of negotiation seemed reasonable, but the acid test for me would be the question of security. Not that the picture on security was wholly bad. The Irish Government devoted significant resources to security…more on a per capita