Bang!: A History of Britain in the 1980s (14 page)

While Nigel Lawson conceded the time she put in on her homework ‘was a desirable characteristic’, it ‘could lead to time-wasting attempts to show off her mastery of detail, at
the expense of the main business in hand’.
²³
Nevertheless, it unquestionably kept her colleagues on their toes. What was more, while she
seemed incapable of backing down in an argument or conceding that she might be wrong, she did use the exchanges as a means of deciding what her own position really was, taking on board such points
as she had found unanswerable and subsequently adopting them as her own. She did not confine her love of a good scrap to her ‘wettest’ colleagues. She could be equally demanding of
ministers from her own wing of the party. The term ‘handbagging’ was widely understood by all who trod the corridors of Whitehall. In contrast to her instinctive prickliness and
unclubbable attitude towards other members of the Cabinet, she was generally far more sweet-tempered towards her personal advisers and ‘courtiers’. The latter, in particular, fulfilled
the role of favoured Cavaliers, there to entertain an instinctive Roundhead by providing her with light relief as well as different perspectives. The leaders of this group were her playwright
speech-writer Ronald Millar; public relations specialists Gordon Reece and Tim Bell; Bernard Ingham, the bluff, previously Labour-voting, Yorkshireman, whom she appointed as her press secretary
after a two-minute interview; Alistair McAlpine, fine-art collector and party treasurer; and Woodrow Wyatt, newspaper columnist, chairman of the Tote – and former Labour MP. Much as the Tory
paternalists thundered about Thatcherism’s indifference to the responsibilities of
noblesse oblige
, Thatcher herself could not be faulted for her unstuffiness and was unaffectedly kind
and considerate towards her personal staff – drivers, wardrobe assistant, hairdresser and secretaries. The contrast between her thoughtfulness towards them and her indifference to the
feelings of her Cabinet colleagues was perhaps most vividly illustrated by an incident during a lunch at the prime ministerial country residence, Chequers, when an armed services girl, standing in
as a waitress, slipped and spilt hot soup all over Sir Geoffrey Howe’s lap. Thatcher instinctively leapt up, ignoring her scalded Chancellor, to console the girl: ‘There, there. Now you
mustn’t be upset. It’s the sort of thing that could happen to anyone.’
²⁴

There would come a time when Thatcher’s lack of concern for Howe’s feelings would cost her dear. Nevertheless, there was little indication in the early years of her administration
that this would prove the fatal personality clash. Educated at Winchester and Cambridge (but born in the depressed
South Wales area of Port Talbot), Howe had been a QC
specializing in labour law and his conversion to monetarism seemed to have sprung less from first principles than from a reaction to the unhappy experience of the Heath government. Perhaps
misleadingly, his manner was more that of a technician than a philosopher, let alone an idealist. However, his softly spoken demeanour concealed a determined, obstinate streak which Thatcher
eventually tested once too often. It was his inability to come to the point quickly that particularly irritated her. But he was enough of his own man – and his Treasury team was regarded as
sufficiently competent – to be allowed to get his way. As Chancellor, he suffered prime ministerial interference but not direction. After all, on the basics, they were broadly in agreement
– or thought they were. And such differences as arose during the period were informally smoothed over by Howe’s friend Ian Gow, who was also Thatcher’s immensely loyal
parliamentary private secretary.

Yet it was not to her next-door neighbour in Downing Street that Thatcher first turned for ideas about how to reform the British economy. The irony was that a prime minister with no instinctive
respect for or deference towards tenured academics should nonetheless spend so much of her time engaging with intellectuals. Indeed, as the sociologist Paul Hirst put it: ‘The first Thatcher
government was unique in modern British history: a party led by a clique of intellectuals with a strong commitment to a radical ideology.’
²⁵
This clique was predominantly in Thatcher’s circle rather than in her Cabinet. The intellectual godfathers were remote presences indeed – Friedrich von Hayek, author of
The Road to
Serfdom
(1944) and
The Constitution of Liberty
(1960), who had won the Nobel Prize for economics in 1974, and Milton Friedman, who had won the same prize two years later and had written
the popular book and television series
Free to Choose
(1980). They were remote in the literal sense that both Hayek, an Austrian-born British citizen, and Friedman, an American, were living
abroad and only infrequently visited Britain. Scarcity boosted their value to the Tory leader. When either man did visit Britain, often at the bequest of the Institute for Economic Affairs,
Thatcher could be spotted listening with the rapt attention of a schoolgirl with a crush. Such was her devotion to Hayek that shortly after becoming party leader she interrupted a speaker
delivering a middle-of-the-road homily to a Conservative Research Department meeting by extracting from her bag a thick book, declaiming boldly, ‘This is what we believe!’ and banging
The Constitution of Liberty
down on the table.
²⁶
Ascribing such significance to any one text, rather in the manner of Chairman Mao’s
Little Red Book, was certainly not in the Tory tradition, but then one of the most insightful chapters in Hayek’s
Constitution
was titled ‘Why I am not a Conservative’.
Perhaps he was not, but he was still delighted to be made a Companion of Honour by the Queen on Thatcher’s recommendation in
1984. Such was his pupil’s devotion
that only two weeks after she had won the 1979 general election Thatcher wrote a fan letter to Hayek: ‘I am very proud to have learnt so much from you over the past few years . . . As one of
your keenest supporters, I am determined that we should succeed. If we do so, your contribution to our ultimate victory will have been immense.’
²⁷

Hayek had taught at Chicago University in the 1950s, alongside Friedman, who remained there until 1977. The Chicago School became the most important bastion for the intellectual assault on
Keynesianism. Where Keynes had argued that government could keep unemployment and inflation low by manipulating ‘aggregate demand’ through public expenditure or tax cuts, the monetarist
Friedman maintained that unemployment should be left to find its ‘natural’ rate. Well-intentioned attempts by the state to drive down unemployment were economically destabilizing and
ultimately counterproductive. The Chicago Boys’ medicine had been applied by Augusto Pinochet’s regime in Chile, successfully applying ‘shock therapy’ to curb rampant
inflation and subsequently addressing the problem of pension reform. But Pinochet’s Chile was a right-wing military dictatorship which brooked no compromise and crushed dissent. As such, it
was not an example Thatcher could easily hold up as a model for how economic issues could be addressed in pluralist, democratic Britain.

While visits from the Chicago Boys were rare events, their ideas were propagated and applied to British circumstances by a small number of think tanks which enjoyed close access to the prime
minister. The Institute for Economic Affairs (IEA) had the greatest pedigree, having been founded in 1957 (when scepticism towards Keynesian demand management was considered the height of
eccentricity) by Arthur Seldon and Ralph Harris, two Hayek-admiring economists who had risen from humble backgrounds through the grammar school system and the LSE. In contrast, the Centre for
Public Studies (CPS) had been started far more recently, by Sir Keith Joseph, as a response to the perceived disasters of the Heath government. Joseph put his money where his brain was by funding
it himself. Harold Macmillan dismissed him as ‘the only boring Jew I’ve ever met’.
²⁸
Coddled by the mementos of world summitry at
Birch Grove, Macmillan had perhaps lost his former interest in new ideas, for the CPS played an important part in the lead-up to the 1979 general election by providing intellectual ballast for the
direction in which Thatcher sought to take her party in government. Its chairman, Joseph, and its director, Alfred Sherman, shared a Jewish background and an interest in thinking beyond orthodox
ideas. But they were different in almost every other respect. Joseph had inherited a baronetcy and a family business, had been educated at Harrow and Oxford and was a Fellow of All Souls, Oxford.
Born in Hackney, the son of a Labour councillor, Sherman was an outsider who had started out as a communist and had
fought with the International Brigades in the Spanish Civil
War, prior to undergoing a conversion – if not on the road to Damascus, then at least while working as an economist in Israel.

Sherman was soon displaying all the zealotry of the convert. When the distinctly High Tory journalist Peregrine Worsthorne once offered him a lift back from a Conservative conference, Sherman
spent the length of the walk to the car ranting about the uselessness of the British working class: ‘too demoralized by welfare and socialism to be any good for anything’. However, when
they reached Worsthorne’s car it was to discover it had a flat tyre. Neither man had the slightest idea what to do about a puncture until a passing labourer spotted their plight and kindly
changed the tyre for them. Scarcely had the Good Samaritan wished them on their way before Sherman, a stranger to self-parody, resumed his rant: ‘As I was saying, absolutely no good, the
whole lot of them.’
²⁹
The episode underlined the real nature of the divide at the top of the CPS. While Sherman loathed what he took to be the
laziness of the British working man, Joseph knew when a helping hand, rather than a vulgar gesture, needed to be extended, and he had founded a housing association in Paddington to find decent
accommodation for tenants who had been at the mercy of unscrupulous landlords. Indeed, Joseph’s intellectual torment, torn between what he believed was the right policy and anguish for those
who might suffer from it, led to a paralysis of indecision that spoke much for his humanity but blunted his contribution as a practical politician. For a while Sherman was a natural agitator,
Joseph was increasingly seen as a tragi-comic figure. Denis Healey mocked him as ‘a mixture of Hamlet, Rasputin and Tommy Cooper’.
³⁰
Others settled simply for dubbing him, sometimes affectionately, the ‘Mad Monk’. With Joseph’s entry into the Cabinet, the chairmanship of the CPS passed to Hugh Thomas, a
distinguished historian who also provided Thatcher with unofficial advice on foreign policy. Almost inevitably, Thomas, the historian of the Spanish Civil War, and Sherman, the street fighter who
had participated in it, fell out. This led to Sherman’s departure from the CPS and a role on the sidelines of Thatcherism to which, with typical curmudgeonliness, he took to finding
fault.

The eccentricity of some of their luminaries need not detract from the importance of the work undertaken by think tanks like the IEA and the CPS in bolstering Thatcher’s convictions. Aside
from the analysis and detail they provided, their contribution was psychological. They showed that the ‘dries’ were engaged in the world of ideas whereas the ‘wets’, who had
no think tanks worthy of the name,
^EN10
had nothing to offer beyond wishing Keynes was still alive and attaching themselves to the reputation of
Benjamin Disraeli.
The ‘wet’ Sir Ian Gilmour’s philosophical musings on the nature of Toryism were insufficiently practical for a leader like Margaret
Thatcher. Yet, before her prime ministerial schedule took over her free time, even she had occasionally attended meetings of the Conservative Philosophy Group. Their gatherings were held in the
eighteenth-century Lord North Street town house of Jonathan Aitken, an up-and-coming MP and scion of the faded Beaverbrook press empire, whose career mistakes included going out with and then
dumping Thatcher’s daughter, Carol. The group had been established by the Cambridge don John Casey and the philosopher Roger Scruton, who would prove to be the pre-eminent exponent of High
Tory thought during the eighties. The small, traditionally minded Cambridge college of Peterhouse remained its spiritual home, with its dons Edward Norman and Maurice Cowling also to the fore.
Cowling rather doubted whether their philosophical ruminations greatly influenced Thatcher’s thinking,
³¹
though the group may have helped
construct a bridge between her economic policies and traditional High Tory – as distinct from classical Liberal – thought. Given the widespread hostility towards Thatcherism from the
lecturing classes, the Conservative Philosophy Group did provide a degree of academic ammunition for pro-Thatcher newspaper columnists, including the historian Paul Johnson, T. E. Utley in the
Daily Telegraph
, Peregrine Worsthorne in the
Sunday Telegraph
and, in a more whimsical vein, Frank Johnson in
The Times
.

While Thatcher paid little attention to the Whitehall ‘think tank’, the Central Policy Review Staff, as a source of alternative ideas and did away with it in 1983, she was much more
influenced by the rival Downing Street Policy Unit, headed by John Hoskyns and Norman Strauss, two men who had originally been introduced to one another by Alfred Sherman. Hoskyns was tormented by
the evidence of his country’s decline. His father had been killed fighting in the rearguard that sacrificed itself so that the bulk of the British Expeditionary Force could escape from
Dunkirk in 1940. A Wykehamist, Hoskyns had himself held a commission in the army before doing well in the computer business. What he had learned there as a systems analyst he was determined to
apply to government. Strauss was a grammar-school boy (the same school as a prominent supporter of monetarism in the
Financial Times
, Samuel Brittan) who had gone into marketing for
Unilever. Together, Hoskyns and Strauss shared a twin antipathy for what they took to be the two most powerful institutions that acted as a brake on innovation – the trade unions and the
civil service. While others looked to outflank the shop stewards and the Whitehall mandarins through incremental change, Hoskyns and Strauss were obsessed with launching frontal attacks through a
confrontational approach summed up in their slogan: ‘Escalate for our Lives!’