Margaret Thatcher: Power and Personality (46 page)

This speech to the Conservative Central Council in Bournemouth three weeks after the Budget made a great impact. John Hoskyns, who sat up with her, helping her write it long into the early hours of the Saturday morning when she delivered it, believed that she was turning the Budget into a statement of her personal will power. ‘She was getting across the message that she was far tougher and stronger than anyone had thought.’
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This power of her personality changed the game. The wets were routed. The stock market was rallying. The opposition was in disarray after the formation of a new Social Democratic Party (SDP) discordantly headed by four ex-Labour cabinet ministers; Roy Jenkins, David Owen, Shirley Williams and Bill Rodgers. The only political leader who seemed to be certain where the country should be going was Margaret Thatcher. But as events were to show, she was still a vulnerable Prime Minister.

THE VULNERABLE PRIME MINISTER

Although Margaret Thatcher’s ringing enthusiasm for the 1981 Budget strategy produced some good results, such as growing City confidence, better press coverage and some early signs of increasing industrial output, negative forces were at work too. The government had to cave in to a potential miners’ strike over pit closures
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because coal stocks were so low. Industrial action by the Civil Servants Union was ended only by an expensive pay settlement. Unemployment continued to rise towards three million.

The most troublesome problem was an outbreak of rioting, first in Brixton, South London, then in Moss Side, Manchester, and most seriously of all in
Toxteth, Liverpool. The opposition and the government’s internal critics within the Conservative Party seized on the argument that the Thatcher–Howe economic policy was causing these social disturbances. The Prime Minister was having none of it. She identified with the victims. ‘Oh, those poor shopkeepers!’ was her immediate reaction on seeing the television coverage of the looting in Toxteth.
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She regarded the unrest as a police matter, and was adamant in asserting that the paramount imperatives were to stop the violence, uphold the law and punish the lawbreakers. This was right, but initially she seemed unable to express any concern for the need to look more deeply into the background to the disturbances. She delivered a disastrous party political broadcast on 8 July, in which she came across as nervous, insensitive and irrelevant. As
The Times
said in its leader on 10 July, ‘Not for the first time she was unable to strike the right note when a broad sense of understanding was required’.
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Michael Heseltine, hastily appointed Minister for Merseyside, wanted to reduce unemployment in the riot-torn areas with a wide-scale policy of industrial interventionism. The Prime Minister gave him a chilly reception, privately telling Alan Walters that Heseltine was ‘a very vain man – sees Toxteth as a basis for projecting himself’.
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At a meeting of the ‘E’ Committee on 15 July, Jim Prior made an impassioned plea for an extra £1 billion of public expenditure to fight unemployment.

In the middle of these tensions, the full cabinet met on 23 July to discuss the outlook for the autumn spending round. The battle lines were drawn in advance. Spending ministers had submitted bids for extra expenditure of over £6.5 billion. The Treasury put in a paper demanding further extra cuts of £5 billion in 1982–1983, over and above the already reduced totals published in a white paper at the time of the Budget. Against the background of the riots and the unemployment figures it looked as though the meeting was going to be the political equivalent of the shoot-out at the OK Corral. Margaret Thatcher knew how high the stakes were. Just before she went down from her flat to chair the cabinet, she told Denis that she would not remain as Prime Minister unless her colleagues saw the strategy through.
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Her fears of an explosive meeting were justified. After Geoffrey Howe had summarised his proposal for a programme of £5 billion of further cuts, Michael Heseltine, the Environment Secretary, led the charge against the Chancellor.
Speaking after a night of fresh rioting in Toxteth, Heseltine said that Howe’s proposals would cause despair in the inner cities and bring electoral disaster for the government. He advocated a pay freeze. This would have been an astonishing U-turn. Nevertheless this heresy, striking at the root of everything that Margaret Thatcher stood for, was also supported by Peter Walker and Lord Soames. Worse was to come from the Lord Chancellor, Lord Hailsham, who spoke in doom-laden language about how in the 1930s unemployment had given birth to Herbert Hoover’s Great Depression in the United States and Hitler’s Nazi Party in Germany. Without making the same comparison, Jim Prior, Francis Pym and Ian Gilmour were almost as pessimistic about the government’s strategy.

With the temperature rising, Margaret Thatcher became ‘extremely angry’, particularly as some of her most trusted allies defected to the wets. She was astonished when John Biffen switched sides for the first time, saying that public spending should be allowed to rise. An even worse betrayal in her eyes came from John Nott, who launched a withering attack on the Treasury’s figures. ‘All at once,’ Margaret Thatcher recalled, ‘the whole strategy was at issue. It was as if tempers suddenly broke.’
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These bitter divisions brought the government to the brink of a disastrous split. Feuds with the wets had been a festering sore for over two years, but suddenly they were winning by a clear and outspoken majority. Willie Whitelaw did his best to paper over the cracks with a loyal summing up. Yet even he, after rejecting the pay freeze, gave a warning against breaking the tolerance of society.
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Margaret Thatcher had to face the reality that only she and three of her twenty-three cabinet ministers, Geoffrey Howe, Keith Joseph and Leon Brittan, the new Chief Secretary to the Treasury, fully supported her economic strategy. She closed the cabinet on a subdued note, instructing the Chancellor to produce a new paper setting out both sides of the argument. She made a fervent plea for secrecy, particularly about a pay freeze being discussed. She retired from the fray as a wounded Prime Minister. Her wounds hurt. The late summer of 1981 was the lowest point of her time in 10 Downing Street, apart from the dark days when she was ousted from power some nine years later.

Throughout August she had forebodings of a serious threat to her position, discussing it melodramatically with trusted members of her inner circle. ‘The men in grey suits have been to see me’, she told Tim Bell, describing how a
deputation of party elders led by Lord Thorneycroft had come to give her a warning that support for her policies was collapsing. ‘They want me out.’
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In similar vein, she gave a gloomy vision of her future employment prospects to her Economic Affairs Private Secretary, Michael Scholar: ‘I can always get a job’, she told him. ‘I can always scrub floors. And I will if they kick me out.’
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This wild talk worried her staff. Her closest personal aide, Caroline Stephens, asked Ronnie Millar to come in and talk about the Prime Minister’s ‘physical and mental exhaustion, harsh public image and alienation from her friends’.
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Millar was usually a soothing presence. But he evidently felt so upset about his heroine’s prospects that he co-authored with John Hoskyns and David Wolfson a blistering private submission to her, entitled ‘Your Political Survival’. This passed into folklore as ‘The blockbuster memorandum’.
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It had a profound effect on Margaret Thatcher.

BLOCKBUSTERED INTO RESHUFFLING THE CABINET

The blockbuster memorandum offended Margaret Thatcher. This was understandable, since it was probably the most brutal internal communication ever sent to any Prime Minister from members of the No. 10 Downing Street staff. Yet, although many of its words were personally offensive, their message was politically effective. It made disagreeable reading, but it resulted in Margaret Thatcher taking decisive steps to achieve the objective of its title, ‘Your Political Survival’.

The headlines on the various sections of the memo must have come as a shock to her. They included these statements:

‘You lack management competence’

‘Your own leadership style is wrong’

‘The result is an unhappy ship’

‘You have an absolute duty to change the way you operate.’

The specifics were worse than the rebukes. In the paragraph about leadership style, the authors pulled no punches:

You break every rule of good man-management. You bully your weaker colleagues. You criticise colleagues in front of each other and in front of their officials. They can’t answer
back without appearing disrespectful, in front of others, to a woman and to a Prime Minister. You abuse that situation.
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The blockbuster was right on these counts, but Margaret Thatcher did not immediately see it that way. ‘I got your letter. No one has ever written a letter like that to a Prime Minister before’, she hissed to Hoskyns in a moment of fury, believing him to be its principal author. In fact, it had been a genuine collaborative effort by the ‘Westwell Three’, as Margaret Thatcher crossly called the signatories. Her label derived from David Wolfson’s country house in Westwell, Oxfordshire, where the triumvirate had composed their memorandum.

Their message was most effective in its political recommendations. While praising her for launching ‘a near-revolution in the private sector’, it warned that an internal revolt ‘threatens your own position’. It also urged her to make a radical reconstruction of her cabinet, and to sack Peter Thorneycroft as Party Chairman. ‘You need a new Chairman, a younger man who is totally loyal to you, and you need him fast.’ The most devastating part of the blockbuster was its conclusion, which baldly stated that unless she accepted the authors’ advice she would soon be ousted, going into the history books only with the prize for being the ‘Best Loser’.
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Once her temper had cooled, Margaret Thatcher saw John Hoskyns and David Wolfson to discuss their criticisms of her. Although not himself present at this meeting, Alan Walters’ diary entry for Wednesday 26 August reported the essential outcome of it: ‘JH & DW saw PM until 11.30. She was very shaken – realises she has to change – V. tired and needed holiday. MUST (2) [make] bold and decisive move to fire Thorneycroft … Reshuffle being discussed.’
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Although she resented being hauled over the coals so brutally by insiders she considered as loyalists, Margaret Thatcher took their political advice seriously, for she followed their main recommendations on reshuffling the cabinet and changing the party chairmanship. As for their more personal suggestions, she was too angered by them to change her style of man-management. It remained her long-term Achilles heel. But in the short term, the men she needed to manage most carefully were away for the next few weeks. Their absences from the policy-making battlefield demonstrated the truth of an old parliamentary saying, ‘Nothing succeeds like recess’.

The summer recess of 1981 was a hot and happy one. The nation was entranced by the wedding of the Prince of Wales and Lady Diana Spencer at St Paul’s Cathedral on 29 July. The inner-city riots evaporated as mysteriously as they had started. The grandest and most troublesome Tory ministers dispersed to their country houses, grouse moors or villas in Tuscany. Politics and economics seemed to fall off the agenda. Even the holiday-averse Prime Minister eventually shut up shop to spend a few days in the cool of the Swiss Alps. She was biding her time and planning her revenge against her foes.

The cabinet that had so bad-temperedly split over public spending in July never met again with the same membership. The blockbuster memorandum persuaded Margaret Thatcher that she must reassert her authority by wielding her axe. So, on 14 September 1981, while Parliament was still in recess, she sacked three prominent figures from the cabinet, moved seven others and changed the party chairmanship. The net effect was to shift the balance of power in the government towards a more loyal group of ministers who supported her policies and philosophy.

The three dismissals – Mark Carlisle, Ian Gilmour and Lord Soames – she regarded as wets. Two of them did not go quietly. Immediately after his sacking, Gilmour strode out of No. 10 to tell the awaiting journalists that ‘It does no harm to throw the occasional man overboard, but it does not do much good if you are steering full speed ahead for the rocks.’
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Lord Soames, the hero of the Rhodesia crisis, Winston Churchill’s son-in-law, and a Tory grandee to the triggers of his Purdeys, let the Prime Minister have it with both barrels. In what must have been one of the angriest cabinet dismissal interviews of all time, Soames sent her private secretary out of the room and then opened fire. For twenty minutes he gave her a hard pounding for her mishandling of the civil-service strike and her rudeness to colleagues. Both charges were true. But she was impervious because she had come to dislike Soames with a personalised intensity. She retaliated in her memoirs by writing: ‘I got the distinct impression that he felt the natural order of things were being violated and that he was, in effect, being dismissed by his housemaid.’
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Another cabinet heavyweight was almost as upset as Soames – but for being moved to a less influential post. This was Jim Prior, the Employment Secretary. He wanted to stay at the centre of economic decision-making. She wanted to
shift the arch wet away from it. So she offered Prior the job of Secretary of State for Northern Ireland. As he had been leaking to the press for weeks that he would never accept such a move, this folly caused him no little difficulty. After a couple of hours of hesitation, he realised that his bluff had been called. He knew he would look cowardly if he refused the place of honour and danger. But he did negotiate the retention of his seat on the ‘E’ committee – where he was to be consistently outmanoeuvred and outvoted. From that time on, Prior’s influence as a leading wet went into continuous decline.