Margaret Thatcher: Power and Personality (55 page)

In the thirteenth week of the strike, steel stocks mysteriously began to rise because private companies discovered how to import steel in containers using non-union ports. By April the unions settled their pay claim for a disappointing increase – 3 per cent below the rate of inflation. The strike was broken – the first time this had happened to a major union for over twenty years. It was a seminal moment in the power struggle between Margaret Thatcher and the unions, reinforced soon after the Falklands victory when in 1982 she saw off the strikers in two other fiefdoms – the railways and the National Health Service.

In spite of such successes, Margaret Thatcher did not have everything her own way. She continued to look for deeper cuts in public spending. In the summer of 1982, her Downing Street think tank, the Central Policy Review Staff (CPRS), produced a paper packed with radical ideas. It called for funding the NHS with a new system of private health insurance; charging for visits to the doctor; ending state funding for all institutions of higher education, and slashing the social security budget by stopping all welfare benefits from rising with inflation. When this wish list was circulated around Whitehall, according to Nigel Lawson, ‘it caused the nearest thing to a cabinet riot in the history of the Thatcher administration’.
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The wets and the traditionalists were united in denouncing the CPRS proposals, which were largely backed by an accompanying paper from the Treasury.

Ministers attacked these ideas from all points on the political compass. The usually supportive Lord Hailsham called them ‘the worst mistake the Government has made since it came to power’.
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The resident contrarian, Peter Walker, went ballistic in his criticisms and organised the cabinet opposition. He leaked the CPRS paper and the details of the ministerial rebellion against it to
The
Economist
,
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whose story caused an explosion.

Margaret Thatcher’s handling of this foreseeable furore revealed aspects of her personality which were unedifying. They included poor judgement and deceit. Not only should it have been obvious to her that the CPRS agenda could not possibly have been acceptable politically, but she was warned of this by the most neutral and favourable source of advice, her own private office at No. 10.

The Treasury civil servant who had been appointed as her Private Secretary for Economic Affairs was Michael Scholar. He immediately saw the dangers of the paper, and tried to persuade the head of the CPRS, John Sparrow, to tone down the right-wing radicalism. But the Prime Minister had the bit between her teeth, and rejected all recommendations to dilute the proposals or to restrict their dissemination. ‘Does anyone imagine she would have dared to circulate the paper if it hadn’t been for Falklands euphoria?’
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Jim Prior privately asked his colleagues. This correctly identified hubris was followed by the inevitable nemesis. The cabinet was never going to agree to the onslaught on educational, welfare and NHS spending that the Prime Minister was implicitly advocating. She had to retreat under heavy fire. Some of it became personal. ‘Why on earth did you allow this paper to be circulated?’ she was asked, towards the end of the angry cabinet meeting of 9 September. ‘I didn’t’, she replied defensively, pointing her finger at her Private Secretary, who was sitting at the end of the room. ‘Michael circulated it.’
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This was untrue. Michael Scholar had done his best to persuade the Prime Minister to avoid the confrontation that was now taking place. He kept silent, and bore the opprobrium as all eyes turned reproachfully towards him. Although he was far too good a Private Secretary to deny his Prime Minister, he privately felt that Margaret Thatcher had let herself down.

In the face of the near riot by most of her cabinet ministers, the Prime Minister had to give up. She yielded with another display of bad grace, saying in a petulant tone, ‘All right then, shelve it’.
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It was not quite her last attempt to investigate ways of radically reforming the NHS. Soon after this reversal in cabinet, she returned to the subject at a time when the Health Secretary, Norman Fowler, was out of the country studying the worldwide AIDS crisis. In his absence, the Prime Minister reached out to the Permanent Secretary at the Department of Health and Social Security, Sir Kenneth Stowe, commissioning him to produce a brief on the question of whether there were more sustainable ways of running Britain’s health-care system with the users of the service contributing more towards its cost.

Norman Fowler, on return from his travels, was not best pleased to discover that his department was preparing a memorandum for the Prime Minister on how the whole basis of the NHS might be changed. He need not have worried. Ken Stowe, well trusted by Margaret Thatcher since his time as her first Private Secretary at No. 10, produced a magisterially thorough report. The inescapable
conclusion to be drawn from it was that the upheavals involved in root and branch reforms of the NHS would be so dramatic that they would make the reforms themselves virtually unworkable.

After Ken Stowe had presented his report and discussed it with the Prime Minister, she eventually gave a deep sigh and said, ‘Ken, the problem is there’s no constituency for change’.
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Her caution seemed admirably pragmatic to the Permanent Secretary. ‘In terms of her personality’, recalled Sir Kenneth Stowe, ‘this was a good illustration of how this hard-driving, indefatigable, unstoppable Prime Minister could suddenly see that there were buffers in the way of what she wanted to do and that there was no point in hitting them.’
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A few weeks later she finally killed off the speculation that she had plans to overhaul the health-care system by making a pledge in her party-conference speech that ‘the National Health Service is safe with us’.
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This episode showed that within Margaret Thatcher the radical reformer and the cautious realist could co-exist as two sides of her personality. But the earlier story of the cabinet row over the CPRS proposals also showed that she could behave badly when she did not get her way.

THE BEGINNINGS OF PRIVATISATION

The cautious and the radical sides of Margaret Thatcher’s personality were evenly balanced when it came to launching what has been called ‘the jewel in the crown’
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of her domestic policy. This was privatisation, a policy that was popular at home and copied extensively around the world. Yet the Prime Minister needed a lot of convincing before she took her first tentative steps towards putting the idea into practice. During her first three years in power, she not only hesitated, she disliked the word privatisation so much that she refused to use it, sticking rigidly to the more negative and politically divisive term ‘denationalisation’. Yet as success bred success, she came to see that privatisation was one of her most important innovations, and also one of her most enduring legacies.

Although privatisation had been talked about while she was Leader of the Opposition, nothing much came of those discussions. However, she did set up a cabinet sub-committee in 1979 labelled ‘E (DL)’, whose initials stood for economic disposals. It made an unimpressive start, disposing of a mixed bag
of assets such as the British Freight Corporation, various motorway service stations and buildings owned by the water authorities.

There were many ministers who made a contribution to the success of privatisation, but the cabinet colleague who persuaded Margaret Thatcher to implement the policy on the boldest scale was Patrick Jenkin, the Secretary of State for Industry. He was responsible for six nationalised industries. The largest of them, British Telecom, wanted to raise £28 billion to invest in new digital technology. ‘There’s no way you’ll ever get that from the Treasury,’ Jenkin told the BT chairman, Sir George Jefferson, ‘but this bird might fly if we could sell shares in it on the stock market.’
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Once a privatisation plan had been devised, Patrick Jenkin presented it to the Prime Minister, who was sceptical. ‘Why do we have to do it in one go?’ she objected. ‘Why not do it separately in each of BT’s fifty-one areas? That would allow competition.’
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After two meetings Patrick Jenkin persuaded her that the fifty-one areas she kept talking about were irrelevant lines on the map. So she gave her blessing to the whole-scale privatisation of BT. Because of the huge sums of new capital required (selling the first 50.2 per cent of the company’s shares eventually raised £3.9 billion), this sale was delayed until November 1984.

In the months after the Falklands, Margaret Thatcher not only approved what she still called the ‘denationalisation’ of BT, she also gave the green light for the much quicker, if smaller, public offerings of shares in British Aerospace, Cable and Wireless, Amersham International, Britoil and Associated British Ports.

Apart from the enormous breakthrough of the BT share flotation decision, the biggest privatisation in the first term of Margaret Thatcher’s government was the British National Oil Corporation (BNOC). At first she was surprisingly reluctant to allow this to take place, rejecting it twice in cabinet committees, apparently on the instinctive but incredible grounds ‘that Britain would somehow lose control of part of her oil’.
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However, the new Energy Secretary, Nigel Lawson, eventually won her round and 51 per cent of BNOC was privatised as Britoil in November 1982, with the share placing proceeds of £549 million going to the Treasury.

From then on, Margaret Thatcher’s confidence in the policy grew. She had seen the future for privatisation, and became totally committed to it once she
knew it worked. ‘Already we have done more to roll back the frontiers of socialism than any previous Conservative Government’, she told the 1982 Tory conference, ‘and in the next Parliament we intend to do a lot more.’
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She did.

Another part of the revolution where Margaret Thatcher believed she was energetically rolling back socialism concerned the sale of council houses. Her 1980 Housing Act had established the ‘Right to Buy’. As a result, over 370,000 families living in council houses had bought their own homes at a substantial discount by the autumn of 1982. ‘… this is the largest transfer of assets from the State to the family in British history’, she proclaimed. ‘And this really will be an irreversible shift of power to the people.’
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The sale of council houses was such a popular policy that it was visibly shifting political support from traditional Labour voters to Thatcher’s Tories. In my own Kent constituency, over two hundred ‘right to buy’ applications a month were flowing in from the poorest housing estates in Ramsgate by the turn of the year. The Labour Party, both locally and nationally, were vociferous in their opposition to these sales. Margaret Thatcher hit back equally vociferously, declaring that her opponents would never dare to reverse the policy ‘because they know we are right, because they know it is what people want’.
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On the doorsteps of council homes this controversy attracted far more interest than any other political topic. As the MP for a deprived district of South East England with one of the highest concentrations of council housing in the region, I soon recognised that Margaret Thatcher had struck vote-winning gold. My agent and chairman calculated that in the South Thanet constituency approximately 3,000 traditionally Labour-supporting households, grateful for or eagerly waiting for their right to buy, had shifted their allegiance to the Conservatives by the summer of 1983. The only dedicated opponents of the policy seemed to be the Kent Miners and the Socialist Workers Party. Margaret Thatcher was firmly on the side of the council tenants.

THE SUICIDE OF THE OPPOSITION

The Labour Party were not only digging their own political graves over council-house sales, they seemed to have a death wish in several other policy areas. Their leader, Michael Foot, had in his heyday been a left-wing firebrand and a coruscating parliamentary debater. Charming, courageous and brilliant as a former
newspaper editor and book reviewer, he was utterly unconvincing in the role of an alternative prime minister.

As his fighting speech in the historic debate at the start of the Falklands conflict demonstrated, Michael Foot was no pacifist. But he was a longstanding and passionate supporter of unilateral nuclear disarmament. His enthusiasm for this cause could not have been a greater contrast to Margaret Thatcher’s championship of a strong defence policy, whose centrepiece was Britain’s independent nuclear deterrent.

In the middle of her first term as Prime Minister, she chaired a subcommittee of the cabinet, which took the decision to replace Britain’s Polaris nuclear weaponry with the American Trident (C4) missile system. But before it could be installed in British submarines, President Reagan started a programme of modernising the United States strategic nuclear arsenal. As a result, America planned to use a more sophisticated Trident II (D5) missile system. Did Britain wish to buy this upgraded but more expensive version?

Some senior members of the cabinet expressed doubts about Trident II, notably the Defence Secretary John Nott and the Foreign Secretary Francis Pym. Margaret Thatcher called their arguments ‘feeble and unrealistic’.
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But she had a fight on her hands, which she won by calling a meeting of the full cabinet where the doubters were outnumbered. She also launched a pre-emptive strike of her own ahead of the meeting, by declaring her personal support for the value for money of Trident II to a startled House of Commons.
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To no one’s surprise she got her way a few days later in cabinet. Her commitment to this form of nuclear weaponry was driven by national pride, always a key ingredient in her personality and her decision-making.

As part of her commitment to nuclear peace-keeping in Europe at a time when Soviet SS20 warheads were being targeted on the West, Margaret Thatcher agreed to allow the stationing of 144 US cruise missiles at Greenham Common in Berkshire and at RAF Molesworth in Cambridgeshire. Predictably, their deployment in 1983 became the focus for anti-nuclear protests. The dormant CND movement, supported for the first time by the Leader of the Opposition, became resurgent with numbers reminiscent of its Aldermaston marches in the 1960s. With relish, the Prime Minister picked up the gauntlet thrown down by demonstrators, such as the Greenham Common Women for Peace who encamped on the perimeter of the cruise-missile base.