Margaret Thatcher: Power and Personality (84 page)

34

Exit the Chancellor, enter the stalking horse

TRYING TO STABILISE THE GOVERNMENT

Although she pretended to put on a confident face after her ill-received Howe reshuffle, Margaret Thatcher was shaken by the public and parliamentary reaction to it. One sign that she understood the need to stabilise her government came at the first meeting of the new cabinet on 27 July. She surprised her colleagues by announcing that she now had in place the ministerial team with which she would fight the next election. She emphasised that there would be no further cabinet changes for the remainder of the parliamentary term.

It was unprecedented for any Prime Minister to tie their hands in this way, almost three years before an election was due. Margaret Thatcher had never before shared her thinking on reshuffles, or lack of them, with her colleagues. The likely explanation was that she wanted to repair the damage to her negative image as a divisive leader by appearing to work for the long haul with a united team.

There were some signs that the Prime Minister was beginning to think about bringing on a potential successor during 1989, even though she believed she would have another four or five years in power. She was far from ready to make any such choice. But at least she had decided who would
not
succeed her. At the top of her ‘He will never be Prime Minister’ list were her two
bêtes noires
, Michael Heseltine and Geoffrey Howe. She also ruled out those who were the same political generation as herself, saying, ‘I saw no reason to hand over to anyone of roughly my age while I was fit and active’.
¹
This meant that she did not envisage the leadership going to Norman Tebbit or Nigel Lawson.

A further constraint on her selection process was that she did not like the idea of passing the torch to someone who in her early days at No. 10 would have
been called a ‘wet’ and was later characterised as ‘not one of us’. This made it hard for her to favour the chances of Kenneth Clarke, Chris Patten or Kenneth Baker. As she surveyed this field of runners, most of whom had been heavily handicapped under her own rules, a dark horse started to move up on the rails. He was John Major, whose competence as a whip and as a junior Social Security minister had caught her attention. So she promoted him into the cabinet with the low-profile but testing job of Chief Secretary to the Treasury, where he proved himself to be a capable guardian of public expenditure. Also, in his unassuming way he was attractive to women and skilful in the art of feminine flattery. These qualities did him no harm on his rise in the Prime Minister’s estimation.

Her assessment of her new protégé was flawed in one important respect, because somehow she managed to convince herself that John Major was a staunch Eurosceptic and a right of centre Thatcherite in his economic outlook. In fact he was neither. But because he seemed to carry no baggage his ascent was unimpeded by her usual ideological questions.
²

One of the reasons the Prime Minister assumed he was ‘one of us’ was that she liked the story of his background. He was far removed from the world of Tory privilege, since he had left school at fifteen, endured youthful poverty in Brixton, and come up the hard way. So he fitted her presentational bill when it came to grooming a candidate for stardom, even though she misunderstood where his political orientation lay. This was how John Major came to make the great leap forward from Chief Secretary to the Treasury to Foreign Secretary in the July 1989 reshuffle. His elevation astonished everyone, including himself, but it immediately established his credentials as a potential successor. Inevitably, one or two senior colleagues’ noses were put out of joint, particularly those of Geoffrey Howe and Nigel Lawson, over such a dramatic promotion for the most junior member of the cabinet.

John Major’s tenure at the Foreign Office was a brief and uncertain one. He tried to decline the job when it was first offered to him. He felt uneasy with the culture of the FCO, which had become a demoralised department thanks to the Prime Minister’s style of running foreign policy from No. 10. But whatever
angst
the new Foreign Secretary felt over his appointment, it was short lived. For in another part of the government a storm was blowing up which would sweep John Major to a higher destiny more quickly that he could have possibly imagined.

The economy was at the centre of the storm. Nigel Lawson, lauded to the skies as a great Chancellor just eighteen months earlier, was now in the depths of unpopularity as he took the blame for the grim conditions he had helped to create. Britain had the worst balance of payments deficit in its history. Inflation was the highest of any industrial country at 7.6 per cent and rising. Interest rates were 14 per cent. The protests from mortgage holders and the business world were fierce. ‘This Bankrupt Chancellor’ was the headline on the front page of the
Daily Mail
on 10 October 1989, five days after he put interest rates up by a full point to 15 per cent.

Some newspaper commentators speculated that in the face of such bombardment, Nigel Lawson might be looking for an escape route. But although he was under pressure, he was too proud a politician to jump ship because the sea was rough. In fact, he managed to strengthen his position in mid-October with two good speeches. The first was a barnstorming romp to the Conservative Party conference, which brought him a standing ovation. The second was an acclaimed address to the Lord Mayor’s annual banquet at the Mansion House. On both occasions he sounded like a Chancellor who knew how to weather the storm.

Yet, for all the outward confidence that Nigel Lawson managed to project to the world, inwardly he was seething over a long-nurtured grievance that was troubling him both emotionally and practically. This grievance was about Margaret Thatcher’s special relationship with Alan Walters.

THE PROBLEM OF ALAN WALTERS

Although she was making more effort to get along with her Chancellor, Margaret Thatcher was not in harmony with him. ‘Nigel and I no longer had that broad identity of views or mutual trust which a Chancellor and Prime Minister should’ was how she put it.
³
She continued to blame him for stoking the rate of inflation. They were in profound disagreement over the ERM. These divisions were frustrating Lawson more than they apparently troubled his boss. She suspected him of looking for an excuse to leave the government. To her chagrin, he found one in a convenient but artificial row about Alan Walters.

Ever since Margaret Thatcher had insisted on bringing Alan Walters back into No. 10 as her part-time economic adviser, Nigel Lawson had been spoiling for a fight on this issue. Although the Prime Minister as First Lord of the
Treasury was more than entitled to take advice from any expert she wanted on the economy, Nigel Lawson was a proprietorial Chancellor and hated to have his stewardship of the economy second-guessed by prime ministerial advisers. This resentment went wider than Alan Walters. Lawson also look a hostile stance towards Brian Griffiths, the head of the No. 10 Policy Unit, whenever he passed comments about Treasury issues.

The Chancellor’s hyper-sensitive skin received a new pinprick on 18 October when the
Financial Times
reported on an article by Alan Walters which disagreed with the view that Britain should join the ERM. However, on closer investigation it became clear that the offending article had never seen the light of day until the
FT
’s story. It had been written but not published by an obscure academic journal a year before Walters was appointed as the Prime Minister’s economic adviser. Far from being an attack on Lawson’s current policies, the article referred to a historical controversy about the ERM eight years earlier. It should have been treated as a small storm in an old tea-cup.

Nevertheless, Nigel Lawson took umbrage as the
Financial Times
contrived to report the retrospective dispute as if it were a newsworthy and current topic. The Chancellor became hot under the collar and wanted to have an immediate confrontation over the article.

Unable to see Margaret Thatcher because she was away in Malaysia at the Commonwealth Heads of Government Conference, Nigel Lawson summoned the Prime Minister’s PPS, Mark Lennox-Boyd, to No. 11 and asked him to pass an urgent message to his boss, to the effect that Alan Walters’ activities were becoming so damaging to the government that they could no longer be tolerated. Lennox-Boyd thought that Nigel Lawson was merely putting down a marker for the record. A copy of the offending Alan Walters article was faxed to Kuala Lumpur, where Margaret Thatcher took a nonchalant view of it on the grounds that it had been written some months before its author formally joined her staff. ‘As the article was written well before Madrid,’ she minuted, ‘I don’t see the difficulty. Moreover, advisers ADVISE, Ministers decide policy.’
⁴

Smarting from this rebuff from the Prime Minister, Nigel Lawson had to endure another torment – mockery in the House of Commons. On 24 October, Labour’s Shadow Chancellor, John Smith, made one of the wittiest attacking speeches ever heard in an economic debate. He had some easy Aunt Sallies for his knockabout. The dire economic statistics. Two Chancellors, one unelected,
speaking for economic policy. The saga of the official residences, in which Lawson had been the loser. According to John Smith’s burlesque version of events, Margaret Thatcher had taught her ministers this lesson by her reshuffle:

If you lose your job you get another house, but if you keep your job, you lose your house. [Laughter.] If you are not careful, you might lose both. Whatever happens, Mr Bernard Ingham – that other unaccountable source of power in Britain – will be waiting to give a friendly benediction as one moves on.
⁵

This ridicule was uncomfortably near the knuckle. Watching Nigel Lawson squirm on the front bench as the whole House rocked with laughter at these jibes, it became apparent that he was quite likely to heed John Smith’s parting words of advice; that the time had come for him to tell the Prime Minister ‘Either back me or sack me’.
⁶

LAWSON SNAPS

Within forty-eight hours of being ridiculed in Parliament, Nigel Lawson decided he could stand it no longer. He followed John Smith’s advice and issued his own ultimatum to the Prime Minister. It was, in effect, ‘Sack Alan Walters or I resign’.
⁷

Because of her absence from London at the Commonwealth Conference, Margaret Thatcher was not confronted with the Lawson problem in its full magnitude until the morning of 26 October. At 9.00 a.m. she met him to hear his ultimatum. She pretended that she could not take his threat to resign seriously, and believed she had persuaded him to think again.

In the overcrowded day that followed, she had to fit three further meetings with him around Prime Minister’s Questions and a statement on the Commonwealth Heads of Government Meeting to Parliament. But in the end, faced with having to choose between her personal economic adviser and her Chancellor of the Exchequer, Margaret Thatcher made the extraordinary decision that the Chancellor would have to be the one to depart. As she put it to Nigel Lawson, ‘If Alan were to go, that would destroy
my
authority’.
⁸
It was a ludicrous observation, because her authority as Prime Minister had little or nothing to do with Alan Walters.

To make the situation even more ludicrous, a few hours later Alan Walters concluded that his position also had become untenable. He also resigned. It was a disastrous débâcle.

The next day’s newspaper headlines were the worst of her ten years as Prime Minister: ‘Thatcher Day of Disaster’ (
Daily Mail
); ‘Thatcher in Crisis: Government Totters’ (
Daily Mirror
); ‘Government in Turmoil’ (
Independent
); ‘Crisis for Thatcher’ (
Daily Telegraph
).

Inside Parliament there was incredulous bafflement at her man-management. One old hand who put his finger on the problem was Willie Whitelaw, who wrote in a private letter to Nigel Lawson: ‘She could so easily have got rid of Walters, but increasingly I fear that she simply cannot bring herself to be on the losing side of any argument. That failing may ditch us all.’
⁹

The Lawson resignation did great harm to Margaret Thatcher. Her stock plummeted further as a result of a television interview she gave to the usually friendly Brian Walden on Sunday 29 October. She began by taking the unconvincing line that she had fully ‘backed and supported’ the Chancellor whose position, she kept insisting, was ‘unassailable’; a word she repeated seven times with theatrical emphasis. Even more unconvincingly, she claimed that she could not understand why Nigel Lawson was so concerned about Alan Walters, saying, ‘It is just not possible that this small particular thing could result in this particular resignation’.
¹⁰

But when Walden finally cornered her in his relentless cross-examination style, her bravado collapsed into ignominious mumblings and non-sequiturs. It was probably the worst interview she ever gave, as the transcript shows:

BW:  Do you deny that Nigel would have stayed if you had sacked Professor Alan Walters?

PM:  I don’t know, I don’t know.

BW:  You never even thought to ask him that?

PM:  I … that is not … I don’t know. Nigel had determined that he was going to put in his resignation, I did everything possible to stop him.

BW:  But …

PM:  I was not successful. No, you are going on asking the same question.

BW:  Of course, but that’s a terrible admission, Prime Minister.

PM:  I have nothing further … I don’t know … of course I don’t know … I am not going on with this.

BW:  I suppose I must ask you once more, just once more, did … you say you don’t know whether you could have kept him if Walters had gone … did he ask you to sack Walters?

PM:  I’m not going to disclose the conversations which the two of us had together …
¹¹