Margaret Thatcher: The Authorized Biography (48 page)

Partly because they all expected an election at any time, Mrs Thatcher also kept her public expressions of dissent to a minimum. In May, in a radio interview with the right-wing former editor of the
Spectator
George Gale, she let her hair down enough to say, ‘I do hope that we shall return to being the party which I believe can get the economy right,’ and ‘I think we shall finish up being the more radical party,’ but, when Gale invited her to declare herself a Powellite, she easily deflected him by concentrating on Powell’s wickedness in turning against the party at the election.
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People began to point her out more often as a rising star. A newspaper interview in June described Mrs Thatcher as ‘currently the person whose name is rustling along the corridors of power as someone who could supplant Ted Heath as Tory Party leader’;
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but she was careful not to promote herself excessively, and even in private gave no indication of any personal ambition for Heath’s job. Between February and the election in October, there were only a handful of occasions when Mrs Thatcher spoke in public on anything beyond her shadow brief.

In giving Mrs Thatcher the subject of the environment, which included housing and local taxation, Heath put her at the centre of his strategy for the coming election, although he brought her no nearer to his inner circle. As Alison Ward, her secretary, remembered it, ‘Ted piled more and more on her because he resented her, but she did better and better.’
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Prompted by a discussion with Pierre Trudeau, the Prime Minister of Canada, Heath had become obsessed with the idea that he had lost the February election because he had been too honest and not given people enough of what they wanted.
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In particular, he believed that it was the middle classes, denied the goodies which they expected from a Conservative government, who had defected to the Liberals. After the property boom of the early Heath years, house values had slumped, and the introduction of Peter Walker’s unpopular reorganization of local government had produced large rises in the rates (as local property taxes were known). Heath therefore decided that a fairly shameless electoral pitch should be made for these votes, and that housing and rates were the ground on which to make it.

In one sense, Mrs Thatcher was happy to oblige. Housing was one of
her interests, and she identified absolutely with the bourgeois aspiration to own one’s own home. In another, she was chary of what Heath wanted. She was cautious about reform of the rates, because she had already seen the difficulties of the alternatives, and about government intervention in the housing market. One of her strongest criticisms of socialism was that its controls had damaged housing. It had taken rented housing off the market, and forced people to live in council tower blocks rather than the Victorian and Edwardian terraces which they preferred. Of such blocks, she complained that ‘The architects who build them don’t live in them.’
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‘If we are anxious to have maximum housing standards it pays to have as many people as possible as owner-occupiers,’ she told the House of Commons,
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and in principle she favoured the idea, long current in Tory circles, that council house tenants should be free to buy their homes. In practice, however, she worried that such purchase, if put into law as a right and offered at too great a discount, would annoy ‘our people’ who were having to pay full prices on the open market. She later came to see her own objections as ‘narrow and unimaginative’.
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Mrs Thatcher formed a housing policy group, on which sat, among others, a new MP and former editor of the
Spectator
, Nigel Lawson,
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who had helped to draft the February manifesto. As an economist and free-marketeer, Lawson opposed government subsidy for mortgages. Mrs Thatcher worried about the size and effects of subsidy too, but, despite Lawson, her housing group worked on the assumption, politically encouraged by Heath, that there would be subsidy in some form.
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Dispute was to come about how much the subsidy should be, and how specific the promises made about it. When the group presented its report to Heath towards the end of June, it recommended a reduction in the tax rate paid by building societies and, for first-time buyers, a lump sum to match the amount of savings they had accumulated in building societies. Another idea to which Mrs Thatcher gave encouragement was that of ‘shared purchase’, by which owners could acquire equity in stages.
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She worried that a publicly stated commitment to hold mortgages to a particular rate would prove irresponsibly expensive. She preferred to speak only of keeping the rate within ‘reasonable limits’.
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Similarly, on rates, Mrs Thatcher was cautious. At a Shadow Cabinet meeting in late June she unsuccessfully advocated an all-party study of rate reform rather than a Tory commitment to abolition.
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And in a debate in
the Commons on 27 June in which the Conservatives succeeded in defeating the government in two votes, she called for ‘a fundamental reform of the rating system’,
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but declined to say exactly what that would be. She spoke of interim rate relief, a central government power to cap local council spending and an investigation of the possibility of local income tax, but went no further than that. Her performance disappointed Airey Neave: ‘Margaret Thatcher a little uncertain. We seem to be very coy in pressing home our advantage about rates and Crosland
*
demolished most of her arguments.’
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It was a fairly dismal summer. ‘The weather continues cold and windy and the Stock Exchange gets lower and lower,’ wrote Neave.
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Increasingly desperate, Heath, urged on by Peter Walker, who was boldly populist on the subject of housing, decided to toughen up the policies for the election. Fed up with Mrs Thatcher’s resistance to promising an exact figure for the mortgage rate, he summoned her back from holiday in Lamberhurst for a meeting on 1 August at his house in Wilton Street with Walker, Ian Gilmour and Robert Carr. They prevailed on her to accept that a figure of ‘below 10 per cent’ could be promised. The next step came at the end of the month.
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Heath’s purpose was to ensure that, rather than say ‘below 10 per cent’, Mrs Thatcher be as specific, and set her rate as low, as possible. She said she would accept 9.5 per cent, but would go no lower. Heath put on similar pressure over the rates, again summoning Mrs Thatcher to Wilton Street, again backed by senior colleagues, this time on 16 August, to make her promise to abolish domestic rates in the next Parliament. This she reluctantly did, even though none of them really knew what the replacement would be. Part of the rate burden, at her suggestion, would be transferred to central government, which would pay directly for the salaries of teachers.

It is typical of Mrs Thatcher’s political professionalism that, despite her reluctance, and her resentment at being strong-armed, she seized the chance and made the most of the policies which she had not wanted. At a press conference on 28 August, she announced that a Conservative government would reduce the mortgage rate from 11 to 9.5 per cent and make that rate the future ceiling. She also drew attention to the ‘real problem’ of domestic rates, seeking financial independence for local authorities ‘in such
a way that they are responsible to those whom they tax. (Only a minority of electors are ratepayers.)’ There were 9 million more income taxpayers than ratepayers, she pointed out,
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and pledged to get rid of the rating system. On her party political broadcast that night with a voice-over that said, ‘For the first time someone has gone back to basics,’ Mrs Thatcher repeated her mortgage promise and attacked rates because they ‘often have nothing to do with what you can afford to pay or with the services you receive’. Whatever new system the Tories brought in would be ‘based on what you can afford’. Her performance made a strong impression, even among those who saw the policies (rightly) as electoral bribery. ‘This almost gave Crosland apoplexy,’ wrote Neave of the 9.5 per cent promise, ‘and he said it was irresponsible.’
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Events rushed forward, most of them unhappy ones for Ted Heath. On 2 September his yacht,
Morning Cloud
, was capsized in a storm. Heath was not on board, but two of her crew, one of them his godson, died. On 8 September, while Heath was away in Washington, the Conservative manifesto for the expected general election was leaked to several newspapers. For it, Mrs Thatcher had made another concession in her area of policy. She had consented to the idea that the Conservatives would offer a ‘right to buy’ to all council house tenants, and that a third of the market price should be discounted. The manifesto said that the Tories would ‘place a duty on every council to sell homes on these terms’. Variation of the ‘composite rate’ of tax on the building societies would allow the government to keep the mortgage rate at 9.5 per cent or below. Rates would be replaced by taxes ‘more broadly based and related to people’s ability to pay’. Unable to resolve the party’s own internal confusion about the causes of inflation, the Conservative manifesto mentioned control of the money supply as one of the necessary tools, but also spoke of the need for a prices and incomes policy. It preferred a voluntary one, it said, but ‘no government could honestly say that it would never be necessary to use the law in the national interest to support an effective policy for fighting inflation.’

On 18 September 1974, Harold Wilson called a general election for 10 October. He felt justified in doing so by the need to get an overall majority, and he had spent the summer making what he hoped would be electorally beneficial deals with the trade unions. Partly because the Conservatives were anxious to preserve a studied vagueness and moderation in their approach to the great economic and industrial questions of the moment, Mrs Thatcher’s specific policy promises were almost the only important ones of the Tory
campaign. She fought it with gusto, and without embarrassment, strongly promoting the middle-class interests which Heath criticized himself for having neglected when in office. It was the first campaign in which party strategists made her nationally prominent, and she profited from this, proving herself combative, persuasive and much better than people had expected on television. Home ownership, she argued, ‘gives people independence and a stake in their country’
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and ‘provides the best possible protection for people’s savings against inflation’.
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‘A home, like food,’ she told constituents in Finchley, ‘is a basic need in our lives. All governments avoid taxing food for that reason … And yet we single out the home for an extra tax.’ At a Central Office election press conference devoted to her policies, on 27 September, she declared: ‘The right to own the land on which your house stands is quite emotive in English history … I do not propose to deny that right to people because they live in council houses’; she upped the excitement about her mortgage-rate offer by promising that it would come into effect before Christmas. And she even turned the inconsistency with her pure economic doctrines into a sort of virtue. ‘I am dealing with a problem’, she told the monetarist interviewer Peter Jay, ‘in which the economics are probably different from the human answer.’
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As election day approached, Mrs Thatcher was one of those chosen to present the culminating party political broadcast. The pledges on rates, she said, were ‘firm, unshakeable, categorical’. She delivered such lines very well, and they rattled the Labour Party. Bernard Donoughue recorded in his diary: ‘The only new issue is Thatcher’s 9½ percent mortgage commitment, and everybody is frightened of that – and furious with Tony Crosland for failing to deal with it.’
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But there was another reason why Mrs Thatcher’s were almost the only concrete Conservative promises of the campaign. It was because Heath had decided to push the notion of ‘national unity’, with its implicit suggestion of coalition. He therefore wanted as few policies as possible which would quarrel with this aim. The manifesto said that ‘as a national party we will pursue a national policy in the interests of the nation as a whole. We will lead a national effort. In normal times, the party struggle is the safeguard of freedom. But the times are far from normal. In a crisis like this, it is the national interest that must prevail.’ The atmosphere of doom was to be built up, the details of possible solutions to be played down: ‘we see this as part of the Tory strategy’, wrote Donoughue, ‘to create a sense of cataclysmic crisis, like 1940, as the build-up to the necessary coalition.’
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‘National unity’ annoyed Mrs Thatcher very much. As in the aftermath of the February election, she was intensely suspicious of any deal with the Liberals. She instinctively preferred the public two-party battle to a world of private understandings and shifting alliances, and she believed that the answer to the national crisis was not the forging of a national consensus
round the old, wrong policies, but a bold leap for new, right ones. To the extent that her own election campaign was allowed to differ from that of the party leadership, it indicated this preference, often echoing words from Keith Joseph’s speeches. ‘The central issue’, she said at her adoption meeting in Finchley, ‘is do we continue the free society with its emphasis on individual freedom and responsibility or do we become the most state-controlled society in the world outside the Iron Curtain,’ warning that ‘The extreme left is well in command.’
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On the BBC’s
Any Questions?
in the last week of the campaign, Mrs Thatcher maintained the party line that a government of national unity might be a good thing, but went out of her way to say that she ‘could never sit in the same government with Michael Foot or Anthony Wedgwood Benn, because they believe in nationalizing the lot’.

It was unreasonable of Mrs Thatcher to complain, as she did in after years, that ‘national unity’ had been foisted upon her at the last minute. It had been agreed, if in rather nebulous form, in mid-July, and she herself had called for it in her election address: ‘We are the only party pledged to work with all people of goodwill for national unity and therefore our main aim is to safeguard the existence of a free society.’ But she had reason to be annoyed that, once again, Heath summoned her to a meeting and tried to bounce her into a change of policy, this time at the climax of the campaign. Behind her performance on
Any Questions?
lay her anger at what had happened in the two days before. On 2 October, Heath had floated the idea of a government ‘of all the talents’, thus pushing the idea of coalition more explicitly. The next day, he had summoned Mrs Thatcher to Wilton Street to brief her before her BBC appearance. He said he wanted to push for a ‘government of national unity’ and asked her to be ready to drop her housing and rates pledges on air. Having been marched up to the top of the hill on these subjects by Heath before the election, Mrs Thatcher was not going to be marched down again. ‘I was absolutely fed up,’ she remembered. ‘I wasn’t going to say: “I’m going to become half-socialist.” ’
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_On
Any Questions?
she stuck to her guns. Her Labour opponent, Roy Hattersley,
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spotted and exploited the half-hidden disagreement between Heath and ‘his principal spokesman on housing matters, who baldly announces this evening that her housing proposals are non-negotiable’.
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