The Story of Britain: From the Romans to the Present (108 page)

In 1979 the state not only owned practically every large industry from Vickers shipbuilding to British Steel, from Jaguar to British Gas, from British Airways to Rolls-Royce. It owned and maintained all the nation’s council houses; it paid the salaries of the whole of the civil service and its myriad subdivisions which took care of tax collection and parking fines; its employees also included all the nurses and doctors employed in NHS hospitals and the cleaning staff too. It had to meet gigantic welfare bills. Since the beginning of the twentieth century the British state had been expanding its remit until it was the biggest employer and provider in the country. And yet Great Britain plc was going broke. She could not afford to run all the businesses she owned; she was constantly having to bail out many of the older industries like shipbuilding and coalmining with subsidies, because other countries could produce those products more cheaply. The spectre of mass unemployment in the communities that had grown up round shipyards and mines kept them open.

Mrs Thatcher was adamant that Britain could not go on borrowing immense sums from the International Monetary Fund to save failing state industries for what she considered to be sentimental reasons. She believed that Britain had drastically to reduce the overwhelming Public Sector Borrowing Requirement, and also to bring down the terrifying inflation rate, not by agreements with the trade unions but by controlling the money supply. Mrs Thatcher became famous for making Britain balance her books, for only paying what she could afford, and for a campaign to replace the culture of benefit scrounging with a nation of responsible home owners.

Though the Conservative party was traditionally a party of pragmatists who distrusted ideology, the Thatcherites were known for their slogans. They believed that they had a hard road to travel to rid Britain of the creep of socialist ideas, those post-war consensual assumptions Mrs Thatcher’s mentor Sir Keith Joseph called ‘well-intentioned statism’. Their most celebrated slogan summed up everything about the Thatcher Revolution. It was ‘rolling back the frontiers of the state’. Privatization of numerous state activities was the Thatcher government’s most significant contribution to British politics; in the process they invented what they called ‘popular capitalism’ through a ‘stakeholder democracy’. British politics were turned on their head.

Almost all of the nationalized industries, most of which had become unprofitable monoliths, were sold off to private companies, or privatized, starting in 1980 with British Aerospace and British Airways. Private sector involvement was heavily encouraged in the public services. In the process Mrs Thatcher for most of the decade succeeded where her predecessors for the previous thirty years had failed: she broke the power of the trade unions once and for all and slew the dragon of inflation. By ridding the government of responsibility for inefficient and expensive state-owned industries, by the late 1980s she had raised £20 billion for the Treasury, and still more was raised when her creation of a deregulated, free-market economy helped spark a consumer boom.

By giving ordinary people who had never bought a share in their life a stake in the privatized industries and utilities of Britain, Mrs Thatcher intended to strengthen the bulwarks of the democratic process against socialism, by restoring people’s pride in their independence. She believed that a dependency culture was eating away at Britain–too many people expected everything to be provided by the welfare state instead of by their own efforts. She was determined to create an enterprise culture instead where the sort of people who supported her were rewarded, not those who depended for everything on what she called the nanny state. In some ways Mrs Thatcher’s convictions were simplistic. One of her favourite slogans was that Britain must return to ‘Victorian values’, when the state had been kept at arm’s length by the self-reliant ethos which had made Britain great. She believed that if people owned their houses they would become more upright citizens and take greater care of their environment. Her Council House Acts of 1980 and 1984 which enabled council-house tenants to buy their own homes with large discounts helped swing the working-class vote her way.

Mrs Thatcher had read chemistry at Oxford in the late 1940s, at that time a considerable achievement for a woman. As prime minister she stood out against her all-male Cabinet, as she did against the 635-strong House of Commons, for in 1979 there were only nineteen women MPs. She had shown similar robustness as education minister under Heath and had given some hint of the shape of things to come when she ended free milk in schools, gaining the nickname ‘Mrs Thatcher, milk snatcher’. Some of her keenest supporters were self-made British Asian businessmen whose values of frugality, hard work and self-sufficiency were so similar to hers. But her followers came from a wide spectrum: they were not only bankers and financiers, they were small businessmen, shopkeepers and ordinary people fed up with the culture of Labour which seemed to be epitomized by inefficiency and the closed shop. The advertising slogan accompanying a posed photograph of a snaking dole queue which had helped win the Conservatives the 1979 election, ‘Labour isn’t working’, said it all.

The arrival of the new government was overshadowed by two IRA assassinations, spectacular even after a five-year Provisional IRA campaign to get the British troops out by bombing the mainland. There had been bombs on the M62, and at pubs in Guildford and Birmingham, but when the IRA succeeded in penetrating the House of Commons car park and blew up Mrs Thatcher’s mentor, the MP and Colditz escaper Airey Neave days before his protégé was elected prime minister, there was consternation over the threat to state security. It was followed at the end of August 1979 by the no less shocking murder of Earl Mountbatten and members of his family in a fishing boat in Ireland.

In its first months in office the Conservative government scored a remarkable diplomatic success. The seemingly intractable problem of the fifteen-year-old war in Southern Rhodesia yielded to the formidable foreign secretary Lord Carrington when he decided to deal directly with the guerrillas. Under the Lancaster House Agreement of 1979 Smith and the guerrilla leaders agreed to a ceasefire and democratic elections. The guerrillas handed in their guns in an orderly fashion at collection points, and free elections were arranged on the basis of one man one vote. Black majority rule brought the former guerrilla leader Robert Mugabe to power in February 1980. He became prime minister of the independent nation of Southern Rhodesia, which took the African name Zimbabwe.

The same year the amount of oil flowing from Britain’s North Sea oilfields took a quantum leap five years after coming onstream and solved Britain’s fuel crisis. Cushioned by oil income–Britain in the early 1980s was extracting close to one-tenth of the world’s production–Mrs Thatcher reinvented the British economy. Under her chancellor of the Exchequer Geoffrey Howe, Labour’s swingeing taxation of the wealthiest was ended, the supertax of 83 per cent was cut to 60 and income tax reduced. A few years later the highest tax band would be 40 per cent. Mrs Thatcher believed that the pounds saved from the taxman would create a consumer boom. At the same time indirect taxation such as VAT was almost doubled, which (as some commentators noted) put the tax burden back on to those least able to bear it.

As the work of freeing the state of its vast burden and dismantling the enormously top-heavy public sector got under way, inflation fell towards single figures. Life slowly began to improve for many Britons as Mrs Thatcher and her team embarked on breaking up the state monopolies. Control over telephone equipment, for example, was removed from the Post Office in 1980. Once the telecommunications industry had been opened up to competition, the bad old days of a quarter of a million people waiting for phones, as they had done in the 1970s, were over. British Telecom, the new name of the privatized industry, was obliged to compete in the market. Overall Britain became far more efficient.

But the Thatcher success story and the Thatcherite mantra that the market must rule and the government not interfere had social drawbacks: massive unemployment and the contraction of the United Kingdom’s manufacturing base. As a result of the new government’s determination not to pour good money after bad, many state-owned and private businesses started to go bankrupt. In September 1980 the steel works at Consett, County Durham, which was the main source of work in the area, closed down. In historic manufacturing centres like Leeds, where engineering, textiles and printing had provided employment for more than a hundred years, the unprofitable, in the Thatcherite jargon of the day, had ‘to go to the wall’. Manufacturing slumped from 52 per cent of the British economy to 32. All over the north, the centre of heavy industry, unemployment rose by leaps and bounds.

By the spring of 1982 more than three million people were out of work, figures which were worse than those seen in the great depression. Helped by the harsh economic climate, Mrs Thatcher’s war against the unions was dramatically successful. She outlawed secondary picketing, reduced the scope of the closed shop and made it easier for employers to sack inadequate employees, which previously would have brought the unions out on strike. Unions could also be fined for unlawful industrial action. As unemployment climbed in the recession of the early 1980s the unions lost much of their power as a result of huge redundancies. They were not able to come out on strike because their membership had decreased so rapidly, and the TUC no longer encouraged strikes as they had in the past. In 1983 a newspaper publisher from Manchester named Eddy Shah paved the way for the computerized newspapers of our era when he launched a paper called
Today
without unionized labour.

In a failure of imagination born of her own comfortable circumstances and her own strong character, Mrs Thatcher could not visualize the plight of the poor or unemployed who through no fault of their own were living on benefit. To discourage reliance on the welfare state and force the unemployed into looking for jobs, her government deliberately set benefits to be increased at a rate 5 per cent below inflation. This was a saving at the expense of those least able to afford it, but Mrs Thatcher believed that harsh measures were the only way to break what she thought of as a vicious circle.

Mrs Thatcher’s pronouncements to the effect that she did not believe in ‘society’ infuriated many of Britain’s institutions–the universities and Churches, local councillors and the caring professions. The government’s reputation could not but be dented by the unprecedented unemployment figures. The complaints that Thatcherism was cold and unfeeling began to be heard even among Tories, many of whom were of the One Nation Disraelian variety. They believed with Peel and Disraeli that Conservatism must not be the rule of the haves without reaching out to the have-nots. Mrs Thatcher herself divided her party into wets (One Nation Tories) and dries (her sensible followers). Britain’s greatest asset in many people’s eyes was that she was a uniquely caring society, the jewel in whose crown was the safety net of the National Health Service. But Mrs Thatcher and her brilliant Cabinet, whose grasp of the mysteries of economics could reduce opponents to silence, believed that this was the sort of talk that had driven the country massively into debt. Yet no matter how much hard men surrounding Mrs Thatcher suggested that the unemployed ‘got on their bikes’ and out of the social security offices to find work, too many areas had unemployment levels approaching 50 per cent.

In the spring of 1981 the tension in Britain suddenly exploded into inner-city riots. Brixton in south London was out of police control for several days. Although they were called race riots, the motive seems not to have been racial so much as the reaction of disadvantaged inner-city people who saw no future for themselves. Lord Scarman, a distinguished law lord who was chosen to chair an inquiry into the riots, was of that opinion. In Scarman’s view the underlying problem was not criminal elements but unemployment and social despair in the decaying inner cities. Mrs Thatcher, however, refused to believe his evidence. Scarman also recommended that larger numbers of the police be recruited from the ethnic minorities and greater efforts be put into community policing.

Though Mrs Thatcher personally continued to believe in ‘criminal elements’, other members of the government nevertheless accepted that there was an urgent need for some state involvement to accelerate urban renewal. Grant-aided schemes for the unemployed were produced to help them start up their own businesses. The environment secretary Michael Heseltine launched a big northern initiative to help Liverpool’s Toxteth district where there had been rioting for three days.

A few months after the Brixton riots the social fabric of Britain was strong enough to revive for the marriage of Prince Charles, the heir to the throne, to the enchanting blonde nursery-school teacher Lady Diana Spencer, in July 1981. She was a nineteen-year-old member of an old aristocratic landowning family with strong links to the court. Princess Diana’s youth and spontaneous charm took the popularity of the royal family to new heights, as did her warm-hearted espousal of many difficult causes. She was admired for insisting on shaking hands with AIDS sufferers at a time when many thought that it was like leprosy and spread by touch. She would go on to do much to discredit the use of landmines throughout the world. The wedding at St Paul’s Cathedral was watched by millions of people round the world and there were celebratory street parties all over the country.

Meanwhile Mrs Thatcher’s success curve continued onwards and upwards: she moved from setting Britain’s financial house in order to clawing back the nation’s surplus contribution to the European Community budget, and by 1983 she had achieved a £450 million EC budget rebate to the UK. Nevertheless her revolution continued to antagonize many sections of British society, as did her close relationship with the ultra-conservative Republican administration in Washington. The election in 1980 of President Ronald Reagan, and the Soviet invasion of Afghanistan in 1979, restarted the Cold War after a promising period of détente which had seen work begin on a gas pipeline between Siberia and western Europe.