The making of Thatcherism: The Conservative Party in opposition, 1974–79 9781526131317

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The making of Thatcherism

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Series editor Richard Hayton

The study of conservative politics, broadly defined, is of enduring scholarly interest and importance, and is also of great significance beyond the academy. In spite of this, for a variety of reasons the study of conservatism and conservative politics was traditionally regarded as something of a poor relation in comparison to the intellectual interest in ‘the Left’. In the British context this changed with the emergence of Thatcherism, which prompted a greater critical focus on the Conservative Party and its ideology, and a revitalisation of Conservative historiography. New Perspectives on the Right aims to build on this legacy by establishing a series identity for work in this field. It will publish the best and most innovative titles drawn from the fields of sociology, history, cultural studies and political science and hopes to stimulate debate and interest across disciplinary boundaries. New Perspectives is not limited in its historical coverage or geographical scope, but is united by its concern to critically interrogate and better understand the history, development, intellectual basis and impact of the Right. Nor is the series restricted by its methodological approach: it will encourage original research from a plurality of perspectives. Consequently, the series will act as a voice and forum for work by scholars engaging with the politics of the right in new and imaginative ways. Reconstructing conservatism? The Conservative Party in opposition, 1997–2010 Richard Hayton Conservative orators: From Baldwin to Cameron Edited by Richard Hayton and Andrew S. Crines The right and the recession Edward Ashbee The territorial Conservative Party: Devolution and party change in Scotland and Wales Alan Convery David Cameron and Conservative renewal: The limits of modernisation? Edited by Gillian Peele and John Francis Rethinking right-wing women: Gender and the Conservative Party, 1880s to the present Edited by Clarisse Berthezène and Julie Gottlieb English nationalism, Brexit and the Anglosphere: Wider still and wider Ben Wellings Cameronism: The politics of modernisation and manipulation Timothy Heppell

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The making of Thatcherism The Conservative Party in opposition, 1974–79

Philip Begley

Manchester University Press

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Copyright © Philip Begley 2020 The right of Philip Begley to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. Published by Manchester University Press Altrincham Street, Manchester M1 7JA www.manchesteruniversitypress.co.uk British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN  978 1 5261 3130 0  hardback First published 2020 The publisher has no responsibility for the persistence or accuracy of URLs for any external or third-party internet websites referred to in this book, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. COVER IMAGE: Margaret Thatcher speaks at a press conference on 19 September 1983. © Rob Bogaerts / CC0 1.0 Universal Public Domain

Typeset in Arno Pro by Servis Filmsetting Ltd, Stockport, Cheshire

Contents

Acknowledgements page vi Introduction 1 1 The 1970s 12 2 Inflation 30 3 The economy 54 4 Ownership 77 5 Industrial relations 91 6 Immigration 121 143 7 Scottish devolution 8 Education 160 Conclusion 178 Bibliography 182 Index 191

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Acknowledgements

This book has been a long time in the making. This means that I have received advice and support from many different people. Thank you to my colleagues over the years at the University of Lincoln and the University of Liverpool, especially expert supervisors Krista Cowman and Ian Packer, and Catherine Bochel and Sally Sheard, who kindly allowed me time to work on a book. Thank you to the many archivists and librarians I have encountered, especially the ever helpful Andrew Riley at the Churchill Archive Centre. Thank you to everyone at Manchester University Press and series editor Richard Hayton. Thank you to my friends, especially Matthew Francis who has been a consistent source of intellectual support. Most of all, thank you to Stephanie and Henry and my family.

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Introduction

This book considers the development of Conservative Party policy between 1974 and 1979. This period has often been seen as one of significant change in Britain, with Conservative policy one part of much wider and more dramatic changes. However, if 1974–79 is examined in detail then much of this change appears more modest and more complex than has often been appreciated. This book will explain why policy developed in the ways that it did, what the implications might be for wider conceptions of British politics and examine the 1970s through the prism of Conservative policy. There were a range of factors pulling the Conservatives in different directions during this period. At times policy moved forward because of these forces but at others its development was slowed. In order to understand this period and the changes in Conservative policy fully, we need to take a rounded view and have an appreciation of the intellectual, economic and social contexts of the time. However, the central contention of this book is that the short-term political context was most important and helps to explain why Conservative policy did not change as much as might initially be expected. The first step in recognising this is to understand how the period has been viewed to date, beginning with the Conservative general election victory in May 1979, which brought an end to five years in opposition and could be seen as a turning point in British politics. In simple terms, the result was significant. Margaret Thatcher became Britain’s first woman Prime Minister, having returned her party to government with the largest swing in support towards any party since 1945.1 But even at the time, the Conservative victory was widely seen as representing something more meaningful. The Guardian described the result as ‘as positive an affirmation of faith as the British people have contrived, for three decades’.2 The future electoral success of the Conservative Party and the hegemonic success of Thatcherism during the 1980s and 1990s would give the strong impression that 1979 was a turning point, the beginning of a shift away from much that had preceded it; the postwar consensus; Keynesian economics; close co-operation between government and trade unions; a serious commitment to the welfare state; and a belief in the benevolence of government. This was seemingly undermined and then replaced by a new set of priorities and preoccupations, centred on a reaction against many

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of the perceived developments over recent decades, influenced by neoliberal ideas; marked in economic terms by a revival of classic liberal or laissez-faire thinking, a belief in monetarism, and in a wider sense by faith in market-based competition, and individual responsibility.3 Politically, Thatcher and the Conservatives were at the heart of these changes. Did 1979 confirm the end of one political settlement and open the way for its replacement? Did a kind of collective experience during the 1970s, shaped by political, social and economic developments, help to make 1979 a turning point? It is clear that something of real interest did happen at that general election. Whether or not they realised it, the electorate returned a Conservative government with its own set of ideas and its own particular range of policies, and it would have a period of secure majority government in which to implement them. Much of the rhetoric around the election, and indeed much of the rhetoric that had permeated the years leading up to it, gave the impression that on some level the Conservatives wanted to reverse the course of recent history. The possibility of serious change was at least on the agenda. Tellingly, both Thatcher and the Labour Prime Minister James Callaghan, though they raised the prospect for different reasons, appeared to agree that the Tories wanted to break with the mix of policies that had been ascendant since at least the mid-1960s.4 This alone did not necessarily mean that the election was a watershed moment, but once the result had been absorbed it was widely felt that the British people had voted quite decisively for a ‘change’ of some kind.5 But of what did this desire for ‘change’ actually consist? Had the policies of the Conservative Party really broken through and become popular? Or did the public generally hold only a vague impression that the Conservatives offered something different from that which they had experienced under Labour? The limits of what actually happened in 1979 have always been apparent. Although the final result was decisive in terms of parliamentary arithmetic it was also the case that, as with all British first-past-the-post elections, a party could be returned with a majority whilst still only receiving support from a minority of the electorate.6 However, it was not just that 56 per cent voted against the Conservatives. Their 43.9 per cent of the popular vote was an increase of seven points on the last election in October 1974, the largest gain by either leading party since 1945, but it also represented the lowest level of support for any post-war party that then went on to form a government, with the exception of Labour in 1974.7 In their influential Nuffield study, David Butler and Dennis Kavanagh also highlighted the fact that the swing to the Conservatives was not uniform across the whole country and that the party’s share of the vote was actually on a par with its average across the post-war period.8 Such relative limitations would not normally be associated with a watershed moment. Although expectations may have been raised by the change of government and Thatcher’s sex and personal style, the result did not necessarily indicate, at least at first, a fundamental realignment amongst the electorate or a lasting shift in the balance of power between the two main parties.9 The

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Introduction3 argument instead that 1979 represented more of a negative judgement on Labour’s record than a positive endorsement of the Conservative alternative, a classic example of a government losing an election rather than an opposition winning it, has also been made many times.10 Yet despite this, a sense that something had changed was felt at the time and there can be little doubt that a new political settlement did later emerge. A detailed analysis of Conservative Party policy between 1974 and 1979 – from the point at which it had last been in government to the point at which it subsequently regained power – can help us to understand the Conservative victory in 1979 and its significance. What exactly did more than 13 million Britons vote for in May of that year? A note on historiography There is an extensive and growing body of literature which overlaps with the scope of this book. This includes general histories of the Conservative Party and Britain in the post-war period, individual biographies and memoirs, and more specialist studies which cover a wide range of topics including the economy, industrial relations, constitutional issues and social policy. There are works of history, politics, political science and philosophy. However, no work has yet examined the 1974–79 opposition period in its own terms in the amount of detail that is attempted here. It usually only forms one part of a wider narrative. Of the books which have sought to address this subject more directly, Robert Behrens’s The Conservative Party From Heath to Thatcher was published in 1980, so the author did not have access to the many primary sources which have since become available, whilst Adrian Williamson in Conservative Economic Policymaking and the Birth of Thatcherism, 1964–79 and Eric Caines in Heath and Thatcher in Opposition have made excellent use of many of those sources, but focus primarily on economic issues, the battle of ideas and the role of leading individuals.11 Though such elements are clearly important, this book takes a different approach by considering change in Conservative policy in many more areas and thinking more specifically about the scope and terms of its immediate development. Perhaps most importantly the book plays directly into two burgeoning debates about the significance of the 1970s as a decade and the origins of Thatcherism. The 1970s have become an important decade for studies in recent years, attracting both popular and academic attention. The academic studies have been typified by an ongoing reassessment of the decade, how it should be understood and what lessons, if any, can be taken from it. The task set for his fellow historians by Hugh Pemberton when he encouraged them to ‘mine the archival record and to begin to provide a coherent explanation of why the 1970s turned out the way they did’, provides a good example.12 In Reassessing 1970s Britain Pemberton took up the task himself alongside Lawrence Black and Pat Thane.13 This book also makes a contribution to this on-going reassessment, by suggesting that, although there can be little doubt

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that the 1970s was a significant period, Conservative Party policy between 1974 and 1979 was not necessarily an area which witnessed dramatic change. Popular works of history on the 1970s often focus on culture. Good examples include Pat Long’s History of the NME and David Heathcote’s design study The 70s House.14 These broad approaches have been combined in a number of overviews which often make genuine attempts to reassess the overall significance of the decade. Dominic Sandbrook has argued that the 1970s marked a moment of great reckoning and were a crucial turning point in Britain’s post-war history.15 Francis Wheen has suggested that paranoia was the dominant theme of the decade.16 For Andy Beckett, popular perceptions of the 1970s had been greatly simplified and needed readdressing, whilst for Alwyn Turner the decade was perhaps best understood in terms of its popular culture.17 Each of these studies, and many others, underline why the 1970s is such an important period for research. Historians interested in the origins of Thatcherism have also naturally focussed a great deal of attention on the 1970s. A good example is provided by Robert Saunders and Ben Jackson’s Making Thatcher’s Britain, which often sees the decade as a time when Thatcherite ideas and their political appeal were developing.18 Saunders’s argument that ‘As a public doctrine, Thatcherism in the 1970s was essentially a negative body of ideas, defined more by what it was against than by a specific set of policies’ is particularly significant.19 An evolving rhetoric about the 1970s as a period of crisis to which only Thatcherite ideas could adequately respond was a crucial part of their future hegemonic success, Saunders suggested. Thatcherism, at least during the 1970s, was not the same as official Conservative policy, but this kind of analysis lends support to one of the points that this book seeks to make; that Conservative policy up until 1979, although it developed in many different ways, had not changed beyond all recognition and had not simply become concomitant with wider Thatcherite or neoliberal ideas. It was later during the 1980s under different political circumstances, when the link between these two became much closer, that it really began to play out in detailed policy terms. Much of the rhetoric of the 1970s may have suggested otherwise but the fine detail of policy, for reasons that will be explored, remained a little way behind. Following on from this, the work of Ewen Green and two elements of his influential analysis in particular are also significant. Green argued that the Conservative Party had not been distinctly un-ideological before the election of Thatcher as leader and the apparent ascent of Thatcherism during the 1970s and 1980s, and that many of the kinds of ideas associated with her, and it, had been an important part of Conservative thinking for many years. As he put it, ‘There was a ready-made Conservative audience for the Thatcherite agenda’. Despite its common protestations of being pragmatic and non-doctrinaire, different forms of political ideology had also driven the party during other periods, and in many ways Thatcherism was the latest incarnation of this trend.20 In complement to this, Green argued that such ideas were able to gain significant traction during the 1970s and 1980s, where per-

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Introduction5 haps they hadn’t before, because the economic and intellectual context in Britain had shifted to a position more favourable to their uptake.21 Taken together, these two factors begin to provide a persuasive explanation for many of the things that are examined in the course of this book. This concept of the political space in which Thatcherite ideas could develop will be returned to again, but we must also be aware of the other side of the coin: the political space in which the Conservative Party as a whole operated also often mitigated against the radical development of official policy. Green’s key point about neoliberal or Thatcherite-like ideas having a real history in the party also tends to suggest, as this book also argues, that a degree of continuity should always be seen in Conservative policy development. As will be shown, there were often clear similarities between what was proposed in 1974 and in 1979. In analysing the nature of change within Conservative thinking during the second half of the twentieth century, Kevin Hickson has also argued that there were important elements of continuity, identifying one particular thread which remained constant in party thinking and united all Conservatives, holding them together even when their wider visions may have differed. The key factor was a belief in inequality, or at least a rejection of attempts to engineer equality in British society.22 This concept was taken up and considered in greater detail by Peter Dorey, and it appears to offer a persuasive explanation as to why the Conservatives were able to remain a relatively coherent and cohesive political group despite their often obvious internal divisions, including during the 1970s.23 At any particular time, official policy represented a compromise with which all sections of the party could be relatively content, whilst wider common threads like inequality drew them together. This was the case at the beginning of our period in 1974 and it was the case at the end in 1979. The political and economic context of the time developed so as to allow Conservative policy to change and for all sides to remain on board, but it did not develop enough to allow truly radical change, with one side of the party unable to make any kind of accommodation at all. There would always be some element of compromise and some element of continuity. In addition, individual Conservatives often had a collective sense of what they were against or what they should oppose together. In immediate political terms this meant Labour and the Liberals, but in the context of the Cold War it also meant socialism and communism. In simple terms of course, they shared a desire for electoral success and wished to see a return to Conservative government after the next general election. This book argues that these kinds of short-term political factors have been relatively underestimated, in comparison with the wider economic context of the 1970s for example, in accounts which have looked at this period to date. By taking account of these kinds of ideas and thoroughly examining the 1974–79 period, reaching conclusions about the extent to which Conservative policy developed and how any changes can be best explained, this books attempts to make an important and original contribution to a number of debates and, as a whole, to our collective understanding of the recent past.

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The making of Thatcherism

6 A note on methodology

The primary approach of this book has been to focus on the actions of leading politicians and their parties, the motives which governed them and the political results. As a result, it is primarily concerned with ‘high politics’. Nonetheless, the obvious weaknesses of a strictly ‘high politics’ account have, hopefully, not been repeated here. It was not the case that only a limited number of important individuals and their interests were at the centre of events. Many more people than that mattered. An appreciation of the role of parties and politicians will be complemented by broader considerations of the structures and contexts – social, economic, cultural and institutional – which influenced them and helped to shape their ideas. A reasoned ‘high politics’ approach of this kind is that best suited to answering the questions in which this book is interested. Policy change was brought about by the agency of some groups and individuals, operating in a sphere in which particular concepts and ideas were gaining increasing traction. Nonetheless, the short-term political context, the organisational structure of the party machine and some personal dynamics of the period all also influenced policy development to some extent. Practical concerns competed with, and, at times, stood up to, broader ideological and philosophical pressures. Analysing this period in terms of wider economic and social change would highlight only some of the relevant factors which are needed to understand it fully. The political sphere must be at the heart of the picture. It must also be recognised that there has been a need to impose somewhat arbitrary boundaries on the timescale and range of issues considered. As Steven Fielding has described, ‘in that respect political historians are no more blinkered than the rest’.24 But this, again hopefully, should not reflect any lack of broader ambition or imply that more is not understood to be incredibly important. The fact that the Conservative Party was out of government between February 1974 and May 1979 helps to apply a more definite start and end point to the field of study. For the central question of official Conservative policy and how it developed, this is where the period is seen to begin and end. However, many of the ideas and issues discussed in this book naturally transcend these boundaries, having their origins both in the recent past of the Conservative Party, and perhaps even further back, whilst only reaching their full salience in the 1980s, though likely many are still directly relevant to us today. When this is the case, those themes and ideas are pursued as far as necessary, prior to 1974 and beyond 1979. In more specific terms, the key methodological approach has been qualitative research underpinned by an empirical ‘fine-grain’ approach – reading sources in depth, with different versions of events cross-checked against other sources, in order to trace the source and development of ideas and policies – complemented by elements of oral history. This is the best way to understand the gradual and subtle changes that were taking place during the 1974–79 period.

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Introduction7 A key concept at the heart of this book is party policy: its derivation and its implementation. In government the concept of policy is a straightforward one. The official position on a particular issue is usually easily identifiable. In opposition, things are not quite so certain. Here policy is understood to be the text of party election manifestos and official documents produced for public consumption, in the first instance. Beyond this there are other public statements, whether set-piece speeches, speeches in Parliament or answers in interviews, all of which are important but have not been considered to represent the official line of policy in quite the same way. Further sources which often form the backbone of this research but were not designed for public consumption are described in detail below. Given the stated aims of this book, how might we measure change in this Conservative policy? In many ways, this is a relatively simple task which involves comparing the policies outlined in February 1974 and May 1979 and noting the differences. This is the basic approach that has been taken. However, a slightly more detailed framework might be appropriate when seeking to make wider judgements. The broad principles outlined by Anthony Seldon in the chapter ‘Ideas are not Enough’ have been looked to in this regard and will be returned to in the conclusion.25 Seldon described how change would occur when the right combination of ideas, individuals, circumstances and interests were in place. The interplay between these four concepts for the Conservatives during the 1970s will be central to much of this book. A note on sources The most important sources considered are the two Conservative general election manifestos of February and October 1974, the policy document The Right Approach of 1976, its 1977 follow-up The Right Approach to the Economy, and the final 1979 election manifesto.26 It should be possible to trace how policy broadly developed through these documents as an important first step. Here was how the party chose to define its thinking to the electorate, at some length and in its own considered words. This is not to suggest that manifestos are perfect historical documents, but they are the best initial guide we have.27 As such, it is understood that Conservative policy can be found primarily in these official policy documents. Their content was the culmination of detailed policy work, undertaken as part of a wellestablished process, incorporating conclusions by a number of important policy groups and official research and advice from inside the party machine. The role of the Conservative Research Department (CRD) was extremely important here. The development of The Right Approach and The Right Approach to the Economy in particular can now be traced through archival sources, and this sheds some light on the reasons why they came to appear in the form that they did, and why the party’s overall approach moved forward quite hesitantly. A number of drafts and revisions were produced and circulated amongst leading Conservatives, with their feedback

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collated by Chris Patten at CRD. Their contents were the subject of strong debate before the final documents were published. Each of the policy areas that will be discussed in the course of this book had one or more of those relevant policy groups that worked through the party’s options in detail and represented a crucial location of policymaking, though their raison d’être was somewhat different from the similar set of groups established under the leadership of Edward Heath after 1965, focussing in theory more on important principles than the fine detail of policy.28 They were usually chaired by the responsible Shadow Minister and were attended by MPs and some outside experts. For example, the Economic Reconstruction Group (ERG), chaired by Sir Geoffrey Howe, performed an important role in the development of economic policies. The groups’ ideas were often considered by an Advisory Committee on Policy chaired by Sir Keith Joseph, a body which had been in place since the late 1940s and was drawn from across the landscape of the Conservative Party, with the parliamentary party, National Union, Chairman’s office, CRD and smaller groups such as the Conservative Federation of Students each represented.29 Policy proposals would also go through a Steering Committee and the Shadow Cabinet itself, which would make final collective decisions. During a period of opposition, without the support of the civil service, the work of the CRD took on even more importance. It provided secretarial support and policy advice to each of the groups. This was a well-established mechanism for developing policy, and the CRD had experience in strategy and research, with individual desk officers responsible for different areas of policy. CRD traced its origins to the pre-war leadership of Neville Chamberlain but began to take on a prominent role under the post-war chairmanship of R.A. Butler.30 By the 1970s it occupied a pair of narrow Georgian houses in Old Queen Street, London and was known for having ‘something of the intellectual high-spiritedness of student politics’, populated as it continued to be by ambitious young university graduates. Future Conservative luminaries such as Matthew Parris, Michael Dobbs and Michael Portillo began their careers there during the mid-1970s, as had Enoch Powell, Iain Macleod and others during previous decades. Nonetheless, it formed the centre of much of the policymaking process, with its officers and, in particular, its Director Chris Patten and Assistant Director Adam Ridley providing a crucial advisory role. Patten had joined CRD in the run-up to the 1966 general election and later went on to be an MP and Party Chairman, amongst other notable achievements.31 Ridley was a former civil servant who never entered Parliament but served as a special adviser in government after 1979. As John Ramsden identified, although the character of the party leader and other wider factors could at times be significant in setting the agenda – indeed CRD and the many party institutions were ultimately responsible to and served the leader – the pressure of time and the scale and complexity of modern politics necessitated a consultative and collaborative mindset: ‘Whatever constitutional theory may say, Conservative policy must be a collegiate activity.’32 In each of the

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Introduction9 key policy areas that will be discussed therefore, it was the CRD and these kinds of party insiders that were overwhelmingly responsible for devising, discussing and developing official policy, or assisting the politicians in doing so. Outside voices may have sometimes generated more heat but it was party officials who generated most of the light. Material in the manifestos and policy documents has been supplemented by a rich variety of sources produced by the party between 1974 and 1979 that were intended for public view; newspaper articles, broadcasts, political speeches and parliamentary debates. Archival research was also undertaken, principally at the Churchill Archive Centre and the Conservative Party Archive at the Bodleian Library, Oxford. The former is home to the Thatcher Papers, which contain a wide range of material from across the former Prime Minister’s entire career, as well as the papers of Lord Hailsham and Adam Ridley. At the Conservative Party Archive the most important sources came from the personal papers of Sir Keith Joseph, Sir Geoffrey Howe, and the records of Conservative Central Office and CRD, especially the files produced by Chris Patten. These key sources have been supplemented by the parliamentary records of Hansard and other sources from the websites of the Margaret Thatcher Foundation and The National Archives. A range of contemporary newspapers and journals were also important. A note on structure Chapter 1 of this book examines the wider context of the 1970s. How the decade was perceived at the time is discussed, with a focus on key themes such as the apparent breakdown of the post-war consensus, economic decline, the governability of the country and popular morality. This is related to the concepts of the political space in which the Conservatives were operating and the construction of rhetoric around a sense of crisis discussed above, in order to see how important these wider factors really were to Conservative policy. The central focus then shifts to the policy areas that the primary and secondary sources suggest were most important throughout the 1970s. These are also the policy areas where the most interesting, most meaningful and most definable changes are discernible. The chapters which follow therefore cover Conservative policies towards inflation, the economy, ownership, industrial relations, immigration, devolution and education. This is not to underestimate the importance of other areas such as foreign affairs, defence, health or social security, but these could not be said to have defined the 1970s in quite the same way, at least in the political terms under consideration here. In each of the key policy areas a broadly similar pattern can be observed; namely that policy did develop to a meaningful degree but other factors held back this change to some extent, so that by and large it was not truly fundamental. At certain times, these changes may have been quite important, with the Conservatives making a clear break with their own recent past, but at others change may have been somewhat limited.

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10

This book argues therefore that there were a range of factors pulling the party in a number of different directions. At times these forces meant that policy moved forward, but at others this process was slowed by the retarding effect of other factors. Here the political reality of the time and significant debates about the direction of policy inside the party, both of which served to engender a great deal of moderation, were crucial. The broader ideological context of the period, the natural desire to move on from recent failures and to look for alternatives were also significant in many different ways, but their influence on the fine detail of Conservative policy was more limited than might initially be expected. There were some areas in which very important developments did take place, and the party often discussed in private the possibility of much more radical and controversial change. Although such ideas may not have always made it into speeches and manifestos, there was at least the potential for more dramatic policy development. Nonetheless, this book argues that, on the whole, short-term political factors rather than broader philosophical and ideological concerns, upon which the greatest attention has so far been placed, were most influential in determining the development of Conservative policy between 1974 and 1979. Notes  1 The average swing of 5.2 per cent would remain the largest until the next Labour landslide in 1997, which saw a swing of more than 10 per cent.  2 The Guardian, ‘The Lady and the People’, 5 May 1979 p. 12.  3 Orthodox studies which take this kind of approach include R. Cockett, Thinking the Unthinkable: Think-Tanks and the Economic Counter-Revolution 1931–1983 (London, 1995) and D. Kavanagh, Thatcherism and British Politics: The End of Consensus? (Oxford, 1990).  4 D. Butler and D. Kavanagh, The British General Election of 1979 (London, 1980) p. 339; E. Caines, Heath and Thatcher in Opposition (Oxford, 2017) p. 117.  5 See for example Daily Mirror, ‘Divided We Fall’, 5 May 1979 p.  1; The Economist, ‘Mistress of Downing Street’, 5 May 1979 p. 13.  6 In 1979 the Conservatives won 339 seats with 43.9 per cent of the popular vote whilst Labour won 269 with 36.9 per cent, for a working majority of 44: D. Butler and G. Butler, British Political Facts, 1900–1994 (Basingstoke, 1994) p. 218.  7 Butler and Kavanagh, 1979 p. 339.  8 Ibid. p. 337 and p. 351.  9 Ibid. pp. 338–9. 10 Butler and Kavanagh put it rather eloquently when they argued that ‘The Conservatives were well placed to catch the plum that fell into their laps. But it was the Labour movement that shook it off the tree’: ibid, p. 340. 11 R. Behrens, The Conservative Party From Heath to Thatcher: Policies and Politics 1974– 1979 (Farnborough, 1980); A. Williamson, Conservative Economic Policymaking and the Birth of Thatcherism, 1964–79 (Basingstoke, 2015); Caines, Heath.

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Introduction11 12 H. Pemberton, ‘Strange Days Indeed: British Politics in the 1970s’, Contemporary British Politics, Vol. 23, No. 4, 2009 p. 594. 13 L. Black, H. Pemberton and P. Thane (eds), Reassessing 1970s Britain (Manchester, 2013). 14 P. Long, The History of the NME: High Times and Low Lives at the World’s Most Famous Music Magazine (London, 2012); D. Heathcote, The 70s House (London, 2005). 15 D. Sandbrook, State of Emergency: The Way We Were: Britain, 1970–1974 (London, 2011); D. Sandbrook, Seasons in the Sun: The Battle for Britain, 1974–1979 (London, 2012). 16 F. Wheen, Strange Days Indeed: The Golden Age of Paranoia (London, 2010). 17 A. Beckett, When the Lights Went Out: Britain in the Seventies (London, 2009); A.W. Turner, Crisis? What Crisis? Britain in the 1970s (London, 2008). 18 B. Jackson and R. Saunders (eds), Making Thatcher’s Britain (Cambridge, 2012). 19 R. Saunders, ‘“Crisis? What Crisis?” Thatcherism and the Seventies’ in Jackson and Saunders, Making p. 40. 20 E.H.H. Green, Ideologies of Conservatism (Oxford, 2002) p. 236. 21 Ibid. 22 K. Hickson (ed.), The Political Thought of the Conservative Party since 1945 (Basingstoke, 2005). 23 P. Dorey, British Conservatism: The Politics and Philosophy of Inequality (London, 2010). 24 S. Fielding, ‘Looking for the “New Political History” ’, Journal of Contemporary History, Vol. 42, No. 3, 2007 p. 52. 25 A. Seldon, ‘Ideas Are Not Enough’ in D. Marquand and A. Seldon (eds), The Ideas That Shaped Post War Britain (London, 1996). 26 The versions of the two 1974 and the 1979 manifestos referred to throughout this book are those available online from  www.conservativemanifesto.com/. The copies of The Right Approach and The Right Approach to the Economy that are referenced are those available on the Thatcher Foundation website: TF, The Right Approach, 4 October 1976 and The Right Approach to the Economy, 8 October 1977. The page numbers taken from The Right Approach to the Economy refer to the Thatcher Foundation transcribed version and not necessarily the original printed document. 27 The Right Approach was well publicised in 1976 and released to coincide with the party’s annual conference. Although its focus was often strategic, outlining Conservative thinking rather than detailed policies, it was represented as the official line. The Right Approach to the Economy was only officially released under the names of its individual authors but it represents an important step in Conservative policy development. 28 Caines, Heath p. 154. 29 C. Patten, ‘Policy Making in Opposition’ in Z. Layton-Henry (ed.), Conservative Party Politics (London, 1980) p. 11. 30 Ibid. p. 12. 31 C. Patten, First Confessions (London, 2017) p. 96. 32 J. Ramsden, The Making of Conservative Party Policy: The Conservative Research Department (London, 1980) p. 3.

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1

The 1970s

A ‘pivotal moment’? In order to understand the development of Conservative policy we need to consider the context in which it took place. What did the 1970s feel like? What did they look like? What distinguished this from other decades? What were the prevailing concerns of the time? What social, political and economic trends were underway? How important was the wider context of the decade, its particular themes and its particular preoccupations? To many this was a period of relative economic decline and high inflation, of trade union power and industrial unrest, of tension over race relations and British identity, of concern about the break-up of the United Kingdom, of random acts of terror, private armies and underground political movements. For some the very fabric of society appeared to be under threat. There was a crisis of trust in authority and growing scepticism about the role of government. Individualism appeared to be winning out over a sense of community. The picture was bleak. Taken together all of these issues could have signalled two things: the end of the post-war consensus but also uncertainty about what would replace it.1 However, although there clearly were serious problems and a wholly positive picture of the 1970s could never be painted, a number of academics are beginning to make a serious reappraisal of the decade. In this vein, this book argues that only by understanding developments during the 1970s can we hope to fully understand the 1980s and 1990s, and that the development of Conservative Party policy can be examined in seeking to understand why the 1970s turned out the way they did.2 Were the 1970s a ‘hinge’ decade? Were they a ‘pivotal moment in our recent history’?3 Conservative Party policy can help us to answer these questions. The first step in achieving this is to examine the ways in which the 1970s were understood at the time, how they were felt to relate to earlier periods, principally the 1960s, and how they were later felt to relate to the 1980s. The popular picture of the decade has often been a negative one.

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The 1970s13 ‘One of the worst decades Britain has known’ At the end of the 1970s the journalist and author Christopher Booker began to corner the market in making sweeping judgements about the period as it drew to a close. Looking back he described it as ‘a decade of unending hard slog through the quicksand’ and ‘hardly a time which in years to come is likely to inspire us with an overpowering sense of nostalgia’.4 In making an early claim for it to be the most important decade of the twentieth century so far, he suggested that ‘the supreme keynote of this past 10 years’ had been the ‘dashing of hope’ and the ‘exhaustion’ of optimism’.5 But Booker was far from alone in his negativity. In December 1979 the Daily Express encouraged its readers to ‘Smile Please – It’s Almost Over’, whilst noting that ‘There is much to remember about the punk-ridden, terrorist-laden seventies. But there is much more we would prefer to forget.’6 The former Labour Cabinet Minister Lord George Brown, by the late 1970s a Thatcher sympathiser, saw it as a period of ‘despair and disintegration’ and ‘one of the worst decades Britain has known’.7 In slightly more philosophical terms, an Observer editorial described the prevailing mental condition of the 1970s as an ‘inert, numinous stupor’. It had been a period ‘which turned retrogression from a psychological ailment into the name of a fashion’, a retread of the morbid 1930s. The Economist reflected on the extent to which Britain’s economic woes had defined the ‘miserable 1970s’, labelling it the ‘Opec decade’.8 The Daily Mirror did attempt a slightly more nuanced assessment by reflecting on the fact that despite serious problems the everyday lives of millions of Britons had actually continued to improve, and that at least the world had not ended in a nuclear war as many had feared.9 Nonetheless, relief that the 1970s were over was a much more common feeling. As such, descriptions of the uncertainty, the gloom and the fear have understandably continued to punctuate popular accounts of the period.10 Francis Wheen has persuasively argued that paranoia was the default mindset of the time, amidst a ‘pungent melange of apocalyptic dread and conspiratorial fever’, and more than one observer has looked to the work of Margaret Drabble, and in particular her novel The Ice Age, as saying something profound about the anxiety of the period in which it was produced.11 In this sense the 1970s were often seen as representing a reaction to or a hang­ over from the 1960s, which had been a very different kind of decade. Building on the affluence and youthfulness of the 1950s, the 1960s were widely thought of as a period of energy, optimism and liberation – the point at which Victorian constraints on British society were finally lifted.12 However, what for some was enjoyable freedom was to others simply permissiveness. The seeds of disillusionment and the potential for a serious change of mood were always present and only grew as the rush of the 1960s wore off and economic reality and a sense of crisis began to set a different tone.13 This notion of a reaction was central to Booker’s analysis, which argued that whilst many of the 1970s’ defining political and military events had been largely unpredictable, other problems, especially those such as high inflation

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The making of Thatcherism

and aggressive trade unions which particularly affected Britain, represented the culmination of trends which had already been discernible at the end of the 1960s.14 The years from 1964 to 1976 had been a self-contained period in English life, exemplified by trendiness, immaturity, wishful thinking and childish heroism, Booker contended, and although some of the ‘follies’ of the 1960s had been enduring, by the late 1970s the reaction against them had worked its way through to become the new prevailing orthodoxy in Britain.15 This sense of a moral backlash, coming as it did after the Wolfenden Report and many ‘liberal’ changes to the law like the Sexual Offences and Abortion Acts of 1967 and the Equal Pay Act of 1970, was significant in some quarters. One of Thatcher’s key intellectual supporters, Alfred Sherman, was certainly concerned about the consequences of ‘progressiveness’ and ‘permissiveness’ for British society.16 A former Communist, Sherman was a journalist and Conservative councillor who helped to establish the influential Centre for Policy Studies (CPS) alongside Sir Keith Joseph in 1974. As a result, he was regularly in touch with Thatcher prior to 1979, serving as something of an unofficial adviser, and is a recurring side-character in the policy chapters which follow. In a similar vein, Booker argued that by the end of the 1970s there had been a revival of conservative attitudes to the extent that they were once again a powerful intellectual force, in stark contrast to the popular morality of the 1960s.17 Interestingly, however, much of this now sits rather uncomfortably with more recent popular interpretations of the 1960s which emphasise how in many ways the decade was just as conservative as any other.18 In truth, there is never likely to be such a simple divide between decades. The 1960s may have witnessed many of the greatest upheavals, but social change in Britain was cumulative whilst other continuities always remained. The 1960s and the 1970s were both conservative and liberal.19 In this sense, however, a construction of the permissive 1960s was an important part of the construction of the crisis-ridden 1970s. Taking all of this together, it is unsurprising that the decade has long been seen as one of great reckoning, the period when many of the trends that had been playing out in Britain for a long time finally reached their full salience. The wider the perspective that is taken, the greater the number of seemingly relevant factors that can be brought in. Across the whole of the twentieth century Britain could be seen to be defined by its changed world status, the decline of empire, its replacement with the commonwealth, and the resulting loss of prestige.20 There was also the question of failed modernisation, as, over a period of at least twenty years, both the major parties had promised lasting structural reform which would equip Britain for the modern world but in the end had shrunk back from making truly radical changes. By the 1970s, globalisation and rapidly increasing competition from abroad had seriously undermined the once secure foundations of the British economy which, along with social pressures heightened by expanding consumerism and an increasing desire for social mobility, put great strain on politics and politicians. These were

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The 1970s15 profound historical trends that no government would have been able to control, and it was only natural for the post-war consensus to fragment in some way. Many Conservatives certainly thought so. But despite this, there was also much more to the 1970s. A number of studies have countered the negative portrayals and suggested that, notwithstanding the problems, the population as a whole was actually quite content during this period. In 1977 a Gallup poll found that the British people were amongst the happiest in the world, whilst a 2004 report by the New Economics Foundation suggested that 1976 may have been the peak year for well-being in Britain, the time when more people felt better off than any other. The methodology of that study has been questioned, but the attempt to reappraise the 1970s in this way represented an important step.21 This was also a period of general prosperity with relatively low unemployment by modern standards. The number of strikes did rise in the early 1970s, before falling back in the middle of the decade, and then rising again by 1978–79. The strikes that took place were more likely to be large and official, whilst picketing was more likely to be disruptive or violent, but the picture was not universal. Immigration was a potent political issue and it appeared as though notions of race had become uniquely bound up with those of national identity, but this was also the period of Rock Against Racism and the Anti-Nazi League, and of a real overseas influence on British customs. There was a decline in religious observance at the same time as wider stereotypes continued to break down and society continued to loosen along the lines of age and appearance. The liberal social reforms of the 1960s reached their full salience, and further advances towards equality such as the 1975 Sex Discrimination Act were made. It was the era of second-wave feminism, the women’s liberation movement and gay rights groups. There was a rise in environmental awareness, and it was a time of farming success in Britain, despite the fact that the population and much prosperity continued to drift south and east. The period saw changing leisure patterns, with more and more Britons taking foreign holidays, as well as the spread of colour television, rapidly increased hours of viewing and radio phone-ins beginning to offer the first interactive forms of media.22 All of these things together defined the 1970s. This was a time of change, but the pattern of change was more complicated than many observers had appreciated. Most ordinary Britons continued to lead relatively comfortable, affluent lives and were often unaffected by wider debates. Arthur Marwick describes how Most commentators writing at the end of the decade were concerned with ‘crisis’: crisis in the economy, crisis in law and order, crisis in racial and industrial relations. From the point of view of the survival of the nation as a whole as a stable and relatively prosperous (as, of course, in comparison with the rest of the world Britain undoubtedly was) society these commentators may very well have been right.23

However, there was no real question of Britain descending into anarchy. The majority of the population remained ‘as little interested as ever in major national

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The making of Thatcherism

concerns’.24 Although there were clearly serious problems and violence was often simmering on the surface, tolerance and accommodation still existed and many British traditions continued to endure. If there were winners and losers during the 1970s, those who tended to win and those who tended to lose remained largely the same as they had ever been. The mood of parts of the country demonstrated that even the most stable democracies occasionally have crises of confidence.25 However, although the social and cultural foundations of the decade may have been relatively stable, and although the political and economic problems which the country faced may not have been insurmountable, it must also be borne in mind that, despite this, it was precisely those former impressions of the crises-ridden 1970s that many observers, Conservatives chief amongst them, did take away from the decade. This has clear implications for the development of Conservative policy. Even if some issues were overstated at the time, this need not detract from the fact that, for better or worse, they were thought to be important. As such, in order to fully understand the impact that they had on the Conservative policymaking process, ideas such as the breakdown of the post-war consensus, economic decline, the governability of Britain and a loss of morality in national life need to be examined in more detail. Many Conservatives engaged with these debates, sometimes leading from the front, sometimes being affected by them only indirectly, but their influence was real. These were the themes that helped to shape their sense of how the world was changing. To what extent did they actually help to change Conservative policy? The breakdown of consensus Throughout the 1970s the concept of the post-war consensus was an important one for many Conservatives. Whether or not apparently long-standing assumptions about the role of government and the running of the British economy, principally seen as having Keynesian overtones of full employment and demand management, were being called into question, or had ever been right in the first place, was the subject of real debate. Naturally this had some impact on the party’s policymaking. A good insight into this is provided by notes taken by Lord Hailsham during a Shadow Cabinet meeting in April 1975, shortly after Thatcher had been elected leader in February and at a time when the future direction of the party was still unclear. Hailsham recorded details of a debate on a paper submitted to the group by Sir Keith Joseph which discussed how far the current party should seek to openly disassociate itself from the most recent Conservative government and its policies, as well as the perceived consensus as a whole.26 Sir Ian Gilmour argued that ‘Up to 1970 consensus was a Conservative consensus. Not a Labour one.’ As such the party should feel relatively comfortable with the position it had reached. Joseph, however, replied that ‘There was NOT a Conservative consensus before 1970.’27 His recent focus of course had been on deconstructing the whole conduct of economic policy in Britain since the war. To Joseph, and a number of others who shared his

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The 1970s17 concerns, the misguided Keynesian consensus which operated between the two main parties had reached breaking point and was now only exacerbating a number of economic problems. That the consensus had been guided by interventionist principles much closer to those of the Labour Party than those of the Conservatives was a damning consideration.28 Nonetheless, a few years later, demonstrating that the debate was still not over, in his book Inside Right Gilmour directly questioned the idea that the post-war consensus represented any kind of Conservative betrayal.29 He admitted that coming to terms with some errors, as Joseph was seeking to do, was natural and healthy. As will be returned to, there was little disagreement amongst Conservatives about the fact that something had to change and that a more liberal free market-oriented approach was needed, but Gilmour also maintained that it was not right to simply dismiss the last thirty years. Such an attitude did not sit well with the true nature of the party, which implied that the main influence on its policies should be the circumstances in which it found itself at any particular time. It was not for those who came after to second guess their predecessors, who after all had only ever been committed Tories, however they might now appear, Gilmour argued. A certain flexibility between sound principles and good politics has often been seen as an important dimension of Conservatism.30 Nonetheless, a sudden and radical break with the recent past should not be conducive to the Conservative mind-set. If the party existed to conserve national traditions and a sense of unity, then why should it be content to reject its own recent past? If radically different policies had been pursued then the Conservatives would have ended up in the political wilderness and unable to influence events at all. It was clear; ‘For both political and economic reasons Keynesianism was imperative.’31 If the party had been wrong for so long, why should the electorate be inclined to support it from now on? Nonetheless of course, Thatcher, Joseph and others, in the context of the crisis-ridden 1970s, saw themselves as being in line with an increasing majority of the British public.32 Inside Right is also noteworthy for the direct rebuttal of the argument, most clearly articulated by Joseph, that a ‘ratchet effect’ towards socialism had been in operation in post-war Britain.33 According to Gilmour there had been no ratchet during the thirteen years of Conservative government from 1951, after which only the steel industry had actually been nationalised by Labour, and the circumstances faced by the 1970 Conservative government meant that there was no realistic alternative. The Leftward shift of the Labour Party during the 1970s, something which all Conservatives agreed upon, demonstrated that there had not been a socialist victory before; as Gilmour argued, ‘the Leftward lurch of the Labour Party is more a vindication of Tory policies since 1945 than a condemnation of them’.34 The key point was that the Labour Party had been the one which had changed its policies and accommodated them to the moderate majority. Again, however, this was also a measure used by Thatcher and her supporters, who simply understood instead that it was Labour who had dominated the consensus whilst the Conservatives

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The making of Thatcherism

18

had abandoned their true principles. As we shall discover in subsequent chapters, Joseph and Gilmour were two of the key protagonists in a range of different internal debates about policy. That this kind of thinking underpinned their individual positions, and that leading Conservatives could agree that a consensus existed but disagree about what it meant, was significant.35 Decline One of the negative effects of the consensus was thought to be that its failed policies had allowed Britain to fall behind its rivals. As Joseph later recalled of his passionate arguments: Put it down to a mixture of impatience with our slow progress and envy of our neighbours. I never focussed on America – I thought they were outside our culture and our reach – but our ruddy neighbours. Why should they do so much better, particularly when they had been prostrate and flat on their back after the war?36

Such concerns about the state of the nation and its relative position were not new to the 1970s but had surfaced many times since the late nineteenth century, on both the Left and the Right. This has been taken by critics to indicate the ‘empirical vagueness and analytical wooliness’ of such ideas.37 Nonetheless, they were not just the preserve of elite politicians and commentators, although that is where most of the discussion was generated. An intangible though meaningful sense of decline was widespread by the late 1970s. Around this time the quantity of declinist literature increased, and it began to reach a wider audience, building on and reinforcing existing fears. According to Jim Tomlinson, ‘the chattering classes in the mid-1970s embraced with great enthusiasm the notion of Britain’s decline, but this time around the public discussion was much more apocalyptic in its tone and extreme in its advocacy and solutions’.38 The sense that Britain’s competitors were growing faster had been only ‘mildly disturbing’ during the 1960s, but just a few years later a profound sense of crisis had become the norm.39 Unsurprisingly, the Conservatives were overwhelmingly sold on this thesis, and it is clear that decline did play an appreciable role in the development of policy. This influence was not always direct, but a sense of Britain’s weakening position can often be seen behind official thinking in a number of important areas. Although his influence, particularly on leading members of the Conservative Party, would be most significant in later years, the archetypal declinist Corelli Barnett was already honing his craft during the 1970s. Echoing the kind of analysis that was also being made by Joseph, Sherman and others, Barnett argued that decline had been an on-going problem since at least the end of the nineteenth century.40 From this point of view it was telling that Britain had once led the world in economic terms, only to lose its former advantage. In many ways this could be seen as a relatively natural occurrence as other countries developed rapidly and

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The 1970s19 caught up, but for the declinists there was also the question of what might have been done to avoid this happening.41 Britain did not have a special ‘genius for technology’ as various national myths had it, but rather ‘various chance historical factors’ had caused Britain to be the first to undergo an Industrial Revolution, Barnett contended.42 If decline was to have been avoided there would have had to have been none of the ‘Fatal complacency’ or ‘blinkered conservatism’ which had typified British policymaking for many years.43 Here Barnett highlighted the importance of education, leadership, ambition and industrialism, and the difference in outlook and expectation between the British working and middle classes and those in Germany and Scandinavia. The implication was thought to be an urgent need to reconfigure rights and responsibilities now that Britain was no longer as wealthy and successful; or as Barnett described it: we must embark on a root-and-branch adaptation to the bleak and even terrifying reality of Britain’s fallen place in the world; an adaptation not only of our industrial system, but also of our society as a whole – indeed of our very national character and outlook.44

This gives some indication of the kind of fears that were widely held, and the kind of radical solutions that some influential figures were proposing by the late 1970s. Nonetheless, it is also important to ask whether this analysis had much basis in reality, significant though it undoubtedly was. Much of the Barnett-like thesis has since been deconstructed by economic historians. Although it applied most specifically to his later work such as Audit of War, a key criticism has been that even if the problem hadn’t been overstated, the comparison with other countries was usually less than realistic. The declinists tended to ‘conjure some underspecified “other place” ’ with which to compare Britain; Germany was a favourite of Barnett’s but it was ‘usually a Germany of the imagination’.45 David Edgerton has described the proposed remedies to decline as a ‘sledgehammer to crack a nut’.46 Tomlinson also noted that the anti-industrialism and poor educational standards that were seen to be major factors in Britain’s fall were also evident in other developed countries over time. Britain was less than unique. In the end, decline was so significant because it was closely linked to on-going contemporary concerns and the political ideologies that underpinned them. It fitted in neatly with other concerns about economic growth, high inflation, unemployment, levels of investment, and the role of trade unions on both the Left and the Right. At the time it mattered little that with the benefit of hindsight it would be possible to say that inflation was not extravagantly high in Britain, that the trade union problem was perhaps overstated, or that public spending and government borrowing were not out of control. The importance of declinism was also reaffirmed by the economic developments of the period as they unfolded. From the unstable commodity price boom of the early 1970s, the oil price shock at the end of 1973, concerns about public spending and borrowing leading up to the run on the pound and the IMF crisis of late 1976, and

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the culmination of industrial relations problems in 1979, it could easily be seen to fit into the wider fear-driven narrative.47 One party was likely to benefit from this the most. According to Tomlinson, ‘It was of course the Conservatives under Mrs Thatcher who, immensely strengthened by the panic of the mid-1970s, were eventually going to be in a position to pursue a new political agenda.’48 That the electorate may have agreed with Wheen that ‘it was as if the patient had been struck down by rickets, malaria, whooping cough and the blind staggers all at once’ was telling.49 Decline contributed to the growing political space for the Conservatives and the prevailing narrative of the crisis-hit 1970s. Ungovernability Similarly, the Conservative policymaking process was often underpinned by the fear, shared by many observers, that Britain might actually be becoming ungovernable. A key phrase often used during the 1970s was ‘overload’. Such was the depth of social and economic problems the county faced that the very fabric of democracy often appeared to be under threat. Allusions to Weimar Germany and other supposed historical examples were common. Even usually moderate and sensible voices slipped into using this kind of language, and again such analysis was shared across the political spectrum.50 On the Left it could be seen as part of a crisis of capitalism, whilst on the Right it was taken as one symptom of a wider moral decline or demonstrated the need to learn difficult economic lessons. To the journalist Patrick Hutber and the Sunday Times the question was simple: What’s Wrong With Britain? A BBC series asked the question outright: ‘Why is Britain becoming harder to govern?’51 In the accompanying book a number of influential voices were asked for their answers.52 Some more composed observers recognised that the forces damaging British society were still relatively weak, but that such a question was even relevant in Britain at all was often taken to be hugely revealing in itself. The link between a lack of growth, unstable prices and uncertainty about rising living standards and the theoretical possibility of an end to liberal democracy was often made, as economic crisis was seen to have spread into other areas.53 The effectiveness of government in terms of being able to address such serious problems, and Parliament itself in passing laws that would be followed, was often questioned, and the power and responsibilities that unelected bodies, especially the trade unions, were seen to have taken on, was a widespread concern. Unsurprisingly, all of this was music to many Conservative ears. There was also a sense in which the usual channels, the peaceful channels through which individuals might have addressed their concerns in the past, were being increasingly side-lined. Anthony King, for example, highlighted how: Men and women who have grievances, whether they be trade unionists or nursing sisters or dairy farmers, are far readier than they were a generation ago to take their

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The 1970s21 grievances into the streets. Politically as well as economically, we in Britain can feel the ground shifting, ever so slightly, under our feet.54

In slightly more politically charged terms, perhaps even tipping into the territory of concerns about a dependency culture, elements of which were certainly present on the Right during this period, King also summarised these developments in a different way: The hungry sheep look up and reckon that they have at least a reasonable chance of being fed. In so short a time has government come to be regarded, in Britain at least, as a sort of unlimited-liability insurance company, in the business of insuring all persons at all times against every conceivable risk.55

This also played into the wider concern about parties being able to deliver on their promises and governments being stable when the number of things for which they were thought to be responsible was ever increasing. As the number of perceived problems increased and the range of government action was gradually extended, the state’s ability to actually change things was only declining. Here governments were increasingly seen as the ‘sorcerer’s apprentice’, well meaning but powerless to hold back the tide.56 This was how the concept of ungovernability began to take hold. Interestingly, each of King’s contributors played down the role of subversives in contributing to these problems. In some circles, given the wider context of the 1970s, political extremists were the focus of a great deal of attention. At times, there was even talk of private armies and vigilante bodies in response to possible coups, Communist insurgencies and various other malevolent threats. With the benefit of hindsight, Colonel David Stirling with his group GB75 and General Sir Walter Walker with Civil Assistance appear comical figures, but that their ideas were given any serious consideration at all speaks to the anxiety of the time.57 The Conservatives, at least on anything like approaching an official level, were a long way from reaching these kinds of conclusions, but the underlying thinking was not uncommon and there were tangible links. For example, Lord Hailsham had met with Stirling in November 1974 to discuss his ideas about a written constitution and noted that ‘I could not be identified with him consistently with my obligations to party and Shadow Cabinet’.58 Many other accounts also argued that there could be no scapegoats, and that underlying systematic failures were the real key. Richard Clutterbuck’s Britain in Agony, for example, was typical of the period.59 From the problems of the Heath government culminating in the miners’ strike, to the range of violence and terrorism suffered under Labour, including the Ulster Workers’ Council strike, IRA bombings, and the infamous demonstrations at Red Lion Square, Windsor Park, Grunwick and Lewisham, Clutterbuck recounted how the period had been ‘exceptionally violent’.60 Furthermore, the violence was ‘openly advocated, orchestrated and provoked in a way which has been rare in British history’, with the effect of ‘­poisoning not only industrial relations but also political, social and racial

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h­ armony’.61 The situation could hardly have been more serious. Nonetheless, as suggested above, the real problem went beyond politics; poor economic performance had brought about a less united and less compassionate society. Clutterbuck recognised that Britain, even during the depths of the 1970s, was still a very rich nation and was more prosperous in real terms, with higher standards of living, than ever before. But the squeeze on real earnings and unemployment had brought about a situation where more people were unhappy with the balance of society as they saw it, and it had become less stable as a result.62 Similar, though more academic analysis, came from the likes of Richard Rose shortly after the period. As with other important concepts such as decline, there may not have been that much holding up the theory of ungovernability in the cold light of day. According to Rose, ‘Analytically, the idea of ungovernability is a nonsense’, and the central premise was false: The question is not whether we shall be governed but how. A modern Western society can no more do without the authority of government than it could do without money as a medium of exchange. Ungovernability can only be a temporary phase of civil war or anarchy in the career of a political system, followed for better or for worse by the establishment of a new regime or the re-establishment of the regime under challenge.63

From this point of view the threat of serious civil disorder, which was thought to be so real by many, including leading Conservatives, was not a realistic proposition, however passionately felt. In Britain the democratic election of the next majority government would almost certainly represent a return to, or even the continuation of, normality. There was no real threat of a revolution. Rose argued that although ‘Britain enjoys, if that is the word, the ripest variety of prognoses of doom’, it was actually natural for political authority to vary somewhat over time.64 The two centres of political authority, effectiveness and consent, were both required for active co-operation, which would in turn lead to success in government. In the UK there had been some problems with loss of consent after the failure of some policy solutions, but the real danger, if there was one, was likely to come simply from political indifference. In Britain the conditions that were needed in order to see real political violence on another level were not yet in place.65 However, for many on the Right this would almost certainly be seen as an underestimation of the scale of the problem. Many influential figures had outlined that this kind of political violence was emerging in Britain, influencing many Conservatives and at times feeding into the official party policymaking process on some level. The time was now, and the time to find difficult and potentially controversial solutions to these serious problems had already arrived, it was argued. The moral dimension Throughout the 1970s a number of influential voices were suggesting that the country’s problems stemmed not so much from economic collapse, but from something

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The 1970s23 wider and potentially even more difficult to restore – a failure of morality at the heart of British politics and society. This kind of thinking was particularly appealing to sections of the Conservative Party, including some leading policymakers. Lord Hailsham, for example, was particularly concerned about a ‘disease of the spirit’ that had infected the population.66 This had resulted in lack of will to think problems like decline through properly and meant that traditional virtues and values were not being upheld. In addition, Hailsham argued that it was never the ‘under-privileged’ who ‘destroy a society’ but those at the top. As he described, ‘It is always a failure of moral leadership, and intellectual integrity, or, worse still, an element of conscious betrayal, on the part of those whose function it is to counsel, to bear responsibility, and to guide, that causes moral disintegration.’67 Such an argument speaks to the sense of crisis inherent to the 1970s. It fell to the Conservative Party to provide this kind of moral leadership. For Tories like Hailsham, this lack of leadership was all the more disturbing because for so long Britain had been a leading authority in the world. Revolt and social upheaval were things that happened in other countries: We are suffering from a revulsion of feeling against our national past and traditions, our moral and spiritual values, our political and economic achievements, which is comparable only with the malaise of nations smarting under some national humiliation or prolonged failure. Yet we have lost no wars. We have faced no difficulties greater than our neighbours. We have no reason whatever for our loss of self-confidence.68

For the most paranoid exponents of this particular point of view there was also concern about the effect of class war waged by Marxist infiltrators, often abetted by trade union leaders, on much of what had once made Britain great. Alfred Sherman, for example, was particularly worried about the erosion of traditional Christian values and the need to rediscover personal responsibility, railing against ‘Progressives’ in fields like education, where socialist propaganda in schools was thought to be a particular problem. There was also fear about the undermining of right and wrong, and the explaining away of bad behaviour as being the result of social conditions.69 Such views were not at the heart of the official Conservative policymaking process, which was much more restrained by comparison, but Sherman was an influential figure and it is likely that many on the Right shared his views, even if they did not express them quite so articulately or present them directly to the leader of the party as he could. It was perhaps no coincidence that this was also the high point of second-wave feminism and the women’s liberation movement.70 The late 1960s and early 1970s had seen the spread of an organised mass movement across much of the western world, underpinned by a new collective awareness of oppression, marginalisation and the historical roots of sex inequality, based on grass-root activism and consciousness-raising groups.71 In retrospect the 1970s would be seen in both a positive and a negative light by women. It was either the golden age of feminist

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The making of Thatcherism

activism or it was a missed opportunity when much exclusion still took place, not least inside the women’s movement itself.72 Although important changes in women’s lives in relation to sex, marriage and work had been on-going for decades, the 1960s were often perceived as marking a watershed in popular attitudes. The gap between men and women in political terms had been closing as social and economic differences narrowed. After 1967 access to abortion was greater and after 1969 divorces were easier to obtain, whilst oral contraception was available via the National Health Service from 1961. Nonetheless, in the following decade the Equal Pay Act of 1970 and the 1975 Sex Discrimination Act also represented important steps forward, providing for maternity pay and outlawing direct and indirect discrimination in the workplace; although women’s earnings had been half those of men in 1970, by 1980 this had only improved to 60 per cent. 1975 also saw a national campaign to defend those abortion rights, and in 1976 the Domestic Violence Act was passed. In many ways this was the most important burst of social legislation since the 1920s. However, many women remained rightly concerned about wider systemic inequalities that such changes to the law could not address. The explicit aim of parts of the feminist movement was liberation rather than equality with men on their terms.73 By the 1980s concern about social and family breakdown was often focussed through the prism of irresponsibility, ill-discipline and attacks on authority during the 1960s; rates of divorce and the number of children born outside of marriage increased during this period. But women were also more likely to go to university and had much fuller participation in the labour force. That many earlier demands such as equal pay, equal education, free contraception and simply greater opportunity were now taken for granted could be seen to speak to the lasting impact of the women’s liberation movement.74 However, as suggested, despite these advances many women still faced real unfairness. Thatcherism, which had been burgeoning during the 1970s but went on to reach hegemonic status during the 1980s, has been the subject of such criticism. The analysis of Joan Scanlon in Surviving the Blues: Growing Up in the Thatcher Decade, for example, is interesting when thinking about perceptions of morality during this period. The ‘illusion’ marketed by Thatcherism, Scanlon argued, was that individual freedom, particularly in economic terms, would mean equal opportunity for all regardless of sex, whilst in truth many women with families received little state support as a result and were given no encouragement to function as individuals in their own right outside the home. There was also the question of a potential disparity between a desire to see a moral society and the materialism which could be seen to have defined the 1980s.75 However, as Florence Sutcliffe-Braithwaite has pointed out, Thatcherites saw no such contradiction, understanding that the right economic and legal structures in a more liberal marketoriented society would allow people to naturally behave in a more responsible and moral way.76 The development of official Conservative policy, as opposed to the increasingly well-formed ideas of some Thatcherites, during the 1970s was usually a

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The 1970s25 step or two removed from this kind of explicit analysis, but it was often there under the surface and in much of the rhetoric of the time. For example, Matthew Grimley has drawn links between the views of the likes of Sherman and Thatcher, who did allude to moral themes in a number of speeches, and the wider sense of concern about moral decline demonstrated by groups like Mary Whitehouse’s National Viewers’ and Listeners’ Association (NVALA) and the Nationwide Festival of Light.77 At one point Joseph did endorse Whitehouse, whilst in 1978 Willie Whitelaw spoke at the NVALA conference about the need to preserve the moral standards on which society is based for future generations. Thatcher herself lent only tacit support. She did meet Whitehouse and clearly shared many of the same assumptions about the importance of a traditional Christian society, but she did not actively engage with the specific issues which worried the NVALA.78 Grimley has also argued that the moral component of Thatcherism as a whole has so far been underappreciated. Thatcherism may have primarily been an economic body of thought, but it was not exclusively so; moral regeneration was often seen as a necessary corollary of economic recovery. Whilst in opposition, the direct influence of these kinds of ideas on the development of party policy appears to have been relatively limited but they were clearly there in the background. There were no easy answers to these kinds of questions. The necessary policy response was far from clear and even further from a realistic electoral prospect. As Grimley has described, ‘For Margaret Thatcher, a crisis of values was an important part of the broader crisis she diagnosed in the 1970s, and the remoralisation of society was among the medicines that she prescribed. Where she encountered some difficulty was in explaining who or what would drive this remoralisation.’79 It appears therefore, that to some extent the Conservatives were beginning to shape an appreciation of economic and social changes during the 1970s, and the electoral possibilities which were likely to follow. However, party policy was not revolutionised as a result. What distinguished Thatcher, Joseph and others from many of those who explicitly sought a much wider political and ideological mission, those in business, think-tanks or the media for example, was, at least for now, their commitment to using parliamentary methods to achieve their goals. This in turn meant politics and it meant elections. As such, there was always a need to marry social and economic analysis with other factors, including the immediate interests of the Conservative Party, their chosen vessel.80 As the subsequent chapters in this book will show, policy change was often dictated by much more short-term political needs. As a whole therefore, we can see that in Britain the 1970s was often defined by fear and uncertainty. There were serious national debates about the apparent end of the post-war consensus, economic decline, the governability of the country and popular morality. However, it was not all doom and gloom. There has been a shift in historical interpretations of the decade, and it is now seen in a much more balanced light. This was a period of prosperity, material wealth and relative industrial

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26

peace during which important social changes and movements were unfolding, ­punctuated by some traumatic economic events and bouts of unrest. By viewing the 1970s through the prism of Conservative party policy we can begin to see a much more subtle series of political changes than has so far been identified. This book contributes to the recent re-interpretation of the 1970s as a complicated decade with strengths and weaknesses. In addition, only by understanding the context in which the Conservatives were developing their policies can we fully understand why they changed in the ways that they did. As we shall see, in some cases this 1970s’ context clearly had an impact on official thinking. Following Green’s initial idea, this is probably best understood in terms of the changing political space in which the Conservatives were operating. Saunders’s analysis of the construction of the crisis-ridden 1970s complements this well. However, in the chapters which follow we shall also see how the short-term political context of the period also played a significant role. We need to appreciate both factors in order to understand the development of Conservative policy between 1974 and 1979. Notes  1 A. Beckett, When the Lights Went Out: Britain in the Seventies (London, 2009) p. 1; A. W. Turner, Crisis? What Crisis? Britain in the 1970s (London, 2008) p. ix; F. Wheen, Strange Days Indeed: The Golden Age of Paranoia (London, 2010) pp.  10–11, p.  12, p.  184; A. Marwick, British Society Since 1945 (Harmondsworth, 1990) p. 184.  2 H. Pemberton, ‘Strange Days Indeed: British Politics in the 1970s’, Contemporary British History, Vol. 23, No. 4, 2009 p. 594.  3 D. Sandbrook, Seasons in the Sun: The Battle for Britain, 1974–1979 (London, 2012) p. xviii.  4 C. Booker, The Seventies: Portrait of a Decade (London, 1980) p. 4.  5 TheObserver, ‘Goodbye to the Seventies’, 30 December 1979 p. 21.  6 Daily Express, ‘Smile Please – It’s Almost Over’, 27 December 1979 pp. 16–17.  7 Daily Express, ‘Will The 80’s Be Britain’s Decade?’, 30 December 1979 p. 16.  8 The Observer, 30 December 1979 p. 26. The Economist, ‘The Opec Decade’, 29 December 1979 p. 39: the decision by the Organisation of the Petroleum Exporting Countries to quadruple the price of oil in 1974 was thought to symbolise the extent to which Britain’s economic destiny may not even have been in its own hands.  9 Daily Mirror, ‘The 70s Over and Out’, 31 December 1979 p. 2. 10 Turner, Crisis? p. ix, p. xiii; Wheen, Strange pp. 8–9; Marwick, Society p. 184. 11 Wheen, Strange pp. 7–9; P. Whitehead, The Writing on the Wall: Britain in the Seventies (London, 1985) p. 391; P. Clarke, Hope and Glory: Britain, 1900–1990 (London, 1996) p. 363. 12 Marwick, Society p.  9; The Observer, ‘Goodbye to the Seventies’, 30 December 1979 p. 21. 13 Turner, Crisis? p. ix; Whitehead, Writing p. 391. 14 The Spectator, ‘Backwards into the Eighties’, 22 December 1979 p. 16.

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The 1970s27 15 Ibid. 16 P. Begley, ‘“We are the Social Democrats Now”: Sherman, Thatcher and the Electoral Appeal of the Conservative Party’, presented to Progressivism: Past and Present, July 2012, Senate House, London. 17 The Observer, ‘Goodbye to the Seventies’, 30 December 1979 p. 21. 18 See for example D. Sandbrook, Never Had It So Good: A History of Britain From Suez to the Beatles (London, 2005); D. Sandbrook, White Heat: A History of Britain in the Swinging Sixties (London, 2006). 19 Marwick, Society p. 245. 20 Clarke, Hope p. 402. 21 Whitehead, Writing p.  404; Marwick, Society p.  267; Pemberton, ‘Strange’ p.  585; Turner, Crisis? p. ix. 22 Turner, Crisis? pp.  ix–xii; Whitehead, Writing pp.  392–4; Beckett, Lights pp.  3–5; Marwick, Society pp.  239–40, p.  245, p.  248, p.  262. On race see also for example P. Gilroy, There Ain’t No Black in the Union Jack: The Cultural Politics of Race and Nation (London, 1987). On feminism see A. Graham, A. Kaloski, A. Neilson and E. Robertson (eds), The Feminist Seventies (York, 2003). On the rise of television see C. SeymourUre, ‘Political Television: Four Stages of Growth’, Contemporary Record, Vol. 4, No. 2, 1990. 23 Marwick, Society p. 269. 24 Ibid. 25 Ibid. p. 260; Whitehead, Writing p. 292; Beckett, Lights p. 4. 26 Hailsham Papers, HP, HLSM 1/1/10 Part 1, Notes of Shadow Cabinet meeting, 11 April 1975. The minutes have gradually become a staple source for accounts which examine this period. See for example D. Kavanagh, ‘The Making of Thatcherism: 1974– 79’ in S. Ball and A. Seldon (eds), Recovering Power: The Conservatives in Opposition Since 1867 (Basingstoke, 2005); C. Moore, Margaret Thatcher, The Authorised Biography, Volume One: Not For Turning (London, 2013); R. Toye, ‘From “Consensus” to “Common Ground”: The Rhetoric of the Post-War Settlement and its Collapse’, Journal of Contemporary History, Vol. 48, No. 3, 2013. 27 HP, HLSM 1/1/10 Part 1, Notes of Shadow Cabinet meeting, 11 April 1975 28 Ibid. 29 I. Gilmour, Inside Right: A Study of Conservatism (London, 1977). 30 E. Caines, Heath and Thatcher in Opposition (Oxford, 2017) p. xiii. 31 Gilmour, Inside p. 18. 32 Ibid. 33 The phrase was seemingly first used in the Centre for Policy Studies pamphlet Stranded on the Middle Ground (London, 1976). 34 Gilmour, Inside p. 21. 35 Toye, ‘Consensus’ p. 4. 36 Quoted in M. Halcrow, Keith Joseph: A Single Mind (London, 1989) p. 67. 37 J. Tomlinson, The Politics of Decline: Understanding Post-War Britain (Harlow, 2001) p. 61. 38 Ibid. p. 88.

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39 A. King, ‘The Problem of Overload’ in A. King (ed.), Why is Britain Becoming Harder to Govern? (London, 1976) p. 5. 40 C. Barnett, ‘Obsolescence and Dr Arnold’ in P. Hutber (ed.), What’s Wrong With Britain? (London, 1978) p. 29. 41 Clarke, Hope p. 402. 42 Barnett, ‘Obsolescence’ p. 31. 43 Ibid. pp. 31–2. 44 Ibid. p. 34. 45 Tomlinson, Politics p. 59. 46 Quoted in ibid. 47 Ibid. p. 84. 48 Ibid. p.  90. The analysis of James Alt in The Politics of Economic Decline: Economic Management and Political Behaviour in Britain Since 1974 (Cambridge, 1979) is also significant here. 49 Wheen, Strange pp. 249–50. 50 Pemberton, ‘Strange’ p. 586. 51 Hutber, Wrong. 52 King, Why 53 Ibid. 54 Ibid. p. 6. 55 King ‘Overload’ p. 12. 56 Ibid. p. 11. 57 P. Joyce, The Policing of Protest, Disorder and International Terrorism in the UK Since 1945 (London, 2016). 58 HP, HLSM 1/1/19, 8 November 1974. 59 R. Clutterbuck, Britain in Agony: The Growth of Political Violence (London, 1978). 60 Ibid. p. 19. 61 Ibid. See also Marwick, Society pp. 222–3. 62 Clutterbuck, Agony. 63 R. Rose, ‘Ungovernability: Is There Fire Behind the Smoke?’, Political Studies, Vol. 27, No. 3, 1979 p. 351. 64 Ibid. p. 352. 65 Ibid. p. 359. 66 Lord Hailsham, ‘Moral Betrayal, Not Economic Failure’ in Hutber, Wrong p. 41. 67 Ibid. p. 42. 68 Ibid. p. 43. 69 Begley, ‘We’. 70 There is a wide range of literature which touches upon this area. For example: J. Lewis, Women in Britain: Women, Family, Work and the State Since 1945 (Oxford, 1992); I. Zweiniger-Bargielowska (ed.), Women in Twentieth Century Britain (Harlow, 2001); H. Cook, The Long Sexual Revolution: English Women, Sex and Contraception, 1800–1975 (Oxford, 2004); J. Scanlon (ed.), Surviving the Blues: Growing Up in the Thatcher Decade (London, 1990); Graham, Kaloski, Neilson and Robertson, Seventies.

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The 1970s29 71 B. Melman, ‘Changing the Subject: Women’s History and Historiography 1900–2000’ and H.L. Smith, ‘The Women’s Movement, Politics and Citizenship, 1960–2000’ in Zweiniger-Bargielowska, Women p. 19, p. 22, p. 278. 72 Graham, Kaloski, Neilson and Robertson, Seventies, Preface; J. Scanlon, ‘Introduction’ and M. Smith, ‘Can You Hear Me at the Front?’ in Scanlon, Blues pp.  1–2, pp.  30–2. 73 Clarke, Hope pp.  361–2; Lewis, Britain p.  2, p.  5, p.  40, pp.  56–8, pp.  117–18, p.  42; Smith, ‘The Women’s Movement’ and I. Zweiniger-Bargielowska, ‘Introduction’ in Zweiniger-Bargielowska, Women pp. 278–81, p. 4, p. 12. 74 Lewis, Britain p. 40. 75 Scanlon, Blues pp. 5–6. 76 F. Sutcliffe-Braithwaite, ‘Neo-Liberalism and Morality in the Making of Thatcherite Social Policy’, Historical Journal, Vol. 55, No. 2, 2012 p. 520. 77 M. Grimley, ‘Thatcherism, Morality and Religion’ in B. Jackson and R. Saunders (eds), Making Thatcher’s Britain (Cambridge, 2012) p. 78; Wheen, Strange p. 132. 78 Wheen, Strange p. 146. 79 Grimley, ‘Thatcherism’ p. 78. See also Sutcliffe-Braithwaite, ‘Neo-Liberalism’ for greater detail on the philosophical roots of this aspect of Thatcherite ideology. 80 Saunders, ‘Crisis? What Crisis? Thatcherism and the Seventies’ and B. Jackson, ‘The Think-Tank Archipelago: Thatcherism and Neo-liberalism’ in Jackson and Saunders, Making.

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2

Inflation

A new departure in Conservative history? One of the defining issues in British politics and the central focus of economic policy between 1974 and 1979 was inflation. This was particularly true for the Conservative opposition, which invested a great deal in defining policies to deal with it and consistently emphasised the grave threat that it posed; at various times inflation was described as ‘a moral and political evil as well as a social and economic evil’1 and ‘the great destroyer – of jobs, living standards and a stable order’.2 Tackling it therefore, was always ‘The first essential in economic management’.3 The negative effects of inflation played directly into many traditional elements of Conservative philosophy. High levels had long been seen to undermine savings, offending prejudices towards hard work and thrift, and by the 1970s the threat which it was thought to pose to individual freedom and social cohesion was becoming more palpable. It was also thought to be of central importance to the international value of the pound, which was still ‘freighted with all sorts of “great power” beliefs about Britain’.4 Many other problems were viewed through the prism of inflation, and as it reached newly high levels during the 1970s tackling it became a necessary precursor to a number of other policy aims.5 Inflation had been creeping upwards since the late 1960s but had more than trebled by the mid-1970s. It hit 16 per cent during 1974 and went on to reach 24.2 per cent in 1975, before steadily falling back. Nonetheless, an average of 13 per cent across the decade made the 1970s the second most inflationary period in the last 700 years.6 The rising cost of living was consistently seen as one of the most serious problems facing the country.7 Although the British experience was not wholly out of line with those of other leading nations, and although inflation was reduced towards the end of the decade, the rhetoric around it was always significant. It was understood to be an important part of the wider crises of economic decline and governability, and although we can now see that some of the wilder claims about inflation ‘proved to be both gravely exaggerated and extremely transient’, they felt plausible to many of those who experienced it.8 Perhaps the most important question we can ask is to what extent did Conservative thinking move in a monetarist direction as a result? Many accounts have suggested that in overall terms the party moved away from its previous posi-

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Inflation31 tion, typified by a belief that the best way to tackle inflation was for the state to moderate pay claims and set levels for pay increases, whether voluntarily or statutorily, and towards one with a much clearer focus on setting targets for and restricting the rate of growth of the money supply. There seems little doubt that this general picture is correct. Attention has often been focussed on the role of ideas from outside the party in this respect. It is clear that a number of influential economists, to varying degrees of the monetarist stripe, such as Brian Griffiths, Alan Budd, Patrick Minford, Alan Walters, Tim Congdon, Gordon Pepper and Samuel Brittan, as well as the ubiquitous Alfred Sherman from the Centre for Policy Studies and Ralph Harris and Arthur Seldon from the Institute for Economic Affairs, were, in Ewen Green’s words, ‘drawn into the Conservative policy discussion circuit’.9 The CPS in particular saw itself as a ‘free-standing participant in the Conservative campaign of re-assessment and opinion-forming’ or a ‘trail-blazer’.10 Economists with different perspectives were nowhere near as important to the Conservatives during this period. That the likes of Griffiths, Pepper and Walters, some of the leading disseminators of monetarist ideas in economic journals and periodicals, were drawn towards the Conservatives demonstrates the common ground that existed between them. Although Eric Caines contends that such figures were influential in helping to make the Conservatives ‘electable’ in a wider sense, in policy terms their success was not all-encompassing.11 Conservative policy was not revolutionised as a result. Other ideas closer to traditional prices and incomes policies remained stubbornly in play during policy group discussions and still made it into official policy documents and manifestos. With the rise of monetarism, their share of the stage may have been shrinking overall, but they were not yet dispensed with entirely. Pragmatic concerns were often just as significant as wider economic and ideological forces. Furthermore, such concern about inflation was not new to the late 1970s. The issue had long been at the centre of Conservative economic thought. The immediate cause of the infamous 1958 Treasury resignations, for example, had been disagreement about the measures necessary to combat it.12 Monetarism was appealing to many Conservatives because it offered a simple explanation and solution to the inflation question. It was a ‘means to an end’ and ‘provided a new rationale for many measures which they had long supported’.13 As well as tackling high inflation, it also fitted with much Conservative thinking on the need to reduce public spending and the malignant influence of trade unions. A greater focus on monetarist ideas did not necessarily require a significant re-evaluation of Conservative philosophy. There is also a real sense in which the Conservatives played only a supporting role in the story of British monetarism. The Labour government and the monetary authorities at the Bank of England and the Treasury were already moving in an increasingly monetarist direction during the 1970s, as the conditions which had underpinned the post-war ‘Golden Age’ began to deteriorate. The 1970s were a learning phase for all political parties. Traditional Keynesian policy solutions like prices and incomes policies were increasingly shown to be inadequate once the

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benign economic conditions and consequent wage restraint vital to their success had disappeared.14 The idea that there could be a short-run trade-off between inflation and unemployment, the control of which had been the central aim of economic policy in the post-war period, was also questioned as both began to increase despite efforts to manage the economy successfully. Both Conservative and Labour governments during the 1970s appeared to be defined by ‘contingency’; just trying to stay on course and willing to try any new policy in order to do so.15 A number of events over the course of the decade contributed to these economic difficulties and the on-going policy change. The breakdown of the Bretton Woods fixed exchange rate system which had dominated the post-war world, and the subsequent floating of the pound in international currency markets, had a significant impact on the domestic economy.16 The susceptibility of Britain to external forces, particularly excessive pressures in supply and demand, was further shown by the subsequent 1974 oil price shock.17 Such was the lasting impact on the British economy of the quadrupling of the price of oil, especially in terms of rising commodity prices adding to an already significant balance of payments deficit, putting further pressure on sterling and pushing up inflation, that The Economist later described the 1970s as ‘The Opec Decade’.18 This was part of a wider trend in which financial markets, international investors and ‘The City’ would come to have a much more significant role in influencing the policies of British governments.19 After the late 1960s the rate of monetary growth developed from a relatively obscure technical measure into a key test of the confidence of outside investors in Britain. By the end of the 1970s it had also become a test of the basic economic competence of the British government.20 After the devaluation of the pound in 1967, amidst serious debates about monetarism in financial circles, the Wilson government had given the first hints of the future direction with an apparent commitment to control ‘Domestic Credit Expansion’.21 This was far from abstract monetarism as outlined by some theorists but it ‘served to valorise the monetary aggregate as a key component in the control of the British economy’.22 This process was given further impetus by the high inflation experienced in Britain after 1973, which was widely understood to have been the result of lax monetary policy under the Conservative Chancellor Anthony Barber, and by 1976 an indication of official belief in monetary targets was seen as essential to halting declining confidence.23 The psychological impact of the International Monetary Fund crisis towards the end of that year has long been considered important. As the pound devalued over the course of 1976, the confidence of investors in the Labour government’s ability to meets its commitments also declined, resulting by September in an application to the International Monetary Fund for an emergency loan of £2.3 billion.24 The subsequent negotiations ended with a requirement for deep cuts in public expenditure as a condition of the loan, but further moves towards official monetary targets were also seen as necessary to try to restore confidence.

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Inflation33 A number of observers have argued that this may have been the moment when controlling inflation finally took precedence over the control of unemployment in Britain, and that 1976 was therefore a defining moment in the move towards monetarism.25 According to Noel Thompson, the Labour government was ‘left with little in the way of an economic philosophy of its own’, and its economic policy ‘did not so much bear the imprint of ideas as the scars of expediency’.26 Though perhaps a little less dramatically, the same might apply to the Conservatives. The party was increasingly convinced of the need for monetary discipline. Monetarism being forced upon Labour was seen as a good thing. However, although the Conservatives were undoubtedly pro-business and pro-City, the need to appease the markets was not yet present in a significant sense during internal party discussions. Monetarism was not yet explicitly linked to the confidence of foreign investors as such in the minds of most leading Conservatives. Nonetheless, it was certainly linked in the minds of the Bank of England and the Treasury. It seems likely that the monetarist policies of the first Thatcher government after 1979 owed more to the development of targets under the previous Labour administration than work done by the Conservatives themselves in opposition. After 1976 it may have been impossible to move away from official targets. They were expected to be lower each year regardless of other economic pressures that the government might face. The pattern at the end of the 1970s was consequently one of recurring stop–go cycles in the markets for government debt as investors anticipated changes in interest rates as a result of whether official pronouncements on monetary policy were likely to be realistic.27 A kind of self-perpetuating circle had emerged as officials moved closer towards strict monetary targets as a means of re-establishing investor confidence, in turn fuelling the extent to which monetary restraint was relied upon as an indicator of government competence. Monetary control thus came to fill the gap left by the end of the Bretton Woods system.28 This affected the incumbent Labour government and its successor. For all their hard work in opposition, the Conservatives may have naturally followed the administrative patterns that had already been set, including keeping the confidence of the markets.29 There were limits to the extent to which the Conservatives could influence the official agenda. The fine details of monetary policy were not carefully worked out prior to 1979. The hard work lay in reaching a decision about incomes policies and monetarism. This was a debate where a truly satisfactory conclusion was elusive. In practical terms, however, there was no clear ‘one or the other’ choice to be made and it would not have made much strategic sense in the political context of the time for the Conservatives to make one. The task facing the party in opposition was to define a realistic and comprehensible position which could be adopted in relation to tackling inflation, and they set about doing this by balancing the competing claims of incomes policy and monetarism, and a number of other key policies, outlining a broad approach. In reality the picture was constantly changing and there were few

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fundamentalists, but it is possible to discern two sides of a real debate about the best means of tackling inflation, one arguing that monetarism should be the main focus of policy, and the other contending that incomes policy should remain an important option. The former approach was favoured by those pragmatists closer to the ‘One Nation’ tradition like Sir Ian Gilmour and Jim Prior, and the latter by those like Sir Keith Joseph and Sir Geoffrey Howe who wished to see an intellectually driven reappraisal. There was consistent philosophical pressure from a number of politicians on both sides to move the agenda in their direction. However, finding a balance between the apparently competing claims of incomes policy and monetarism was of central importance to almost all. It was also the case that, however important such debates were, policy was not just the result of Shadow Cabinet discussions. The work done by policy groups and the preparation carried out by the Conservative Research Department was significant. The potential benefits and the potential flaws of each approach were recognised. Official publications retained elements of both. Inflation provides an excellent example of an area in which the political context of the period was important. Throughout this period the Conservatives consistently argued that they would recognise when the Labour government was doing the right thing. This often meant being willing to at least accept the need for, if not support, particular measures, whilst still holding out the prospect that only the Conservatives had the real answers. This balance most often manifested itself in arguments that the government had wisely taken some necessary policy steps but had not gone far enough. Inherent in this was the need for flexibility and a certain lack of definition in the party’s own policies whilst still being robust enough to be defended. This approach was not without its complications. It was soon realised by some Conservatives that despite the suggestion inherent in monetarist theory that such measures were irrelevant, or at least should be left to operate out of the hands of politicians, the party would naturally still have to come to some conclusions about the likely size of pay increases. As long as there were millions of people working in the public sector for which the government was ultimately responsible, there could never be an environment completely free of all incomes policies. Monetarist thinking could not eradicate traditional ways of understanding economic problems overnight. One of the most notable solutions that the Conservatives developed in opposition, based upon the West German concept of Concerted Action, could be seen as an attempt to address this concern. Policy development therefore unfolded along two complementary but distinct tracks; the agreement of detailed policies on inflation which all senior Conservatives would be comfortable repeating and the agreement of shorter-term positions to take in responding to the actions of the incumbent government. By 1979 monetarism had become more central to inflation policy. Ideas in the style of incomes policy were not provided with the same tone or style of intellectual support as they had been, but in essence they persisted.

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Inflation35 The policy debate on inflation The widely perceived economic failure of the Heath government undoubtedly contributed significantly to the subsequent transition away from incomes policies and towards monetarism.30 Expectations in the free market-oriented, non-­ interventionist, perhaps even monetarist intentions of the government had been raised by the party’s manifesto at the 1970 general election, which had been developed at the now infamous Selsdon Park conference.31 However, such hopes were dashed as, under pressure to produce economic growth and reduce inflation, the government embarked upon a series of U-turns, intervening to bail out failing industries and attempting to enforce prices and incomes policies.32 Monetarist economists were scathing of the subsequent monetary expansion in an attempt to reflate the economy, which was understood to have further fuelled inflation.33 Some kind of shift towards monetarism may have become unavoidable. This has certainly been the conclusion of some observers. Michael Oliver and Hugh Pemberton have argued that the number of economic ‘anomalies’ which accumulated under Heath meant that ‘no amount of experimentation with new instruments and settings could hold the paradigm together, and during the next five years Keynesianism gradually disintegrated’.34 In an attempt to rescue its reputation to some extent, other accounts have sought to contextualise the decisions taken by the Heath government, suggesting that there was little alternative to many short-term decisions.35 Any government would have been troubled by the oil price shock of 1973 and subsequent worldwide recession.36 Nonetheless, it was still the case that inflation had risen from an average of 4.2 per cent between 1967 and 1969 to 9.2 per cent in 1973 and 16 per cent in 1974.37 The solution put forward in the Conservatives’ manifesto at the February 1974 general election had been simple: ‘We shall, therefore, press ahead with the pay and prices policy, if necessary stiffening it in the light of the developing economic situation.’38 It was argued that the counter-inflation policies of the then Conservative government had been successful and that they had been forced by the trade unions to move from a voluntary to a statutory incomes policy. The manifesto presented a list of justifications for the government’s refusal to agree to unaffordable wage demands and the responsibility of the unions to make reasonable settlements was made clear. Many immediate priorities, especially in the field of economic policy, were viewed through the prism of relationships between the government and other leading groups in society. There was no mention of monetary policy. The Labour Party was criticised for being ‘committed to abandoning the legally-backed pay and prices policy’.39 This was, for the moment, the answer. Two key factors subsequently directed Conservative thinking on inflation. The first was the result of the general election. Although the poll itself was inconclusive, with no party winning an overall majority, after an ill-fated attempt at reaching some

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sort of agreement with the Liberal Party the Conservatives entered opposition.40 Wilson’s inability to conduct official business meant that a second election could only be a few months away, but the move from government naturally afforded the Conservatives an opportunity to at least begin to reconsider some policies. The second factor was the initiative taken up by Sir Keith Joseph, who had been given the chance to re-think the course of economic policy by Heath. The Leader would later argue that he had not foreseen how seriously Joseph would take this role, but the mission that he embarked upon has since been one of the most recounted stories in recent political history, with huge significance often attached to it.41 Joseph had seemingly argued in vain for monetarism at Shadow Cabinet in May 1974, before going on to make a series of speeches which made the point in fundamental terms. ‘This is not the Time to be Mealy-Mouthed: Intervention is Destroying us’ at Upminster in June and ‘Inflation is Decapitalising British Industry’ at Leith in August were followed by ‘Inflation is Caused by Governments’ at Preston in September.42 Here Joseph argued that both parties had pursued mistaken and wrongheaded policies for the past thirty years, storing up economic problems which were now coming to fruition. The suggested solution was relatively simple and to its adherents the step Joseph had taken by placing it on the agenda was hugely significant. His biographer Morrison Halcrow suggested that Preston had ‘turned monetarism from an academic into a major political issue’. It was also ‘the most important speech in Joseph’s career, and one of the seminal speeches in political history’.43 Nonetheless, his apparent conversion to the monetarist cause would never be enough for those that had been arguing for such policies over many years. Enoch Powell, for example, who had become a well-known advocate of monetarism during the late 1960s, is reported to have said that ‘I have heard of death-bed repentance, but it would perhaps be more appropriate to refer to post-mortem repentance.’44 By the next general election in October, however, the policy options were not so easily resolved. As that manifesto then made clear: There is no quick or simple way of defeating inflation. We do not claim to have any easy solution. Indeed no government can beat inflation by itself. The only way the battle can be won is by the Government and the people of this country uniting on a national policy.45

The details of this ‘national policy’ were more varied than those that had been spelled out eight months earlier. Now it was argued that the problem could not be resolved by ‘using only one weapon’. Rather than a simple commitment to further pay and prices policies, there was now a promise to introduce ‘a comprehensive price stabilisation programme which will use every tolerable means available to fight inflation’. This would include ‘restraint in prices and incomes’ but also rigorous ‘control of public spending and the money supply’. This last element was seen as ‘a vital, though not the only, part of our counter-inflation armoury’.46

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Inflation37 Heath himself saw the manifesto as ‘restating our opposition to the brutal deflationary policies which were now being advocated by the monetarists, both within our own party and beyond it’.47 The central focus was still on full voluntary prices and incomes policies and an end to excessive wage settlements, or ‘paying ourselves more than we produce’, whilst a move to support this in law was not ruled out if thought to be necessary.48 The only alternative to this was likely to be unacceptably harsh economy measures. Monetary policy itself was only mentioned as one of these difficult options, not necessarily as one of the underlying causes of high inflation. The Conservatives’ wider economic and financial policies would also be important in bringing about the conditions in which inflation could be dealt with acceptably. These issues were examined shortly after Thatcher’s accession to the leadership in February 1975 by Chris Patten at the Conservative Research Department. In a Director’s note looking at inflation he had sought to outline ‘The Conservative Approach’, and perhaps frame the terms of the forthcoming debate, in unobjectionably abstract terms. ‘The Conservative Party’, he wrote, does not believe that there is any single or simple cure to inflation. We believe that the only politically acceptable and desirable way of tackling it is to apply a number of remedies in a steady and sustained way. The elements in our approach are therefore interlocking and interdependent: they are all necessary, no single one of them is sufficient on its own.49

As time went on, however, the pressure to be more specific would increase. In June 1975 the Conservative MP David Howell composed a lengthy memo to Thatcher which demonstrated the prevalence of such views. According to Howell: There are those who advocate keeping to generalities at this stage and going no further in our elaboration of economic strategy. With this I totally disagree. I accept that one must not on any account go to the other extreme and churn out detailed policy proposals which then grow stale and can be picked to bits. But the idea that we can lie low hiding our policies up our sleeve while Labour makes a mess of things belongs to a Trollope novel. Times are much too serious for party gamesmanship of this unsophisticated kind. It seems to me essential that we harden up and present both our shortterm and medium-term economic policy aims as quickly as possible.50

Among the implications of Howell’s advice was the idea that the Conservatives must come to a clear decision in the choice between incomes policies and monetarism, and that this debate was too important politically to be left unsettled. In a sense Howell was successful with his last point because a longer-term economic strategy was articulated more clearly as time went on, but a balance was always maintained to some extent on the smaller question. The political and party dynamics meant that the incomes policy or monetarism questions were not settled simply on one side or the other, though changes were taking place within those overall constraints. An example is provided by a paper on inflation presented to the Shadow Cabinet

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by Prior in 1975 which sought to make the case for the role of incomes policy ­alongside monetarism. As Green describes, ‘it may have been that Prior thought this was the best way of “selling” his preferred policy option to his colleagues, but if so this only confirms the point that, early in Thatcher’s leadership, the economic agenda was being defined in increasingly monetarist terms’.51 At the same time as conducting their own internal debates, the Conservatives had to fulfil their role as the official opposition. Perhaps the most difficult balance for any opposition to strike is that between criticising and supporting the government, especially at difficult moments. In a July 1975 speech, Howe, the Shadow Chancellor, outlined how the Conservatives would look to the national interest, as Labour had failed to do in recent years.52 However, a number of issues highlighted the practical problems with such an approach. Fundamentally, by expressing concern about rising inflation and placing its tackling at the heart of their economic strategy, the Conservatives left themselves the challenge of how to respond to government attempts to confront the same problem, and how this in turn would be viewed by the public. If Labour were understood to have been successful in their attempts to tackle inflation then this political conundrum would only become more acute. These kinds of issues were key drivers in the development of policy. Looking back, senior Conservatives insist that little serious consideration was given to the possibility that the government would be successful in reducing inflation.53 Nonetheless, at the time others in the party had to take this possibility into account. To do otherwise was to at least run the risk that the party’s credibility could be undermined at some point in the future. Such a responsibility was often taken up by Adam Ridley at CRD. In June 1975 he told Thatcher ‘it would be ridiculous to claim with any sense of certainty that there will be no de-escalation of wages later this year or next. It could still happen, either because of a revised Social Contract, the unemployment effect or both.’54 However, at this stage there was ‘no sign of this new dawn, nor even any indirect evidence on which to predict its imminence’.55 The Labour government clearly believed that its subsequent inflation White Paper would have some success, and it would have to as large pay settlements continued in the first half of 1975 despite high unemployment. The Conservative response to this effort was to demonstrate ‘regret’ for and to ‘deplore’ particular elements of the government’s approach. However, the parliamentary amendment laid down by Thatcher also showed some support for the government’s ‘belated commitment to reduce the disastrous rate of inflation’.56 On the substance of the White Paper and the key sticking point for Conservative policymakers, incomes policy, it was conceded that this must be an important element of the government’s approach. Thatcher was happy to attack the £6 limit for pay increases suggested by Chancellor Denis Healey, contending that is was unlikely to succeed, and questioned the ‘temporary success’ which both voluntary and statutory incomes policies had produced in the past, whilst also recognising that they had a necessary purpose in holding down pay expectations and the level of unemployment; although this

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Inflation39 was only likely to be the case if they were employed alongside a number of other measures, including monetary control.57 However, under pressure to articulate a clear and comprehensible position on the floor of the House, Thatcher was forced to take a series of unhelpful interventions, with, for example, Liberal leader Jeremy Thorpe rising to enquire: ‘As the right hon. Lady said that, in her view, this was only half a package which she did not think would succeed, are we to take it that the Opposition will be voting for or against, or abstaining?’58 Naturally this did not elicit a direct response. The Conservative inclination was to ‘reserve judgment on the package’, before asking ‘the country in a year or two what it thinks of it when the country knows how it works in detail’. The simplest choice, however evasive, was therefore to abstain; as Thatcher explained, ‘This policy is not a wholehearted attack on inflation. When it is, we shall support it.’59 She later confided to the Conservative MP Jock Bruce Gardyne that ‘Maybe we did not get a very good Press, but at least we kept the Party together in spite of everything.’60 Charles Moore observes that ‘She could not get a purchase on events.’61 At this early stage it was not politically feasible to attempt a more detailed analysis, let alone rule out either incomes policy or monetarism altogether. In July 1975, at the time of the inflation White Paper and a return to incomes policy by Labour, which had originally envisaged a system of free collective bargaining, Ralph Harris wrote to Howe that ‘I can see that Mr Wilson’s U-turn places you and your Shadow Cabinet friends in a quandary. The correct course is clearly, for you to wash your collective hands whether of 10 per cent or £6 all round.’ If they had to ‘compromise’, Harris suggested another fall-back position outlined by the economist and future Nobel laureate James Meade, or ‘If all of this is too complicated why not confine your response to the Government’s incomes policy by making an amendment that the 10 per cent etc, should only be confined to public employees’.62 The official Conservative response was to do neither of these things. Halcrow had argued that ‘The appearance of continuity symbolised by the old faces still on the Conservative front bench in the Commons was gradually undermined. Between 1975 and 1976, Mrs Thatcher drew her advice and moral support largely from outside the official Conservative organisation.’63 This is often taken to be a key point but for the time being there was little evidence of this, at least in terms of official policy. Public opinion was always a central concern. Party officials kept abreast of popular concerns on important issues via regular Opinion Research Corporation reports. In August 1975 James Douglas of CRD reported to leading Conservatives that ‘the vast majority of the electorate (about 70%) believe the government should have legal control over the size of pay increases; their doubt is whether the actual policies will be either effective or fair’.64 However, the right approach in the light of this was still not clear. Much would, by necessity, come to rest on Labour’s record as it unfolded. As Douglas outlined:

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The low level of expectations about the policy shown by this research works both ways. The government cannot hope to acquire popularity by introducing the policy but conversely they are less likely to lose it if the policy does not work very well and if by any chance the policy should work well and the effects exceed the expectations they could score.65

The judgements involved were just as difficult and potentially contradictory for the Conservatives. It is easy to understand why a relatively non-committal line was attempted. Others in the party had also come to very different conclusions from Howell about the impact of presenting a balanced approach to tackling inflation and seeking to preserve unity. A good example is provided by an exchange between Sir Ian Gilmour and Joseph in May 1976. After reading the draft of a monetarist speech which Joseph was set to make, Gilmour wrote to his colleague at some length to outline his concerns. They centred on three main points: the immediate political danger of giving the speech, the likely internal effect on the party and the resulting consequences for Conservative policy. As Gilmour described: It seems to me that it would be highly inopportune for you to make your speech now because: 1. It would leave an impression, however unjustified, both of sour grapes and of dogma. 2. It would probably drive people in our party who hold very different views from you to make speeches in favour of incomes policies. 3. Express or implied criticisms of the last Conservative Government do not help to unify the party.

And perhaps most interestingly, from a philosophical point of view: 4. It all seems a bit simple to me. Of course you are much better read in the monetarist economists than I am. But would, for instance, Friedman, or Laidler, or Johnson fully agree with what you are saying here? Also I thought that many monetarists accept that there is a problem of expectations which an incomes policy can help to reduce.66

It was a difficult balance for Gilmour and others that shared his concerns to strike. They had to accept that monetarism would have some role in controlling inflation, whilst also highlighting its potential shortcomings and defending the alternatives robustly enough, without being seen to be too difficult or obstructive. The result was such attempts to appear moderate and reasonable. As Gilmour told Joseph, the position of the then Labour government with regards to inflation was something around which they could all frame their own attempt at a policy; ‘I think we should continue to say that an incomes policy is part of the necessary economic strategy, but only one part of it, and that at present the other parts are missing.’67 Nonetheless, not all leading Conservatives were yet necessarily in the loop. Reginald Maudling, the former Chancellor of the Exchequer and Home Secretary

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Inflation41 in the Macmillan and Heath governments, retained in the Shadow Cabinet by Thatcher as Foreign Affairs spokesman until November 1976, presented a paper to his colleagues in May of that year which attempted to set out the case for an incomes policy once again. He focussed on the need to effectively respond to trade union pressure, against which monetary measures were likely to be ineffective. As Maudling made clear, ‘I have remained very sceptical of the effects of monetary policy on inflation … I do not see how reducing the money supply can help.’68 Unfortunately, enough of his colleagues had now accepted this principle. Adam Ridley noted to Thatcher that ‘I spent some time on Friday trying to persuade him to accept a substantial number of drafting changes, in particular putting to him the point that monetary policy and the level of demand did have some influence on the rate of inflation. I am afraid I did not succeed in inducing him to change his text in the time available.’69 Nonetheless, the minutes of a subsequent Economic Reconstruction Group meeting in June 1976 show how the concept of wage restraint and government attempts to engender it remained a consistent problem. Guided again by political caution the group concluded that ‘This was not an area in which we should be seeking sharply to differentiate ourselves from the Government’. In simple terms it was still ‘a crucial part of economic policy’ but it was only ‘over the “price” of wage restraint’ that the Conservatives should be seeking to stand out.70 This approach was the one which largely found its way into The Right Approach. However, compared with 1974 the importance of monetary policy and retrenchment in government spending was clearer. As suggested, they were now at least presented first amongst the elements that would be important in ‘mastering inflation’. A disciplined monetary policy was seen as vital to future economic stability, but this could not be brought about without complementary fiscal restraint. As such, the document argued for the first time for the introduction of official targets for monetary expansion. In addition, the sense that a new, less reactionary and longer-term approach was needed was also hinted at in passages which sought to diagnose why efforts by recent governments had not been successful: Inflation was stimulated by rising taxes and excess demand. And so the economy ran time after time into the traditional ‘stops’. The political pressures during each inevitable period of rising unemployment then led to a repetition of the same process.71

The idea that loose monetary policy was a direct cause of inflation was also clearly suggested for the first time at such an official level. But there were still limits to these changes. The Conservative position was not turned on its head. Much the same policy weapons that had been emphasised in 1974 remained but with perhaps a slightly fuller articulation of their potential effectiveness. Furthermore, The Right Approach did not completely rule out the possibility of a future Conservative government introducing a statutory incomes policy; though the document went out of its way to dissect the political and economic flaws of such an approach. A balanced

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but equivocal line was attempted with the argument that ‘Experience does not suggest that this is the best way of finding a long-term solution to the problem. That same experience demonstrates the unwisdom of flatly and permanently rejecting the idea.’72 The internal feedback on the document collated by Patten at CRD shows that different figures came to very different conclusions about the same inflation section when it was drafted in July 1976. When outlining his views, Prior was able to write that ‘I believe this passage relies too heavily on money supply and is not in conformity with Geoffrey Howe’s Bow Group Speech. There is a much more important role for incomes policy than is stated here.’73 Gilmour agreed, arguing that ‘the section on incomes policy is too one-sided. In his Bow Group Speech, Geoffrey Howe set out a more balanced approach which I think most of us are prepared to support.’74 Nonetheless, at the same time Joseph was making it clear that, in his view, far from being too tough the document actually needed to be made tougher still. He told Patten that ‘While I commend the humility, I think we go too far in disclaiming the answers’, and in relation to pay claims he questioned ‘what is the sense of the word “restraint”? Surely we believe that the main restraint is by government in its own spending – and that without that nothing will be achieved.’ Joseph also questioned the tone of the document, asking, ‘May I request that we drop “the fight against inflation”? It seems empty and a little tarnished as a phrase. Why not say “the abatement of inflation”, or “the end of inflation”.’75 The divergence of such views helps to explain the balanced approach outlined in The Right Approach. The on-going debate inside the party came to be directly reflected in the text. However, by the end of 1976 events had unfolded that moved the debate about inflation on at a national level. In the wake of the IMF crisis, Adam Ridley continued to recognise that the Conservatives needed to tread carefully; as he described in a paper for the ERG, ‘To conclude that one is against a statutory or highly institutional policy is not to imply that the objectives which it is designed to meet are irrelevant and can be left to solve themselves’.76 Ridley’s advice was that ‘In an uncertain world the best strategy may well be to choose that policy which minimises the “downside” risk.’ Demonstrating real concern that events might overtake and expose a Conservative policy which had become too inflexible, he went on: ‘Always assuming that one can be devised which is flexible enough, it is likely to be valuable if a strong resurgence of wage costs is otherwise inevitable and harmless if it is not. On the other hand a freefor-all could permit a very damaging and irreversible wage explosion, which would, on the criterion proposed, make it the less good strategy to follow.’77 However, if the Conservatives successfully circumnavigated this potential pitfall then Ridley also expressed some optimism that the line they settled on would be sustainable. He acknowledged that ‘there are still serious differences of view about the relevance of a statutory, institutionalised “incomes policy” of the old kind’, but this was somewhat offset by the fact that ‘there is a clear new synthesis of doctrines about the causes

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Inflation43 and remedies for inflation round which we can unite. To do the latter may require little more than semantic changes.’78 In many ways this was a perfect description of the balanced approach that the party was in the process of developing. A few months earlier Ridley had also discussed the inherent difficulties of talking about the ‘causes’ of inflation, which may have been undermining the reaching of a consensus. He argued that it was essentially meaningless to look for the simple primary cause of inflation, and that it was actually best understood as a fever or a ‘phenomenon in whose explanation coincidence and correlation are often not distinguished from true causal links’. It must be better, Ridley thought, to consider all potential factors, and to see them as ‘determinants’ rather than ‘causes’.79 He also cautioned that ‘we should probably not “knock” the Social Contract too violently. It contains the seeds of its own decay.’80 Such an attempt by Labour to moderate pay claims by promising changes in other areas of government policy was pure anathema to most Conservatives, but Ridley’s CRD colleague Robbie Gilbert agreed, suggesting that ‘premature gloating by the opposition over difficulties into which the present 5% limit may run, and the strident presentation now of policies which could appear to be “anti-union” should be avoided. Such action could provide the only motive strong enough to close the ranks of the Labour movement around the  Social Contract’.81 Again, the political reality of the period mediated against speaking out more strongly as many Conservatives probably would have wished. The practical difficulties with this approach were also readily apparent. The MP Robert Rhodes James, future biographer of Churchill and Eden amongst others, told Howe of his concern that ‘we have gone back to fundamentals of our philosophy and approach but have left glaring gaps on specifics’ and his ‘increasing impatience about the generalisations that are becoming depressingly frequent by Shadow Cabinet spokesman in response to direct and clear questions’.82 By October 1977, The Right Approach to the Economy had been produced by Howe, Joseph, Prior and Howell.83 Although the document did not represent official Conservative policy, it built on the line established in its predecessor. In fact, because it was written with a little more freedom and in slightly more philosophical terms, the authors were able to go a little further. The central argument was that tackling inflation rested on the twin pillars of monetary and fiscal restraint. The introduction of firm targets in order to bring about a reduction in the growth of the money supply was seen as crucial, along with a better understanding of this approach amongst policymakers. Greater pressure and accountability would also be focussed on them such that they would be less likely to superficially boost the economy for short-term political reasons.84 However, this would not be enough on its own. Emphasis was also placed on the need to reduce government expenditure, which had increased too rapidly in Labour’s first few years and added to the inflationary spiral. The two elements would go hand in hand. Both had already been accepted in some form by the Labour government or, from the Conservative perspective, had been forced upon them by economic reality and the IMF, though

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doubt was expressed about the adequacy of those changes.85 The authors were more open in their desire to see a return to free collective bargaining, and the ­‘unemployment effect’ was looked to more plainly as the means by which wage claims would be moderated.86 Monetarist ideas had clearly become influential therefore. However, there was still a gap between the document and the rhetoric of many monetary exponents.87 The fact that The Right Approach to the Economy was not granted the status of official Conservative policy was also significant. Prior’s name on the document indicates that, despite its more robust approach, it was still something with which all sides of the economic debate could be happy. The party’s broader approach continued through to the end of the period. The 1979 general election manifesto re-emphasised the Conservative commitment to tackling inflation, which it was argued had ‘come near to destroying our political and social stability’.88 The solution was again seen to be monetary restraint, with official targets for the growth of the money supply, along with a reduction in the scale of government borrowing.89 Labour’s attempt at an incomes policy had ‘done nothing to prevent inflation’, it was argued.90 This political attack was perhaps only natural so soon after the government’s failure to enforce its final 5 per cent limit on pay rises had precipitated the damaging strikes of the Winter of Discontent, but inflation had fallen back in each of the last three years.91 Monetarism was not the whole answer but it was now at the front line in the tackling of inflation. Nonetheless, this might still be seen as part of a wider trend. The Labour government and economic policymakers in Britain had been learning similar monetarist lessons and were already responsible for their practical implementation. Furthermore, as we have seen, the short-term political context of the period and divisions over the substance of policy often meant that the party took a less radical line than might otherwise have been the case.92 It was also the case that, as some internal party documents indicate, the Conservatives had not yet fully broken out of established ways of thinking about inflation and its causes. The relationship between the Conservatives’ official anti-inflation policies and monetarist theory was not straightforward. The ‘pay norm’ problem The complexity of this relationship is further demonstrated by some of the inherent problems with the relatively balanced line that the party sought to pursue. A key consideration of those internal debates about the necessity and desirability of incomes policies was the extent to which the Conservatives should recognise or accept at all that they would need to have some kind of target for wage increases. As was often recognised, to consider this may have been to also implicitly consider the rest of the worms that might escape from the ideological can. This problem was not resolved by the end of the period. The policy solution that monetarism could be seen to have offered did not override practical issues.

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Inflation45 The compromise encapsulated in The Right Approach to the Economy, that it would probably be necessary to come to ‘some conclusions’ about the likely level of pay rises, had been the subject of discussion inside the party for a long period of time.93 There had been voices urging a move in the opposite direction. In June 1975 Thatcher had received a memo from David Howell which accepted that the party should be cautious around the issue of pay policies, as the public and media were conditioned to a ‘do something’ attitude. They should try to develop positive proposals which could connect, but Howell warned against slipping back to discussions of pay ‘norms’, arguing that the Conservatives should also be clear that formal restraint would damage the economy and that the government must square up to its role as an employer.94 The concept of ‘norms’ would not be employed in the way it had been previously, but this did not solve the wider conundrum. The presentational difficulties of such an approach had also been anticipated at this early stage. As CRD Director Chris Patten outlined, ‘the government will inevitably have to take a view on how much can be afforded for pay increases’.95 The minutes of the ERG record that in June 1976 ‘It was agreed that wagerestraint was a crucial part of economic policy’, and that ‘An orderly wage-round was necessary’.96 In December the group recognised that it was likely to still need some kind of ‘norm’ to go along with limits on monetary growth, as earnings could only rise by so much. But it was also recognised that it might not be necessary to apply it throughout the whole economy, and the semantic side step of talking about an ‘earnings policy’ rather than an ‘incomes policy’ was also suggested.97 A further example of the endurance of this kind of thinking is provided by a separate exchange between Joseph and Prior in 1976. In holding up his side of the bargain and defending the balanced approach, Prior had reasoned that ‘I do not believe we can return to a “free for all” situation in one step because other policies will just not be working in the time scale required. What is needed is gradualism whilst a change is made.’98 Prior and Joseph, and indeed their colleagues with a wide range of views on many issues, did not disagree about the need for change, but the idea of employing ‘gradualism’ was the political equivalent of showing a red rag to a bull. The bull was polite and professional but still prepared to be sardonically ruthless in dismissing such ideas. As Joseph replied, ‘With respect, I do not think that devices such as “gradualism” will help. Difficult though freezes and norms are – and bound to lead to even greater difficulties later – I believe that a flexible pay control system is a contradiction in terms.’ He went on, ‘I do not pretend it will be easy but I am convinced that only a straightforward expansion, rather than “gradualism” will do’, but at the conclusion of his argument it was the parting shot and attempt to deride Prior’s words that was most noticeable: ‘if you have designed some miraculous form of “gradualism” then of course it will merit study’.99 In February 1978, after the release of The Right Approach to the Economy, an important meeting on Pay Bargaining was held, with leading economically minded Conservatives present. Interestingly, different sets of minutes survive within the

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Thatcher Papers and the Joseph Papers. Joseph himself wrote to CRD to ask for them to be redrafted after he and others were unhappy with the way a discussion about the concept of a ‘going rate’ for wage increases had been recorded. The ­likelihood, perhaps even inevitability, that the policies of a future Conservative government would implicitly result in some sort of ‘norm’ or ‘range’ being signalled, even if unintentionally, and that many of the problems associated with this would not automatically be eliminated, was spelled out too explicitly. Adam Ridley’s response made clear that ‘we do attempt to record as far as possible what was said pro and con in a neutral manner, without attempting to sum up precisely where the final objective truth lies’. And, perhaps with a hint of irony, he added, ‘If we do not attempt such a course, there will inevitably be at least one colleague present at any meeting who will not feel satisfied!’100 The approach was broad and balanced, containing as it did both monetarism and concern about wage claims. There was even the concession that the Conservatives should not just be able to openly declare themselves comfortable about greater differences in earnings emerging as a result of their beliefs in this area, but consciously seek to promote such an outcome. However, for Joseph and others, thinking like that encapsulated in those minutes still leant too far in favour of one side of the divide, demonstrating the extent to which they did not have it all their own way and the relative moderation which still defined party policy as a whole. Concerted Action It was also the case that the Conservatives, perhaps recognising that there could never be a truly straightforward transition back to free collective bargaining, however desirable one may have been, considered other policies that could be seen to fit into this picture of inevitably having to have some kind of ‘pay norm’. As will be discussed in greater detail in the context of industrial relations, the party also often advocated some kind of ‘Concerted Action’. Influenced by the West German concept of an official forum for interaction between the government and economic interest groups, giving them an opportunity to discuss co-ordination towards certain goals, leading Conservatives picked up on the idea as a possible option for Britain. Via the ERG the concept made its way into The Right Approach to the Economy and the 1979 general election manifesto, and became a relatively important part of the party’s overall economic strategy. The policy also provides another example of the important international context in which Conservative policy was developing. The tackling of inflation itself was not outlined as one of the key objectives of such efforts in this direction, but when the ERG discussed the principles of Concerted Action in 1977 it heard from the German economist Konrad Zweig that it had helped to bring about support for restrictive monetary policy despite the resulting rise in unemployment.101 As a result, inflation had been reduced and the

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Inflation47 economy set on a better path towards sustainable growth, with lower unemployment in the long run. It is easy to understand why such a policy might have become attractive to leading Conservatives. But however attractive a prospect this may have appeared in principle, it was also recognised by others that Concerted Action as an immediate policy had inherent flaws and potential contradictions, just like other aspects of Conservative thinking. At the meeting of leading Conservatives in March 1978 to discuss Pay Determination doubts were raised, not just about the suitability of the National Economic Development Council as a starting point for the forum, as was party policy, but also about the likely danger of allowing economic interest groups to have an opinion, or the opportunity to believe that they should have one, about the government’s own monetary policy, the successful implementation of which was to be crucial to its overall aims. Fundamentally, Concerted Action could be seen as a relative continuation of the corporatist trends which were evident at the beginning of the period. The removal of economic influence from interest groups such as trade unions inherent in monetarist ideas could be seen to be undermined by the prevalence of such a policy at the heart of the Conservatives’ economic strategy. Williamson has further demonstrated how, despite the fact that a new consensus, which included Labour, may have emerged recognising the importance of monetary policy and cash limits, the question of whether these alone would ever be sufficient to tackle inflation had not truly been settled by the Conservatives. The interest in Concerted Action itself could be seen as a means ‘to avoid choosing’ between prices and incomes policies and free collective bargaining.102 This may not have been entirely fair to Howe and others who really believed in the role of such a forum, but it was clearly the case that the party accepted that any government would have some role still to play. A pertinent question therefore was how any ‘guidance’ that the economic forum might give about pay levels would actually differ from a ‘norm’. But this was never coherently answered.103 Although monetarism was now at the centre of Conservative thinking there were always other ideas in play. These might have been spending cuts or Concerted Action, or, as Williamson has also argued, the first signs of recognition in 1978 amongst leading figures like Howe and Lawson of how important mechanisms of exchange rate control like the European Monetary System may have been.104 The missing detail It was also the case of course, that whilst the Conservatives were working through all of these ideas, it was the Labour government that was actually overseeing the  practical move towards monetarism on an everyday basis. In many ways, although they may have given stronger ideological support for monetarist policies, the Conservatives were actually somewhat behind in considering how they might

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a­ ctually be made to work. According to some of those with stronger monetarist inclinations, future government expectations about pay rises should only have existed at all in the form of the setting of targets for monetary growth, with the effect on wage demands being governed indirectly by resulting pressures. At what levels the targets should be set and when was much less clear-cut. In December 1976, Adam Ridley reminded the ERG that even though they had agreed on the principle of monetary targets, they also needed to explore the details: how and when they should be introduced, how flexible they should be, the data that should be used and the likely effect they would have on employment.105 Such factors had been considered by the group, and its monetary policy subgroup, at earlier meetings but they had seemingly not moved on from discussing general principles and the initial steps which might be important with the introduction of any such policy.106 Politically, the actions of the Labour government and the Bank of England in outlining their own targets for monetary expansion may go a long way to explaining the lack of detail in Conservative plans. It can be no coincidence that amongst the economic papers collected by Thatcher was a copy of a February 1978 speech by the Bank Governor in support of monetary targets, but there was no real need for the  opposition to match or second guess the official attempts to tackle inflation via this method.107 It would likely have been sufficient, both theoretically and politically, to support the general principle whilst also waiting cautiously to see how the overall picture had developed by the time of the next general election, though Howe and Lawson were privately sceptical about the commitment of the Treasury Permanent Secretary Douglas Wass to the monetarist cause.108 In addition, the Conservatives had no access to official data or advice, and could not submit a detailed proposal on specific targets without them even had they wished to do so. When leading Conservatives had held their meeting on pay which produced different sets of minutes, the importance of wider consultation on the concept of monetarism was also recognised to be important. Otherwise, ‘There was a danger that the proposals could become seen as panaceas and provoke disruptive and unproductive institutional change’. Furthermore, ‘It would be imperative to avoid such attitudes and changes’.109 In simple terms, this lack of fine detail about monetary policy can also be seen to demonstrate the limits that such ideas had on policy. In abstract terms, monetarism was highly significant but no detailed plan for its implementation was articulated on an official level. Nigel Lawson has himself recognised that the actual mechanisms of monetary control had not been considered in any great detail prior to 1979.110 Fundamentally, inflation had long been a concern for Conservatives across the party, but by the mid-1970s it was placed unquestionably at the centre of their economic analysis. It was the key issue from which all other economic recovery would flow. The most significant influences upon the development of Conservative anti-inflation policy were the political reality of the time, the inherent caution of

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Inflation49 policymaking and the divisions over the substance of policy, most specifically over the balance between incomes policy and monetarism. Nonetheless, there is also a sense in which the Labour government, British policymakers, international investors and the Conservatives were all learning similar monetarist lessons during the 1970s. The Conservatives were one small part of this wider trend. Although they may have provided stronger rhetorical support for monetarism, just like everyone else they were searching for policy alternatives and had not yet broken out of established ways of thinking altogether. Official policy remained relatively consistent and balanced over the course of the 1974–79 period. Monetarist ideas became increasingly important and did move to become the central focus of party thinking, at the expense of incomes policies. However, ideas around the government’s role in pay claims were not dispensed with entirely. The monetarist takeover was not comprehensive. Many of the same policy solutions remained in place whilst the tone and style with which they were articulated changed. By 1979, the Conservatives still had more questions than answers on inflation.111 Notes 1 Putting Britain First, October 1974 General Election Manifesto. 2 The Right Approach to the Economy, 1977 p. 4. 3 The Right Approach, 1976 p. 24. 4 J. Tomlinson, ‘Thatcher, Monetarism and the Politics of Inflation’, in B. Jackson and R. Saunders (eds), Making Thatcher’s Britain (Cambridge, 2012) p. 64. 5 Jackson and Saunders, Making p. 271. 6 M. Schulze and N. Woodward, ‘The Emergence of Rapid Inflation’ in R. Coopey and N. Woodward (eds), Britain in the 1970s: The Troubled Economy (London, 1996) p. 106. 7 R. Coopey and N. Woodward, ‘The British Economy in the 1970s: An Overview’ in Coopey and Woodward, Troubled pp. 1–2. 8 J. Tomlinson, The Politics of Decline: Understanding Post-War Britain (Harlow, 2001) p. 91. 9 E.H.H. Green, Thatcher (London, 2004) p. 60. See also, C. Moore, Margaret Thatcher, The Authorised Biography, Volume One: Not For Turning (London, 2013) pp. 341–5; E. Caines, Heath and Thatcher in Opposition (Oxford, 2017) ch. 9. The future Lord Griffiths was then a university lecturer before going on to become Head of Thatcher’s policy unit in Downing Street from 1985 and Chairman of the CPS from 1991. The future Sir Alan Budd would later become a leading light at the Treasury, the Bank of England and the Office for Budget Responsibility. Patrick Minford would rise to much greater Thatcherite prominence later on but he was then a former Treasury adviser and Economics Professor. Alan Walters was another Professor who would go on to be the Chief Economic Adviser to Thatcher during the 1980s. Tim Congdon would become a leading figure in the City of London and later a UKIP candidate. During the 1970s Gordon Pepper was responsible for the influential Monetary Bulletins published by W. Greenwall & Co. Samuel Brittan was and remains an influential commentator with the Financial Times.

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10 Sherman Papers, AC 580, AR CPS/A&O/3/3, Box 7, ‘Our Second Birthday, Two Candles to Shed Light’. 11 Caines, Heath p. 172. 12 See for example E.H.H. Green, ‘The Treasury Resignations of 1958: A Reconsideration’, Twentieth Century British History Vol. 11, No. 4, 2000. 13 Ibid. p. 430; P. Hall, ‘Policy Paradigms, Social Learning, and the State: The Case of Economic Policy Making in Britain’, Comparative Politics, Vol. 25, No. 3, April 1993 p. 286. See also Green, Thatcher; Tomlinson, ‘Thatcher’; D. Smith, The Rise and Fall of Monetarism (Harmondsworth, 1991). 14 K. Middlemas, Power, Competition and the State, Vol. 3: The End of the Postwar Era (Basingstoke, 1991) p. 73; M. Schulze and N. Woodward, ‘The Emergence of Rapid Inflation’ in Coopey and Woodward, Troubled p. 132; A. Gamble, ‘Economic Policy’ in Z. Layton-Henry (ed.), Conservative Party Politics (London, 1980) p. 27. 15 D. Porter, ‘Government and the Economy’ in Coopey and Woodward, Troubled p. 34. 16 Middlemas, Power; P. Clarke, Hope and Glory: Britain, 1900–1990 (London, 1996) p.  333; Coopey and Woodward, ‘Economy’ pp.  4–6; Smith, Monetarism pp.  35–6; M. Oliver, ‘From Anodyne Keynesianism to Delphic Monetarism: Economic PolicyMaking in Britain, 1960–79’, Twentieth Century British History, Vol. 9, No. 1, 1998 p. 146. 17 Middlemas, Power; Coopey and Woodward, ‘Economy’ pp. 6–8. 18 The Economist, ‘The Opec Decade’, 29 December 1979 p. 39. 19 Middlemas, Power p. 37; Oliver, ‘Anodyne’ p. 150. 20 A. Davies, The City of London and Social Democracy: The Political Economy of Finance in Britain, 1959–1979 (Oxford, 2017) p. 212. 21 Clarke, Hope p. 320; Smith, Monetarism pp. 35–6. 22 Davies, City p. 188. 23 Gamble, ‘Economic’ p. 40; Clarke, Hope p. 337. 24 Important accounts of the crisis include K. Hickson, The IMF Crisis of 1976 and British Politics (London, 2005); K. Burk, ‘The Americans, The Germans and The British: The 1976 IMF Crisis’, Twentieth Century British History, Vol. 5, No. 3, 1994; M.D. Harmon, ‘The 1976 UK–IMF Crisis: The Markets, The Americans, and the IMF’, Contemporary British History, Vol. 11, No. 3, 1997. 25 See for example Burk, ‘Americans’ pp. 351–2; Davies, City p. 205. 26 N. Thompson, ‘Economic Ideas and the Development of Economic Opinion’ in Coopey and Woodward, Troubled pp. 77–8. 27 Thompson, ‘Ideas’ p.  77; Davies, City p.  210; P. Sinclair, C. Ryan and M. Walker, ‘Continuity, Change and Consumption: British Economic Trends 1945–95’, Contemporary British History, Vol. 10, No. 4, 1996 pp. 36–7. 28 Thompson, ‘Ideas’ p. 77; Davies, City p. 210; Sinclair, Ryan and Walker, ‘Continuity’ pp. 36–7. 29 W. Keegan, Mrs Thatcher’s Economic Experiment (Harmondsworth, 1984) p.  88; Davies, City p. 220. 30 A. Gamble, The Free Economy and the Strong State: The Politics of Thatcherism (Basingstoke, 1988) p. 73; Gamble, ‘Economic’ p. 41. 31 S. Ball and A. Seldon (eds), The Heath Government 1970–74 (London, 1996).

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Inflation51 32 Porter, ‘Government’ pp. 36–43; Gamble, ‘Economic’ p. 39; Gamble, Free pp. 77–8. 33 A. Beckett, When the Lights Went Out: Britain in the Seventies (London, 2009) p. 281. See for example A. Walters, ‘Inflation and More Inflation and Then … Devaluation’, Sebag Review, Guilt Edged News Letter, No. 4, 23 June 1972. A copy survives in the Thatcher Papers, TP: THCR 2/6/1/93. 34 M. Oliver and H. Pemberton, ‘Learning and Change in 20th-Century British Economic Policy’, Governance, Vol. 17, No. 3, July 2004 p. 15. 35 See for example Ball and Seldon, Heath. 36 D. Sandbrook, State of Emergency: The Way We Were: Britain, 1970–1974 (London, 2011) p. 13; Beckett, Lights p. 2. 37 A. Caincross, ‘The Heath Government and the British Economy’ in Ball and Seldon, Heath pp. 107–8. 38 Firm Action For a Fairer Britain, February 1974 General Election Manifesto. 39 Ibid. 40 D. Butler and G. Butler, British Political Facts, 1900–1994 (Basingstoke, 1994) p. 218. 41 E. Heath, The Course of My Life (London, 1998) pp. 250–1. 42 Thatcher Foundation, ‘Speech at Upminster (“This is not the Time to be MealyMouthed: Intervention is Destroying us”)’, 22 June 1974; ‘Speech at Leith (“Inflation is Decapitalising British Industry”)’, 8 August 1974; ‘Speech at Preston (“Inflation is Caused by Governments”)’, 5 September 1974. 43 M. Halcrow, Keith Joseph: A Single Mind (London, 1989) p. 71. 44 R. Shepherd, Enoch Powell (London, 1996) p. 460. On Powell’s early proto-Thatcherite influence, see for example C. Schofield, ‘“A Nation or No Nation?” Enoch Powell and Thatcherism’ in Jackson and Saunders, Making p. 95. 45 Putting Britain First. 46 Ibid. 47 Heath, Life p. 525. 48 Putting Britain First. 49 Conservative Party Archive, Bodleian Library, CRD 403 Director’s File 1974–5, ‘The Conservative Party and Inflation’. 50 TP, THCR 2/6/1/92, Howell memo, 4 June 1975. 51 Green, Thatcher p. 62. 52 TP, THCR 2/6/1/92, Howe speech, 9 July 1975. 53 Interview with Lord Howe, 21 March 2011. Interview with Lord Prior, 25 March 2011. 54 TP, THCR 2/6/1/92, Ridley to Thatcher, 16 June 1975. The Social Contract was the agreement between the Labour government and the TUC which promised certain policies in exchange for co-operation, particularly in terms of wage restraint. 55 Ibid. 56 Hansard, HC Debate, 21 July 1975, vol.896 col.46. 57 Ibid. cc.76–9. 58 Ibid. c.88. 59 Ibid. c.89. 60 TP, THCR 2/6/1/22, Thatcher to Bruce-Gardyne, 4 August 1975. 61 Moore, Thatcher p. 305.

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62 CPA, Joseph Papers, KJ 10/11, Harris to Howe, 9 July 1975. 63 Halcrow, Joseph p. 101. 64 JP, KJ 10/10. 65 Ibid. 66 TP, THCR 2/1/1/23, Gilmour to Joseph, 6 May 1975. 67 Ibid. 68 TP, THCR 2/6/1/158, ‘Incomes Policy’, 21 May 1976. 69 TP, THCR 2/6/1/158, Ridley to Thatcher, 24 May 1976. 70 TP, THCR 2/6/1/37, Economic Reconstruction Group, 24 June 1976. 71 The Right Approach p. 21. 72 Ibid. p. 37. 73 TP, THCR 2/6/1/215, Prior to Patten, 23 July 1976. The Bow Group speech was an address by Howe on 12 May 1976 which laid heavy emphasis on monetary policy but again recognised that it was unwise to rule out anything like an incomes policy altogether. A copy can be found in the Thatcher Papers at THCR 2/1/3/9. 74 TP, THCR 2/6/1/215, Gilmour to Patten, 22 July 1976. 75 TP, THCR 2/6/1/215, Joseph to Patten, 22 July 1976. 76 TP, THCR 2/6/1/37 ERG, ‘Countering Inflation’, 15 December 1976. 77 Ibid. 78 Ibid. 79 TP, THCR 2/6/1/37, ERG ‘On Cause and Inflation’, 18 November 1975. 80 TP, THCR 2/6/1/37, ERG, ‘Countering Inflation’, 15 December 1976. 81 TP, THCR 2/6/1/37, ERG, ‘The Social Contract: A Note on the Year Ahead’. 82 Howe Papers, dep. 136, Howe to Joseph, 7 April 1977. 83 The Right Approach to the Economy. The document was also edited by Angus Maude, the Deputy Chairman of the party and Chairman of the CRD. 84 Ibid. p. 7. 85 Ibid. p. 3. 86 Ibid. p. 9. 87 Keegan, Experiment p. 104. 88 1979 General Election Manifesto. 89 Ibid. 90 Ibid. 91 Jackson and Saunders, Making p. 271. 92 Caines, Heath p. 183. 93 The Right Approach to the Economy p. 12. 94 TP, THCR 2/6/1/92, Howell memo, 4 June 1975. 95 CPA, CRD 403, ‘The Conservative Party and Inflation’. 96 TP, THCR 2/6/1/37, ERG minutes, 24 June 1976. 97 TP, THCR 2/6/1/37, ERG minutes, 16 December 1976. 98 JP, KJ 8/16, Prior to Joseph, 24 February 1976. 99 JP, KJ 8/16, Joseph to Prior, 2 July 1976. 100 JP, KJ 8/16, Ridley to Joseph, 24 February 1978. 101 TP, THCR 2/6/1/37, ‘The Concerted Action in Germany, Principles, Evolution and Place in the Social Market Economy’.

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Inflation53 102 A. Williamson, Conservative Economic Policymaking and the Birth of Thatcherism, 1964–79 (Basingstoke, 2015) p. 113. 103 Ibid. p. 114. 104 Ibid. p. 216. 105 TP, THCR 2/6/1/36, ERG, ‘Countering Inflation’; CRD 15/12/76. 106 See for example TP, THCR 2/6/1/37 and the minutes of an ERG meeting of 24 June 1976 which discussed the likely need for better financial indicators than were currently available and the possibility of outside specialists being brought into the Treasury and the Bank of England. 107 TP, THCR 2/6/1/95; see also Caines, Heath p. 201. 108 Caines, Heath pp. 202–3. 109 TP, THCR 2/6/1/96, minutes of meeting held on 15 February 1978. 110 N. Lawson, The View from Number 11 (London, 1992) p. 17. 111 Williamson, Conservative pp. 121–2.

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3

The economy

A return to traditional nostrums? Inflation may have been the Conservative Party’s preeminent concern but tackling it could only ever be one part of its wider economic strategy. The various crises of the 1970s were also understood to require action on a broader scale. The Conservatives focussed in particular on three areas: public spending, taxation and the role of private enterprise. Each was considered an important part of restoring economic credibility and, in time, economic prosperity to Britain. In simple terms, the party would argue that government expenditure needed to be cut, that the burden of taxation needed to be reduced, and that the profitmaking power of the private sector needed to be restored. However, although there were important developments, the Conservatives’ wider economic policies did not change dramatically between 1974 and 1979. The 1970s are often remembered as a period of economic turmoil.1 When compared with the post-war ‘Golden Age’ of steady growth, low inflation, high employment and widening affluence it is easy to understand why. Personal incomes had risen on average by 4.4 per cent in the years from 1950, but in 1976 and 1977 they shrank for the first time in decades.2 Similarly, economic growth, which had averaged 3.3 per cent per year during the 1960s, fell to an average of 2.2 per cent during the 1970s.3 Unemployment rose from 628,000 in 1970 to a peak of 1,608,000 in 1978.4 As discussed in the previous chapter, by the 1970s the favourable circumstances that had underpinned post-war stability and prosperity were beginning to disappear. Both Conservative and Labour governments struggled to manage the economy effectively as long-standing policy solutions appeared unable to meet new challenges. The 1970s were a learning phase in which all parties were searching for new ideas and new policies that might be seen to work. The impression that British governments gave was often one of contingency or just trying to get by from crisis to crisis.5 This uncertainty and real concern about the poor performance and relative decline of the British economy raised serious questions about public spending, taxation and the balance of market forces during this period. Many on the Right were concerned that the Left had started to articulate an alternative economic strategy based upon state intervention.6 Could a viable democratic alternative be

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The economy55 found? This is the context in which the Conservatives were developing their wider economic policies. As with other areas, there were a number of different pressures acting upon them. The philosophical debates raging outside, and often inside the party, were undoubtedly important. If this whole period is understood in terms of the breakdown of the post-war consensus and a move towards greater appreciation of the virtues of small-state free market capitalism, then the changes in Conservative economic policy might appear to be more meaningful and often contingent upon the unique ideological and economic context of the 1970s. The neoliberal agenda of the Thatcher governments during the 1980s, typified by tax cuts, deregulation and privatisation, would appear to reinforce this impression.7 The economic policies that the party pursued in opposition certainly owed something to the ideas of thinktanks and opinion-formers. Quite radical and controversial changes were often considered. Whilst it would not be fair to suggest that the Conservatives had a detailed economic alternative thoroughly worked out and that parts of it were hidden from the electorate, it was the case that some aspects of Conservative thinking, perhaps understandably from a political point of view, were not shared with voters. Such ideas may not have always made it into official speeches and manifestos, but they can now be seen in the internal documents which form part of the Thatcher Papers and the Conservative Party Archive. However, the ideological context of the 1970s did not have a comprehensive influence upon policy. It owed much more to ideas that had defined Conservative thinking over a long period of time and to the shorter-term political context of the period.8 The Conservatives often moved in the wake of changes made by the Labour government. This was perhaps most clear with regards to public spending. The difficult fiscal position of the period was not something which the Conservatives shied away from addressing, and they may well have understood the philosophical case for retrenchment better than the government, but they often took their lead from the official changes that Labour made. The Wilson and Callaghan governments eventually came to many of the same economic conclusions and oversaw significant cuts. It was only natural for Conservative policy to mirror such prevailing trends; although they could sometimes frame common rhetoric in more conservative language. It was also necessary politically to express pessimism about the state of the economy as it reflected negatively on the record of the government, and in the way that certain ideas were expressed there was an element of managing expectations about what a future Conservative administration might then be able to achieve. There would have been little political capital in pretending that the economic outlook was not difficult or devising unrealistic policies, but this was never likely to have been the Conservative position. This recognition of the difficult position in which the country found itself became central to the Conservatives’ approach, underpinning the views they would take of the economy as a whole and the nature of some policies, but it fitted well with the party’s long-standing economic aims and

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56

overall the Conservatives could feel intellectually comfortable with the developing agenda of the time. Debates during this period were about the scale and scope of economic changes, not about most of the underlying principles. By 1979 the Conservatives were willing to invest a little more in the idea that the electorate was ready to acknowledge the need for difficult reductions in government expenditure, despite the fact that they also fully realised that cuts would be unpopular.9 Any fiscal leeway would also come to be directed towards reducing taxation first and foremost. There were some slightly more philosophical justifications for tax cuts by the end of the period and there were further steps towards a switch from direct to indirect taxation, by cutting income tax and increasing value added tax. The related need to restore profit and incentive to businesses was also articulated a little more fully, although the move into opposition rather than any real change of direction perhaps best explains this. The Conservative Party had always been concerned about the economic role of the public sector, however pragmatic it may have become in government. Although some rhetoric may have been ramped up during this period, it was not matched by radical changes in policy. Fundamentally, the ideas outlined at the beginning of the period under Heath were remarkably similar to those that were put forward at the end of the period under Thatcher. There were interesting and important changes within this, but the overall picture did not change as much as might be expected. Public expenditure The difficult economic circumstances that the Conservatives observed and concern about their future prospects in office naturally coalesced with traditional party preferences for the private over the public and scepticism about the size and scope of the state, to engender a strong stance in relation to public spending during this period. Between 1974 and 1979 the Conservatives consistently argued that reductions in government expenditure needed to be made, and that they were necessary for a number of reasons. It was suggested that the Labour government had essentially reached the limits of what the state could spend and the proportion of the economy that it should represent, with a step back from this position being the only realistic option.10 Cuts were also thought necessary to help facilitate an economic recovery, particularly in terms of reducing levels of government debt and shifting resources back towards the private sector. But to what extent did the Conservatives have detailed plans for retrenchment in place by 1979? Were they determined to ‘slash’ public spending at all costs, for example? Under Heath the party had acknowledged that difficult times lay ahead, that a Conservative government would have to be restrained in what it was able to do, and that for the foreseeable future Britain was likely to be poorer as a nation.11 The party was clear that certain ambitions would have to wait until such a time as the economic conditions allowed. Everything was predicated upon the emergence of

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The economy57 brighter times ahead. After the economic travails of the past few years it would have been unrealistic to suggest anything else. It is interesting therefore that within such constraints the party’s October 1974 manifesto promised to increase spending in three key areas. Immediate action on pensions, housing and food production was proposed in order to help protect ‘the basic livelihood of every family in the country’. This spending was felt to be so important that it was openly acknowledged that it would ‘cost money’ and that in order to fund it it would be ‘necessary to make cuts in public spending or increases in taxation’.12 This may have been a part of the broad appeal to the national interest that the party was seeking to make at the time; although the underlying fiscal context dictated that there was never any chance of serious promises on spending, the party often recognised that it would need to have some positive messages for floating voters. Nonetheless, it was also made clear that this would be an exception and that a Conservative government would be instinctively more comfortable reducing taxation and reducing expenditure.13 This general approach was maintained under Thatcher’s leadership as the party continued to make a virtue of its modesty and argue that the British economy had been severely weakened and needed time to recover. As time moved on and the political agenda moved further away from the record of the previous Conservative administration, the party was able to frame its realism in terms of the negative consequences of Labour’s own policies and the inheritance it was likely to receive itself, but the overall party line about the scale of government spending remained largely unchanged. However, although it was often possible to stick to generalities, that the logical consequence of the Conservative call for economies would be questions about what and when the party would cut was also perfectly well understood. As early as April 1975, anticipating pressure to be specific about reductions around the time of the Labour government’s first budget, Chris Patten, the Director of the Conservative Research Department, received advice that ‘The answer here must be – urgently – to prepare a list of “show” cuts which must be plausible and relatively painless – even if in reality they are relatively trivial.’14 No doubt the Conservatives were ideologically comfortable calling for spending reductions, but that the sharp spending cuts and increases in the basic rate of income tax and value added tax outlined by Denis Healey required a coherent response demonstrates the importance of the political dimensions of the period to party policy.15 At the same time, however, there were also calls for a more fundamental longterm approach. In June 1975 David Howell told Thatcher that rather than simply seeking to slash public spending, the Conservatives needed ‘to show that we have in mind an ordered and sustained programme extending far beyond the initial cuts to provide a steady continued pressure on public spending of a kind which has been missing in the past’.16 Another interesting insight into this kind of thinking is provided by a short, seemingly innocuous July 1976 memo from Sir Keith Joseph to Thatcher in which he suggested that the party should aim to reduce the size of government from 63 per cent to 40 per cent of GNP within the next two Parliaments.17

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This measurement was not used very often during leading policy discussions, but such a shift would have represented cuts on a significant scale. In private, some important figures were considering truly radical changes. Nonetheless, it was not just such ideologically robust Conservatives that were concerned with these kinds of issues. Representing the official policymaking machine, Adam Ridley of CRD had previously attempted an initial assessment of the changes which might be needed to economic policy, and discussed the abandonment of some Labour spending proposals, reductions in subsidies to industry, cash limits (which will be considered in more detail below) and the general need for reductions in spending on goods and services; though he also recognised that any success was predicated upon the Conservatives finding new and unconventional ways to make such changes and the development of conditions in which they might become acceptable.18 Ridley estimated that savings of 15 per cent – 10 per cent from cuts to new government programmes and 5 per cent from a reduction in the Public Sector Borrowing Requirement – would bring in £30 billion, with £4.5 billion found in the then present year. These would be lasting cuts, but even larger ones might be necessary in future if the fiscal situation at the time demanded it, he suggested. Needless to say, these numbers were not debated in public. As will be discussed, Ridley also acknowledged the political and social cost that changes on this scale might have, whilst maintaining that they would help to turn around the British economy in the long run.19 Although leading Conservatives were willing to acknowledge that difficult decisions needed to be taken, they also reminded the electorate that Labour would have to make tough choices as well. The Shadow Chancellor, Geoffrey Howe, told a meeting of the Greater London Area Conservative Women in July 1975 that ‘We look to the Government … for greater honesty and openness about the sacrifices which are needed if we are to climb out of the morass.’20 The following year, briefing notes prepared for Conservative MPs on the economic situation demonstrated the extent to which such political calculations were still on-going. Problems with the further economy measures that had recently been announced by Healey were outlined, but some of the changes were recognised not to be wrong in themselves. They had simply been applied erratically and centred too much on tax increases rather than spending cuts, with the civil service escaping tough efficiencies, it was argued. This would not stimulate the private sector and switch resources away from the public sector as the Conservatives believed was necessary.21 Recognition of the need for retrenchment was shared by both parties, but the Conservatives could turn this to their political advantage. They would have made difficult choices out of conviction whereas Labour had been forced into taking them and was still instinctively more comfortable increasing spending rather than cutting it.22 In a particularly political moment Howe told Thatcher that ‘they need to be required to drink at the fountain of truth, even if the inadequacy of their measures foreshadows failure and subsequent defeat or economic collapse before we can take up the real challenge’.23

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The economy59 By late 1976, the Conservatives had produced their detailed policy document The Right Approach and a realistic acceptance of the state of the public finances was again demonstrated. As was made clear, ‘The days of high spending politics are at an end’.24 Its release during the middle of the Parliament, and at a time of continuing crisis, meant that no detailed figures on public spending were given. It would not have made much sense for the Conservatives to outline detailed plans only to see them quickly overtaken by events. However, three general areas were now seen as being ready for cuts. These were a number of ‘socialist policies’ and nationalisation plans, government subsidies irresponsibly increased by Labour, and extravagant waste which could be eliminated without harming public services. Some of the language used in The Right Approach was tough and the ideological roots of some of its analysis were clearly evident. As it concluded: We do not argue that all public spending is bad and that only private spending is good. But too much public spending that the nation cannot afford is bad. It saddles an increasing number of people with a growing burden of tax. It throttles initiative at every level. It destroys jobs. We shall only have a chance of breaking out of the closing Socialist circle of tax, subsidy, controls, debt and unemployment if we succeed in cutting the overload of public spending.25

During the tense months of late 1976 the Conservatives had a political advantage over the Labour government as its economic policies appeared to be in trouble, and this had to be driven home. Traditional Conservative thinking was perhaps being articulated a little more forcefully, but there was little real policy change going on behind the rhetoric. In his speech to the Conservative Party conference, Howe had indicated that he would cut public spending with an ‘iron resolve’ until it was reduced to 50 per cent of GNP.26 Wisely, however, he provided no time scale, nor did he suggest where the cuts would actually fall.27 The IMF crisis and the resulting ‘mini-budget’ of December 1976 give a further insight into the ways in which the political dynamics of the period influenced the Conservatives. In his statement to the House of Commons Healey announced significant reductions of £1.5 billion in each of the next two years.28 In his response Howe again accepted the need for cuts but attacked the government for allowing them to fall too heavily on the private sector. He also tried to get Healey to acknowledge that he had opposed similar measures when they had been proposed by the last Conservative government less than three years earlier, and that a great deal of time and money had been wasted as a result.29 Again, suggesting that the Conservatives really believed in making cuts, whilst expediency had forced Labour into making them, was thought to be a good line of attack. How their reductions in spending would really have differed from Labour’s was much less clear-cut. During the production of The Right Approach to the Economy, Howe even commented that ‘It is a matter of policy not to be too specific about cuts.’30 Interestingly though, that document did state clearly that the Conservatives wished to see a

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reduction in the share of national income consumed by the state.31 This was at least a slightly different and arguably somewhat more fundamental way of expressing familiar ideas. Again, no detailed figures, let alone something like Joseph’s earlier idea of 40 per cent, were given, though it was suggested that savings would be brought about not through indiscriminate cuts but by allowing ‘spending and revenue a significantly smaller percentage slice of the nation’s annual output and income each year’.32 If the reductions were ‘phased as to give the most benefit to the nation’s productive capacity’ then they might actually be ‘progressive’.33 However, apart from some further vague references to ‘Socialist programmes’, a reduction in the size of the civil service through natural wastage, and perceived bureaucracy, the only things mentioned in terms of cuts were waste and inefficiency. The most specific focus in the document, as will be discussed, was on the expansion of cash limits in the public sector, which had been begun by Labour but would be strengthened and taken further by the Conservatives. The Right Approach to the Economy did argue that reducing the scale of government borrowing was so essential that it would need to happen even though there was expected to be a shortfall in the difference between the money that a future Conservative government would save through public spending cuts, and that which it would spend in reducing the rate of income tax. The only alternative would be other tax increases, and this was acknowledged.34 Despite the tough rhetoric on spending cuts therefore, the Conservatives recognised that there were limits to how far they would be able to go. Some tax increases might also be necessary if they were to meet all of their fiscal goals. There were still few detailed figures in all of these areas. The size of the civil service had been examined by the Preparation for Government Group, a small collection of officials brought together to give advice on a future transition into office. In general terms it recommended that it would be sensible to ‘require unequivocal collective assent in opposition to priorities for economies and spending increases’.35 Such decisions should not be left until the party found itself in government, it was argued, and the possibility of making such decisions binding upon future ministers was also suggested. However, a secret note from Thatcher to colleagues shortly after her arrival in Number 10 made clear that ‘It will be sensible to establish a rule in each Department that for a while there should be no recruitment, at least not without your specific approval, so that wastage can give scope for economies and redeployment.’36 This demonstrated the determination of the new Prime Minister to keep a handle on civil service costs, but it also suggests that the details of the Conservatives’ approach, and what it would mean for each minister in practice, had not been given great thought over the past few years. However, to some extent there was a limit on what Shadow Ministers were allowed to say overall, for fear of them making spending commitments that could not be met, or would have to be met, and the Conservatives at least attempted something close to a full shadow spending review. Peter Riddell and Catherine Haddon have described how this was, nonetheless, a difficult process:

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The economy61 There was not only the political problem of getting members of the Shadow Cabinet to make commitments in Opposition, but also the economic difficulty of a moving target of defining expenditures in real, inflation-adjusted terms when inflation was high, and variable, and spending was being limited in cash, or money, terms. The work was complicated during the ‘Winter of Discontent’ in 1978–79 because strikes disrupted the collection of data. Consequently, by the end of March, the Conservatives knew that all sorts of things were wrong, but they could not make precise expenditure calculations, or conduct a proper 1979 shadow expenditure review.37

At the CRD, Ridley was able to produce a detailed dossier for each new government minister to take into office with them, which included policy outlines, past speeches and articles covering their areas of responsibility, as well as details of the expected spending plans for each department. These books, which now form a part of Ridley’s personal papers at the Churchill Archive Centre, represent valuable sources in relation to a number of policy areas and will be returned to again, but in terms of public spending they expected £1.77 billion worth of cuts collectively across government in the then current financial year.38 Tellingly, this was less than had been contemplated before and was actually less than Labour had planned. The Public Sector Policy Group which considered these issues had initially been eyeing up cuts of up to £3 billion, and then £2.5 billion.39 Despite their tough message and their general caution therefore, the Conservatives had made not insignificant spending commitments in some areas. Defence spending was thought to be so important that it was to be increased despite the wider pressures. The budgets for Health and policing were also to be protected, meaning that other areas would be disproportionately affected. However, perhaps the most significant decision, seemingly taken for political reasons, was that to accept the recommendations of the Clegg Commission into pay comparability. The commission had been established by the Labour government in early 1979 as part of the settlement to end the Winter of Discontent and went on to suggest significant pay rises for parts of the public sector. Riddell and Haddon have estimated that the new awards may have cost as much as 1.5 per cent of national income, undoing much of the work done by cuts elsewhere.40 Nigel Lawson would later admit that ‘with the wisdom of hindsight, it is possible to argue that the Conservative Party should never, when in opposition, have pledged itself to honour whatever cheques the Clegg Commission … cared to present’.41 The commission was subsequently abolished, but the acceptance of its findings demonstrates that short-term practical considerations were still having a significant influence on the direction of Conservative policy, despite the wider ideological and economic pressures to make as many savings as possible. By May 1979, with an actual election to win and the underlying political situation having shifted to some extent after the damaging strikes of the last few months, the then Conservative manifesto could be seen to have taken the party line a little further, making it clear that ‘substantial economies’ needed to be made and acknowledging that some of the savings would engender ‘change’ and ‘complaint’.42

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62

This kind of language may have been used a little more openly and with a little less concern about putting off floating voters. If so, this likely demonstrates the extent to which the prevailing view of all parties had shifted further away from the virtues of high spending and towards an understanding of the need for cuts. Once they entered office, the Conservatives were faced with implementing the ideas that they had outlined in opposition. Although there were many complications and spending proved more difficult to control than might have been anticipated, it could still be argued that ‘the pre-election work was both extensive and valuable’.43 By the end of the period, the Conservatives were willing to be a little more open about the need for cuts and had thought quite hard about the kinds of spending reductions that were necessary. After the economic travails of the last few years the electorate were more willing to accept this message. But the Conservatives had always had a tough message on public spending, and although some dramatic changes were discussed in private, the final line that the party articulated was not hugely detailed and was not dissimilar to that which had been outlined in 1974, despite the use of some more powerful language. Cash limits One of the few specific policies that the Conservatives did openly support was the wider use of cash limits. Fundamentally, it was thought to be much easier to discuss an overall figure within which departmental budgets or public sector pay rises had to be settled, rather than starting a spending round or a negotiation with a percentage figure, which would only be the subject of debate. The possibility of making savings in this way was the key attraction of the policy. However, if the government made only a set amount of money available and left it up to relevant interest groups to strike the right balance between maintaining services, wage rises and levels of employment within those constraints for there would then be a much clearer relationship between larger pay rises and the number of workers that would be able to receive them – then such difficult decisions might also engender a greater degree of responsibility and realism. This approach might shift much of the responsibility for negotiation and the outcome of fine details away from the government, it was hoped. During its private discussions the Economic Reconstruction Group consistently recognised that cash limits would be a key instrument in moderating public sector pay claims. This would be achieved by shifting the focus to overall employment figures. Nevertheless, there would at times have to be some politically expedient exceptions for groups like the police, miners or nurses, and whilst it was also recognised that they might not eliminate relativity pay claims, overall it was seen that ‘cash limits, firmly enforced, could help to break outdated rigidities’.44 However, that the unions would still argue about the final amount of money that the government said was available and demand consultation about it, was also fully under-

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The economy63 stood. As discussed in the previous chapter, by even announcing a figure, which it would be impossible to hide, the Conservatives knew that they would be implicitly presenting some conclusions about the likely size of pay increases. One of the ways in which they proposed to deal with this, Concerted Action, will be discussed in more detail below. Nonetheless, the late Lord Howe argued that cash limits were not explicitly seen as an alternative to talking about pay norms.45 A further problem might have arisen from the fact that the Conservatives did not foresee enforcing the same changes in the private sector and, on the contrary, wished to see a return to free collective bargaining there. It was hoped that the private sector might provide an example of what a proper system operating outside of state control would look like.46 It was always the case there that if workers received excessive pay increases this would result in a loss of jobs. It was hoped that the discipline needed to ensure that this did not happen could be replicated in the public sector. That this freedom, and the potential for unrestrained pay increases which came with it, however undesirable or unexpected from the Conservative point of view, might be seen as unfair whilst the government was seeking restraint in its own spending was given some consideration, but the positive aspects of the policy were seen to be much more significant.47 In private, David Howell could spell out the effects of these changes in more robust language, telling Thatcher that it would be a good thing for the Conservatives to imply that the government should only concern itself with the level of average incomes and the overall public sector wage bill, not individual percentage increases.48 Pay differentials should not be considered a problem, he argued; if employers wanted to pay their workers more and could afford to do so then that was their choice and their responsibility, but the government had a wider duty. The consequences of any unrestraint in this area might also be spelled out in greater detail, it was suggested; for example, if miners received excessive wage settlements this would on some level have negative consequences for pensioners.49 However, although cash limits became an important part of the Conservatives’ emerging approach, precisely because they were understood to have these positive effects and would save the next Conservative government money, they were not a Conservative innovation. The system was ‘devised by officials before the Labour Government came to office and presented to the chancellor as a solution when appropriate problems arose’.50 Peter Hall saw them therefore as the result of a ‘garbage can’ approach to policymaking, in which almost anything that could be devised became a viable policy for addressing enduring problems, such as excessive spending and wage claims in Britain.51 With few proven alternatives, they offered an easy and relatively justifiable policy choice, especially for the Conservatives whilst they were still only in opposition. Cash limits represented an adaptation in Conservative economic policy therefore, rather than being the result of radical change.

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64 Taxation

A belief in the merits of low levels of taxation has long been a central tenet of Conservative economic thinking.52 Unsurprisingly therefore, official policy on this point remained consistent throughout the period. If it did develop to a noticeable degree, then it may have been that a somewhat philosophical case for having lower rates of tax was not quite as easy to identify at the beginning of the period as it would be by 1979. There can be little doubt that this is what the Conservatives had also believed in 1974, but it was not articulated quite so clearly in those earlier manifestos. There may have been some relatively small changes of style and tone when it came to tax, but not in terms of the party’s general approach, and those changes were usually contingent upon the political dynamics of the period and the actions of the Labour government, rather than any wider ideological forces. Many of the trends that the Conservatives, indeed all major parties, would follow in subsequent years had been set in motion by the Heath government. When it left office in 1974 the basic rate of income tax had been 30 per cent, with a top rate of 75 per cent, and the party was able to argue that overall tax rates had been substantially reduced since 1970.53 The most important change had come with the introduction of VAT in 1973 as part of an attempt to switch taxation away from earnings and towards consumption. However, difficult economic conditions meant that no future promises were made. It was clear that tax-cutting remained a Conservative ambition, but only when the economic circumstances facilitated it. As the party’s February 1974 manifesto made clear: Our record on tax reduction and tax reform speaks for itself. Obviously in the present grave situation it would be irresponsible to make any commitments about tax rates. But what we can promise is that the burden of taxation on everyone in Britain will be far less than it would be under Labour.54

This would prove to be an important line. Interestingly, as discussed, the October 1974 manifesto identified a number of areas where public spending would be increased and conceded that certain taxes might have to be increased in order to meet the costs. Nonetheless, it was also made clear that this would be the exception and that a Conservative government would be instinctively more comfortable reducing taxation. After Thatcher’s election as leader in February 1975, the party continued to demonstrate a similar caution about the fine detail of policy whilst also maintaining that underlying principle. The basic rate of income tax quickly rose to 33 per cent in 1974 and then reached 35 per cent after Healey’s April 1975 budget, which dramatically cut spending and sought to boost revenues in order to control borrowing. Significantly, the top rate was stretched to 83 per cent and a luxury VAT of 25 per cent was also introduced.55 To his opponents, Healey’s previous desire to ‘squeeze the rich until the pips squeak’ appeared to be coming true. In her parliamentary response Thatcher

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The economy65 suggested that ‘Anyone shearing sheep stops when he comes to the skin. This is a lesson that the right hon. Gentleman has not yet learned. He is fleecing people practically down to the skin.’56 It was also clear that the Conservatives thought they had popular opinion on their side. As Thatcher put it, ‘I believe that people have virtually come to the end in terms of the additional taxation that they are prepared to yield to the Government.’57 We can see therefore, that some of the rhetoric on both sides was heightened at this time. Nonetheless, with the next general election likely still years away Thatcher did not promise to reverse the tax rises as soon as she had the opportunity. However, she did make a link between high levels of government expenditure and high levels of taxation (if the first was to be reduced as the Conservatives wanted then so could the second) and the negative effect of some taxes on investment incentives. A consistent theme of speeches by leading Conservatives therefore, was the need to rediscover the importance of profit.58 This stemmed from two essential beliefs; philosophically, that it was better for future economic growth to be sustainable and based upon private enterprise in an atmosphere where business and entrepreneurship were encouraged; and economically, although the Conservatives did not articulate it strictly in these terms, that there was really little alternative to a profit-driven private sector-led recovery at a time when public spending was being squeezed. A consequence of Labour’s continued belief in subsidies and support for unprofitable industries was understood to be that the general appreciation of the need for profits had been undermined. The ERG considered this problem in May 1976 and even discussed ‘the possibility of a campaign to educate the nation – and in particular the trade unions – into thinking that profits mattered’.59 Restoring incentives and profit was an important part of Conservative thinking throughout this period. By the appearance of The Right Approach to the Economy in 1977, the party was even clearer that taxes had been used by a ‘free-spending government’ to ‘impose Socialist priorities in the distribution of income and wealth’.60 The Conservatives had now begun to promise a reduction in the basic and higher rates of income tax, a raising of the thresholds and a widening of the tax bands, without outlining any specific figures. But the language used was telling. The document spoke of a ‘Return to Reason’ and highlighted the likely effects of excessive taxation on incentives to invest, to work and to avoid tax, in the context of international competition, with lower tax rates in other countries.61 The party had long argued that tax cuts were a means of rewarding hard work, but this kind of wider thinking had not been quite so evident at the beginning of the period. After this it was consistently recognised that any wiggle room in government expenditure would first and foremost go towards cutting income tax. For example, briefing notes for MPs ahead of debates about the Finance Bill in November 1977 emphasised the importance of reducing the basic rate from its current level of 34 per cent above everything else.62

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66

However, as reductions in government borrowing were also essential, it was still recognised that indirect taxation would probably have to rise as well. The Conservatives appeared fairly confident that this would not harm their electoral prospects. As The Right Approach to the Economy described, ‘Most people now agree that pay-as-you-spend is a healthier tax principle than pay-as-you-earn’.63 This was a natural continuation of the direction established under Heath. As such, the Preparation for Government group suggested that rebalancing income tax and value added tax would be among the first major changes the Conservatives would make.64 Nonetheless, the underlying economic conditions meant that even this policy might have to be revised. In April 1978 the Finance Committee of the Shadow Cabinet met to discuss Healey’s latest budget and its implications. The group was forced to acknowledge that they might not be able to go much further than the tax cuts which the Labour Chancellor had already announced; there had been changes to capital gains and corporation taxes, but the basic rate was now down to 33 per cent, with a new lower rate of only 25 per cent.65 That more significant changes were necessary and desirable was undeniable, it was thought, but realistically the official line might have to be that Healey had left no room for manoeuvre.66 Even so, in 1979 the party was still committed to cutting income tax across the board, raising the threshold at which it was paid, and again declared its intention to further ‘reward hard work’ and increase incentives.67 All of this was familiar to Conservative supporters. However, interestingly the party’s final manifesto did not mention the rate of VAT itself. It was regarded as important to ‘simplify’ such taxes, and whilst it was said that there would be a further switch towards taxes on spending, it was also made clear that VAT did not apply. The language in this passage was not ambiguous. But just a few months later it was shown to be disingenuous when former rates of 12.5 per cent on luxuries and 8 per cent on essentials were replaced by a basic rate of 15 per cent. Labour would claim that the Conservatives had been a little less than honest about their intention to ‘double’ VAT, but Howe’s first budget in July 1979 also cut the basic rate to 30 per cent and slashed the higher rate to 60 per cent, fully in line with party thinking as it had developed over the last four years.68 Conservative attitudes towards taxation changed very little between 1974 and 1979. The party’s longstanding beliefs allowed it to passionately attack Labour when taxes went up, and despite some economic constraints, by continuing with their previous approach of switching from direct to indirect taxation, when they returned to government the Conservatives were able to restore the basic rate to the level it had been when they last left office. Free enterprise Along with these ambitions to cut spending and reduce taxation, another consistent theme for the Conservatives was the need to reinvigorate the free market economy. That there was even an apparent choice between this kind of capitalist system and

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The economy67 communism, socialism or some British alternative with a bureaucratic state controlling vast swaths of the economy, speaks to the fear and uncertainty of the late 1970s, and demonstrates the extent to which some political rhetoric had become heightened in the shadow of the Cold War.69 As discussed above, many on the Right were concerned about the alternative economic strategies being outlined on the Left. The Conservatives did frame some of their ideas in these kinds of terms. Of particular importance in this regard was the concept of ‘crowding out’, most clearly associated with the Oxford economists Roger Bacon and Walter Eltis. In a series of articles in the Sunday Times which became the book Britain’s Economic Problem: Too Few Producers, they argued that the public sector had grown too large and was consuming too many resources, at the expense of the private sector which actually generated them. Or, as they put it, a falling proportion of the national economy was actually responsive to market pressures, paid for and productive.70 This analysis fitted in neatly with wider concerns about the poor performance and relative decline of the British economy during this period, and could even be seen as a reprise of long-established concerns about the size of the public sector that had resurfaced at a number of points throughout the twentieth century.71 Like many Conservatives, Bacon and Eltis were concerned about Britain’s slow growth rate, low levels of investment, falling share of world trade and high inflation. Their proposed solution was a rebalancing of the economy back towards the marketed sector, making it larger than the non-market sector, by cutting public spending and restoring incentives to profit and investment.72 The Conservative Party’s approach was very similar, and although the argument was far from being accepted by all, or indeed most economists, it is clear that ‘crowding out’ had an influence on policymakers.73 How such ideas might be translated into a detailed and coherent policy agenda was less clear. The reality was always likely to be that Britain would maintain a mixed economy. The real debate was about where the balance between public and private should be drawn. The Conservatives usually came down instinctively on the side of the private sector and attacked Labour for its interventionism, arguing that the free market not government action offered the best solution to many economic problems.74 But, as with other policy areas, there were limits on the extent to which this kind of thinking could be carried to its logical conclusion. Despite the much more radical changes that were to come later on, whilst still in opposition the Conservatives remained highly pragmatic about the shape of the economy. The party often saw itself as coming to the defence of a balanced economy that was under threat and could be swept away by Labour extremism, and attempted to appear moderate and pragmatic by comparison. There had always been some appreciation of wider social concerns rather than simply economic imperatives; in 1974 the party’s aim had been described as a ‘system of free enterprise more socially responsible to the public’.75 A mixed economy was seen as fundamentally important to freedom and prosperity, but it was also argued that any economic recovery must

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be led by increased productivity from private enterprise and industry ­operating in a more business-friendly environment. A number of leading Conservatives had learnt stark lessons about the desirability of state intervention during the Heath years. Britain had been weakened and suffered economically as a result of government action it was argued, and trends in levels of taxation, industrial productivity and inflation were often discussed.76 The Right Approach to the Economy praised the power of the private sector to create more sustainable wealth-creating jobs, as part of a broader vision of a freer and more competitive and, as a result, efficient economy. The party’s 1979 manifesto also demonstrated real scepticism about regulation and intervention. As such, this philosophical belief in the free enterprise system was expressed consistently and clearly. However, some active policy steps were also considered. A prominent example is provided by exchange controls. In an interesting exchange with Adam Ridley in February 1977, Joseph rounded on them as one policy area in which important changes could be made and justified in theoretical and practical terms. As Joseph described: It would be consistent with our philosophy to get rid of exchange control, both because it limits freedom and because exchange control – by imprisoning capital here – allows governments to pursue bad policies. Without exchange control the movement of money would tend to force our level of profit up and our levels of inflation and interest rates down.77

He also gave some consideration to the timescale on which such changes might be introduced, suggesting that ‘There may be steps that we should follow towards ending exchange control rather than do it in one. Or it may be better to leave this until 2 years of prudent finance has made it less traumatic to do.’78 In the event, exchange controls were abolished with one act in the autumn of 1979. However, similar restrictions had already been reduced over much of the last decade. Such policy changes owed much to developing views within the Bank of England and Whitehall, not just the Conservatives’ economic philosophy.79 At CRD Ridley kept abreast of other economic indicators such as import and export figures, and analysed the relationship between supply performance and labour relations.80 The Conservatives also demonstrated strong support for the continuing development of the North Sea oil industry, raising concerns about whether the benefits which such private enterprise might bring would be fully utilised by Labour and the burgeoning British National Oil Corporation, and thinking about how best to invest any future revenues.81 Officials also held a series of meetings with the Confederation of British Industry, and formed a number of policy groups to consider a wide range of areas such as support for small businesses, company law, competition, employment and planning. During this period, some Conservatives began to demonstrate a much greater concern for the future of financial services and the City of London, ahead of more traditional manufacturing industries.

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The economy69 According to Green, ‘the Conservative Party’s tone and policy approach became markedly positive towards the financial sector’.82 But despite such trends it appears as though there were no clear and direct links between specific decisions taken in opposition and the ‘Big Bang’ of the mid-1980s. There was no clear policy path of deregulation and private expansion laid out prior to 1979. Furthermore, the financial revolution of the Thatcher years might actually be seen as the realisation of much longer-term trends, with the Conservative Party finally embracing structural shifts from the secondary to the tertiary sector in the British economy that had been on-going for many decades.83 An indefensible rundown of services? In simple terms of course, the Conservatives understood that their ideas were the right ones for the economic situation which the country would find itself in when they next took office, and they believed that they would be successful in bringing about the kind of economy they wanted to see. Some of the wider consequences of these policies also had to be considered, however. This was a consistent thought for party officials. But the impact that such insights had on the detail of policy appears to have been relatively limited. Unemployment was a particularly important issue. Although it remained relatively low by modern standards during the 1970s, it had risen significantly since the 1950s and 1960s.84 Since 1966 in particular there had been a noticeable deterioration and the worsening figures were a source of serious concern. In August 1975 unemployment passed 1 million for the first time since the Second World War and it moved towards 2 million in 1978.85 Although it peaked and then began to fall, by 1979 unemployment was more than twice the level it had been thirteen years previously.86 It was consistently seen as a serious problem by the electorate, and the importance attached to it mirrored the trend in the unemployment figures.87 This was an issue that the Conservatives had to address. Unemployment was approached from a number of different angles. The first is best exemplified by a July 1978 letter from Lawson to Thatcher in which he expressed concern at ‘how many of our colleagues appear to have swallowed the Labour line that our economic policies, especially on the public expenditure front, would cause increased unemployment. There is of course no reason whatever why they should do so, quite the reverse.’88 Such a fundamental belief that unemployment would actually fall after the next general election appears to have been incredibly rare inside the official party machine, such was the gravity of the economic situation. Lawson was probably concerned that Labour should not be allowed to make easy political attacks because the Conservatives had acknowledged too openly that their policies were likely to be controversial.89 However, it was a consistent element of Conservative thinking that the outlook for employment and job creation would improve after the party’s economic policies had had a chance to take effect. Considered in this way, Lawson’s argument is not unusual. When the party

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did attempt to address these issues in public, unemployment was usually framed as a negative consequence of Labour’s record in government which Conservative plans would address. As described above, The Right Approach saw it as one of the areas which would improve as a result of public spending being reduced.90 This political concern about unemployment can also be seen in the reaction to a series of statements produced by the Centre for Policy Studies in 1975. Published monthly with the heading ‘What the … Unemployment Figures Really Show’ such statements took issue with the official statistics released by the government, arguing that the figures were too high, had been miscalculated and did not represent a true picture of what was happening in the economy.91 Concerns about the implications of this were raised by Ridley in October 1975, who made clear to Thatcher that the statements needed to stop as they were being presented and commented upon in such a way that the Conservatives’ opponents were able to say that the party wished to pretend that there were fewer people out of work than was actually the case. Interestingly, Ridley did not dispute that the government’s figures were problematic, but he did argue that the CPS approach was the wrong one to take and provided Labour with an opportunity to make damaging political attacks.92 A further insight into the thinking of more radical Conservatives is again provided by the arguments of David Howell, who privately advised Thatcher that although the party should not actively aim to increase unemployment, as, in and of itself it was ‘repugnant’, at the same time it should be recognised that it was an unavoidable part of the business cycle.93 Howell argued that the party should stick to its economic strategy and not give in to the pressure to do something about unemployment as Labour had done, despite the usual overreactions about the scale of the problem. As many observers of the British economy had come to believe, there was now no trade-off between a little less unemployment and a little more inflation, as had been thought in the past. The current government had produced both.94 As has been discussed, the importance placed on tackling inflation instead of reducing unemployment has long been considered a defining feature of the period. With Keynesian policies seen to have failed, the next Conservative government turned instead to supply-side reforms such as trade union legislation and labour market deregulation. Unemployment had always cut deeply into some social groups and there were often disparities between the numbers out of work and the jobs that were available, particularly in areas where there had been a decline in traditional manufacturing employment. At the end of the 1970s, real poverty was no less of a social problem than it had been for decades, but a number of grim social and demographic trends were also unfolding. By the early 1980s, many more people would feel lucky to have a job at all, an experience that had not been prevalent in Britain since the 1930s.95 As Nicholas Woodward has noted, whether or not this result was efficient or desirable is questionable, but to many it was certainly logical.96 In 1975, Thatcher had received advice that an actual fall in living standards was necessary in Britain if the economy were ever to recover.97 In February of that year,

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The economy71 The Spectator had suggested that the Conservative Party was increasingly coming to terms with this proposition.98 Internal party documents reveal that many official Conservatives were willing to acknowledge, in private, that the economic policies they wished to pursue would have other difficult consequences. In June 1975, after outlining the potential scale of spending reductions that the party might look for, Ridley offered a stark assessment of what some of the subsequent effects might be. He described how, ‘It is clear that cuts approaching £2 billions would have a substantial and severe direct effect on the level of production and employment, and would be recognised widely as highly deflationary.’99 But beyond this theoretical level, Ridley also recognised that there would be a significant negative impact on individuals: Restrictions in the social services will effect [sic] every local authority, doctor and teacher in the country, with predictable consequences. The sluggishness, inflexibility, and inefficiency of some parts of the system will undoubtedly lead to some spectacular cases of apparently indefensible dislocation and rundown of services.100

If to some extent, however difficult, high unemployment might have to be accepted, as a consequence of tackling inflation, reducing over-manning and moderating pay claims, then an alternative was to re-define what were understood to be ‘acceptable’ levels.101 There is some evidence that thought was given to how this might be brought about without making unemployment so difficult for those it affected that other negative consequences would also result. During a July 1975 meeting between leading Conservatives and top economists to discuss pay policy, Howe asked: First, how could the effects of unemployment be made harsher, for example, for those elements of the labour force which were insufficiently mobile; and second, how could the effects of unemployment be made less harsh so that either frictional or disinflationary unemployment could be made less unpalatable and likely to cause less social strain.102

However, although noteworthy such examples do not provide a direct link between the opposition period and what was to occur after 1979. It appears fairly certain that the Conservatives did not officially discuss the possibility of unemployment rising to more than 3 million, the onset of a severe recession, such significant falls in manufacturing output or unrest on the scale that was to occur on British streets. This is not to suggest that hard-line Conservatives would have changed their minds about the scale of changes needed if the true nature of any effects had been known in advance; as Green has described with regards to unemployment, that there was ‘no specific figure … was largely irrelevant’.103 But some subtlety is needed. One of the most interesting aspects of this debate is that it is difficult to find evidence of those politicians in favour of the greatest retrenchment stating clearly that the painful effects of Conservative policies would be necessary or were a price worth paying. This was the case during the mid-1970s and has been so ever since. Nonetheless, although the exact words may not have been there, a number of observers have acknowledged this implicitly. Howe has generally argued that the

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economic problems the Conservatives went on to inherit were so severe, and previous policies so ‘tested to destruction’, that there was no alternative, and the government was ‘obliged to press ahead’ despite the difficulties which would result.104 Thatcher recorded in her memoirs that those who voiced concerns argued that radical free market policies ‘would only work at a political and social cost that would be unsustainable’.105 Clearly she understood that the situation would be sustainable in spite of those great costs. And in a sense, she was proved correct, at least from a narrow perspective of the electoral success of the Conservative Party. That as long as a sizeable enough proportion of the population was able to enjoy increased prosperity, high levels of unemployment need not bring about the fall of a government, eventually became clear.106 It was also the case that unemployment might only concern those out of work, whilst inflation, which the Conservatives instead prioritised, could be of concern for everyone, employed or otherwise. However, it must also be kept in mind that such ideas were very far from being spelled out explicitly to the electorate. Despite all of these pressures official policy remained measured and moderate in tone, however much some Conservatives may have been thinking more radically in private. As a whole therefore, Conservative economic policy was not fundamentally revolutionised between 1974 and 1979. In terms of public spending, taxation and the free enterprise system, there were significant continuities across the period. There was a little more acceptance that the electorate were aware of the need for tough spending cuts by the end of the period, but the Conservatives had always called for retrenchment. Despite some tough rhetoric the party did not appear ready to slash public spending at all costs. There were also some more philosophical arguments about the need to reduce taxation and support the free market system by the end of the period, and there were hints at some of the more controversial and lasting changes that would be brought about by the Thatcher governments. However, once again the fine detail of Conservative policy did not develop as much as might be expected. Here we can see the continuing interplay between ideological and political forces, between the long term and the short term. Conservative policies were pushed forward to some extent by recognition of the need for change and were given greater emphasis by the ideological and economic contexts of the 1970s, but they were also held back by pragmatic concerns. Fundamentally, the party believed in lower spending, lower borrowing, lower taxes and a rejuvenation of private enterprise. Although in simple terms this is essentially what it went on to deliver, most of the fine details had not been worked out prior to 1979. Notes 1 R. Coopey and N. Woodward, ‘The British Economy in the 1970s: An Overview’ in R. Coopey and N. Woodward (eds), Britain in the 1970s: The Troubled Economy (London, 1996) p. 1.

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The economy73 2 A. Marwick, British Society Since 1945 (Harmondsworth, 1990) p.  186; A. Beckett, When the Lights Went Out: Britain in the Seventies (London, 2009) p. 404. As discussed, Britain easily remained amongst the most prosperous nations in the world and living standards continued to rise overall, but this stalling was significant and had a political impact. 3 1974 and 1975 had been particularly bad years of negative growth, before there was a relatively strong recovery up until 1980: C. Johnson, The Economy Under Mrs Thatcher 1979–1990 (London, 1991) p. 265. 4 Although this was still far below the later peak of 3,408,000 reached in 1986: D. Butler and G. Butler, British Political Facts, 1900–1994 (Basingstoke, 1994) pp. 374–5. 5 Coopey and Woodward, ‘Economy’ p. 29; D. Porter, ‘Government and the Economy’ in Coopey and Woodward, Troubled p. 34. 6 On the developing left-wing alternative see for example A. Seldon and K. Hickson (eds), New Labour, Old Labour: The Wilson and Callaghan Governments, 1974–79 (London, 2004) or M. Beech, K. Hickson and R. Plant (eds), The Struggle for Labour’s Soul: Understanding Labour’s Political Thought Since 1945 (London, 2004). For a contemporary perspective see R. Bacon and W. Eltis, Britain’s Economic Problem: Too Few Producers (London, 1978). 7 This kind of impression has typified some influential accounts such as D. Kavanagh, Thatcherism and British Politics: The End of Consensus? (Oxford, 1990); K. Middlemas, Power, Competition and the State, Vol. 3: The End of the Postwar Era (Basingstoke, 1991); R. Cockett, Thinking the Unthinkable: Think-Thanks and the Economic Counter Revolution 1932–1983 (London, 1995). 8 Vernon Bogdanor recognised that during the 1970s, a period of economic crisis, the Conservatives returned ‘to their traditional nostrums of cutting public expenditure and distancing government from the economy’, just as they had during earlier periods: V. Bogdanor, ‘The Fall of the Heath Government and the end of the Post-War Settlement’ in S. Ball and A. Seldon (eds), The Heath Government 1970–74 (London, 1996) p. 377. 9 Interview with Lord Howe, 21 March 2011. 10 A. Gamble, ‘Economic Policy’ in Z. Layton-Henry (ed.), Conservative Party Politics (London, 1980) p. 27. See also A. Gamble, The Free Economy and the Strong State: The Politics of Thatcherism (Basingstoke, 1988) pp. 49–51. 11 Firm Action for a Fairer Britain, February 1974 General Election Manifesto. 12 Putting Britain First, October 1974 General Election Manifesto. 13 Ibid. 14 Conservative Party Archive, CRD 403, Tim Boswell to Patten, 28 April 1975. 15 Healey’s April 1975 budget cut expenditure by £900m. As unemployment was rising it could be seen to represent a significant step away from Keynesian demand management: N. Thompson, ‘Economic Ideas and the Development of Economic Opinion’ in Coopey and Woodward, Troubled p. 75. However, Thatcher was reportedly ‘contemptuous’ during her budget response speech, suggesting that a moment of decision had been postponed. In wider terms the budget was condemned from the Right as ‘administering catastrophe’: The Spectator, ‘The Budget’, 19 April 1975 p. 459. 16 Thatcher Papers, THCR 2/6/1/92, Howell to Thatcher, 4 June 1975.

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17 Quoted in E.H.H. Green, Thatcher (London, 2004) p. 60. 18 TP, THCR 2/6/1/92, ‘Reducing Public Expenditure’, 5 June 1976. 19 Ibid. 20 TP, THCR 2/6/1/92, Howe statement, 2 July 1975. 21 TP, THCR 2/6/1/94, Briefing notes, July 1976. In July 1976 Healey had announced a further emergency cut of £1bn in public spending and increases in National Insurance in order to reduce government borrowing. 22 I. Gilmour and M. Garnett, Whatever Happened to the Tories: The Conservative Party Since 1945 (London, 1998) p. 301. 23 TP, THCR 2/6/1/93, Howe to Thatcher, 7 July 1975. 24 The Right Approach, 1976 p. 25. 25 Ibid. p. 27. 26 The Economist, ‘Howe Hits, Prior Plods’, 9 October 1976 p. 24. Public spending had then been more than 60 per cent of GNP. 27 Ibid. 28 Hansard, HC Debates, 15 December 1976, v.922, c.1536. Healey was again attacked from the Right for not going far enough. As The Spectator put it, ‘Only if a Chancellor says plainly to the House of Commons, to the country and to our foreign creditors that there are a whole series of things which people have learned to expect government to do and it will no longer do, and reduces expenditure accordingly, have we any chance of prosperity’: ‘Wrong Again’, 18 December 1976 p. 1. 29 Hansard, HC Debates, 15 December 1976, v.922 col.1540. Healey’s first budget in 1974 had increased spending by nearly £700m, before it was cut back again dramatically in 1975 and 1976: Thompson, ‘Economic Ideas’ p. 74. 30 TP, THCR 2/6/1/216, Howe to Thatcher. 31 The Right Approach to the Economy p. 8. 32 Ibid. 33 Ibid. 34 Ibid. p. 18. 35 TP, THCR 2/6/1/194. 36 TP, THCR 2/6/2/118. 37 P. Riddell and C. Haddon, ‘Transitions: Preparing for Changes of Government’, Institute for Government, November 2009 p. 38. 38 Ibid. After negotiations with the Treasury the Conservative Cabinet eventually agreed on cuts of £1.5 billion in 1979–80. 39 Howe Papers, Dep. 140, ‘Parameters for Public Expenditure’; Dep. 140, ‘Public Sector Policy Group – First Draft Report’; E. Hampshire, ‘Margaret Thatcher’s First U-Turn: Francis Pym and the Control of Defence Spending, 1979–81’, Contemporary British History, Vol. 29, No. 3, 2015. 40 Riddell and Haddon, ‘Transitions’ p. 39. 41 Thatcher Foundation, ‘Thatcherism in Practice: A Progress Report’, 14 January 1981 p. 9. See also M. Thatcher, The Path to Power (London, 1995) pp. 438–9. 42 1979 General Election Manifesto. 43 Riddell and Haddon, ‘Transitions’ p. 39. 44 TP, THCR 2/6/1/37, ERG minutes, 16 December 1976.

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The economy75 45 Interview with Lord Howe, 21 March 2011. 46 The Right Approach to the Economy pp. 4–5. 47 TP, THCR 2/6/1/37, ERG minutes, 26 May 1977. 48 TP, THCR 2/6/1/92, Howell memo, 4 June 1975. 49 Ibid. 50 P. Hall, ‘Policy Paradigms, Social Learning, and the State: The Case of Economic Policy Making in Britain’, Comparative Politics, Vol. 25, No. 3, April 1993 p. 283. 51 Ibid. 52 Gamble, ‘Economic’; Green, Thatcher. 53 Butler and Butler, Facts p. 384; Firm Action for a Fairer Britain. 54 Firm Action for a Fairer Britain. 55 Hansard, HC Debate, 15 April 1975, v.890, c.302. 56 Ibid. c.325. 57 Ibid. 58 See for example, Thatcher Foundation, ‘Speech to the Greater London Area Conservative Council (‘Towards a Prosperous Britain’)’, 3 March 1976. 59 TP, THCR 2/6/1/37, ERG minutes, 20 May 1976. 60 The Right Approach to the Economy p. 16. 61 Ibid. p. 18. 62 TP, THCR 2/6/1/95, Briefing notes for Finance Bill, 15 November 1977. 63 The Right Approach to the Economy p. 19. 64 TP, THCR 2/6/1/194. 65 Butler and Butler, Facts p. 384. 66 TP, THCR 2/6/1/95, Finance Committee, 11 April 1978. 67 1979 General Election Manifesto. 68 Butler and Butler, Facts p. 384. 69 See, for example, some of the language used in The Right Approach and The Right Approach to the Economy. 70 Bacon and Eltis, Problem. 71 J. Tomlinson, ‘Crowding Out’, History and Policy, December 2010. 72 Bacon and Eltis, Problem. 73 R. Blake, The Conservative Party from Peel to Thatcher (London, 1985) pp. 323–4. 74 See, for example, The Right Approach and The Right Approach to the Economy. 75 Firm Action for a Fairer Britain. 76 Gamble, Free p. 73; Gamble, ‘Economic’ p. 41. 77 Joseph Papers, KJ 10/5, Joseph to Ridley, 28 February 1977. 78 Ibid. 79 W. Keegan, Mrs Thatcher’s Economic Experiment (Harmondsworth, 1984) pp. 149–50. 80 TP, THCR 2/6/1/92, Ridley to Thatcher, 6 June 1975. 81 See for example The Right Approach and The Right Approach to the Economy. 82 Green, Thatcher p. 74. 83 Ibid. 84 Coopey and Woodward, ‘Economy’ p. 2; Beckett, Lights p. 3. 85 Marwick, Society pp. 185–6.

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86 N. Woodward, ‘The Retreat From Full Employment’ in Coopey and Woodward, Troubled p. 136. 87 Coopey and Woodward, ‘Economy’ p. 1. In 1978, the peak year for unemployment, more than 30 per cent identified it as the most significant problem. 88 Quoted in Green, Thatcher p. 68. 89 Ibid. 90 The Right Approach p. 15. 91 TP, THCR 2/6/1/22, Ridley to Thatcher, 24 October 1975. 92 Ibid. 93 TP, THCR 2/6/1/92, Howell to Thatcher, 4 June 1975. 94 Ibid. 95 P. Clarke, Hope and Glory: Britain, 1900–1990 (London, 1996) p. 402. 96 Woodward, ‘Employment’ p. 159. 97 TP, THCR 2/6/1/93, ‘The Crises and its Core’, undated. 98 The Spectator, ‘Wages, Work and Inflation’, 22 February 1975 p. 193. 99 TP, THCR 2/6/1/92, ‘Reducing Public Expenditure’, 5 June 1975. 100 Ibid. 101 See Green, Thatcher pp. 66–70 for discussion. 102 TP, THCR 2/6/1/92, Minutes of meeting on Pay Policy, 8 July 1975. 103 Green, Thatcher p. 69. 104 Interview with Lord Howe, 21 March 2011. 105 Thatcher, Path p. 298. 106 Green, Thatcher p. 70.

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4

Ownership

A number of important elements of Conservative thinking during the 1970s can be drawn together under the theme of ownership. This chapter examines the development of policy in relation to the nationalised industries and housing in particular. By the 1970s the Conservatives had long been clear that they saw public ownership as undesirable in principle and that economic activity belonged predominantly in the private sector. They had consistently resisted the idea of more industries being nationalised and regularly looked forward to denationalisation – returning certain industries to the private sector. At the very least subsidies to industries that were inefficient would be scaled back. The fundamentals of this approach were consistent throughout the 1974–79 opposition period. It was easy therefore to criticise the Labour government for moving further in the wrong direction. As discussed, ‘Nationalisation plans’ were one of the few areas which were clearly earmarked for future cuts. It was also understood that reducing the scale of public ownership would help to tackle other perceived industrial problems, particularly trade union power and the closed shop. The key question was how this could best be achieved and how important a priority it was to be – how far and how fast the Conservatives were willing to go. Dynamic thinking was certainly taking place on this point, not least inside the policy groups set up to consider the issue. A range of policy options were considered, and a clearer stance emerged. As with other areas under Thatcher’s leadership, the Conservatives came to articulate their concerns more decisively. The party began to consider how to denationalise in practice. But once again the economic and political realities of the period mitigated against dramatic change. It was widely recognised that shifting the balance between public and private ownership of industry would be a contentious and time-consuming process. By 1979 only the shipbuilding industry and British Aerospace were officially envisaged as being returned to the private sector by the next Conservative government. The method most often proposed for unwinding the nationalised industries was wider share ownership. This was one part of a push towards ‘popular capitalism’ emerging during this period which can also be seen in relation to home ownership. The aim of a ‘property-owning democracy’, a long-standing element

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of Conservative thinking throughout much of the twentieth century which had been revived and updated a number of times, moved more clearly to the centre of party strategy under Thatcher. Its central and ultimately most successful dimension was the sale of council houses to their tenants through an extension of the ‘right to buy’ scheme. Nonetheless, the scheme itself was not new, having emerged during the 1960s and been a feature of Conservative manifestos in 1970 and 1974. A new impetus for ‘right to buy’ in the lead-up to the 1979 general election did not necessarily require a significant reassessment of party policy and owed more to the emerging political and economic possibilities of the period rather than relatively familiar philosophical justifications. Nationalised industry Privatisation was one of the defining policy agendas of the 1980s. In 2012 the Institute for Government identified it as one of the most successful policies of the previous thirty years.1 The transfer of British Telecom, British Gas and many others from the state sector to the private sector helped to reshape the landscape of British industry and the nature of the British economy.2 From the perspective of the early to mid-twentieth century these changes now appear permanent and a lasting legacy of Thatcherism. But what did the Conservatives think of the nationalised industries prior to 1979, and to what extent did they have detailed plans for privatisation, or denationalisation – the term used at the time – worked out? The Conservatives were naturally sceptical about public ownership. A preference for economic activity in the private sector, a limited role for the state and a broader base of ownership were part of the party’s DNA, and by the 1970s had underpinned its attitude to the economy and industry for many decades. Whilst the party had sometimes strayed, or been seen to stray by its supporters, from the enlightened path which these principles suggested, such developments are best understood in contingent terms as part of a readjustment to the political and economic landscape of the post-war world, rather than as indicative of a fundamental change of beliefs. According to Ewen Green, ‘The twentieth-century Conservative Party’s view of nationalization was, at best, one of grudging acceptance, and, at worst, complete hostility.’3 There had therefore been a tentative debate about denationalisation for many years. Nonetheless, despite the Conservatives’ instinctual distrust of nationalised industries, denationalisation was not yet a significant electoral issue and the conditions necessary for a telling shift in policy were not yet in place. A Policy Committee on the Nationalised Industries had been established during the 1950s, but it made little headway and concluded that there was ‘no case for complete denationalization of any of the nationalized industries’.4 Conservative discomfort continued such that a further Policy Group for the Nationalised Industries was set up under Edward Heath’s leadership in 1967. Impetus was given by the appointment of the young MP Nicholas Ridley as Chairman, and

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Ownership79 the thinking which emerged was somewhat sharper and the policy prescriptions more detailed than had previously been the case. The group’s final report completed in 1968 argued that ‘there was “a very strong case for gradually dismantling the public sector” and had identified several candidates for denationalization’.5 However, once again, political and economic reality, or at least conceptions of them among the Shadow Cabinet, steered the party away from dramatic conclusions. As Matthew Francis has described, ‘For many senior Conservatives at this time, denationalization remained the crackpot fantasy of a few ideologues and by no means a serious political proposition’.6 A Wider Share Ownership Committee established in 1968 also considered potential schemes for ‘industrial co-partnership and employee profit sharing’ which might help to break up the public sector.7 Selling such assets to the public was a relatively niche but consistent element of Conservative thinking during this period. This kind of approach was thought to be more likely to be irreversible than a simple selling off of whole industries to private interests. In the event, however, though the party’s manifesto during the 1970 general election stated that ‘We will progressively reduce the involvement of the State in the nationalised industries’, no specific means by which denationalisation might best proceed was identified.8 The Conservatives were perhaps preoccupied with defending free enterprise and remaining private ownership from the threat posed by Labour. Nationalisation was consistently framed as a dividing issue between the two main parties. Labour would not just make small changes but had designs on something much more significant and fundamental, it was argued. This dynamic was carried through to the February 1974 general election when it was suggested that ‘Labour’s policy for industry is one of massive nationalisation on an unprecedented scale’.9 Even the major banks were now in their sights. Significant emphasis was also placed on the future of North Sea oil. The Conservatives were implacably opposed to the nationalisation of the burgeoning industry. Labour plans to take it into public hands provided a frequent reference point from which the party could launch a defence of private enterprise throughout this period: ‘Labour’s irrelevant and disastrous proposal to nationalise our offshore oil would needlessly deprive Britain of an invaluable source of capital, skills and experience, and would cause confusion and delay when the nation can least afford it.’10 The picture was very similar by October 1974. The Conservatives warned against a Labour government in economic terms: ‘our economic condition is far too grave for our country to be subjected to a divisive and dogmatic attack upon the private enterprise sector’, and in perhaps slightly more philosophical terms which evoked a defence of individual freedom: ‘People are not clamouring for Whitehall to seize even greater control over their lives. They want more choice and diversity, not less.’11 Once again, however, there was little practical sense in which an unwinding of public ownership might begin, and no specific sectors were mentioned as likely candidates for denationalisation. Nonetheless, this lack of detail was in part a

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hangover of recently being in government. Questions as to why certain sections of the economy should now be moved back to the private sector yet the Heath administration had not attempted to move them, would naturally have been forthcoming. Under Thatcher’s leadership a new Policy Group for the Nationalised Industries was formed. One again Nicholas Ridley served as Chairman. At its first meeting in April 1976 the group agreed that denationalisation was the right way forward but also that each industry should be considered separately and that the best form of denationalisation in each case would vary. It was even recognised that ‘certain industries or parts of industries could never be commercially viable’.12 Furthermore, significant emphasis was now placed on spending cuts and the possibility of making efficiency savings. It was perhaps this more than any other factor that meant there was a fresh wind in the sails of denationalisation advocates. Nonetheless, Conservative intentions were serious. As Green identified, the question was ‘not whether or if the State sector should be jettisoned, but when and how’.13 By May 1976 the group was already engaged in detailed discussion about which industries it would be easiest to denationalise. Whilst ‘technical monopolies’ of utilities ‘such as telecommunications’, electricity and gas would be ‘a lower priority for reprivatisation’, other industries including coal, steel and British Airways were deemed ‘capable of being subjected to competition, and we should break their statutory monopoly powers’.14 When the group produced its interim report in July 1976, denationalisation was seen as essential and unavoidable. The philosophical underpinnings of the group’s approach were clear: ‘there are inherent defects in Nationalised Industries which exist because they are nationalised and which cannot be overcome’.15 But whilst significant change was necessary, it was also recognised that this could not be brought about quickly and would be dependent on circumstances: Our main policy … should be the pursuit of plans for a more organic and automatic erosion of the public sector of industry. How far we can go will depend upon the political climate of the time, but we should make such preparations as we can so that we are at least ready to take advantage of a favourable mood if there is one.16

The preferred incremental approach was to remove the statutory monopolies from the appropriate industries and see others broken up into small units which could then be sold or given away for free to private shareholders or workers. The issuing of equity shares might also work in some circumstances. The interim report listed each nationalised industry and briefly considered how they might best be treated. The limits of this approach were acknowledged but it was also believed that it would be difficult for Labour to attack and might prove to be irreversible. The National Bus Company was identified as a sensible first target which should be announced in order to make Conservative intentions clear. During the autumn of 1976 The Right Approach provided space for a public articulation of Conservative thinking. The poor performance of the nationalised

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Ownership81 industries and the negative economic repercussions were seen in the context of a ‘Socialist obsession with extending the power of the State’.17 The public sector now represented 60 per cent of national income. The recent nationalisation of the aircraft and shipbuilding industries was mentioned in particular as an example of the ways in which individual freedom was under threat. Indeed, The Right Approach was explicit that the interests of British Shipbuilders and British Aerospace ‘should be sold off to the private sector’, though exactly how this should be done was not entered into.18 Tax relief might also be used to encourage more voluntary profit-sharing schemes for employees. The justification was philosophical: We believe that proposals of this kind … would help to strengthen our democracy, spreading ownership to millions of people in a way that State Socialism never can and never will. They would form, along with our proposals for wider home ownership, a vital part of our total strategy for increasing the scope for personal independence and responsible citizenship.19

Two further, now consistent threads were that all nationalised industries should have a target ‘rate of rerun’ to prove their efficiency and that ‘better management’ would also bring about improvements. The burgeoning North Sea oil industry was of particular interest. The Conservatives had shown strong support for private development, but in 1975 the Labour government established the British National Oil Corporation (BNOC). In January 1977 the Nationalised Industries Policy Group identified that whilst it would not be possible to simply abolish BNOC, its ‘dissolution’ was the ‘long-term ideal’.20 Getting a sympathetic chairperson in place and allowing them to judge the best method of moving the industry into the private sector was thought to be the best way forward. In its final report in July 1977 the group outlined again the need to introduce private sector discipline into the nationalised industries – ‘greater rewards for success and penalties for failure’ – or ‘carrots’ and ‘sticks’, as they were now termed.21 It was recognised again that different techniques would be necessary to get different industries back into the private sector. Breaking up monopolies into smaller units with new financial obligations was again seen as an important step, and the group also discussed in more detail the possibility of offering shares as a route to denationalisation. This kind of evolutionary approach was preferable as ‘A frontal attack upon this situation is not recommended. Instead the group suggest a policy of preparing the industries for partial return to the private sector more or less by stealth.’ BNOC had now become central to the group’s thinking, with the suggestion that it should be announced that the Conservatives would offer shares directly to the public at a reduced price, in order to provide ‘a “coup de theatre” ’.22 Nonetheless, the group was also clear that denationalisation would not be an easy process: It should be asked whether we have the political willpower for such a policy. If there were to be weakness in one case – doubtless a politically embarrassing one – the whole

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policy would be lost. There is no other way to restore financial responsibility in the public sector of industry. Something like this has to be done if the country’s economy is to be brought under control. Nevertheless there is no point in undertaking it if we are not prepared to go through with it.23

This theme was taken up in even more robust terms in a confidential annex to the report titled ‘Countering the Political Threat’, which anticipated a full political fightback six to eighteen months after the next general election, assuming the Conservatives entered office. As was described, ‘Some issue of discontent will be found, where feeling is strong, and the full force of the communist disruptors will be used to exploit that discontent’. One potential strategy was to deliberately leave scope for higher wage claims than might be expected in vulnerable industries in order to ‘try and provoke a battle in a non-vulnerable industry, where we can win’.24 As such the Nationalised Industries Group wandered somewhat past its remit into other policy areas. Further tactics might include contingency plans for energy including stockpiling coal, ending strikers’ benefits and organising mobile police squads to deal with violent picketing. This approach would ‘enable us to hold the fort until the long-term strategy of fragmentation can begin to work’.25 Shorn of its most controversial elements, the thinking done by the group underpinned the analysis of the nationalised industries in The Right Approach to the Economy. Alongside calls to cut subsidies, increase competition and offer more protection to management, there was also an interesting attempt to introduce a wider political perspective: ‘Britain’s nationalised industries are expected to perform with economic efficiency – yet they are the playthings of political whim. No previous government is free from blame in this respect – and this is the core of the case against nationalisation.’26 A process of denationalisation would take politics out of the equation: ‘Making a distinction between the economic and the social functions of State industries will make it easier to separate the requirements of efficient operation from political and social objectives.’27 Nonetheless, no specific industries were identified as early candidates. Denationalisation was largely left at the theoretical level, beyond a brief philosophical mention of the merits of share ownership schemes: ‘The long-term aim must be to reduce the preponderance of State ownership and to widen the base of ownership in our community. Ownership by the State is not the same as ownership by the people.’28 The work of the Nationalised Industries Policy Group would likely have gone largely unnoticed outside the policymaking machinery of the Conservative Party, had the final report of the previous July not been leaked to The Economist in May 1978. Under the dramatic headline ‘Appomattox or Civil War?’ the details of the report were recounted in detail alongside a suggestion that they would cause ‘a humdinger of a row’.29 The report has since taken on great significance for those who wish to see direct continuities between Conservative planning in opposition before 1979 and the actions of the Conservative government in ending disputes,

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Ownership83 often violently, during the 1980s. This is a tempting line of analysis. The dynamics are striking. But no simple line can be drawn. The central tenets of Conservative policy were now set. In a paper circulated to the Shadow Cabinet in June 1978 Ridley emphasised once again that ‘The industries must be exposed as far as possible and appropriate to the discipline of the market place. Where this cannot be done, they must be controlled by methods whose effects resemble those of market disciplines.’30 In terms of the mechanics of denationalisation, a new Wider Share Ownership Group was considering policies, including whether it might be feasible to ‘“give” the nationalized industries to workers’ co-operatives’.31 The group considered the possibility of a ‘people’s stake’ in North Sea oil. It also had links with the similarly named but separate Wider Share Ownership Council, which had a particular investment-driven vision of economic enfranchisement.32 Nonetheless, it was clear that the Conservatives would not pursue denationalisation at all costs and that the process for achieving what was feasible would not be straightforward. As Ridley identified in June 1978, the ‘scope for achieving [denationalisation] will vary widely’ and the agenda would need to be approached ‘cautiously and flexibly’.33 It would also need to fit with the party’s many other policies and preoccupations and, as in other areas, the Conservatives were well aware of the dangers of moving further and faster than the electorate would be willing to understand or accept. The language and tone of the 1979 general election manifesto was strikingly similar to its predecessor documents in 1974, therefore. The focus was on Labour’s approach, particularly further industries that were in their sights, and the opposition of the British public to nationalisation. Once again there were significant but brief evocations of freedom and state interference, and the role of BNOC was questioned. The main development was that some nationalised industries were now identified as candidates for being returned to the private sector, though they were arguably the easiest and least controversial. As the manifesto outlined, ‘we will offer to sell back to private ownership the recently nationalised aerospace and shipbuilding concerns, giving their employees the opportunity to purchase’.34 Shares would also be sold in the National Freight Corporation, but this time directly to the public with a different aim of bringing in private investment. The National Bus Company and other industries once considered had not made it this far. The manifesto conveyed no real sense in which the denationalisation of more complex and controversial industries would follow. Indeed, it was those industries that the policy group had envisioned would be most difficult to denationalise – telecommunications and gas for example – that were eventually privatised during the 1980s with much the greatest political and economic impact. For now, they were not on the agenda. We can see therefore that although there were important changes between 1974 and 1979, Conservative policy in relation to the nationalised industries is best understood as the realisation of a long-term process. The philosophical desire to denationalise received fresh economic and political impetus during the 1970s.

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Ultimately, the dramatic privatisations of the 1980s likely owed more to ‘strategic learning conducted within the state after 1979’ than planning done by the Conservatives themselves during their years in opposition.35 A property-owning democracy Housing policy was also an important part of the political and ideological success of Thatcherism. Its most significant feature – the extension of the ‘right to buy’ scheme – remains amongst the most widely felt and long-lasting reforms of the period. By 1996 2.2 million council houses had moved from public to private ownership.36 Fundamentally, ‘right to buy’ was understood to be a popular policy which contributed to the Conservative Party’s electoral success in 1979 and after. It had crossclass appeal and allowed the Conservatives to talk about aspiration and opportunity whilst fitting in neatly with other policies which aimed to reduce the role and size of the state and encourage market discipline. This ideological dimension has often been seen to be significant. According to Alan Murie, ‘Terminating local discretion over council house sales and sustained and concerted action across housing policy was designed to dismantle local authorities’ role, undermine mutualism and leave market processes to determine what happened in housing’.37 This explicit kind of ideological thinking was not quite so evident prior to 1979, though it may have become clearer later. In opposition, the Conservative ambition is best understood as the creation of a ‘property-owning democracy’ – a frequently used phrase which had been a consistent element of Conservative thinking since at least the 1930s. By the 1970s it had been given a new impetus by political and economic circumstances. As Matthew Francis has described, ‘while the creation of a “property owning democracy” was an enduring Conservative goal, the version of this concept propounded by many Thatcherites was strikingly novel’.38 The original idea of a ‘right to buy’ stemmed from Conservative fears about the expansion of public ownership by Labour after 1945 and came to the surface as a realistic policy option by the late 1960s. What had changed by the 1970s was not so much the Conservatives’ approach but the context in which they were working. According to Aled Davies, ‘The eventual adoption of the idea in the 1970s was a function of structural changes and contingencies, which reordered the environment in which the Conservative Party, pursuing a set of fairly fixed goals, was able to operate.’39 The potential for saving money at a time of widespread spending restraint and the possibility of developing an electorally popular policy were crucial. The Conservative manifesto at the 1970 general election had promised to ‘encourage local authorities to sell council houses to those of their tenants who wish to buy them’.40 This policy was framed more in practical than philosophical terms. The key point identified was that local authorities would then be free to spend the money released on housing ‘for the aged, for the disabled, and for those on the housing lists’.41 In the event, fewer councils than had been hoped took up the

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Ownership85 opportunity. The policy had not been mandatory. By February 1974 the party’s next manifesto noted somewhat sardonically that ‘The number of new home-owners would have been larger still had certain Councils not opposed the sale of Council houses to those Council tenants who were willing and able to buy them with the help offered by the Government’.42 In future unsupportive local councils would be bypassed, subject to limited rights of appeal, and tenants would be able to buy their homes ‘as of right’.43 Nonetheless, no specific arrangements were mentioned beyond the fact that tenants would be able to buy ‘on reasonable terms’.44 By October 1974 more details were forthcoming. The eight-month period out of government had resulted in what Thatcher herself, now briefly responsible for housing policy as Shadow Environment Secretary, described as an ‘almost frantic search for attractive policies’. Not only must the policies be attractive but they also ‘had to be novel, and they had to cast no doubt on the underlying correctness of the recent Conservative Government’s policies’.45 Attempting to go further with ‘right to buy’ therefore made strategic sense. It was proposed that tenants who had lived in a property for at least three years would be given the chance to buy their homes at two-thirds of the market value. Not only would councils now have a ‘duty’ to sell but to sell on these specific terms. As the October manifesto made clear, ‘The community will no longer tolerate the attitude of councils which, for narrow partisan reasons, stand in the way of their tenants becoming homeowners.’46 More widely, housing was identified as a key policy area which required new initiatives. A Home Savings Grant Scheme was proposed to help first time buyers save a deposit, alongside a pledge to fix the interest rate charged by building societies at a maximum of 9.5 per cent. This was seen as a way to help new buyers as well as existing mortgage customers. At face value this policy was intriguing as, despite its potential appeal, it appeared to run counter to many Conservative instincts about the undesirability of state intervention. As Environment spokesperson, Thatcher played an important role in its development. The principle of artificially holding down the mortgage rate came first. The original plan was for the October manifesto to state that it would be kept at a ‘reasonable’ level, but political pressure emerged for a specific figure. 9.5 per cent was eventually settled on because it was as low as Thatcher thought she could reasonably go, below the psychologically important figure of 10 per cent that had been identified. Reflecting on this debate later she was clear that ‘the purist view would be that artificially controlling the price of borrowing for house purchase was bound to be counterproductive. And in this matter the purist, as so often, was right.’47 For his part Heath emphasised in his own memoirs that Thatcher had been sceptical not just about the 9.5 per cent idea but also about ‘right to buy’ and the housing agenda as a whole: Mrs Thatcher strongly advocated these policies during the election campaign, so few would have guessed that, originally, she had opposed them just as strongly within the Shadow Cabinet. Indeed, I had to hold a private meeting with Mrs Thatcher and William Whitelaw in order to talk her round to supporting these ideas. She had

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opposed the sale of council houses on the basis that it would offend Tory voters in privately-owned residences nearby. How different the story would become in the 1980s.48

Thatcher later conceded that her thinking had been ‘narrow and unimaginative’.49 Under her leadership after February 1975 Conservative thinking was developed by a Home Ownership Policy Group, which produced an interim report in July. The group concluded that the party’s approach during the previous October had been the right one, but that economic conditions likely meant that the 9.5 per cent pledge should not be repeated at the next general election.50 When the group produced its final report in May 1976 it was clear that ‘public expenditure conditions rule out the adoption of a scheme which offers help indiscriminately’.51 The focus should be on first time buyers rather than existing home owners. As such, the Conservatives’ commitment to ‘right to buy’ became firmer still. In practical terms it represented an ‘excellent bargain for public funds’, and more philosophically it would encourage ‘independence and self-reliance’.52 Interestingly, the MP Peter Walker, a former and future Minister and an influential figure in the party, had been brought in for discussions with the group and advocated for a scheme through which council houses or flats would be given free of charge to tenants of twenty years’ standing. Whilst this approach had merits, it also raised old concerns: The Group fully understood the considerable political advantages among council house voters for the suggested policy. However it was our judgement that the objections from home owners would be very strong and difficult to overcome. We cannot therefore recommend its acceptance.53

The fundamentals of the Conservative approach were also explored by a Public Housing Sector Policy Group chaired by the MP Michael Morris and made up of MPs, party officials, a valuer, a housing association representative, a county councillor, an architect and a lawyer. Their report in June 1976 developed thinking along two clear lines: reducing public spending whilst ‘ensuring those unable to provide for themselves are looked after’ and encouraging more owner occupation.54 On the former point it was recognised that whilst there were significant savings to be had in the housing sector, there were limits to how far it was possible to go. Discussions on the latter point reveal that the Conservatives had been considering working towards achieving a target of 80 per cent owner occupation during the 1980s, but that this was now considered ‘almost certainly unattainable’.55 A new target of 70 per cent – which would require 250,000 council house sales per year – would eventually generate huge savings. The details of ‘right to buy’ on which the party would fight the next general election, and which would form the backbone of the policy agenda in office, were also now in place. The principle would be established after three years, at which point tenants would be eligible for a discount of 30 per cent. This would increase year on year up to a maximum discount of 50 per cent after a further twenty years. A paper on housing policy produced by the Shadow Environment Secretary,

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Ownership87 Tim Raison, and circulated to the Shadow Cabinet around the same time highlighted a significant reduction in public spending and the importance of ‘choice’ and ‘opportunity’ in extending home ownership. Thinking politically, Raison was concerned that the party should ‘effect significant policy changes in such a way as to stress the positive attractions of our approach and to minimise the opportunities for opposition to them’.56 Later in 1976, outside of the constraints of an election manifesto, The Right Approach was able to discuss Conservative thinking on housing in more detailed and philosophical terms: There are three main reasons why we should do more to encourage home ownership. First, it gives people independence; the ownership of their home buttresses a family’s freedom. Second, largely for this reason, most people want to become home-owners, and are happier as home-owners than as tenants. Third, helping people to become home-owners represents an excellent bargain for the taxpayer.57

Strikingly, fixing a maximum mortgage rate was still in the policy mix. The ‘purists’ had not yet won out. The Right Approach saw it as one of the methods that could, under the right circumstances, be used to help favour first time buyers, although no figure was now suggested. That ‘right to buy’ would come into effect after three years was made clear, but no specific figure for the discount was yet spelled out. This lack of detail was remarked upon by the next Environment spokesman, Michael Heseltine, who in a June 1978 paper lamented the slow progress on ‘right to buy’ and tried to make clear to his colleagues what the stakes were: ‘If the next Conservative Government is not able to raise the rate of council house sales well above anything in the past decade we will make little progress towards our objective of expanding home ownership’.58 His case had a number of dimensions: democratic – an expansion of ‘right to buy’ was popular and would meet public demand; economic – fewer housing subsidies would be necessary; and political and social – ‘Expansion of home ownership is one of the most important things we can do to spread wealth and ownership, and therefore independence from the State, among our citizens’.59 At the same time it is clear that, as with other areas of policy, more radical thinking was going on outside the official policymaking machine, but that this had only a limited impact on the serious yet incremental approach developed by the Conservatives. For example, correspondence between Sir Keith Joseph at the Centre for Policy Studies and Ralph Harris at the Institute for Economic Affairs about future publications reveals that some of the options that might be considered in the course of ‘Dealing with council houses’ included not just ‘Sell ’em off’ but ‘Give ’em away’.60 That proposal had also been considered by the Selsdon Group. Whilst many may have sympathised with this approach in theory, it was not a realistic proposition in political terms for the Conservatives. By the end of the opposition period, despite such debates about housing policy, relatively little had changed. The 1979 general election manifesto outlined a remark-

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ably similar approach to the sale of council houses as its predecessor ­documents had five years earlier. The record of the Labour government was naturally criticised and, once again, local authorities which had failed to take advantage of the opportunities presented by ‘right to buy’ were criticised. The key development was that the terms of the council house sales would now be even more generous – 33 per cent for tenants of three years’ standing and 50 per cent for those of twenty years’. It was also made clear that the necessary legislation would follow in ‘the first session of the next Parliament’.61 Furthermore, whilst mortgage rates were still recognised to be important it was now envisioned that they would be lower as a result of ‘cutting government spending and borrowing’. No specific figures were mentioned. Interestingly, however, the philosophical case for increased home ownership was arguably less evident than it had been in previous manifestos. More practical considerations were to the fore.62 We can see therefore that a commitment to expanding home ownership had been a clear and consistent element of Conservative thought over a long period of time. By the mid- to late 1970s this long-standing interest had centred on an expansion of the ‘right to buy’ scheme, but this was not necessarily indicative of change. Philosophical justifications for this approach were still important, but they were combined more than ever before with wider economic and political considerations. That the policy offered the promise of significant savings in public expenditure and might have a popular electoral appeal were particularly important and led to ‘right to buy’ receiving a new impetus in the years leading up to 1979. Notes  1 J. Rutter, E. Marshall and S. Sims, ‘The “S” Factors: Lessons from IFG’s Policy Success Reunions’, Institute for Government, 2012.  2 R. Heffernan, ‘UK Privatisation Revisited: Ideas and Policy Change, 1979–92’, Political Quarterly, Vol. 76, No. 2, 2005 p. 266.  3 E.H.H. Green, Thatcher (London, 2004) p. 84.  4 Ibid. p. 87.  5 M. Francis, ‘“A Crusade to Enfranchise the Many”: Thatcherism and the “PropertyOwning Democracy” ’, Twentieth Century British History, Vol. 23, No. 2, 2012 p. 281.  6 Ibid. p. 282.  7 Ibid. p. 280.  8 A Better Tomorrow, 1970 General Election Manifesto.  9 Firm Action for a Fairer Britain, February 1974 General Election Manifesto. 10 Ibid. 11 Putting Britain First, October 1974 General Election Manifesto. 12 Thatcher Papers, THCR 2/6/1/52, ‘Nationalised Industry Policy Group’, 20 April 1976. 13 Green, Thatcher p. 93. 14 TP, THCR 2/6/1/52, ‘Nationalised Industry Policy Group’, 12 May 1976.

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Ownership89 15 TP, THCR 2/6/1/159, ‘Nationalised Industries’, 13 July 1976. 16 Ibid. 17 The Right Approach, 1976 p. 21. 18 Ibid. p. 32. 19 Ibid. 20 TP, THCR 2/6/1/52, ‘Nationalised Industries Policy Group’, 12 January 1977. 21 TP, THCR 2/6/1/37, ‘Economic Reconstruction Group’, 8 July 1977. 22 Ibid. 23 Ibid. 24 Ibid. 25 Ibid. 26 The Right Approach to the Economy, 1977 p. 32. 27 Ibid. 28 Ibid. 29 The Economist, ‘Appomattox or Civil War?’, 27 May 1978 p. 21. 30 TP, THCR 2/6/1/163, ‘Policy for the Nationalised Industries’, 26 June 1978. 31 Francis, ‘Crusade’ p. 284. 32 A. Edwards, ‘“Manufacturing Capitalists”: The Wider Share Ownership Council and the Problem of “Popular Capitalism”, 1958–92’, Twentieth Century British History, Vol. 27, No. 1, 2016 p. 109. 33 TP, THCR 2/6/1/163, ‘A Policy for the Nationalised Industries’, 16 June 1978. 34 1979 General Election Manifesto. 35 Heffernan, ‘Privatisation’ p. 264. 36 A. Davies, ‘“Right to Buy”: The Development of a Conservative Housing Policy, 1945– 1980’, Contemporary British History, Vol. 27, No. 4, 2013. 37 A. Murie, ‘The Housing Legacy of Thatcherism’ in S. Farrell and C. Hay (eds), The Legacy of Thatcherism (Oxford, 2014), pp. 143–4. 38 Francis, ‘Crusade’ p. 276. 39 Davies, ‘Development’ p. 423. 40 A Better Tomorrow. 41 Ibid. 42 Firm Action for a Fairer Britain. 43 Ibid. 44 Ibid. 45 M. Thatcher, The Path to Power (London, 1995) p. 242. 46 Putting Britain First. 47 Thatcher, Path p. 243. 48 E. Heath, The Course of my Life (London, 1998) p. 523. 49 Thatcher, Path p. 246. 50 TP, THCR 2/6/1/156, ‘Interim Report of the Home Ownership and Construction Industry Policy Group’, 15 July 1975. 51 TP, THCR 2/6/1/158, ‘Final Report of the Home Ownership and Construction Industry Policy Group’, 6 May 1976. 52 Ibid. 53 Ibid.

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54 TP, THCR 2/6/1/159, ‘Public Sector Housing Policy Group’, 18 June 1976. 55 Ibid. 56 TP, THCR 2/6/1/159 ‘Housing Policy’, 23 June 1976. 57 The Right Approach p. 51. 58 TP, THCR, 2/6/1/163, ‘Sale of Council Houses’, 28 June 1978. 59 Ibid. 60 Thatcher Foundation, ‘Joseph to Harris (Request for Publication Ideas)’, 10 February 1976. 61 1979 General Election Manifesto. 62 Ibid.

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5

Industrial relations

Getting away with murder? Trade unions, their practices, and their political and economic impact were important issues throughout the 1970s.1 Such was their significance that, according to different interpretations, this was either the period which marked the highpoint of trade unionism in British history, or it was the moment of victory for neoliberal critiques of trade unions and the beginning of the end for traditional industrial relations.2 The Conservative Party is at the heart of these debates and was at the centre of many important changes during this period. The 1960s and 1970s could be seen as a time of progress for trade unions rather than one of defeat, particularly if it is recognised that there were no simple periods of advancement or retreat for the labour movement. Industrial change had been possible over many decades, in spite of the continued resilience of capitalist forces, and this process largely continued during the 1970s.3 The labour movement may not yet have been in crisis. According to John McIlroy, ‘If we compare British trade unionism at that time with its position both earlier and later in the twentieth century, it is difficult to agree (without over-estimating their influence) that unions were already Emperors with no clothes.’4 This period also marked a highpoint in trade union membership. Having been consistently above 40 per cent since the 1950s, by 1975 more than 50 per cent of the British workforce belonged to a trade union. In 1979 this figure reached 55 per cent and, although the numbers were soon to fall back, 1980 represented the peak year for membership in Britain.5 Declining numbers coincided with real changes to industrial relations during the 1980s, but there need be no simple links between the events of the 1970s and specific changes brought about during the subsequent decade. What happened in the 1980s could have been determined largely by the unique political and economic circumstances of that period.6 It was also the case that although high at the beginning and end of the decade, the number of strikes in Britain remained relatively modest for most of the 1970s. Between 1974 and 1979 the number of working days lost halved, and then halved again in 1980. The period was not necessarily dominated by mass walkouts.7 However, a number of observers have argued that the social and economic landscape was already changing by the late 1970s, in such a way that the ­traditional

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labour movement was being undermined, particularly in terms of growing materialism, consumerism and a move from a collective to a more individualistic culture. During a period of high inflation, unemployment and taxation, an increasing number of trade unionists may have been fighting first and foremost for their own material interest. Individually they had little strength, but when significant parts of the growing trade union movement were engaged, they could collectively wield great political and economic power.8 A number of contemporary critics recognised this, however, and the period could also be seen in terms of a shift in the ‘governing ideology’ of industrial relations across the whole of the late twentieth century, not just in Britain but around the world.9 At the heart of this shift was arguably a detailed neoliberal critique of the economic and political role of trade unions which ‘contrasted the public interest of individual consumers with sectional producer interests’ and drew deeply negative conclusions.10 Neoliberal thinking on trade unions had been evident since at least the 1930s, when the analysis of some free marketeers, particularly those associated with the Mont Pelerin Society, had forcefully rejected the granting of a legitimate economic role to such uncompetitive monopolies, which would use officially sanctioned coercion to advance their own sectional interests.11 By the 1950s and 1960s, groups like the Institute of Economic Affairs in Britain had played an important role in ‘systematizing’ this analysis and combining traditional concern about trade unions with the excesses of the post-war consensus into a powerful ideological package.12 In the 1970s, this long-standing hostility was also bound up with fears about high inflation, economic decline and ungovernability.13 That monetarist theory suggested that inflation was the result of lax monetary policy on the part of governments mattered little as traditional anti-union rhetoric continued to be ‘deployed by its supporters with promiscuous abandon’.14 A number of influential voices in the media certainly performed this role. In one interesting example, the outspoken journalist Peregrine Worsthorne compared the trade unions to popes of the Middle Ages who were able to get away with murder by claiming to be doing God’s work, and suggested that the problem was so serious that it was the moral equivalent of appeasement. In Worsthorne’s words, ‘Herr Hitler was not a gentleman. Nor are the Communists in the unions, who are fighting to win.’15 It is unsurprising therefore that such an anti-union agenda was able to make some headway and help to bring about later policy changes by the Thatcher governments. As Ben Jackson has described: The neo-liberal analysis of trade unions was influential in bolstering the intellectual self-confidence of right-wing politicians and activists, particularly in Britain and the United States. Of course, the leaders of the British Conservative Party in the 1970s and 1980s hardly needed to be told by a group of intellectuals that the trade unions posed a serious threat to their political objectives. Nonetheless, neo-liberal ideas framed and deepened their political thinking and furnished them with a powerful rhetoric about the necessity of industrial relations reform.16

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Industrial relations93 As with other areas therefore, official Conservative Party policy, particularly during the 1974–79 opposition period, provides a good test of what was actually happening in British politics. To what extent was a neoliberal critique of trade unionism apparent in official Conservative policy? Did the Conservatives have detailed plans for trade union reform worked out prior to 1979? This chapter will argue that, although it is important to recognise that some changes were on-going during the 1970s, and they did come to have an impact, the specific policy changes of the 1980s do not appear to have been directly foreshadowed by 1979. An examination of Conservative policy at this time suggests that, as with other areas, tradition, continuity and the short-term political constraints of the period remained important factors. Wider neoliberal ideology, particularly the critique of trade unions offered by the Institute of Economic Affairs and the Centre for Policy Studies, and the anti-union activities of groups like the National Association for Freedom (NAFF), which will be discussed in detail below, clearly had an impact and contributed to the use of some more powerful rhetoric. As we shall see, a number of Conservative politicians like Sir Keith Joseph were often outspoken about the trade unions and their perceived threat to individual freedom.17 They were particularly animated by the Grunwick dispute, which is the subject of an instructive case study in this chapter. However, a gap still remains between this kind of thinking and the policy reality of the period. The Conservatives as a whole moved only gradually and partially in this direction. Significantly, the Shadow Cabinet and those at the heart of the Conservative policymaking process were most immediately concerned with framing realistic proposals that reflected political events, and moderate voices remained in positions of influence. Jim Prior in particular performed a crucial role as the official spokesman on Employment, whilst other ‘One Nation’ types like Ian Gilmour and some of the older paternalist figures argued for a more balanced and cautious approach.18 Though members of the Economic Reconstruction Group and others saw dealing with the trade union issue as a crucial element of economic policy, there was little appetite for taking responsibility away from Prior.19 There were no simple defenders of the unions and there was agreement about the need for some kind of change, but how this might be achieved, whether by confronting the unions more forcefully or adopting a largely co-operative line, was not fully resolved to the satisfaction of either side. Overall therefore, official thinking on industrial relations did not change dramatically between 1974 and 1979. There were some noteworthy developments and the party did devise new policies to address particular issues, but these were in line with long-standing Conservative concerns and often a necessary response to specific events as they unfolded. Changes were proposed to the laws governing the closed shop, picketing and trade union elections, and more serious and controversial reforms to the welfare payments made to strikers were contemplated. But the Conservatives did not overthrow many aspects of their previous approach. The party broadly held positions which both recognised the negative role that trade

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unions increasingly played, whilst also accepting that in some form they could have a positive and collaborative role. The prospect of consultation with government about economic goals, which had been present at the beginning of the period, continued throughout, although the form it would take developed. Furthermore, the West German-influenced process of Concerted Action that the Conservatives would come to rely on in this regard also provides an example of the ways in which the party was learning policy lessons from a wide base. Pay bargaining The rights, responsibilities and legal immunities enjoyed by trade unions had first been established by the 1906 Trade Disputes Act, which formed the basis of industrial relations for much of the rest of the twentieth century.20 Trade unions played an important co-operative role during the Second World War, and although this successful collaboration with government would continue in some important regards after 1945, by the 1950s and 1960s serious questions were being raised about the suitability of the long-standing settlement on rights and immunities.21 By the 1970s, the underlying economic context in Britain, the resulting priorities of governments and the interests of trade unions had begun to diverge. Many of these problems had been diagnosed by the neoliberals who formed part of an early ‘subterranean movement’ against the collectivism of the 1930s and 1940s.22 By the 1950s, after their own experiences in government, a number of Conservatives had become increasingly concerned about the conciliatory attitude of their party towards the trade unions. The record of Walter Monckton as Minister of Labour in the Macmillan government was the subject of particular scrutiny.23 A young Geoffrey Howe was amongst those who proposed radical reforms in the 1958 pamphlet A Giant’s Strength.24 Such advice was disclaimed as official policy but it serves to demonstrate that, within certain bounds, some Conservatives were willing to consider the possibility of significant trade union reform.25 By the late 1960s, the need for change was also recognised by the Wilson government and the Secretary of State for Employment, Barbara Castle in particular. The 1969 White Paper ‘In Place of Strife’, based on the findings of a Royal Commission, proposed new rules governing strikes, but the reform was famously opposed and abandoned.26 As, ultimately, was that attempted by the Heath government with the 1971 Industrial Relations Act, which had sought to impose an official system of union registration and introduced the ill-fated National Industrial Relations Court to mediate disputes.27 The Act was hugely contentious and, as we shall see, the fallout from its failure affected the Conservative Party for many years afterwards. After settling the 1972 miners’ strike by conceding a massive pay increase, the Heath government’s authority was further undermined. Significantly, the strike had been dominated by scenes of mass picketing, including that which famously forced the closure of the Saltley coke depot.28 When a second strike began towards the end

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Industrial relations95 of 1973, forcing the declaration of a state of emergency and resulting in shortages and blackouts as part of the ‘three day week’, Heath and a number of those around him felt there was little alternative but to appeal to the electorate and seek a fresh mandate in order to confront the trade unions once and for all.29 The subsequent election was, unsuccessfully, fought on the theme of ‘Who Governs Britain?’ Perhaps unsurprisingly, the party’s manifesto described industrial relations as the ‘Achilles heel of the British economy’.30 It had certainly been the Achilles’ heel of the Heath government. The rhetoric aimed at certain trade unions and the National Union of Mineworkers in particular was robust.31 Nonetheless, it was also clear that the party remained committed to the principle of co-operation at the highest levels. The delivery of successful economic policies was seen as the responsibility not just of government but also of its partners. As it had been the centrepiece reform of the Heath government, relations were also viewed through the prism of the 1971 Industrial Relations Act, and although a strong defence of the Act and its intentions was mounted, the manifesto also accepted that it was imperfect in its current form and that it would be necessary to ‘amend it in the light of experience’.32 We can see therefore, that a balance between attacking the trade unions which had caused the government so much trouble and forced it to the polls, and recognising that they still had an important role to play, was already at the heart of Conservative thinking. That using large and complex pieces of legislation to address the trade union issue may not have been the best approach was also becoming apparent. By October 1974 therefore, after eight months of reflection in opposition and the repeal of the Industrial Relations Act by the incoming Labour government, the Conservatives promised not to reintroduce it.33 A different solution would have to be found, one that would fit the different circumstances that the party was likely to inherit in future. Labour’s new Trade Union and Labour Relations Act was even accepted as the best way to move forward. The second manifesto expressed hope that the decision would ‘create a better climate for industrial partnership’.34 The trade unions were recognised as an ‘important estate of the realm’ with whom it would be necessary to ‘co-operate closely’. ‘Partnership’ was the document’s defining word, although there was also some tough rhetoric about the ‘short-sighted selfishness of some powerful groups’.35 Perhaps most significantly, the party was beginning to look for another way to formalise the relationship between the government and interest groups. Backing was now given to a strengthened National Economic Development Council, the corporatist body established in 1962 to bring together the important players.36 Andrew Taylor has suggested that Heath had therefore completed his journey to ‘tripartism’.37 The framing of the whole October manifesto in terms of a bi-partisan appeal to the national interest was certainly important in this regard, but it was not inevitable that this ‘corporatist flowering’ was subsequently ‘neutralized by defeat’.38 Whilst some things certainly did change under Thatcher, this kind of overall approach remained in place throughout the period.

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The new leader’s personal hostility towards the trade unions was clearly an important factor, but even more significant was the experience of two general election defeats. Changes became easier once it was apparent that a significant period in opposition lay ahead, and that the party would have to replenish its lost authority on industrial relations. There was pressure from inside and outside the party to take a dramatically different approach and speak out more decisively against the trade unions, which at times some Conservatives were able to do, but their rhetoric was not always matched by policy change. As we shall see, policy continued to develop along familiar lines. In outlining the tasks facing the party in 1975, the Director of the Conservative Research Department, Chris Patten, accepted how important the trade union question was likely to be, but also sounded a note of caution about how it should be addressed: In presentational terms, we should not seek to pretend that we have an easy answer to the problem of trade union power: we should stress that this is a problem central to the future of parliamentary democracy and that, even while we have proposals (postal ballots etc.) for strengthening the moderates inside the unions, this problem can only ultimately be resolved by the will of the common sense majority.39

Those specific proposals will be addressed in detail below, but this kind of cautious thinking was accepted by the majority of the Shadow Cabinet. In private, Howe, the new Shadow Chancellor, described the monopoly bargaining powers of trade unions as a ‘lever that has been used effectively to obtain control of the keys to the Bank of England’.40 He also recognised that monetarism in the economic sphere would not be enough on its own to undermine this power and that complementary reform of industrial relations was also necessary: The analysis of Professor Milton Friedman – who comments from an American setting, where the economy is far more flexible, far less centralised and far less ­unionised – has always appeared to me to place too little emphasis on this point. This is why the question of ‘Who Governs Britain?’ cannot be too easily dismissed.41

Leading Conservatives were far from complacent, therefore. There was a prospect of change once a little political space opened up and more could be done about the trade unions. But the party would not shed all this early caution. That Howe still framed his thoughts in terms of the ill-fated February 1974 election campaign further points to the relative continuity in official thinking. By 1976, the dynamics had been changed somewhat by the introduction of a formal incomes policy by the Labour government. In place since 1975 to try to hold down soaring wages and prices, the policy went against many of the better instincts that Labour had outlined just a year earlier. This went hand in hand with the ‘Social Contract’, an implicit agreement between the government and the trade unions of improved welfare provision in exchange for co-operation.42 Whether or not this approach unravelled as past incomes policies had done, as the Conservatives considered likely, would be a significant factor. For now, the Conservative Party could

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Industrial relations97 allow events to unfold to some extent and hold to its firm yet pragmatic line. This approach was supported by commentators such as Patrick Cosgrave and John Grigg in The Spectator, who recognised that whilst many of the Conservatives’ previous positions had failed and a number of trade union practices were still unacceptable, it would still be necessary to work constructively with them if the next Conservative government wanted to have the best possible chance of securing an economic recovery.43 Grigg even suggested that the principle of the Social Contract should be accepted, as trade union power was not going away and the Conservatives were unlikely to win without doing so.44 Perhaps unsurprisingly therefore, The Right Approach, released towards the end of 1976, argued strongly that ‘Parliament Must Prevail’, whilst again promising that a future Conservative government would not introduce another major piece of legislation.45 As will be discussed below, only a few smaller changes to the law on specific issues were considered, but the substance of the party’s position, and the way in which it was articulated, had changed very little. The Right Approach used exactly the same line that ‘the trade unions are not the government of the country’, whilst continuing to concede that a ‘strong and responsible trade union movement has an important role in a free society’ and that ‘it should be widely consulted and its interests acknowledged and understood’.46 The environment in which such consultations might take place was not yet described in detail, but the tripartite system operating in West Germany was mentioned as a successful model which might be looked at.47 Such a move towards ‘Concerted Action’ would soon be at the heart of the Conservatives’ position. Here there was also an attempt at differentiation from the approach being taken by Labour. The document highlighted the problems with incomes policies and the danger of unrepresentative relations between government and union leaders, such as those that Labour were overseeing, and suggested a move towards something closer to free collective bargaining, although that phrase itself was not used, but with a formalised and positive relationship between the relevant interest groups.48 The Right Approach has since been described as an ‘allthings-to-all-men compromise’.49 As discussed with regards to inflation, in April 1977 the Economic Reconstruction Group discussed a paper by the German economist Konrad Zweig which underpinned their debates about Concerted Action.50 Zweig described the West German system in which the government could consult with interest groups, such as trade unions, share information and work towards collective economic goals. Official advice was provided by an independent panel of economists. The ERG agreed that a similar system would be beneficial in the UK, likely built on the existing National Economic Development Council, and with a council of ‘wise men’ able to consider official data and conduct a useful and constructive dialogue with the unions about the economy.51 The Conservatives had already demonstrated their support for the NEDC in October 1974. However, Zweig also pointed out the significant ­differences between the UK and Germany, not least the more negative outlook for

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inflation and the politically motivated trade unions that would impede progress in Britain. The ERG recognised this and although concerned that the work of the wise men would be difficult, concluded that ‘while we should avoid presenting concerted action as any kind of panacea, it could help in spreading understanding of the realities of our economic position’.52 The process might help to bring about some ‘moderation of influence of pressure groups’.53 This again demonstrates the extent to which the Conservatives, or at least the ERG, were learning policy lessons from different places and operating in an increasingly international context. It was not just British narratives about industrial relations and the negative role of trade unions that were influential. Howe and Nigel Lawson had been particularly attracted to the West German model of economic success. Martina Steber has since demonstrated that there are important points of comparison between the experience of the conservative parties in both countries during the 1960s and 1970s. Discourses about employee participation and economic co-operation shared a great deal of common language, although, as recognised by Zweig, a real transfer of West German ideas to the UK was probably not possible.54 It appears unlikely that ideas such as Concerted Action would have been generated internally in quite the same way, or eventually taken so far, without the attraction of them having first been developed elsewhere. That they represented fresh thinking and an alternative to failed British approaches must have been important. However, as suggested above, they could also be seen to fit the direction that the party had been developing on some level since 1974. With no more major pieces of legislation in the pipeline, this was the policy that would formalise the relationship between the trade unions and the next Conservative government. Unfortunately, the subtleties of this whole approach were lost on the Conservative leader. When sent a copy of CRD’s proposals for Concerted Action in May 1977, Thatcher scribbled her now famous comments across the top: ‘Please tell Geoffrey and Adam Ridley that I disagree most strongly with this paper. We are trying to cut down advisory bodies and requests for statistics – not multiply them.’55 Richard Ryder, Thatcher’s Political Secretary, noted simply that ‘Her comments are selfexplanatory.’56 When the subject was debated again by the ERG in June something less than a ringing endorsement of Concerted Action made its way into the minutes of the meeting.57 As was described; ‘Very strong reservations were expressed as to the advisability of setting up new institutions, such as a council of economic experts. It could be harmful, and resuscitate all the old arguments against such bodies, and could create fresh difficulties.’58 The focus would instead be on reforming existing bodies and parliamentary procedures and improving the quality of information and advice in order to facilitate better decision-making. The ambitions attached to Concerted Action were more limited than they might have been, therefore. This was not expected to be a forum which would actively and successfully debate the finer details of government fiscal and monetary policy. Nonetheless, Concerted Action was significant, particularly as it might help to ease the transition to the kind

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Industrial relations99 of economy that the Conservatives wanted to see. By 1979 Adam Ridley was able to record that CRD had discussed the setting up of the group, its form and new functions, and the timetable by which it might be introduced. The Head of the National Economic Development Organisation had also written to the Chancellor, Denis Healey seemingly describing how it was ready and well suited to the role.59 In 1977, The Right Approach to the Economy continued to question the whole concept of incomes policies and made perhaps the most open and philosophical case yet for a return to free collective bargaining. The reality of cash limits and the threat of unemployment if workers priced themselves out of the market were thought to be central to moderating wage claims.60 However, there was also recognition that in order to help bring about the right kind of thinking the government would have to be open and transparent and the official forum, based upon the existing structure of the NEDC, would be crucial.61 Here, we can see that the Concerted Action approach represented a compromise between two otherwise politically unacceptable extremes: statutory incomes policies, which were increasingly seen to be wrong in principle and were likely to fail again under Labour, and the dangers of full free collective bargaining. The Right Approach to the Economy criticised the subservience of the Labour government to a small number of trade union leaders, but again repeated the popular mantra that the trade unions were a ‘very important economic interest group whose co-operation and understanding we must work constantly to win and to keep’.62 As the document made clear, ‘We see no need for confrontation and have no wish for it.’63 In November 1977, as part of a wide-ranging assessment of Conservative strategy, Patten presented an interesting choice of themes on industrial relations.64 Would this position be sustainable right up until the next general election? Either the Conservatives’ approach should shift away from a focus on how they would be able to get on with the unions, Patten argued, and should instead concentrate on the negative results of their role, with greater attempts to distinguish between the leaders and the ordinary members, or they should stop talking about the trade unions altogether. ‘By constantly referring to them, we only remind people of an issue on which we can never win’, Patten suggested.65 The second option was clearly a straw man, and in a follow-up document in December Patten argued that: We should stop saying that we can get on with the unions. This is too defensive. We must change the question from ‘Could Conservatives get on with the unions?’ to ‘How can the Labour Party and union leaders go on justifying to their members policies and attitudes which have left their members so much worse off than their counterparts abroad?’66

Nonetheless, rather than unleashing a rhetorical attack on the unions that would have shifted the party clearly in a neoliberal direction and pleased many on the Right, he suggested that this change should be initiated by the pragmatic Employment spokesman. As Patten described, ‘Jim Prior has a sufficiently strong

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reputation as a “friend of the unions” to say some more critical things about them now. He is the right person to take the lead in changing the union question.’67 The Conservatives were willing to step up their rhetoric when it was to their political advantage therefore, and coming from Prior it would appear more authentic. A strong dose of ideological hostility to the trade unions had always been present but allowing it to rise to the surface a little more need not mean giving up on the pragmatic approach overall. If Labour was failing on industrial relations and the public was moving in a more critical direction, then it was only natural for the Conservatives to respond. In January 1978 Lawson provided Thatcher with copious notes on Patten’s strategy document, seemingly on his own initiative, and was critical in a number of areas.68 However, he too believed that Prior was the key man in dropping the claim that the party could get along with the unions: otherwise it will be interpreted as a major split within the party on this vital issue. Splits are, of course, always unhelpful; but over the trade unions they are potentially more damaging than over any other issue. People will have confidence in our ability to handle the trade unions only if we appear to have confidence in ourselves.69

As long as the distinction between trade union leaders and their rank and file was always made clear, then the party could remain united around a more robust line. However, that Prior would even want to attack the unions was far from clear. Prior was far from soft on the issue, but he had been working hard to build up positive relationships with union leaders, from the low point of 1974, by attending meetings, conferences and lunches, and he fully understood the need to take a cautious approach.70 In January 1977, after eighteen months of cultivation by Prior, representatives from the TUC General Council met with members of the Conservative front bench.71 Because others in the party were ‘busy trying to go down exactly the same path as [the Conservatives] went down in the early ’70s, and thinking everything could be solved by legislation’, Prior, in Howe’s words, lived in fear of a lurch to the Right.72 It has long been recognised furthermore, that although Thatcher was instinctively more hostile to the trade unions and ideally would have liked a more robust line, she acquiesced to Prior’s approach for practical and political reasons.73 John Hoskyns, a former businessman and associate of Joseph and Alfred Sherman at the CPS, was particularly disappointed that Prior did not speak out in the way he had been expected to.74 By early 1978, greater pressure on the trade union question was being applied by those at the CPS and elsewhere. Along with another political outsider, Norman Strauss, Hoskyns was to play a particularly interesting role. Sherman had first been receptive to his analysis of industry and democracy and the need for stark ‘realism’, and, after initial meetings, Joseph and Thatcher were also suitably impressed and brought Hoskyns and Strauss into the official Conservative policymaking process. Hoskyns in turn was ‘struck by her belief that “something simply had to be done” ’.75 He stayed close to the centre for

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Industrial relations101 several years, later serving as Head of the Downing Street Policy Unit from 1979 to 1982. Hoskyns and Strauss spent most of 1977 producing the detailed ‘Stepping Stones’ report.76 The substance of the report stemmed from the emerging ideas of systems analysis which were beginning to gain acceptance in business circles during the late 1970s.77 An important element was the detailed ‘cause and effect matrix’ or ‘wiring diagram’, which attempted to demonstrate how all of Britain’s economic problems were interconnected, with the trade unions at the centre. By thinking logically and making changes at the correct points in the process, the whole system would begin to work more effectively, the authors argued. According to Hoskyns, ‘We are not talking about a planning gadget, but about the fundamental approach of a government which is trying to save a socio-economic system which can no longer save itself.’78 Stepping Stones contended that the Conservatives could bring about real change, the kind needed to reverse Britain’s decline and secure an economic recovery, by instigating a strategic approach rather than focussing on detailed policies. Beginning a national debate on the union question and leading the argument in favour of change were seen to be particularly important. A shift in the climate of opinion against the trade unions and away from collectivism and socialism was needed, not just a narrow Conservative victory at the next general election.79 Stepping Stones was officially presented in October 1977 and made its way through a number of committees and a special policy group chaired by Willie Whitelaw.80 At various points Hoskyns and Strauss were convinced that they were making headway and their work was of real value to the party, whilst at others they felt that they were meeting stubborn resistance and the Conservatives would never endorse their ideas.81 The key moment came in January 1978 when the Shadow Cabinet met to discuss the programme. Although it was thought that the trade union problem had been diagnosed correctly, no agreement was reached on the desirability of using the report in any official sense. Stepping Stones had been ‘strongly opposed’ by Prior, who argued that ‘a strident campaign against the unions would reunite the Labour movement and possibly reverse its growing unpopularity’.82 John Davies, then Shadow Foreign Secretary, had argued that ‘if we told the truth about the unions we should certainly lose the election’, and Thatcher had agreed that the trade unions ‘could not be the centrepiece of our [election] strategy’.83 The role of Patten, after being tasked with marrying the insights of Stepping Stones with the party’s current approach and finding that it could not easily be done, appears to have been important, whilst Gilmour was also thought to have been an important figure in deflecting the report.84 Only simple presentational matters were confirmed, and it was even agreed that Prior, the conciliatory face of the Shadow Cabinet, should have sole responsibility for presenting the Conservative position on trade unions, and that care should be taken that Stepping Stones did not leak to the Press.85 To Hoskyns, Prior and Gilmour had long been particular sources of frustration.86

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Some observers have argued that when the significant reforms the Conservatives were able to introduce after 1979 are taken into account, Stepping Stones begins to appear as a much more significant document.87 Dominic Sandbrook has described how it appears to be a ‘stunningly prescient blueprint for the Thatcher Government’.88 That Stepping Stones was side-lined and ‘gathered dust in the equivalent of a locked desk drawer’ now seems ‘astonishingly cautious’, given the leader’s fearsome reputation.89 However, although it certainly presented some robust arguments, was appreciated by some leading Conservatives and made it a long way in the policymaking process, Stepping Stones did not come to be at the  centre of official party thinking. Traditional ways of understanding the trade union problem remained much more important, and the party largely continued with its pragmatic approach. Similarly, the work of the Authority of Government policy group, established in 1975 to consider the ways in which a future Conservative government might best prepare for and then respond to another major industrial dispute, was striking in its scope and seriousness before only relatively muted conclusions were eventually reached. The group, chaired by Lord Carrington, was most notable for the inclusion of outside voices, such as the then Barrister (and medieval historian) Jonathan Sumption and the Finance Director of Tate and Lyle, David Hardy. Invited guests also gave expert evidence, including Lord Armstrong, Head of the Home Civil Service until 1974, former Permanent Secretaries Sir Anthony Part and Sir Conrad Heron, senior representatives of the ports, oil, gas, electricity and water industries, and, on an informal basis, Sir Robert Mack, the Commissioner of the Metropolitan Police.90 Recommendations included the setting up of a new civil service unit to identify potential industrial conflicts early and co-ordinate the government response, as well as help better educate the public. Peter Dorey has noted how the group’s final report produced in June 1977 demonstrated ‘caution and circumspection’ and could be read in a number of different ways according to the inclination of the reader.91 It either demonstrated that whilst there was relatively little the Conservatives could meaningfully hope to do, the risk of serious unrest in some industries was limited, or that a tougher stance would eventually be needed across the board. Either way, the work of the Authority of Government policy group did not have a tangible impact on the direction of official Conservative policy in the short term. According to Howe, although Stepping Stones ‘remained available to offer guidance through the years ahead’, the ‘most strategically placed Stepping Stone we could have wished for’ came with the Winter of Discontent.92 As the disruption and unrest of late 1978 and early 1979 began to bite, Sherman was still advising Thatcher of the need to step up the attacks on the trade unions in order to win over the electorate and convince them of the need for real reform. After the severe hit that had been dealt to Labour’s credibility, he was beginning to feel more confident that the Conservatives would be given a second chance to bring about change. The

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Industrial relations103 memory of failure back in 1974 may have faded a little and the outspoken stance of Sherman and his colleagues may have had an impact, but the role of the Winter of Discontent was already being understood as hugely significant. As he described, ‘That is the important thing, the change in the climate of opinion. We did something to bring about this change, but events played the greatest part.’93 Nonetheless, this kind of thinking was not yet universal across the Conservative Party, at least whilst the lasting fallout from the strikes and disputes remained unclear. Howe had made a number of speeches in late 1978 which appeared to signal a step up in rhetoric about the disconnect between trade union members and their politicised leaders, but in January 1979, after reading the text of a robust speech which Joseph was to give on the trade unions, Patten was still able to raise concerns about the short-term political consequences of some of his arguments.94 The speech was designed to focus on wider strategic thinking and influence the minds of commentators rather than elucidate Conservative policy, with Joseph describing his aim as highlighting that ‘over and above some changes in the law, there are equally big questions of the framework within which unions function’.95 Despite this, Patten told Joseph that: I see the point of the speech and admire the trenchant style in which it is written. However, I find the political message a little confusing and think that it contains a number of mines quite large enough to blow you out of the water. It would add a number of new quotations to Denis Healey’s armoury.96

He did not disagree with his colleagues that the events of the winter were likely to be a turning point, but he also went on to say that ‘I believe that things are moving quite nicely in our direction because we have moved skilfully in the wake of events rather than because events have moved in the wake of our rhetoric’.97 The disagreement was essentially about the extent to which the Conservatives should jump on the opportunity that had been presented, and to some extent they had helped to bring about, and fully seek to press home their apparent advantage, or continue to be patient and allow the standing of the Labour government to unravel even further, largely of its own accord. Patten went on; ‘We must be careful not to risk a mistake now but maybe you will think I am being more cautious than Mrs Thatcher, Geoffrey Howe and Jim Prior would want us to be.’98 This approach did not endear the CRD Director to Sherman, who subsequently described his letter as both ‘characteristic and disgraceful’.99 From his perspective Patten was either serially incapable of understanding complicated arguments or was being deliberately and infuriatingly abstruse. He went on; ‘If he has detailed comments to support his argument, let him send them indeed. Otherwise he should have kept his counsel.’100 On the detail of what the Conservatives should attempt to do next Sherman raged that ‘His message seems to be: say nothing, for to say anything gives hostages to fortune. Let us hope that by saying nothing (except that we shall change nothing if elected, which is a major hostage) we shall

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win on the backlash.’101 Patten was ‘congenitally incapable of understanding that politics is about anything but office and that what we do, for better or worse, will decide the fate of this nation’.102 This political short-sightedness did not extend to people like Hoskyns, a ‘real-world man’ and ‘scientific methodologist’, whom it was understood had conclusively demonstrated that ‘there are times when a high-risk strategy is the least risky of all choices’.103 This example amply demonstrates the differences that still existed, despite the common acceptance of some tougher rhetoric about the trade unions. There was seemingly little love lost between the two men. In June 1979 Sherman described Patten as ‘pathologically jealous, not only of me and the CPS but of his own associates’, ‘a limited man, promoted far beyond his ability’ and a ‘Heathite’ who ‘believes that the sum of political wisdom is to bribe the public with its own money’.104 However, Patten was the party official, not Sherman. Despite these vigorous debates Conservative policy remained stubbornly moderate and maintained its now well-established pattern. After the Winter of Discontent there were a few significant changes, which will be discussed below, but the fact that Sherman still needed to give this kind of advice indicates that, although it may have gained a little more traction and was even running ahead in rhetorical terms, the neoliberal critique had not yet had a dramatic impact in terms of shifting Conservative policy, despite the opportunity provided by the events of that winter. As before, the party had adapted to shifts in public opinion in its own way. The Concordat reached between the Labour government and the TUC in February 1979, ‘The Economy, the Government and Trade Union Responsibilities’, did not and could not bring an immediate end to all the on-going disputes, but it did signal an apparently important reaffirmation of the desire to work together in order to achieve a number of economic goals, in return for new codes of practice in a number of areas that had been the subject of concern for Labour, the Conservatives and the public.105 Thatcher’s own heavily annotated copy demonstrates the personal scepticism she felt about the endeavour and the extent to which wider confidence in the government was already irrevocably shaken.106 It is perhaps, unsurprising therefore that around this time CRD commissioned reports from the market research firm ORC into the ‘Attitudes of the Electorate to Trade Unions’.107 The results of such surveys almost certainly provided reassurance to the Conservatives that the public was willing to accept the particular policy changes that they had been working towards. The areas in which opinion had not developed as much were also those in which radical steps had not yet been taken. In April 1979 for example, it was reported that the trade unions were seen to represent the second most important issue in the minds of the electorate, behind only unemployment.108 Labour had lost its natural lead on the question of which party would be best at dealing with them, and although the Conservatives had moved up, a majority still thought that they would have major problems when attempting to do so. Recognising a little more openly that trade unions had too much political influence had been an important but relatively easy step for the party to take. There

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Industrial relations105 was no popular mood for the total abandonment of their relationship with government. As the ORC report described, ‘The majority of the electorate agree that it is a good idea for the government, unions and employers to get together to discuss the economy and pay increases in general.’109 Policies such as Concerted Action had a meaningful part to play, therefore. The party had been firm and consistent and moved in the wake of events but had not been pushed beyond the electorate. The even better news for the Conservatives was that similar surveys also demonstrated that trade union members themselves tended to be only slightly more opposed to change. A BBC ‘Nationwide’ poll reported that 71 per cent of members agreed that the unions had too much power (as compared with 85 per cent overall).110 Whilst in 1964 Gallup polls had shown that 70 per cent believed trade unions were a good thing, by 1979 this had fallen to 53 per cent. Those who thought trade unions were a bad thing had risen from 12 per cent to 33 per cent.111 The Conservatives’ final approach was outlined in the 1979 election manifesto. The document condemned the experience of pay negotiations and the Social Contract under Labour, which were seen as an economic and political failure. This experience was thought to show that it was unwise to try to ‘impose responsibility by the prolonged and rigid control of incomes’. As discussed in the chapter of this book looking at inflation, the party had increasingly come to appreciate that this could only be brought about by economic reality. As such, the manifesto argued that the state should have no role in pay bargaining in the private sector. In the public sector, however, ‘open and informed discussion of the Government’s economic objectives’, again based on the West German model, would help to bring ‘wider understanding of the consequences of unrealistic bargaining and industrial action’.112 We can see therefore that such policies had not changed dramatically over the course of the period. In 1974 trade unions had been seen in both a positive and a negative light but were recognised as important partners of the government. In 1979 trade unions were still seen in much the same way and although no longer a partner, the government would still have to discuss its policies with them in a formal setting. Within this framework, it was clear that complicated pieces of legislation like the Industrial Relations Act were no longer on the agenda. As discussed below, a number of smaller changes were looked to instead, but these were in relation to individual issues that had often been a concern for the party over a long period of time and, perhaps most importantly, were of particular concern to the electorate. A wider neoliberal agenda is certainly discernible during this period, but although its rhetorical effect may have been significant it was not yet successful in dramatically changing Conservative policy. The Grunwick dispute We can understand further why this was the case by looking in detail at a significant event that played out at the same time as party thinking was developing. There were

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a number of high-profile strikes and disputes which helped to fuel a debate about industrial relations during this period, beginning in the early 1970s and peaking with the Winter of Discontent, but also stretching well into the 1980s. Perhaps the most notable dispute was that at the Grunwick photo-processing plant in North London between August 1976 and July 1978. Taking this dispute as a case study it is possible to demonstrate how popular concerns – about trade union power, the rules governing strikes and picketing, fear of violence and intimidation, the closed shop, trade union democracy and welfare provision for strikers – were important and how the Conservatives responded. Grunwick also demonstrates the important role that some external groups played during this period and the ways in which they interacted with the Conservative Party, but also the relative limits of their final influence. The long-running and bitter dispute centred on a stand-off between George Ward, the owner of the semi-eponymous company, and a number of his former employees represented by the trade union APEX.113 A wide range of other interest groups, activists, campaigners, businesses and politicians also became involved. The workforce at Grunwick included a large number of Asian immigrants from East Africa, many of them women, and the dispute, seemingly the latest in a series of problems at the plant, began after a small group had been dismissed or walked out following arguments with management about their poor conditions and unreasonable workloads. There had long been no union representation amongst the employees and after seeking help from the Citizens Advice Bureau the group approached APEX to take up their case.114 After initial picketing more than 130 others also walked out and were subsequently dismissed. The TUC and the Advisory, Conciliation and Arbitration Service (ACAS) subsequently gave support to the strikers and intervened to mediate the dispute. Legal disputes abounded for the rest of 1976 and most of 1977 as each side sought to defend its position and argued about whether the dismissed workers could or could not be represented or had any cause for recompense.115 The debate also spread to include those Grunwick workers who had not come out on strike and continued to work for the company. Scenes of mass picketing and violent clashes with police dominated headlines during the summer of 1977 as wide-ranging union pressure was brought to bear on the company. Ward and his supporters, including the National Association for Freedom, argued therefore that the dispute was no longer about the basic rights and possible recognition of those on strike, but those who seemingly had no desire to join a union and were facing fierce intimidation simply for trying to get to work.116 This argument quickly became bound up with wider concerns about the closed shop; the practice by which an individual could be required to be a member of a particular trade union as a condition of their employment. This had long been a cause of concern for many Conservatives. It was often seen as a particularly offensive demonstration of trade union power which raised principled questions about freedom and personal choice.117 The 1971 Industrial Relations Act had sought to introduce restrictions on the closed shop for the first time in Britain. However,

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Industrial relations107 along with the rest of the legislation, the provisions floundered under trade union criticism and were repealed by Labour.118 The issue was quickly back on the agenda once Thatcher became leader in 1975 and it was the subject of scrutiny by a subcommittee of the Shadow Cabinet and the Employment policy group chaired by Prior. No snap decisions were made about the party’s position, but it was eventually decided that the party could not promise to outlaw the closed shop altogether on the grounds that doing so would be too disruptive.119 There would instead be compensation for those who lost their job as the result of a closed shop, and a statutory requirement for the practice to have the support of a majority of workers in a secret ballot, as part of a new code of practice.120 Although many Conservatives consistently declared themselves to be against the closed shop in principle, it would not be made illegal. Right up until 1979 therefore, the party continued to ‘evince considerable caution’ on the issue.121 Grunwick, however, was seized upon by those who would have gone further. During the dispute there was still much confusion about the cause and overall legitimacy of the strikes. In reality, the dispute was about trade union recognition at the plant, and the subsequent representation of the sacked workers by APEX. There had been no union recognition at Grunwick and the company resented the intervention of APEX and others, and the subsequent rulings of ACAS, which it had overturned in the High Court, that APEX could even become involved and have any official role in the dispute.122 The wishes of the remaining workforce, particularly in terms of not wanting to join a union at all and go to work without being intimidated, became the centre of attention. However, during the confusion the narrative of the Prime Minister and others was that, although the government could do little to intervene, some employees had lost their jobs at the plant as a result of wishing to join a union. These points were fiercely debated in the House of Commons, but Thatcher’s criticism that ‘the right of the law-abiding citizen to go peacefully to work’ was not being adequately defended was rebuffed by Callaghan as an unwarranted intervention in the dispute and an attempt to start a ‘political battle’.123 The following week, with passions raised amongst MPs on both sides, Thatcher and other Conservatives tried to pin Callaghan down on the legal right of an employee not to belong to a union just as much as the right to belong to one.124 Thatcher understood that there had been union members working there before the dispute began, which was not correct either, but the fact that the Conservatives picked up the issue in this way is revealing. The most powerful rhetorical attacks came from ‘moral individualists’ like Ward and his supporters at NAFF, but some ‘Conservative neo-liberals’ also joined in.125 Joseph in particular was often scathing about Grunwick. The dispute was more like a ‘siege’ or ‘battle’ he suggested, whilst those who had exacerbated it were ‘agents of hate and destruction’ and ‘red fascists’.126 Most importantly, however, it represented a ‘make-or-break point’ for the ‘freedoms of ordinary men and women’.127 That the dispute was viewed through the prism of the right not to belong to a trade

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union in this way demonstrates how important such issues were to Conservatives. The closed shop was widely felt to demand a clear answer, but even when presented with an opportunity like Grunwick, which apparently raised all sorts of fundamental questions about trade union recognition, the rights of employers and the rights of individual workers, at no point did the party come close to grasping the nettle and proposing to outlaw the practice all together. With no adequate route to make the kinds of changes necessary in this area via official Conservative policy, those like Joseph had to lend strong rhetorical support to NAFF and others instead. In relation to the closed shop therefore, Conservative policy remained consistent and pragmatic despite a number of wider pressures. The events at Grunwick, particularly the scenes of violence, were so high profile that they could not be ignored. As the scale of the demonstrations reached a peak during the summer of 1977, the Conservatives had little choice but to agree a formal party line on the dispute. At the end of June 1977, as the mass picketing began in earnest, the Shadow Cabinet debated and released a statement which called on the government to give its full backing to the police, condemn the scenes of violence and declare clearly that intimidation by pickets was unlawful.128 Unsurprisingly, the Press covered the dispute, and particularly the violent scenes, in great detail. The crowded, narrow and noisy streets outside the plant were a recurring image on nightly TV news bulletins, whilst for many newspapers the stakes could hardly have been higher.129 The powerful image of PC Trevor Wilson lying in the street and bleeding from the head after being struck by a bottle adorned many front pages on 24 June, and became ‘the ultimate symbol of industrial unrest’.130 The Daily Express described it as ‘THE BLOODY LIMIT’.131 The Times took it as an indication that more and more people thought ‘mob rule, not Parliament, is the way to decide our future’.132 The Thatcher Papers contain newspaper clippings about the dispute and examples of extremist arguments taken from the Socialist Worker. Thatcher also received eyewitness accounts of the on-going picketing from Conservative MPs Barney Hayhoe and Adam Butler, her Parliamentary Private Secretary, who had been sent in to observe.133 Robbie Gilbert of CRD also reported on the number of injuries and arrests and attempted to summarise the developing situation. Speaking for the Conservatives, Prior subsequently described the scenes as ‘detestable to a tolerant society’.134 But what could actually be done about the mass picketing which had led to such violence and intimidation? The basic right to protest peacefully outside one’s own place of work during a legal strike would always remain acceptable and untouched, but by the late 1970s there was a growing concern, not least amongst Conservatives, about the wider practices of some trade unions.135 Secondary action, where businesses not directly involved in a dispute could also be picketed, and the tactics that some pickets might use, were of particular concern; during the Grunwick dispute sympathetic action amongst Post Office workers had caused some disruption, and there had also been attempts to intimidate the staff as they were bussed into the

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Industrial relations109 plant.136 Back in February 1974 the Conservatives had suggested that the current rules governing picketing were probably adequate and just needed to be more widely understood.137 Once out of government, however, it was quickly conceded that some kind of change was needed. The party’s October 1974 manifesto picked up on regulations recently adopted by the National Union of Mineworkers as being a good basis for new ‘strict arrangements’.138 By early 1979, at the height of the Winter of Discontent, Thatcher had begun to argue much more openly for a number of changes to industrial relations. In Parliament, she pledged her support to the Labour government if it introduced ‘new laws and new practices against picketing’.139 The subsequent concordat between the government and the TUC did then speak of a new code of practice. After Grunwick and the Winter of Discontent, picketing was firmly on the political agenda. The polling commissioned by CRD provided further reassurance that the public wanted change. Its April 1979 report suggested that ‘There is strong agreement that reform of the law relating to strikes is required. All the specific proposals (a ban on secondary picketing, limits on the number of pickets allowed, a code of practice for pickets, secret ballots and no-strike agreements in essential services) are approved, by majorities of eight and nine and ten.’140 An earlier MORI poll had also shown a significant majority of trade union members in favour of an end to secondary picketing; 86 per cent, compared with 89 per cent for the whole electorate.141 The Conservatives’ 1979 general election manifesto did not state outright that secondary picketing would be banned, but it did argue clearly that after the recent excesses of violence and intimidation, the right ‘should be limited to those in dispute picketing at their own place of work’.142 This was an area therefore, where events like Grunwick demonstrated to the Conservatives that change was needed, and they proposed it. Changes to the law on picketing were a relatively simple step to take, however, and did not necessarily represent any serious development since 1974. The same could also be said of trade union democracy. After the defeat of the Heath government, the Conservatives had promised to improve industrial democracy by ensuring that postal ballots could be used in the election of trade union leaders, and from October 1974 onwards it was also the case that this would be done ‘with adequate help from the government to cover the expense’.143 This was thought infinitely preferable to other informal means of deciding union affairs, and the approach continued right up until 1979 and beyond. Far more controversial were changes to the rules around welfare payments for the families of strikers. In February 1974, the party had been clear on the issue: it is manifestly unfair that those who do not go on strike are, in effect, obliged to subsidise those who do. It is no part of our policy to see the wives and children of men on strike suffering. But it is only right that the unions themselves, and not the taxpayer, should accept their primary responsibility for the welfare of the families of men who choose to go on strike; and, after discussions with trade unions and employers, we will amend the social security system accordingly.144

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The underlying principle was one with which most Conservatives, and perhaps a majority of the electorate, would be instinctively comfortable. In July 1976, the Employment Policy Group argued that ‘legally and morally, strikers’ dependants were their responsibility, and not the taxpayers’, and that they should not receive supplementary benefit’.145 The merits of changes to social security, particularly the withdrawal of benefits in order to increase the pressure on strikers, were put forward in ‘Countering the Political Threat’, the confidential annex to a paper prepared by the Nationalised Industries Policy Group.146 In July 1977, this was discussed by the ERG, and although it was understood to be an important policy, it was also recognised how controversial such changes would be.147 The group could not decide whether it would be best to openly state that this is what a future Conservative government would do, or if such measures should be announced and then held back until such time as a threat which demanded them emerged. In the end, a compromise line that ‘we should refer to possible legislative changes in the manifesto, but it was not at present possible to decide when action should be taken’, was agreed.148 Nonetheless, specific action on benefits did not make it into the 1979 manifesto. Only the moderate line that ‘we shall ensure that unions bear their fair share of the cost of supporting those of their members who are on strike’ was included.149 We can see therefore, that radical change was considered in private but not fully committed to in public. This again demonstrates that not only were there a number of continuities running through Conservative industrial relations policy during this period, but also that a number of their final polices were more pragmatic than others that were considered. Events like Grunwick pushed the party forward in some cases, and they certainly helped to change the tone used by some Conservatives, but they did not necessarily bring about major changes in policy. Grunwick also provides an excellent example of the important role played by some external groups during this period, and the ways in which they interacted with the Conservative Party. However, it also suggests that their final influence on Conservative policy was fairly limited. Whilst the Conservatives were trying to hold to a firm yet pragmatic line over Grunwick, others were taking much more fundamental lessons from the unfolding events. The National Association for Freedom was particularly significant in this regard. Founded by, amongst others, Ross and Norris McWhirter in 1975, in order to uphold freedom and the rule of law, the group had firmly established itself on the side of Ward and his company by 1977.150 The outspoken John Gouriet, NAFF representative at Grunwick, told Thatcher towards the end of June, in no uncertain terms, that ‘the opposition has declared its hand and is now exposed to the full glare of public view’.151 The significance of the events there was seen to be immense: If the party does not seize its opportunity to accomplish a coup de grace, the full weight of union private armies will be turned on any victim at will, and with invariable success. We have a very rare bird in Grunwick – the will to resist is there – we must not fail these brave people.152

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Industrial relations111 In her memoirs Thatcher later recalled how she knew that Grunwick had been a significant moment but had lacked the confidence to do more about it.153 Nine days later the situation was graver still and Gouriet warned that: If the Party fails to take a positive stand and fully support the company, if certain elements continue to talk of ‘aggravation by Right Wing extremists’ (by implication NAFF because there are no right wing extremists involved) then a major and vital opportunity to display the courage and leadership required to defeat tyranny and the corporate state will have been lost – there may not be another for the lessons of a defeat at Grunwick will not be lost on other employers who might have been otherwise disposed to stand firm on their basic rights.154

He urged that ‘The Conservative Party must not sell the pass on this issue’.155 These ‘elements’ were clearly meant to be Prior and others that were working on a more balanced approach. The suspicion and dislike were mutual.156 Furthermore, in simple terms the aims of NAFF were not and could not be the official aims of the Conservative Party. Many may have sympathised with its point of view, and in recent years increasing significance has been attached to its overall importance, but at the time, whilst it was still on-going, Grunwick could not be the literal turning point NAFF hoped it would be. NAFF’s greatest contribution was probably providing legal and financial support and stiffening the resolve of Ward for the fight. ‘Operation Pony Express’, in which the group apparently helped to keep Grunwick in business by picking up the company’s mail under the cover of night and covertly putting it in post-boxes around the country, in order to get round a sympathetic strike by members of the Post Office Workers’ Union and ensure that it was delivered by the Royal Mail, may have been the most unique and successful intervention.157 That the dispute demonstrated that it was possible to take on unions and win, as would be claimed later, was far from clear at the time.158 There was no doubt that it was a serious confrontation and a further step in a particularly negative direction, but the pressure to join in with NAFF was largely resisted by Thatcher and others. She told Gouriet that she too saw the unfolding events as being crucial, but also ones in which the party should not become too closely embroiled: The situation is fluid, but at the moment we feel that the scenes of violence portrayed on television plus the wild charges and allegations being thrown about in certain quarters, are enough in themselves to put most of the public on the side of right and doing more than hours of argument.159

Thatcher declined an invitation to actually visit the company, and though whilst assuring Gouriet that she would have liked to have done so and implying that he understood why she could not, she wrote that ‘I know you will give Mr Ward strength and encouragement at this very difficult time and will guide him along the paths of responsibility so that he may continue to hold public support’.160

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If this suggestion of a visit was not taken up, then it was even less likely that Thatcher would accept the recommendation of the Selsdon Group that Ward be appointed as a special adviser to the Shadow Cabinet on industrial relations.161 The Secretary of the group, Stephen Eyres, had suggested that after his brave and popular stand this ‘would work wonders in reassuring the Party rank and file of our determination not to capitulate to trade union coercion’.162 In wider terms, Ward was seen to have ‘done what the corporate state puppies of the CBI have lamentably failed to do: to show that good working conditions and rising wages can be best secured without the interference of trade unions. He is a true friend of the free society and deserves our 100% support.’163 Again, this did not reflect the official policies of the Conservative Party, although the fact that such reassurances were necessary may have been significant. Thatcher did not rise to the bait, with Richard Ryder relaying the simple message that ‘She is not proposing to appoint an industrial relations adviser at the present time.’164 Furthermore, a group of more moderate voices, including Patten and Michael Dobbs of CRD, had previously recommended the exact opposite approach, telling Thatcher after one of their meetings that ‘It was felt that some individual Conservatives had identified themselves much too closely with Mr Ward, and that you should take great care to avoid this.’165 An excellent insight into the different ways in which the events were understood by some important figures is also provided by Lord Hailsham’s reaction to a public statement made by Joseph in September 1977, which had been critical of the Scarman Report.166 Mass picketing at Grunwick had been called off after the Labour government initiated an enquiry into the whole affair, chaired by Lord Justice Scarman. His final report recommended the reinstatement of the strikers, that union recognition be given to workers at Grunwick, and suggested that although the management had abided by the letter of the law they had acted outside of its spirit.167 Hailsham first asked for Gilmour’s opinion of a draft letter to Joseph which would make his concerns clear, although he also expressed doubts about actually conveying them. Gilmour insisted that ‘it is a masterly summary of the situation, and to my mind it will be a great pity if you do not send it’.168 Furthermore, he suggested that ‘these things badly need to be said to Keith and Margaret … contrary to what you told me the letter is not rude: firm but not rude!’169 In spite of this, the letter remained unsent, but Hailsham did shine a light on some of the philosophical differences around industrial relations that still existed within the party. He criticised the way in which Joseph had spoken out as well as the likely result of the content of his statement: I hope you will forgive an old friend and colleague for writing you a rather severe letter about your recent utterance on Grunwick. It is a fundamental rule of public life that when a controversial matter impinges on several fields, colleagues should be consulted. I was not consulted about your recent speech.170

Hailsham had long been serving as something of a Shadow Lord Chancellor. In specific terms, he believed that Joseph had spoken too uncivilly of a leading Judge, in

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Industrial relations113 a way which might have been acceptable for Socialists but was ‘quite unworthy of a Conservative’.171 He acknowledged that the dispute was a legitimate subject for discussion but suggested that Joseph may have misunderstood the case and that he did not know Lord Scarman, who was a good Judge. As such, ‘it would have been much better had you moderated your language’, he suggested.172 Perhaps most telling are the hand-written lines at the bottom of the typed letter, which further examine the potential political consequences: As it is, I am stymied in criticising Socialists for rudeness to the judges, and Jim watches bemused as the Trade Union stags he has been stalking for so long gallop wildly away over the skyline, while the party, completely befuddled about the constitutional position barks and growls menacingly at his heels instead of attacking the TUC and their Labour friends.173

In The Spectator, John Grigg was also critical of Joseph’s intervention, arguing that he had ‘grossly oversimplified’ the case by seeing it as simply about the right of the remaining employees not to join a union, and extrapolating far too widely from what was essentially a local and unrepresentative dispute.174 Joseph’s attack was a ‘godsend to Labour’ and it was just as well that Thatcher herself had only contributed a ‘reverberating silence’, Grigg suggested.175 How these differences of emphasis might be overcome, whilst still maintaining a coherent and firm enough public voice over Grunwick, was not obvious. In September, Thatcher was to face Brian Walden in an interview for Weekend World. In preparation Sherman provided detailed notes and answers for a number of different questions, including, in the wake of Grunwick, how the raising of a rift between Joseph and Prior might be countered.176 A few months before he had also arranged coaching in interview techniques for her.177 Sherman argued, with Thatcher underlining the text, that ‘These differences are real, though the common ground is also real. The attempt to minimise the differences could easily lead to the opposite result, i.e. the appearance of trying to paper over very large chasms.’178 In addition to demonstrating less concern for the fundamental principle of party unity than Hailsham and others, Sherman also highlighted how ‘the false position adopted by the Heath Government when it went to the country in 1974 without any clear strategy, and then attempted to present its defeat as a victory by the unions over parliamentary government, is an albatross round our necks.’179 However, others were much more concerned with the present. As a whole therefore, the example of the Grunwick dispute shows how much difficulty the Conservatives had in responding to unfolding events, but, at the same time, how important they could be in helping to change perceptions of industrial relations. The dispute also demonstrates the powerful role of some outside groups in rhetorical terms, during this period. However, they did not have much success when trying to actively engage with the Conservative Party at an official level and did not influence its policies to any great degree. The official line remained strong but cautious.

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We can see therefore that trade unions and their practices were important issues throughout the 1970s. Their political and economic impact was widely recognised to be significant. Conservative Party policy provides a good test of what was actually happening to industrial relations during this period. As has been demonstrated, policy did not change dramatically between 1974 and 1979. Developments were as much a response to on-going events as any wider ideological shifts. The Conservative position on the trade unions was always firm and the Conservatives consistently highlighted the negative role that the unions played. However, it was also conceded that they also had a positive and collaborative role to play. Furthermore, the Conservatives did not break away from many aspects of their previous approach. There were some developments with the policies governing picketing, the closed shop and trade union elections, and more serious and controversial reforms to the welfare payments made to strikers were contemplated. The prospect of consultation with government about economic goals which had been present at the beginning of the period continued throughout, although the form it would take developed. Furthermore, the West German-influenced process of Concerted Action that the Conservatives would come to rely on in this regard also provides an example of the ways in which the party was learning policy lessons from a wide base and working in an international context. The Conservatives were on a learning curve during this period. Hostility to trade unions may have increased in Britain, but from this examination it does not appear that the specific, dramatic changes of the 1980s were inevitable. The neoliberal critique of trade unions was certainly powerful and gaining ground in Britain, but this fact was not necessarily directly reflected in Conservative Party policy. Notes 1 A. Beckett, When the Lights Went Out: Britain in the Seventies (London, 2009) p. 54. 2 See for example J. McIlroy, N. Fishman and A. Campbell (eds), The High Tide of British Trade Unionism: Trade Unions and Industrial Practices, 1964–79 (London, 2007); B. Jackson, ‘An Ideology of Class: Neo-Liberalism and the Trade Unions, c.1930–79’ in C. Griffiths, J. Nott and W. Whyte (eds), Class, Cultures, and Politics: Essays on British History for Ross McKibbin (Oxford, 2011). 3 J. McIlroy and A. Campbell, ‘The High Tide of British Trade Unionism: Mapping Industrial Politics, 1964–79’ in McIlroy, Fishman and Campbell, High pp. 115–16. 4 J. McIlroy, ‘Reflections on British Trade Unions and Industrial Politics’ in McIlroy, Fishman and Campbell, High p. xxiv. 5 D. Butler and G. Butler, British Political Facts, 1900–1994 (Basingstoke, 1994) p. 370; Beckett, Lights p. 437. 6 McIlroy, ‘Reflections’ p. xxiii. 7 Butler and Butler, Facts p. 374–5; A. Marr, A History of Modern Britain (London, 2007) p. 346. 8 Beckett, Lights pp. 54–5, p. 64.

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Industrial relations115 9 10 11 12

Jackson, ‘Ideology’ p. 264. Ibid. p. 273. Ibid. pp. 264–7. A. Taylor, ‘The Conservative Party and the Trade Unions’ in McIlroy, Fishman and Campbell, High p. 166. 13 R. Taylor, ‘Trade Unions Since 1945: Scapegoats of Economic Decline?’, Contemporary Record, Vol. 1, No. 2, 1987. 14 J. Tomlinson, The Politics of Decline: Understanding Post-War Britain (Harlow, 2001) p. 87. 15 Interestingly, in this case Worsthorne was one of a number of British commentators writing for an anti-socialist collection of essays designed for an American audience: P. Worsthorne, ‘The Trade Unions: New Lads on Top’ in R.E. Tyrell (ed.), The Future That Doesn’t Work: Social Democracy’s Failures in Britain (New York, 1977) p. 19. 16 Jackson, ‘Ideology’ p. 277. 17 Taylor, ‘Conservative’ p. 141. 18 Interview with Lord Prior, 25 March 2011; J. Prior, A Balance of Power (London, 1986). 19 Howe Papers, dep. 135, Economic Reconstruction Group, 30 October 1975. 20 1906 was often looked back upon sceptically by the critics of trade unions. See for example, M. Thatcher, The Downing Street Years (London, 1993) p. 102. 21 P. Dorey, British Conservatism and Trade Unionism, 1945–1964 (Farnham, 2009); P. Addison, The Road to 1945: British Politics and the Second World War (London, 1994). 22 Jackson, ‘Ideology’ p. 264. 23 Interview with Lord Howe, 21 March 2011; Dorey, Conservatism; Taylor, ‘Conservative’; A. Taylor, ‘Conservatives and Trade Unions Since 1945’, Contemporary Record, Vol. 4, No. 2, 1990. 24 Produced by the Inns of Court Conservative and Unionist Association, the pamphlet proposed independent tribunals before every strike, a Restrictive Practices Court to rule on the withdrawal of legal immunities from those who struck while the tribunal was still sitting, and regulations on the closed shop: Dorey, Conservatism p. 88; Taylor, ‘Conservative’ p. 151; Beckett, Lights p. 57; M. Thatcher, The Path to Power (London, 1995) pp. 109–10. 25 Dorey, Conservatism p. 89; Taylor, ‘Conservative’ p. 151. 26 Changes included the requirement of pre-strike ballots and a four-week cooling-off period before strikes began, prefiguring many of the reforms that would eventually be made later: National Archives, LAB 44/288; Interview with Lord Howe, 21 March 2011; A. Seldon and K. Hickson (eds), New Labour, Old Labour: The Wilson and Callaghan Governments, 1974–79 (London, 2004); R. Tyler, “‘Victims of our History?” Barbara Castle and In Place of Strife’, Contemporary British History, Vol. 20, No. 3, 2006. 27 R. Taylor, ‘The Heath Government and Industrial Relations: Myth and Reality’ in S. Ball and A. Seldon (eds), The Heath Government 1970–74 (London, 1996); E. Heath, The Course of my Life (London, 1998). 28 Taylor, ‘Heath’; Heath, Life. 29 D. Kavanagh, ‘The Fatal Choice: The Calling of the February 1974 Election’ in Ball and Seldon, Heath.

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30 Firm Action for a Fairer Britain, February 1974 General Election Manifesto. 31 Ibid. Though a minority, extremists were seen to have manipulated and abused their industrial power and caused ‘incalculable damage to the country and to the fabric of our society’. 32 Ibid. 33 Putting Britain First, October 1974 General Election Manifesto. 34 Ibid. 35 Ibid. 36 Ibid. 37 Taylor, ‘Conservative’ p. 166. 38 Ibid. 39 Conservative Party Archive, CRD 403, ‘The Conservative Party and Inflation’, 30 June 1975. 40 Thatcher Papers, THCR 2/6/1/94, Howe to Raymond Gower MP, 10 July 1975. 41 Ibid. 42 Seldon and Hickson, Labour. 43 The Spectator, ‘Tories and the Unions’, 5 March 1976 p. 4; ‘The Tories and the TUC’, 9 October 1976 p. 3. 44 The Spectator, ‘The Tories’. 45 The Right Approach, 1976 p. 44. 46 Ibid. 47 Ibid. p. 38. 48 Ibid. 49 J. Charmley, A History of Conservative Politics, 1900–1996 (London, 1998) p. 389. 50 TP, THCR 2/6/1/37, ‘The Concerted Action in Germany, Principles, Evolution and Place in the Social Market Economy’. 51 HP, dep. 136, ERG minutes, 25 April 1977. 52 Ibid. 53 TP, THCR 2/6/1/37, ERG minutes, 24 June 1976. 54 M. Steber, ‘Fighting Over “Industrial Relations” – Conservative Concepts, Semantic Nets, and German–British Transfers in the 1960s and 1970s’. Paper presented to Diverging Paths? Conservatism in Britain and West Germany from the 1960s to the 1980s, German Historical Institute, London, January 2012. 55 TP, THCR 2/6/1/95, ‘The Economic Education of the Public: Proposals for Concerted Action and Fighting Inflation’, 16 May 1977. 56 Ibid. See C. Moore, Margaret Thatcher, The Authorised Biography, Volume One: Not For Turning (London, 2013) for more detail on Ryder. 57 TP, THCR 2/6/1/37, ERG minutes, 16 June 1977. 58 Ibid. 59 Ridley Papers, Employment dossier, Part 2, 1978–79 supplementary. 60 The Right Approach to the Economy, 1977 pp. 9–10. 61 Ibid. p. 12. 62 Ibid. p. 14. 63 Ibid. 64 TP, THCR 2/6/1/246, ‘Some Thoughts on Strategy and Tactics’, November 1977.

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Industrial relations117 65 Ibid. 66 TP, THCR 2/6/1/246, ‘Implementing Our Strategy’, December 1977. 67 Ibid. 68 TP, THCR 2/6/1/246, Lawson to Thatcher, 15 January 1978. 69 Ibid. 70 Interview with Lord Prior, 25 March 2011. 71 Taylor, ‘Conservative’ pp. 169–70. 72 Interview with Lord Prior, 25 March 2011; G. Howe, Conflict of Loyalty (London, 1994) p. 104. 73 See Thatcher, Path; Taylor, ‘Conservative’ pp. 169–70. 74 J. Hoskyns, Just in Time: Inside the Thatcher Revolution (London, 2000) p. 70; Moore, Thatcher pp. 360–3. 75 Moore, Thatcher p. 302. 76 A copy of ‘Stepping Stones’ survives within the Thatcher Papers: THCR 2/6/1/248. For detailed discussion see in particular Hoskyns, Revolution or A. Taylor, ‘The “Stepping Stones” Programme: Conservative Party Thinking on Trade Unions, 1975– 9’, Historical Studies in Industrial Relations, Vol. 11, 2001. Hoskyns, Strauss and others were also interviewed for the BBC Four TV series Tory! Tory! Tory! broadcast in 2006. 77 Hoskyns, Revolution; Taylor, ‘Stepping’. 78 Sherman Papers, AC 915, AR M/N10/1/4, Box 19, ‘Policy-Making for the Next Conservative Government’. 79 Hoskyns, Revolution; Taylor, ‘Stepping’; Taylor, ‘Conservative’. 80 Hoskyns, Revolution; Taylor, ‘Stepping’; Taylor, ‘Conservative’. Briefer accounts of this process can also be found in Thatcher, Path and Howe, Conflict, among others. 81 Hoskyns, Revolution; Taylor, ‘Stepping’; Taylor, ‘Conservative’. 82 I. Gilmour and M. Garnett, Whatever Happened to the Tories: The Conservative Party Since 1945 (London, 1998) p. 302 83 Quoted in E.H.H. Green, Thatcher (London, 2004) p. 116. 84 E. Caines, Heath and Thatcher in Opposition (Oxford, 2017) p.  214; Beckett, Lights pp. 441–2. 85 Green, Thatcher p. 116. 86 Hoskyns, Revolution. 87 See, for example, Taylor, ‘Stepping’. 88 D. Sandbrook, Seasons in the Sun: The Battle for Britain, 1974–1979 (London, 2012) p. 680. 89 Ibid. 90 Thatcher Foundation, ‘“Gentleman George”: the Secret Archive of George Younger’, www.margaretthatcher.org/archive/Younger.asp. Accessed 12 January 2020. 91 P. Dorey, ‘Conciliation or Confrontation with the Trade Unions? The Conservative Party’s “Authority of Government Group”, 1975–78’, Historical Studies in Industrial Relations, Vol. 27/28, 2009 p. 150. 92 Howe, Conflict p. 108, p. 113; Taylor, ‘Conservative’ p. 174. 93 TP, THCR 2/6/1/225, 23 March 1979. 94 HP, dep. 390, Speech to Conservative Central Office, 7 August 1978; Speech to Kirklees Chamber of Commerce, 15 September 1978.

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95 TP, THCR 2/1/1/39, Joseph to Thatcher, 27 January 1979. 96 TP, THCR 2/6/1/229, Patten to Joseph, 19 January 1979. 97 Ibid. 98 Ibid. 99 TP, THCR 2/6/1/229, Sherman to Joseph, 24 January 1979. 100 Ibid. 101 Ibid. 102 Ibid. 103 Ibid. 104 Sherman Papers, AC 196, AR CPS/LMPC/6, Box 5, Sherman to Thomas, 6 June 1979. 105 Seldon and Hickson, Labour. 106 TP, THCR 2/6/1/257. 107 CPA, CRD 4/4/78, ORC Report ‘Attitudes of the electorate to Trade Unions’, April 1979. 108 Ibid. 109 Ibid. 110 CPA, CRD 4/4/78, Britto to Thatcher, 30 January 1979. 111 Taylor, ‘Conservative’ pp. 174–6. 112 Ibid. 113 Detailed accounts of the dispute can be found in Beckett, Lights, Sandbrook, Seasons and J. McGowan, ‘“Dispute”, “Battle”, “Siege”, “Farce”? – Grunwick 30 Years On’, Contemporary British History, Vol. 22, No. 3, 2008, amongst others. A valuable online resource has also been created as part of the ‘Striking Women: Voices of South Asian Women Workers from Grunwick and Gate Gourmet’ exhibition: www.leeds.ac.uk/ strikingwomen. However, these accounts, and many others, appear to derive most of their information from J. Rogaly, Grunwick (Harmondsworth, 1977), which remains a particularly important source. 114 Rogaly, Grunwick; McGowan, ‘Dispute’. 115 Rogaly, Grunwick; McGowan, ‘Dispute’. 116 Rogaly, Grunwick; McGowan, ‘Dispute’. The owner also provided a personal account, whilst the dispute was still going on, in G. Ward, Fort Grunwick (London, 1977). The book was also serialised in the Sunday Telegraph. 117 P. Dorey, ‘Individual Liberty Versus Industrial Order: Conservatives and the Trade Union Closed Shop 1946–90’, Contemporary British History, Vol. 23, No. 2, 2009 p. 221. 118 Ibid. p.  227. The Act distinguished between agreements where new employees and existing employees might be required to join a trade union; the latter need not be discouraged, it was argued, as long as the practice was working well and certain safeguards were in place. The fact that this distinction was even made drew criticism from some Conservatives. 119 Ibid. p. 229; Green, Thatcher p. 117. 120 The Right Approach p.  45; The Right Approach to the Economy p.  33. The drafting process of The Right Approach overseen by Patten, which can now be traced through the Thatcher Papers, also demonstrates that Prior and Gilmour raised concerns when an initial version of the document took too tough a line on the closed shop, and had it

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Industrial relations119 changed. We can see therefore that the more pragmatic figures in the Shadow Cabinet had to fight their corner on these issues, but they were holding their own: THCR 2/6/1/215. 121 Dorey, ‘Liberty’ pp. 230–1; The Economist, ‘Closing the Closed Shop Split’, 15 October 1977 p. 16; Interview with Lord Prior, 25 March 2011. 122 Rogaly, Grunwick. 123 Hansard, HC Debate, 23 June 1977, v.933, cc1736–7. 124 Hansard, HC Debate, 30 June 1977, v. 934, cc.539–40. 125 P. Dorey, The Conservative Party and the Trade Unions (London, 1995) p. 135. 126 Thatcher Foundation, ‘Speech at Doncaster Racecourse (Grunwick Dispute)’, 24 June 1977. 127 Ibid. 128 TP, THCR 2/6/1/259, Shadow Cabinet Statement, 22 June 1977. 129 K.O. Morgan, The People’s Peace: British History 1945–1990 (Oxford, 1990) pp. 402–3. For greater detail on the media coverage see Rogaly, Grunwick pp. 79–90. 130 Sandbrook, Seasons p. 611. 131 Daily Express, 24 June 1977 p. 1. 132 The Times, 24 June 1977 p. 14. 133 Thatcher, Path p. 399; Beckett, Lights p. 394; Moore, Thatcher pp. 358–9. 134 TP, THCR 2/6/1/259, Prior Statement, 11 July 1977. 135 Taylor, ‘Decline’; Taylor, ‘1945’. 136 Rogaly, Grunwick; Beckett, Lights. 137 Firm Action for a Fairer Britain. 138 Putting Britain First. 139 HC Deb, 16 January 1979, v.960, cc.1540–41. 140 CPA, CRD 4/4/78, ORC Report ‘Attitudes of the Electorate to Trade Unions’, April 1979. 141 CPA, CRD 4/4/78, Britto to Howe, 15 February 1979. 142 1979 General Election Manifesto. 143 Firm Action for a Fairer Britain; Putting Britain First. 144 Firm Action for a Fairer Britain. 145 Green, Thatcher p. 119. 146 Taylor, ‘Conservative’ p. 169; A. Gamble, The Free Market and the Strong State: The Politics of Thatcherism (Basingstoke, 1988) p. 93. 147 TP, THCR 2/6/1/37, ERG minutes, 14 July 1977. 148 Ibid. 149 1979 General Election Manifesto. 150 N. Nugent, ‘The National Association for Freedom’ in R. King and N. Nugent (eds), Respectable Rebels: Middle Class Campaigns in Britain in the 1970s (London, 1979). See also Rogaly, Grunwick; Beckett, Lights; McGowan, ‘Dispute’. 151 TP, THCR 2/6/1/259, Gouriet to Thatcher, 21 June 1977. 152 Ibid. 153 Thatcher, Path p. 402. 154 TP, THCR 2/6/1/259, Gouriet to Thatcher, 30 June 1977. 155 Ibid.

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1 56 Interview with Lord Prior, 25 March 2011. 157 For more detail see Beckett, Lights; and Tory! Tory! Tory! 158 Beckett, Lights p. 401; McGowan, ‘Dispute’ p. 400. 159 TP, THCR 2/6/1/259, Thatcher to Gouriet, 22 June 1977. 160 Ibid. 161 TP, THCR 2/6/1/132, Eyres to Thatcher, 1 September 1977. Named after the infamous Selsdon Park conference, the aim of the group, made up of MPs and Conservative supporters, was to prevent further Conservative U-turns away from free market ideas. 162 Ibid. 163 Ibid. 164 TP, THCR 2/6/1/132, Ryder to Eyres, 2 September 1977. 165 TP, THCR 2/11/19/1, Michael Dobbs to Thatcher, 27 June 1977. 166 Joseph described the report as, amongst other things, ‘bad for the country’. For more detail see McGowan, ‘Dispute’ p. 398. 167 Thatcher Foundation, ‘Scarman Report (Court of Inquiry Report)’, 26 August 1977. The conclusions are also reproduced in Rogaly, Grunwick p. 185. 168 Hailsham Papers, HLSM 1/1/12, Part 2, September 1977, Gilmour to Hailsham, undated. 169 Ibid. 170 HP, HLSM 1/1/12, Part 2, September 1977, Hailsham to Joseph, 16 September 1977 – unsent. 171 Ibid. 172 Ibid. 173 Ibid. 174 The Spectator, ‘Ward Politics’, 10 September 1977 p. 4. 175 Ibid. 176 TP, THCR 2/6/1/227, Sherman notes for Thatcher, September 1977. 177 Sherman Papers, AC 63, AR KJ/M/3/17, Box 3, ‘Coaching for Margaret in Radio Techniques’. 178 TP, THCR 2/6/1/227, Sherman notes for Thatcher, September 1977. 179 Ibid.

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6

Immigration

Rivers of blood Britain in the 1970s often appeared to be defined by fear and uncertainty.1 The decade arguably witnessed a subtle yet discernible change in atmosphere.2 There can be little doubt that it witnessed a change in tone. If there was one issue which cut across popular concerns about economic decline, governability and morality, it was immigration. The 1970s was the most propitious post-war decade for these kinds of fears.3 It was a period of high inflation and unemployment.4 There was a moral backlash against the decadence and liberalisation of the 1960s.5 Popular fears about terrorism, the future of the United Kingdom and Britain’s place in the world, and the inability of weak governments to confront all of these problems, contributed to the sense of uncertainty and a rise in social tension.6 Race and immigration became significant political issues during the 1970s.7 This was at times a period of political extremism. In this environment it is perhaps unsurprising that the National Front (NF) should rise to prominence, and the group had a significant impact during this period, particularly on the Conservative Party. Founded in 1966, bringing together a number of right-wing factions, it combined a powerful anti-immigration agenda and provocative tactics.8 Its membership rapidly increased and it began to enjoy sudden surges of electoral support.9 The NF helped to change the landscape of the 1970s. Race and immigration were firmly on the political agenda. Nonetheless, if we are to avoid an arbitrary and undeservedly negative picture, it is also important to recognise that there was much more to the decade. The 1970s had weaknesses just like any other period, but there were also positive continuities. As discussed in previous chapters, this was a time of rising prosperity for many Britons.10 It was also a period of a real influence on British customs from overseas; in Arthur Marwick’s famous phrase, immigration and multiculturalism allowed Britain ‘to acquire a new cosmopolitanism without shedding its old xenophobia’.11 Although there were negative messages, most leading political parties, and indeed many Britons, continued to recognise the positive contribution that immigrants had made and the importance of maintaining good race relations. A true picture of the 1970s must also recognise the significance of movements like Rock Against

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Racism and the Anti-Nazi League.12 The entry of groups like the National Front into electoral politics acted as a catalyst for anti-fascist and anti-racism movements across Britain, which made a very different kind of appeal.13 Their concerts, marches and demonstrations were the culmination of a new, young, left-wing political activism that had built up during the 1960s and 1970s.14 Their most important contribution may have been to brand the National Front and its philosophy as inherently un-British and unacceptable in a tolerant society.15 When it comes to race and immigration therefore, the 1970s were a period of clashes and complexities. In 1977, the Marxist academic Tom Nairn presented perhaps the best-known examination of racism and nationalism in Britain at the time.16 Nairn argued that the concepts of race and nation were closely related, and that the former essentially derived from the latter. This was challenged by modernist interpretations, such as that put forward by Benedict Anderson, who instead argued that a nation was a social construction based upon distinguishing factors, such as the printed language, and that biological differences were largely irrelevant; anyone could, in theory, become a citizen of a particular nation therefore.17 Historians such as Peter Clarke have also argued that during this period British identity was increasingly linked to individual social and cultural identities, and that a process of integration usually occurred, such that immigrants to Britain could essentially become British, despite differences of race.18 However, it appears as though Britain during the 1970s, including the Conservative Party, was in large part closer to Nairn’s analysis. The concept of race was often closely connected with a sense of national identity and was often at the heart of legislative changes in relation to immigration introduced by both Labour and Conservative governments.19 Why had immigration become closely associated with national identity? In order to understand this, we need to consider the history of immigration in Britain, and the restrictions upon it, in a little more detail. In the immediate post-war period, there had been a widely accepted imperative to promote immigration in order to address labour shortages in important sectors of the economy, first from Europe but then particularly from the ‘new Commonwealth’.20 In 1953, just 2,000 immigrants had arrived in Britain from those countries, but this rose quickly to more than 40,000 annually by the middle of the decade, before falling back but peaking again at 136,400 in 1961.21 1948 had seen the now iconic arrival of the Empire Windrush carrying the first significant number of West Indian migrants to Britain.22 The Conservative Party had officially been opposed to attempts to limit freedom of migration between Britain and the Empire, such as Labour’s 1948 British Nationality Act. According to Zig Layton-Henry: It was a considerable source of pride among many Conservatives that a British subject from any part of the Empire (and Commonwealth), no matter what his colour or creed, could come to the mother country, serve in the armed forces or public service,

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Immigration123 stand for parliament, and enjoy the same rights and obligations as any other British citizen.23

However, by the 1950s this picture had begun to change.24 In particular, a number of Conservative MPs became more outspoken and began to campaign for the introduction of controls.25 The numbers arriving from the West Indies, India and Pakistan reached new highs, despite the fact that the labour shortages which had earlier made immigration more acceptable were no longer present. After pressure from the grass-roots continued to increase, the Macmillan government introduced the Commonwealth Immigrants Act of 1962, the first major restriction on immigration of the post-war period.26 In 1965 Wilson’s Labour government tightened the controls further, but also introduced the Race Relations Act which made discrimination on the grounds of race illegal. A new Race Relations Board would monitor fair practices.27 A consensus that immigration should be firmly controlled, but that some action should also be taken to ease the lives of those who had already arrived in Britain, appeared to be operating therefore.28 The Race Relations Act was further strengthened in 1968. However, against expectations the number of immigrants actually rose in the two years after 1966, largely as a result of the dependants of those who had already settled arriving too.29 Further controls were therefore introduced with the 1968 Commonwealth Immigration Act.30 The Act was perhaps most significant because it introduced the legal concept of ‘patriality’ for the first time. The key fact which determined whether someone wishing to settle in Britain was able to do so, whether or not they were subject to controls, was if a parent or grandparent had been born in the UK.31 This was the most exclusionary step so far, as anyone who could not claim national membership no longer had a right to citizenship in Britain. That right was instantly taken away from thousands of Commonwealth citizens. According to Gilroy, the Act therefore codified a cultural biology of race into law, as part of a deliberate strategy to exclude black and Asian settlers.32 The new restrictions were successful in halving immigration from the New Commonwealth over the next ten years.33 Nonetheless, these changes to the law could not easily take account of the fact that immigration patterns varied across Britain, with particular concentrations in some towns and cities.34 This was the situation exploited by Enoch Powell, who took race and immigration to new heights of political relevance and new depths of controversy with his infamous ‘Rivers of Blood’ speech in April 1968.35 According to Clarke, he applied ‘a political torch to a highly combustible heap of social grievances which others had swept into a corner’.36 Powell’s speech was perhaps most significant because it demonstrated the growing interface between race and nation in the language of both Conservative and Labour politicians. After 1968, this pattern was clear, and it was very difficult to distinguish consideration of race and British identity from debates about immigration.37

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Outspoken Conservative groups like the Monday Club, active since 1961 on subjects such as Rhodesia and South Africa, and responsible for focussing a certain amount of alienation from the party leadership, also began to gain a particular reputation around this time.38 Powell himself was fired from the Shadow Cabinet but his continuing high profile and further internal pressure were influential in the Heath government’s introduction of the 1971 Immigration Act, which introduced work permits with tough restrictions on settlement for those with no close links to the UK and the option of voluntary repatriation, with some financial assistance, for those who wished to use it.39 In their 1970 general election manifesto, the Conservatives had promised that there would be no further large-scale immigration.40 However, this would be tested by events. That even these changes would not be enough to finally settle the immigration question was quickly demonstrated by the Ugandan Asian crisis in which several thousand refugees with a legal right to settle in Britain were forced from their homes by the dictatorial government of Idi Amin. Despite real pressure the Conservative government did not renege on its obligation to allow the refugees to arrive and successfully begin a new life in the UK.41 The 1971 Act had little effect in terms of further reducing immigration therefore.42 When the Conservatives left office in early 1974 many questions about the impact and best means of controlling immigration still remained. As with other areas, Conservative thinking between 1974 and 1979 provides an interesting window on the 1970s and the wider trends that have been discussed. How did the Conservatives interact with these debates about race and immigration? How did this affect official party policy on immigration? The Conservative position during this opposition period might best be understood as a tightening up of existing policies and the expression even more clearly of outstanding concerns. The Conservatives consistently argued strongly that levels of immigration needed to be reduced. There were seemingly no calls for immigration to be allowed to continue at existing levels during the 1970s. The debate was simply about by how much it should be reduced and by what means. However, at the same time the party could not, and generally did not wish to do this by following any extreme policies which might undermine its electoral support, damage race relations or lead it to renege on assurances that had been given in the past. For example, as we shall see in this chapter, the Conservatives considered tougher policies like repatriation and did give some thought to withdrawing the right of entry to Britain from some groups that they had previously expected would keep it, before eventually rejecting them and sticking to a firm but pragmatic approach. As we have seen, there is also a sense in which the Conservatives were part of a wider context, learning policy lessons alongside and moving in the same general direction as the Labour Party. The dominant political narrative was that immigration needed to be strictly controlled. Conservative policy did not develop dramatically during this period, therefore. Policy was already tough; the Conservatives, and Labour, had already introduced restrictions on the number of people who could settle in Britain, and strengthened

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Immigration125 them a number of times. It may have been that policy could not get much tougher without becoming unacceptable. Here, as we shall see, rhetoric sometimes became important. Margaret Thatcher’s famous intervention on immigration in January 1978 provides an example of the ways in which rhetoric could act as a substitute where policy change was not possible, as we have seen at other times. Immigration therefore provides another example of a policy area in which there is something of a gap between the rhetoric of the period, and in this case particularly its tone, and the policy reality. Although there was real pressure from inside and outside the party to take a tougher line, and this was sometimes matched in terms of tough rhetoric, beneath the harsh tone policy remained largely consistent. It developed in line with the established patterns of the time and the underlying principles of the Conservatives’ long-standing approach. Rather swamped by people with a different culture Initially, the Conservatives were able to argue that the 1971 Act had ‘provided the country with the necessary means for preventing any further large scale permanent immigration’.43 The introduction of work permits was thought to be a success as 1973 had apparently seen the fewest new immigrants to the UK since controls were first introduced in the 1960s.44 The Conservative aim was to see this decline in numbers continue whilst also ensuring that the government fulfilled its obligations to those with dependants and others from the Commonwealth who still had a legitimate right to settle in Britain. In addition, it was also recognised that ‘The harmony of our society in the future depends to an important extent on the white majority and the coloured minority living and working together on equal terms and with equal opportunities.’45 This twin focus on reducing immigration and maintaining good race relations would continue to underpin Conservative thinking right through until 1979. After the successive election defeats of 1974 and the subsequent election of Thatcher as leader there was ample opportunity for immigration policy to be fully debated and re-developed once again. One arena in which these debates could take place was the policy group established to consider immigration and race relations questions. As with other areas of policy it is possible that the final impact of the specialist group may have been relatively limited, with the really telling input being reserved for the Shadow Cabinet later, but those early meetings shed real light on the ways in which such issues were discussed and the range of options that were at least given some consideration. The group may also have served some function as an outlet for controversial backbench opinions. Nonetheless, two significant points were the subject of particular consideration. The first, the dependants of those who had already settled in the UK and their status, came to be at the centre of Conservative thinking. The second, the concept of repatriation, was present and an on-going concern, but did not come to have the same importance attached to

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it. A scheme under which immigrants wishing to resettle in their country of origin could apply for state funds in order to help them return had been in place since 1971. An option for Conservatives who wished to see an easing in the pressure which current levels of inward migration might create was to extend or more widely promote this kind of programme. However, at least one member of the policy group was ‘strongly opposed to the widening of the repatriation scheme to the extent that was suggested’ as ‘it would be very damaging to race relations here (by its implication that we wanted to get rid of as many coloured people as possible), and could only marginally increase the numbers leaving the country’.46 Under such circumstances, the suggestion was also made that repatriation be discussed only in the context of race relations and as a way of helping people rather than as a part of immigration policy.47 Similar conclusions were reached in a confidential brief, ‘Repatriation of Immigrants’ in December 1975.48 It argued that such programmes were generally expensive in economic, social and political terms, and that no other kind of scheme would even be politically tolerable.49 Forced repatriation was not on the agenda. There was little that the party could reasonably do except better publicise the present voluntary programme, whilst also being aware that even this could damage race relations. Striking the right balance between taking a tough line and not doing any wider harm was difficult. The brief suggested that repatriation funds might even be better spent on reducing immigration elsewhere.50 In an interim report sent to Sir Keith Joseph in July 1975, the group made it clear that the party should ‘restrict all new immigration to the absolute minimum, beyond those who we are already committed to accept’.51 Fundamentally, they argued, ‘At the present time the number of immigrants who are allowed to settle here after fulfilling certain conditions is running far too high and we will aim to cut this back.’52 Nonetheless, there was no simple answer as to how this might actually be achieved. It was also the case that at least one member of the group had some concerns about even the suggestion of an initial stage or a more formal means of counting how many people, principally the relatives of those already settled, might be eligible to enter the UK. As was described, they ‘disagreed that immigrants’ dependents should be registered’.53 Nonetheless, this idea would become increasingly important to the Conservatives. A subsequent confidential CRD paper, produced in December 1975 to consider different policy options, again argued that improved statistics were needed before the effect of any policies could be anticipated, something which a register might help to achieve, and that any restrictions were likely to harm race relations.54 It even suggested that any attempts to make reductions were unlikely to be successful anyway and that there was very little that a future Conservative government could do to change the prevailing picture; Britain may already have been admitting the minimum possible numbers.55 The paper further warned that ‘Immigration restrictions are a very poor policy tool for dealing with these problems and any attempt to use immigration as a high-profile political, partisan political issue is likely to be

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Immigration127 counterproductive in this respect’.56 Despite these concerns, the strong impulse was that the Conservatives should seek to do something to reduce immigration.57 However, the way forward in terms of actual policy remained unclear. At the same time as the party was beginning to think these things through, immigration was very far from receding as an electoral issue.58 In January 1976, the Shadow Cabinet had recognised that it would only become increasingly important and that the official position would need to be reconsidered as a result.59 As such, the debates around such a ‘complicated subject’ continued to rage inside the policy group.60 Ronald Bell, a particularly outspoken MP and member of the Selsdon Group and Monday Club, continued to argue that ‘the solution to the whole problem was to repatriate the immigrants already here’.61 As discussed, the Monday Club had been extremely hostile to the more balanced elements of policy pursued under the Heath government; towards the end of 1973 the group had even instigated a ‘Halt Immigration Now’ campaign. However, after becoming far too close to the National Front, it had become ‘discredited’ and was a ‘spent force’ in serious Conservative circles soon afterwards.62 Nonetheless, Bell still had forceful opinions to convey. Other members simply questioned whether the party ‘had the political will or the right to send second generation immigrants back to a country that they had never known’.63 This was certainly an added complication. As it was, the distinction between first and second generations was not officially drawn, with the voluntary repatriation scheme seemingly available to all. The broader analysis which might have followed from this observation – that the stronger and more long lasting a person’s connection with the UK, notwithstanding the fact that many had no strong connections with anywhere else, the less likely they were to wish to leave – was only hinted at in the further suggestion that it would be ‘easier to encourage immigrants to return to their home country at a time of growing unemployment in this country’.64 This point about unemployment would be returned to by leading Conservatives but in relation to different ideas. Any wider repatriation plan would have been flawed and this appears to have been generally understood. As such the focus would instead have to be on those who had yet to arrive in the first place. Bell argued that ‘the first step was to remove the right of dependents to come to Britain’ and rather hopefully suggested that this in itself would ‘ease the flow of immigrants and might well start an outward flow of migrants back to their own country’.65 By June 1976, the atmosphere within the party was shifting. Lord Hailsham recorded that a Shadow Cabinet discussion had become ‘slightly hysterical’.66 Some Conservatives clearly wished to see a much tougher line being taken, and argued that this would benefit the party electorally rather than damage it, but the predominant approach at the official level was to understand the limits of any changes whilst also recognising that there were other problems to consider. As Home Affairs spokesman, the key figure here was often Willie Whitelaw. Whilst consistently outlining the party’s desire to reduce immigration, he also placed emphasis on the existing obligations that it had and the implications of such a policy, especially in

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wider social terms. For example, later in 1976 he told Joseph that although a reduction in immigration was important: At the same time there is no doubt that dealing with these coloured immigrants who will inevitably remain here is going to demand special treatment in particular areas. The great question is how to handle this without appearing to be giving favoured treatment to the immigrants as opposed to the indigenous population.67

We can see therefore that more measured and pragmatic voices had an important amount of control over immigration policy, despite some extreme views and powerful rhetoric elsewhere, whether in the policy group or outside the party. By the appearance of The Right Approach, this attempt at a firm yet fair approach was becoming familiar. A new line praising the ‘remarkable’ way in which different communities had peacefully adapted, condemning discrimination and acknowledging the positive contribution which many immigrants had made to the UK was included in the document.68 However, public services and racial harmony were seen to be strained in some areas, and it was argued that government policy towards immigration would be essential in alleviating these pressures.69 As such, the Conservatives again promised a reduction in the level of immigration and limits on the numbers of people that were able to settle. The level of immigration, it was seen, had increased under Labour and was now ‘much too high’.70 Cuts could be brought about by ‘greater administrative rigour’ and the gathering of better official statistics, as well as the now requisite register of dependants.71 It was concluded that: Public concern over immigration must be met. It is in the interest of those who have settled here and their families, just as much as it is in that of the majority, that we should take such measures as a matter of urgency.72

Around this time the Conservative Party also began to call for a new Nationality Act, in order ‘to allay fears of unending immigration and to establish a rational basis for British citizenship’.73 The belief that the settlement reached in 1971 was now unsatisfactory was shared across the political spectrum. Proposals for the reform of nationality laws were also suggested in an April 1977 Green Paper produced by the Labour government.74 There was seemingly little further detail on the Conservative side prior to 1979, but once in office a White Paper emerged in 1980 based upon the same basic structure of three years before.75 This went on to form the basis of the 1981 British Nationality Act which established a new system and redefined citizenship in more exclusive terms.76 The official language of patriality, established in 1968 and extended in 1971, was also further rationalised.77 This demonstrates the general continuities across party lines during this period therefore. Immigration laws were consistently moving in a more exclusionary direction. When Labour’s Green Paper was discussed in the House of Commons, the Home Secretary Merlyn Rees had made it clear that it was merely intended to begin an open debate and that

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Immigration129 the government had no plans to introduce a Bill. Whitelaw, however, was much more impatient for change: Does he appreciate that the present obscurity of our nationality laws gives rise to widespread fears of unending millions who might claim entry into this country and that this anxiety must be removed, and removed urgently? Will he, therefore, accept that the Green Paper must be used as a basis for action and not as an excuse for prevarication?78

Despite the apparent continuity of policy which The Right Approach demonstrated, immigration remained a contentious issue during the drafting of the document. Ian Gilmour had warned that, as initially worded, some commitments were ‘liable to split the Parliamentary Party’ or ‘needlessly antagonise a large number of people’.79 Similarly, Lord Thorneycroft advised against discussing an ‘inescapable minimum consistent with clear pledges’.80 As he put it, ‘Please stop saying this; it will be so much harder for the poor chap who is left with the job of effecting the escape.’81 Understandably, this line did not make it into the final text and the immigration question was not officially addressed in terms of having to accept an ‘inescapable minimum’. It raised too many difficult questions. The party could get around this potential pitfall by focussing instead on the large number of immigrants arriving and the need to reduce that figure. An exception was the consideration given to having an annual quota, but this was seemingly couched in terms of the maximum number that it was possible for the country to handle, not the minimum number that it was necessary to have each year.82 The position which had been outlined with regards to dependants also appears to have gone through some changes. Gilmour described the original line as ‘wrong and dangerous’, and Prior told Chris Patten that ‘I do not see the necessity of committing ourselves “to reconsider the commitment”. If we have commitments of very long-standing – we cannot rat on them now.’83 The finished document was content simply to suggest that the register was necessary before a limitation policy could be worked out, but that one was essential.84 Patten summed up the on-going debates with the simple observation that ‘There is obviously something less than unanimity on immigration!’85 In an ITN interview to coincide with the launch of the document the leader was pressed on the exact meaning of particular lines.86 As Julian Haviland asked, ‘Isn’t it clear from your document that you mean to withdraw the right to settle in Britain, Mrs Thatcher, from some dependents of immigrants already settled here? Have I got it right?’87 She strategically avoided the direct point of the question, suggesting that it would first be necessary to introduce the register in order to ascertain how many potential dependants there actually were. Citing a possible figure of up to 500,000, which she suggested would be far too many, there would then be a need to ‘change the law or have them in on a very small quota each year’.88 Thatcher went on; ‘We’ve six per cent unemployment. We cannot go on taking people at the rate we have been’.89 In public the final justification for control was therefore, at this stage, economic and demographical rather than nationalist or racial, and somewhat

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obscured behind the call for a register. The unspoken implication was that if the level of unemployment in Britain or the actual number of dependants themselves were low enough then there would be no need for restrictions, but the overall rhetorical effect was heavily weighted in the opposite direction. Away from official policy pronouncements where great caution was needed, and away from the internal decision-making processes where compromise was necessary, others had more freedom to consider the topic. In particular, as part of a wide-ranging and comprehensive economic analysis that he presented to Thatcher personally in his role as an unofficial adviser, Alfred Sherman was drawing explicit links between the level of unemployment in Britain and the level of immigration.90 He had also discussed the need for ‘a proper impartial inquiry into the whole question’.91 In September 1977, Sherman still saw the issue as one on which the Conservatives were vulnerable and one which was likely to be raised by interviewers seeking to highlight real differences within the party.92 Similarly, in January 1978 Nigel Lawson told Thatcher that ‘we must not shirk the immigration issue, which is almost the acid test of whether a political party is in tune with the ordinary people’.93 Nonetheless, as part of his thorough examination of strategy Patten appeared relatively content that the party was more in line with the public on ‘salient’ issues.94 At this stage therefore, the Conservative line remained tough but pragmatic. Not everyone inside the party was perfectly happy with the policy compromise, but a balance was being maintained. Perhaps the key development in immigration policy throughout the whole opposition period came as a result of an answer given by Thatcher during what otherwise might have been a relatively innocuous January 1978 television interview.95 On World in Action she appeared to go further than the party had done to date, when she recognised that ‘people are really rather afraid that this country might be rather swamped by people with a different culture’.96 Thatcher was no stranger to making robust public statements along somewhat similar lines. In December 1976 for example, in the context of condemning the National Front, she had written of ‘the widespread fears amongst a majority of the population that immigration is not sufficiently controlled’.97 However, although the substance of the approach had hardly changed at all – she still broadly approached the question of immigration with the twin arguments of the need for greater control and the need for greater harmony at home – there was nonetheless a subtle but clearly perceptible shift also underway. Moving the focus away from the mechanics of control and on to the effect, which was presumed to be negative, on the incumbent population, along with the new rhetorical flourish of the word ‘swamped’, meant that the political impact of the answer was far greater than it might otherwise have been. Furthermore, there was a new and more critical aspect to this response. It was not just that the British people might feel ‘swamped’ in a more literal sense, it was also that the British character, which was uniquely linked to democracy and the rule of law, may also be under threat and could be ‘swamped’.98 This analysis did not define the whole approach of

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Immigration131 the Conservative Party and was only briefly toyed with during Thatcher’s interview, but the essence of that argument was fundamentally more anti-immigration, and for different reasons, than had so far been the case on anything approaching an official level.99 Unsurprisingly, the remarks received widespread media coverage. The Times, for example, carried the ‘swamping by immigrants’ phrase as its headline on 31 January.100 Condemnation was swift and came from a wide range of voices including Labour MPs, race relations experts and Bishops. Ian Gilmour and Mark Garnett described the incident as ‘the opposition leader’s worst breach of political etiquette’, but Thatcher herself, at least when reflecting back later, was clear that ‘The whole affair was a demonstration that I must trust my own judgement on crucial matters, rather than necessarily hope to persuade my colleagues in advance; for I could expect that somewhere out in the country there would be a following and perhaps a majority for me.’101 Speaking out in this way may have simply been an alternative to pursuing tougher policies. If the Shadow Cabinet or Conservative officials were unwilling to change the policies, why not cut out the middle man and just talk directly to the electorate? This was symbolic, dog whistle politics in its purest form. There was no policy detail, just instinct.102 This approach was not universally popular at the time, however. Commentating in The Spectator, Ferdinand Mount, who would become Head of the Downing Street policy unit just a few years later, suggested the interview showed that Thatcher was not deft and raised serious questions about Conservative competence.103 The impression had been created that the Conservatives would do something serious on immigration, Mount argued, but no thinking had been given to the categories of dependants that might be excluded and the effect this would even have on the total numbers entering Britain, undermining the political authority of the party.104 As he put it: ‘Contrary to the humbug of hack moralists, the fears that Mrs Thatcher stirred up were not that she was meditating repatriation on a Powellite scale but that she was talking off the top of her head!’105 A leader in The Times subsequently defended Thatcher’s right to speak out on the subject, but suggested that ‘Her phrasing, though clearly deliberate, might at certain points have been better’.106 The fact it was not clear what had actually been promised or how Conservative policy would change was also described as a ‘weakness’.107 Nonetheless, an intangible perception amongst the electorate is often more important than the detail of any specific policy. Thatcher was not primarily appealing to her Labour opponents or political commentators. As Green has pointed out, the Conservatives were generally planning for an election during 1978, and ‘whether or not it was the intention, the outcome of Thatcher’s statement, in terms of media and popular response, was that she gave the impression of being in sympathy with the people … feeling “overwhelmed” by immigrants and ignored by elitist politicians’.108 This sense of understanding ordinary concerns in ways which other politicians could not, or were unwilling to do so, was no doubt fuelled by the fact that many of the letters

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that Thatcher received from members of the public were explicitly about immigration.109 In 1976 an assistant estimated that it was mentioned by up to 25 per cent of the leader’s correspondents, with many working-class voters often complaining about over-crowding and other economic pressures.110 Internal polling after the event suggested that up to 20 per cent of those surveyed were more likely to vote for the party if it declared its intention to end immigration.111 This kind of analysis had already been anticipated in much broader terms by some political scientists during the 1970s.112 The most immediate cause of Thatcher’s remarks therefore, may have been the fact that, as discussed, the National Front had been gaining prominence since the early 1970s and had demonstrated its ability to attract electoral support at a local level.113 In the 1977 elections to the Greater London Council the group had received 120,000 votes, more than its entire total in October 1974.114 A strong showing for the National Front would have undermined the Conservatives’ ability to take the seat of Ilford North from Labour in a crucial by-election scheduled for March 1978. After Thatcher’s interview, the result was a Conservative victory on a strong swing of 7 per cent with just a disappointing 2,000 votes and fourth place for the National Front.115 Thatcher’s remarks were certainly interpreted as a premeditated appeal to potential NF voters by the group itself.116 NF News described ‘cunning phrases which SOUND anti-immigration at first hearing but which on closer study do not commit a future Conservative Government to take ANY action to halt immigration’.117 This ‘trick’ had been pulled before, it suggested.118 This pattern continued right up until the next general election when the lasting impact of Thatcher’s words ‘all but destroyed the National Front’.119 In 1979 all 303 of the group’s candidates lost their deposits and received just 0.61 per cent of the total vote, with more than 3 per cent in only 26 constituencies.120 Curiously, just a matter of days before the interview the Finchley Times had carried an explicit denial that the Conservatives had sought to change their policies in response to political pressure from the National Front.121 There had apparently been criticism from both sides at the suggestion that the Conservatives might seek to introduce strict new rules on the admittance of relatives, with the NF suggesting that this was transparent electioneering and the local Community Relations Council warning of the potential consequences if the rights of settled immigrants were taken away.122 Local groups such as Finchley’s Community Relations Council were often associated with the Conservatives’ Community Affairs Department, which had been established at Central Office in 1975. Its aim was ‘to win votes for the party’ and ‘to render the party attractive to people who had either deserted it or had never thought of voting for it’, with ethnic minorities being an important example.123 Furthermore, a trend which would be hinted at in debates about repatriation and British character was highlighted outright by the department, which was ‘committed to reducing the widespread racism within the party’.124 The Director, Andrew Rowe, has suggested that a large number of ordinary Conservative activists,

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Immigration133 probably with Powellite sympathies, were resistant to many of his initiatives, but despite this campaigns were launched and local clubs were established.125 Groups like the Anglo-Asian and Anglo-Caribbean Conservative Societies aimed to encourage political and cultural engagement and on some level to engender Conservative sympathies. The impact of such groups was real and meaningful; Rowe has argued that there was ‘considerable progress’ in tackling the internal racism, but as a whole their success may have been limited by the machinations of the party at a national level.126 In particular, the Leader’s January 1978 interview and ‘rather swamped’ remarks were a problem; ethnic minorities had joined the party but it was ‘not surprising that they did not sign up in large numbers when Mrs Thatcher herself was not always careful about what she said’.127 The negative consequences of this statement, or others like it, might also come to hit the party where it really hurt, Rowe suggested – at the ballot box; again implying that a balanced moderate line was needed. As he argued, ‘We should stress the crucial distinction between race relations and immigration and ensure that everyone who speaks on this subject, which will continue to attract media attention, gives the reassurances to the ethnic minorities which are essential if we are to retain the slightest hope of winning over a number of their votes.’128 Furthermore, it may well have been the case that Powell had changed the political landscape, and that the Conservatives had to change their approach as a result, but they did not all have to be happy about it. Gilmour, for example, was particularly outspoken during this period and placed great importance on the idea that national unity had long been and should remain central to the Conservative cause.129 A polarised debate about immigration was a potential threat to this principle. Reflecting the official line of party thinking, Gilmour argued it was essential that the positive benefits that immigration had brought to Britain were openly recognised.130 Nonetheless, at the same time it was also necessary to recognise some of the inherent dangers. Despite politicians acting with good intentions, to some extent the public felt un-consulted and resentful and might have lost faith in important institutions.131 However, these points could be addressed without exploiting the issue in the way that Powell had done. He, Gilmour argued, was the nearest thing to a dangerous ideologue that the party had.132 It was unbecoming of the pragmatic Conservatives to follow his approach and it would not benefit the party. The importance of immigration as a political issue and the desire of more liberal voices to keep a rein on the acceptable terms of the debate are evident in the personal deconstruction of Powell’s views which also followed. Whilst a minister in the 1950s and 1960s, Gilmour argued, Powell had had no significant administrative achievements, and when out of office he had not warned of the dangers of immigration, only calling for greater controls once others had already done so.133 Quoting an example cited by Hailsham; that Powell had had no problem with the increasing use of Jamaican and Indian nurses in the NHS when Minister of Health, Gilmour added simply that ‘He had full opportunity to warn the country, and he did not take

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it. He was not a Cassandra.’134 Furthermore, he had now set about fulfilling his own prophecies, as his speeches did nothing to improve race relations.135 We can see therefore, that despite Thatcher’s headline-grabbing rhetoric, her views were not necessarily representative of the whole Conservative Party. Thatcher’s use of ‘swamped’ may have been a calculated one-off, but there were other examples of leading Conservatives employing tough language, perhaps in an attempt to suggest that the party was further to the Right on this issue than it actually was. Back at the 1976 party conference, likely influenced by this kind of Powellite agenda, Whitelaw had argued for ‘the end of immigration as we have seen it in these post war years’.136 This line had been followed up on and used again by Thatcher.137 The rhetorical twist was significant and perhaps designed to conjure up the impression of the possibility of an end to all immigration, but this was not the substance of the point and the phrase was simply a different way of suggesting a reduction in the overall number of immigrants arriving in the UK. The fine detail of how this might be achieved was still to be worked out. Thatcher and others could shelter behind their rhetoric and the question of the dependants’ register quite safely it seemed, presenting a strong yet balanced front, but in the event that the party were to win the next general election it would also be necessary to give at least some consideration to the actual ways in which changes might be brought about. During February 1978, in the wake of Thatcher’s infamous statement, the whole issue of immigration was debated in detail at the highest levels. In his internal discussion paper, ‘The Control of Immigration’, Whitelaw repeated the mantras that there must be a sizeable reduction in the scale of immigration and that there must be a finite limit on the numbers that could arrive in any given year; ‘quota’ was the chosen term.138 This would reassure the public and in itself improve race relations in Britain it was argued, and Whitelaw was consistent that the policy should be presented in a consciously positive light. He also made sure that his colleagues were aware of the outstanding and non-negotiable commitments the party had to UK passport holders in East Africa and the dependants of immigrants settled in the country by 1 January 1973, as a result of the party’s own 1971 Immigration Act.139 An outstanding question was whether the second commitment would also extend to those who might have been in the country illegally but had since been amnestied by the Labour government. However, even with these provisos there was a lot that could be done to limit immigration, in addition to reversing changes made to some rules regarding the admission of fiancés and dependants made by Labour which would have a very small effect. A new British Nationality Act could reduce the overall number of people abroad that were outside immigration control. As suggested earlier, detailed work on this would not be possible until the party was in government but the principle was likely to be that ‘Revision of the law could be presented as adjusting our citizenship law to fit our reduced role in the world’.140 Those who had arrived after 1 January 1973 for a temporary stay in the UK should no longer be accepted for settlement when their time

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Immigration135 expired, and those who had arrived and settled since should not have the automatic right for their dependants to join them, except in ‘exceptional’ or ‘compassionate’ cases.141 There would also need to be restrictions on work permits and the entitlements that they carried. However, Whitelaw also recognised that many of these changes would be difficult and potentially controversial as those who had settled might have expected to have certain rights when they first arrived, which would now be taken away. The key factors here would be the register and the quota, which could be made so important as to even override these concerns.142 The register of dependants would help to ascertain the as yet unclear number of people with a right to enter and exclude those who had not been officially declared after one year, and an appropriate quota could then take account of this; as Thatcher had described in her Weekend World interview. Even behind the scenes, however, there was no discussion of what the actual quota might be or the wider economic implications that it might have. The only two points considered were that those to whom the party had made commitments should enter first, and that the measure was necessary in order to meet all those more recent promises.143 One potential policy avenue to which Whitelaw briefly returned, but only really so it might again be rebuffed, was repatriation. The Leader’s Steering Committee concluded that: In Government we should provide more money for assisted passages for immigrants who wished to return to their countries of origin and we should publicise these facilities more than had been done in the past. We should not, however, draw attention to these proposals while in Opposition.144

Interestingly, repatriation was not put to the full Shadow Cabinet, suggesting once again the extent to which it could not be a major part of party thinking, despite the obvious fact that it might have been a further means to their stated ends. Whitelaw and the majority, perhaps the vast majority, did not want it to be compulsory and as such it would not be. The changes, register and quota, were the limits of official Conservative policy.145 The Shadow Cabinet subsequently signed off on the other details of this approach, subject to a number of minor considerations, and also suggested that the problem of the quota level could essentially be avoided by pointing out that immigration had been higher under Labour than the last Conservative government, and by arguing that only their proposals could bring about the lasting reductions needed.146 However, the continuing existence of different voices pushing for an even tougher line to be taken can still be seen, at least in the unofficial advice provided to Thatcher by Sherman. In the wake of Thatcher’s January 1978 remarks, he set out a strategy which might ‘help any MPs who care to take up the cudgels, to deflect some flak from our leader’.147 This was based on the argument that there was a clear conflict between the ‘establishment’ view of immigration and the views of the British people. The Conservative Party would need to harmonise the two and seek

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to gain ‘acceptance for intellectual legitimisation of the popular instinct’, Sherman argued.148 He also continued to suggest that the question was not one of race relations, and that immigration should rather be understood as an economic problem, as well as one of ‘nationhood’; there were apparently much bigger things at stake beyond just the simple consideration of the correct numbers of immigrants.149 In typical fashion, Sherman also criticised trends on the Left and within social science which undermined his understanding of British history.150 As such, there is a clear similarity between this kind of analysis and Thatcher’s recent concern, however fleeting, with the erosion of British character. These kinds of arguments help to give some idea of the context in which such important decisions were being taken, and the competing pressures that leading Conservatives faced. Nonetheless, it was still not this sort of thinking that defined party policy at an official level. Such concerns, though important to the individual protagonists, and perhaps many others too, were not the stuff of everyday practical politics. Andrew Rowe at the Community Affairs Department also understood that immigration and race relations were not the same thing, but for different reasons, as described above. In a December 1978 paper he instead argued that the party should clarify and repeat its message that all those currently in the UK were equal under the law, that there would be no further repatriation and no compulsion to leave, that the party detested extremist groups, and that it recognised the contribution made by minorities.151 Whilst avoiding the detail of specific figures, the Conservatives should essentially seek to provide certainty and justice on immigration, he argued.152 This stemmed from Rowe’s particular concern with the electoral need of the party to win and maintain the support of minority voters, by working closely with them and treating them well at a local level, and recruiting more as members.153 The party at the national level had taken some steps to begin to achieve this objective, but any wrong moves could also fatally undermine it. The continuing importance of immigration as a political issue is further demonstrated in the records of the Preparation for Government group, which considered the introduction of the register of dependants, as well as other changes and new race relations laws, to be amongst the first pieces of major and controversial legislation that a Conservative administration would have to introduce. A new nationality law would also be important, but could follow slightly later.154 This same analysis was evident in the party’s 1979 general election manifesto, which could be seen as the culmination of all that had been debated over the previous five years. It contained much the same line that those who had settled in Britain were now equal before the law and had made a positive contribution, but that immigration needed to be controlled, largely in the interest of ‘good community relations’.155 The document did spell out the party’s specific proposals in a little more detail, as they had been agreed the previous year, but demonstrated no fundamental change in terms of underlying principle. The final Conservative position in 1979 was therefore tough, but still not as

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Immigration137 tough as some influential voices might have wished it to be. Some existing policies had been tightened up since 1974 and some long-standing concerns had come to be expressed more clearly and in a harsher tone. But, as we have seen, there was often a gap between some of the rhetoric used during this period and the policy reality. The Conservatives consistently argued that levels of immigration needed to be reduced, but they generally did not wish to use more extreme policies to make sure that this happened. The importance of not damaging race relations or reneging on promises that had been given to immigrants in the past was often at the heart of internal debates. There is also a sense in which the Conservatives were just one part of a dominant political narrative that had developed over a long period of time and continued during the 1970s and 1980s. This was underpinned by the introduction of ever narrower and more exclusionary restrictions on who had a right to settle in Britain and was often based on considerations of race and national identity. Between 1974 and 1979 Conservative immigration policy therefore remained pragmatic but tough. Notes 1 See for example C. Booker, The Seventies: Portrait of a Decade (London, 1980). 2 D. Sandbrook, Seasons in the Sun: The Battle for Britain, 1974–1979 (London, 2012) p. 580. 3 M. Pitchford, The Conservative Party and the Extreme Right, 1945–75 (Manchester, 2011) p. 182. 4 A. Beckett, When the Lights Went Out: Britain in the Seventies (London, 2009) pp. 367–8. It is also important to recognise that unemployment remained relatively low by historical standards. However, it is often seen in terms of its contribution to debates about immigration among the White British population. During the mid-1970s unemployment among Asian and Afro-Caribbean Britons rose by 290 per cent, more than twice as fast as the overall figure. For similar analysis see also A. Marwick, British Society Since 1945 (Harmondsworth, 1990) p. 201; and P. Whitehead, The Writing on the Wall: Britain in the Seventies (London, 1985) pp. 402–3. 5 Pitchford, Extreme p. 184. 6 Ibid. p. 183; Beckett, Lights pp. 443–4. 7 Beckett, Lights pp. 443–4. 8 Ibid. pp. 445–6; Pitchford, Extreme p. 224. For greater detail see R. Thurlow, Fascism in Britain: A History, 1918–1985 (Oxford, 1987) pp. 275–97. 9 The membership rose from 4,000 in 1968 to 17,500 in 1972. At the 1970 general election the party fielded 10 candidates. This rose to 44 in February 1974 and 90 in October 1974. At the 1973 West Bromwich by-election the party received one-sixth of the vote, and this could increase to one-quarter in some local elections: P. Gilroy, There Ain’t No Black in the Union Jack: The Cultural Politics of Race and Nation (London, 1987) p. 118; Beckett, Lights p. 446. 10 Pitchford, Extreme p. 181. 11 Marwick, Society p. 403.

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12 Beckett, Lights pp.  448–9; Gilroy, Jack p.  120; A. Marr, A History of Modern Britain (London, 2007) p. 362. For greater detail on the Anti-Nazi League see Gilroy, Jack ch. 4. 13 Gilroy, Jack p. 118; Thurlow, Fascism pp. 285–6. 14 Beckett, Lights pp. 450–3. 15 A.W. Turner, Crisis? What Crisis? Britain in the 1970s (London, 2008) p. 224. 16 T. Nairn, The Break-Up of Britain: Crisis and Neo-nationalism (London, 1977). 17 B. Anderson, Imagined Communities: Reflections on the Origins and Spread of Nationalism (London, 1983). See also the discussion on Nairn and Anderson in Gilroy, Jack p. 44. 18 P. Clarke, Hope and Glory: Britain, 1900–1990 (London, 1996) pp. 323–4. 19 Gilroy, Jack p. 45. According to Marwick, race may have become just as important a social divide as class during the 1970s: Marwick, Society p. 221. 20 Beckett, Lights p. 367. 21 Figures in Z. Layton-Henry, ‘Immigration’ in Z. Layton-Henry (ed.), Conservative Party Politics (London, 1980) p. 53. This spike was the result of immigrants attempting to enter Britain in the final year before new restrictions were introduced as part of the 1962 Commonwealth Immigrants Act. 22 Z. Layton-Henry, The Politics of Immigration: Immigration, ‘Race’ and ‘Race’ Relations in Post-War Britain (Oxford, 1992) p. 31. A great deal of valuable information about the Windrush, and indeed post-war immigration and citizenship in general, is available from the National Archives. See for example, BT 26/1237. 23 Layton-Henry, ‘Immigration’ p. 51. 24 Layton-Henry, Politics p. 31. 25 The MP Cyril Osborne was a particularly important figure, who picked up on the racial element of riots in Notting Hill in 1958 and brought discussions of ethnic minority crime into debates about immigration. See for example, Layton-Henry, ‘Immigration’ pp. 53–60; Layton-Henry, Politics pp. 32–4, pp. 72–4; Gilroy, Jack p. 81. 26 The Act introduced an employment voucher system. See for example, Clarke, Hope p. 324. 27 Ibid.; R. Hansen, Citizenship and Immigration in Post-War Britain: The Institutional Origins of a Multicultural Nation (Oxford, 2000) p. 136. 28 Layton-Henry, ‘Immigration’ p. 60. 29 Clarke, Hope p.  324. The number of total immigrants rose from 71,266 in 1966, to 83,314 in 1967, and 84,474 in 1968: D. Butler and G. Butler, British Political Facts, 1900–1994 (Basingstoke, 1994) p. 328. 30 Marwick, Society p. 220; Clarke, Hope p. 324. 31 Gilroy, Jack p. 45. 32 Ibid. 33 Clarke, Hope p. 324; Butler and Butler, Facts p. 328. 34 Clarke, Hope p. 323. 35 For greater detail see Nairn, Break-Up pp. 256–91; Layton-Henry, Politics pp. 80–1; Layton-Henry, ‘Immigration’ pp. 61–3; Z. Layton-Henry, ‘Immigration and the Heath Government’ in S. Ball and A. Seldon (eds), The Heath Government, 1970–74 (London, 1996) pp. 221–3. 36 Clarke, Hope p. 324.

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Immigration139 37 Gilroy, Jack p. 57. 38 See in particular Pitchford, Extreme and L. Mason, ‘The Development of the Monday Club and its Contribution to the Conservative Party and the Modern British Right, 1961–90’, unpublished PhD Thesis, University of Wolverhampton, 2004. 39 Layton-Henry, ‘Heath’ pp. 223–6. 40 Pitchford, Extreme pp. 186–7. 41 Ibid.; Layton-Henry, ‘Immigration’ p.  65; Layton-Henry, Politics pp.  86–9; LaytonHenry, ‘Heath’ pp. 228–31. 42 The Spectator, ‘The Immigration Debate’, 28 January 1978 p. 12. 43 Firm Action for a Fairer Britain. February 1974 General Election Manifesto. 44 Ibid. The total of 55,162 for 1973 was the lowest annual figure since 1959: Butler and Butler, Facts pp. 327–8. 45 Firm Action for a Fairer Britain. 46 Conservative Party Archive, CRD 4/9/24, Immigration policy group minutes, 10 July 1975. 47 Ibid. 48 CPA, CRD 4/9/24, Immigration policy group, Confidential brief ‘Repatriation of Immigrants’, 16 December 1975. 49 Ibid. 50 Ibid. 51 CPA, CRD 4/9/24, Immigration policy group, Interim report, July 1975. 52 Ibid. 53 CPA, CRD 4/9/24, Immigration policy group minutes, 10 July 1975. 54 Joseph Papers, KJ 16/5, ‘Immigration into Britain: Some Options for Restriction’, 12 December 1975. 55 Ibid. 56 Ibid. 57 Ibid. 58 David Butler and Dennis Kavanagh suggest immigration was a significant electoral issue throughout this period, and the electorate was to the right of both Labour and Conservative leaderships: D. Butler and D. Kavanagh, The British General Election of 1979 (London, 1980) p. 74, pp. 82–3. 59 Thatcher Foundation, ‘Shadow Cabinet: Minutes of 90th Meeting’, 6 January 1976. 60 CPA, CRD 4/9/24, Immigration policy group minutes, 15 January 1976. 61 Ibid.; for more on Bell see in particular Mason, ‘Development’. 62 Layton-Henry, ‘Immigration’ pp. 65–6. 63 CPA, CRD 4/9/24, Immigration policy group minutes, 15 January 1976. 64 Ibid. 65 Ibid. 66 Hailsham Papers, HLSM 1/1/10, Diary, 30 June 1976. 67 JP, KJ 8/25, Whitelaw to Joseph, 4 August 1976. 68 The Right Approach, 1976 p. 47. 69 Ibid. p. 48. 70 Ibid. 71 Ibid.

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72 Ibid. 73 Ibid. 74 Layton-Henry, Politics p. 157. 75 Hansen, Citizenship p. 208. 76 Ibid. pp. 209–21. 77 Gilroy, Jack p. 45. 78 Hansard, HC Debates, 27 April 1977, v.930 c.1228. 79 Thatcher Papers, THCR 2/6/1/215, Gilmour to Patten, 22 July 1976. 80 TP, THCR 2/6/1/215, Thorneycroft to Patten, 22 July 1976. 81 Ibid. 82 See the discussion below in relation to the Thatcher interview on 4 October 1976. 83 TP, THCR 2/6/1/215, Gilmour to Patten, 22 July 1976; Prior to Patten, undated. 84 The Right Approach p. 48. 85 TP, THCR 2/6/1/215, Patten to Thatcher, 23 July 1976. 86 TF, ‘TV Interview for ITN News at Ten (Launching The Right Approach)’, 4 October 1976. 87 Ibid. 88 Ibid. Emphases in original transcript. 89 Ibid. 90 TP, THCR 2/6/1/228, Draft speech ‘Slings, Arrows and Boomerangs?’, 4 November 1976. 91 Sherman Papers, AC 29, AR KJ/M/2/22, Box 3, Sherman to Joseph, 9 February 1976. 92 TP, THCR 2/6/1/227, Preparation for Thatcher interview on Weekend World, September 1977. 93 TP, THCR 2/6/1/245 Lawson to Thatcher, 15 January 1978. 94 TP, THCR 2/6/1/245. 95 Television was becoming an increasingly important medium during this period. See for example, C. Seymour-Ure, ‘Political Television: Four Stages in Growth’, Contemporary Record, Vol. 4, No. 2, 1990. 96 TF, ‘TV Interview for Granada World in Action (“Rather Swamped”)’, 27 January 1978. 97 TF, ‘Letter to Labour Candidate for Finchley (Condemning National Front)’, 30 November 1976. 98 TF, ‘TV Interview for Granada World in Action (“Rather Swamped”)’, 27 January 1978. 99 Beckett, Lights p. 442. 100 The Times, 31 January 1978 p. 1. 101 I. Gilmour and M. Garnett, Whatever Happened to the Tories: The Conservative Party Since 1945 (London, 1998)/p. 304; M. Thatcher, The Path to Power (London, 1995) p. 409. 102 Beckett, Lights pp. 446–7; Turner, Crisis? pp. 224–5. 103 The Spectator, ‘Bye, Bye, Bipartisan’, 11 February 1978 p. 4. 104 Ibid. 105 Ibid. 106 The Times, ‘Mrs Thatcher on Race’, 1 February 1978 p. 15.

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Immigration141 107 Ibid. 108 E.H.H. Green, Thatcher (London, 2004) p. 136. Original emphasis. 109 Turner, Crisis? p. 224. 110 C. Schofield, ‘Enoch Powell and Thatcherism’ in B. Jackson and R. Saunders (eds), Making Thatcher’s Britain (Cambridge, 2012) p. 105. 111 Green, Thatcher p. 136. 112 See for example W.L. Miller, ‘What Was the Profit in Following the Crowd? The Effectiveness of Party Strategies on Immigration and Devolution’, British Journal of Political Science Vol. 10, No.1, January 1980. Miller demonstrated how the electorate was generally closer to the Conservative position on immigration. Whether they realised this or not, and even with the natural effects of party constraints and the warping of perceptions, ‘following the crowd’ could result in a swing of support to the Conservatives. Post Powell, Miller argued, it was possible to raise immigration and not leave oneself marginalised as an extreme candidate. Thatcher had perhaps attempted this with her ‘swamped’ statement, and as a result ‘For a week the entire British press publicized a new but unspecified hard line on immigration’. 113 Thurlow, Fascism p. 291. 114 Sandbrook, Seasons p. 588. 115 Butler and Butler, Facts p. 237; Sandbrook, Seasons pp. 594–5; Beckett, Lights p. 447; Turner, Crisis? p. 225. 116 Pitchford, Extreme p. 226. 117 Ibid. 118 Ibid. 119 Schofield, ‘Powell’ p. 107. 120 Butler and Kavanagh, 1979 p. 337; Pitchford, Extreme p. 226; Turner, Crisis? p. 225. 121 TF, ‘Written Statement on Immigration Policy (Immigration)’, 19 January 1978. 122 Ibid. 123 A. Rowe, ‘The Community Affairs Department, 1975–79: A Personal Record’ in S. Ball and I. Holliday (eds), Mass Conservatism: The Conservatives and the Public Since the 1880s (London, 2002) p. 207; Butler and Kavanagh, 1979 p. 72. 124 Rowe, ‘Community’ p. 207. 125 Ibid. p. 210. 126 Ibid. 127 Ibid. p. 216. 128 Ibid. 129 I. Gilmour, Inside Right: A Study of Conservatism (London, 1977) p. 132. 130 Ibid. p. 133. 131 Ibid. p. 134. 132 Ibid. 133 Ibid. 134 Ibid. 135 Ibid. pp. 133–5. 136 The Times, ‘Whitelaw Aim “Toward Ending Immigration” ’, 6 October 1976 p. 4. 137 TF, ‘TV Interview for Granada World in Action (“Rather Swamped”)’, 27 January 1978.

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138 TF, ‘Steering Committee: Paper Circulated (Whitelaw on Control of Immigration)’, 10 February 1978. 139 Ibid. 140 Ibid. 141 Ibid. 142 Ibid. 143 Ibid. 144 TP, THCR 2/6/1/233, Steering Committee minutes, 13 February 1978. 145 It was also the case that public support for repatriation declined during this period, from 43 per cent in 1974 to 34 per cent in 1979: I. Crewe and D. Searling, ‘Ideological Change in the British Conservative Party’, American Political Science Review, Vol. 82, No. 2, June 1988 p. 376. 146 TF, ‘Shadow Cabinet: Minutes of 191st Meeting’, 20 February 1978. 147 TP, THCR 2/6/1/225, ‘Notes on Immigration – Speeches Strategy’, 8 February 1978. 148 Ibid. 149 Ibid. 150 Ibid. 151 CPA, CRD 4/9/2, ‘The Conservative Party and Race Relations’, 17 December 1978. 152 Ibid. 153 Ibid. 154 TP, THCR 2/6/1/294. 155 1979 General Election Manifesto.

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7

Scottish devolution

Introduction Devolution was one of the defining issues in British politics during the late 1970s. It was the subject which eventually brought about the parliamentary defeat of the Labour government and precipitated a general election. Both Labour and the Conservatives had long grappled with the question of how desirable and how achievable a shift of administrative and legislative powers away from Westminster may have been. Although their chosen methods for achieving such a change, and their absolute belief in them, differed, the belief that devolution was necessary and represented a positive step forward was shared by both parties. The relationship between different parts of the United Kingdom had been placed firmly on the agenda by violence and upheaval in Northern Ireland, whilst in Wales proposals for the creation of a new assembly with limited powers were rejected in a referendum in March 1979. However, for the Conservative Party it is Scotland which arguably provides the most interesting case. The relationship between the party and the concept of devolution was, and remains, a complex one. The Conservatives had a uniquely strong tradition of support for the principle of the UK, particularly in Scotland. As Richard Finley has described, ‘Scottish Tories had come to believe that they were the party of the Union, and a unionist tradition that encapsulated both Scotland and Ireland had been part and parcel of Scottish Conservative identity throughout the twentieth century’.1 The last thing that many wished to see was any threat to its integrity. That the Conservative Party might actually help to precipitate the end of the Union was unthinkable. Nonetheless, it was also recognised that some form of devolution in Scotland would be broadly welcomed. In political terms, it was natural for the party to attempt to have a positive message. By the mid-1970s therefore, the party had accepted the need for a measure of devolution. The official approach was underpinned by two important considerations: the need to preserve the Union and the need to decentralise power. A limited form of devolution, however unpalatable, would serve as a means of avoiding more radical change in future, such as full Scottish independence, that might otherwise have been demanded. Such thinking also had a strong tradition in much

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Conservative philosophy, particularly from a One Nation perspective. For example, Ian Gilmour saw the issue as being like many others about which the Conservative Party had faced difficult choices during its history. Gilmour’s conception of ‘Peelite’ change, when the Conservatives had accepted the inevitability of certain changes, and ‘Disraelian’ change, when they had anticipated change and introduced their own reforms, recognising that opposing reform might only engender more radical change in the future, speaks to the tensions of the time. Accepting a moderate and democratically overseen form of devolution might ultimately help to strengthen the UK, it was hoped. As Gilmour described, ‘if either party had been more sympathetic earlier to Scottish aspirations for greater control over their own affairs, probably less change would have been necessary than now seems probable’.2 Alongside this, devolving greater autonomy to Scotland was also consistent with the party’s traditional interest in strengthening democracy and repairing institutions. For many therefore, devolution was a process with positive aims and positive outcomes, and not something that the Conservative Party should fundamentally be afraid of. Many Scottish Conservatives felt that it was perfectly possible to be both a Unionist and a nationalist. This commitment to devolution was real and remained in place throughout the 1974 to 1979 period. Within this picture, however, there was a perceptible waning of enthusiasm over time, at least at an official level. To some extent this was the result of greater scepticism on the part of Thatcher and some leading Conservatives about the whole process. Great claims would be made about this later. However, although personalities were clearly important a number of factors were in play. Perhaps the most important was that with Labour’s 1978 Scotland and Wales Acts, which had been the subject of much debate, devolution was no longer an abstract principle. It became a concrete set of proposals that would soon be implemented. The Conservative opposition had to confront the problems, both political and philosophical, that this threw up. Despite clear misgivings about Labour’s approach, the principle of devolution itself was not dispensed with entirely. There were changes in tone, in the justifications that were given in support and the detail of specific proposals, but there was no reversal. The inherited position Conservative support for devolution in Scotland was set by the 1968 ‘Declaration of Perth’, in which Ted Heath, then Leader of the Opposition, called openly for the introduction of a directly elected assembly in Edinburgh. His speech to the Scottish Conservative conference was seemingly influenced by two factors. The first was the political imperative for the Conservatives to have a new and distinctive policy in order to try to regain lost ground in Scotland; since its peak in the mid-1950s Conservative support north of the border had long been in decline. It was also the case that the ties which appeared to bind Scotland to the rest of the UK had changed

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Scottish devolution145 to the detriment of the Conservatives. As Findley has described, ‘as empire declined, the welfare state was increasingly identified in the popular imagination as the fundamental British institution that cemented Scottish loyalty to the Union’.3 The second was the clear indication given by the party grass-roots in Scotland that the current structure of government was unsatisfactory; in recent years a committee under Sir William McEwan Younger and the Thistle Group, a ‘ginger group’, had become influential voices, with the latter in particular arguing that the Conservative Party needed to become more aware of Scottish political identity. According to Bogdanor: They both claimed that the existing structure of government in Scotland was inefficient, because the range of functions for which the Scottish Office was responsible was too wide to be scrutinised properly either by parliament or by ministers, and the system therefore allowed too much power to rest in the hands of civil servants.4

Conservatives could therefore see the need for devolution on both political and philosophical grounds. However, problems began to emerge almost immediately. This new agenda was often associated just with the leader himself rather than all of his colleagues. Tom Devine has described how ‘to the horror of many in the audience … he committed the Conservatives to a devolved Scottish Assembly, thus reversing at a stroke an entire century of consistent Tory opposition to home rule’.5 There was apparently little consultation with the rest of the Shadow Cabinet or the wider parliamentary party. Many English MPs felt particularly affronted.6 For Heath at least, it was selfevident that the dispersal of political power and an improvement in democratic representation north of the border would help to maintain the UK rather than undermine it. As such, support for a directly elected assembly for Scotland duly made its way into the Conservatives’ 1970 general election manifesto. A party committee chaired by Sir Alec Douglas-Home had considered a number of different proposals and its thinking was thought to be the basis for reform. But despite this, no legislation was actually brought forward during the lifetime of the Heath government. It may not have been an urgent priority for an administration wrestling with economic issues, but the government was also forced to wait for the report of the Royal Commission on the Constitution set up by Labour in 1969, which eventually overran by many years. There were also some indications that Conservative opinion in Scotland was becoming more sceptical about devolution.7 The February 1974 manifesto took only two lines to mention that the Conservatives would be publishing a separate document for Scotland, and were ‘studying’ the Kilbrandon Report, the result of the Royal Commission; the majority report of which would go on to form the basis of Labour’s future proposals.8 The Scottish manifesto suggested that ‘We are preparing proposals taking into account the different recommendations’ and that ‘Our commitment to present proposals still stands.’9 In October the party was a little more forthcoming and it framed its ideas once again in terms of freedom and autonomy. However, after the

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Scottish Conservative conference in Ayr had initiated another change, the proposal was now only for a non-elected assembly. Importantly though, as Labour gained electorally, the Conservatives lost ground in Scotland in both the February and October elections. The official commitment subsequently fluctuated back towards a directly elected assembly under the influence of the official party spokesman Alick Buchanan-Smith. Looking back from the relative comfort of the 1990s, with the threat of devolution seemingly averted, it was easy for Thatcher to reflect that ‘Ted had impaled the party on an extremely painful hook from which it would be my unenviable task to set it free’.10 However, that this was necessary or even desirable had been much less clear at the time. The devolution debate Early moves after February 1975 under Thatcher included a new devolution policy group under the chairmanship of Willie Whitelaw, followed by Shadow Cabinet discussion and subsequent agreement of its proposals. At this initial stage the starting point was still the earlier Home proposals and the October 1974 manifesto, although a number of key changes were also made including a shift back to support for a directly elected assembly. The move into opposition meant that the party could be more cautious and, if it wished, more sceptical about any specific proposals that were brought forward by Labour. The Shadow Cabinet therefore became concerned about a number of practical points, including the potential for future conflict between any new assembly and the Westminster Parliament, the likely role and influence of minority parties, and the effect that any changes would have on further demands for independence. For example, as Whitelaw made clear, ‘the current proposals of the government go so far down the road of devolution that it will be very difficult to resist further pressures which might well lead to total separation’.11 These concerns would continue to underpin Conservative thinking over the next few years. With the stakes so high, it was essentially acknowledged that it was no longer the role of the party to make the running on devolution. The longer-term nature of the issue – the fact that any changes could not be made overnight – also meant that there was less pressure on the party. Conservatives could avoid being too controversial whilst holding together some sort of comprehensible position. This would prove to be a difficult balancing act. The result was an attempt to find the least objectionable position, essentially sticking to the commitments that the party had made previously, whilst also keeping policy up to date. However, internal debates could still be fraught. The question of whether by doing very little the party was in fact doing something and undermining the devolution project, intentionally or otherwise, was always present. A key test of this early positioning would come at the next Scottish Conservative conference in May 1975. Again, Thatcher looked back retrospectively and was

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Scottish devolution147 clear about the extent of her scepticism even then. ‘I repeated the commitment to a directly elected Assembly as briefly as I decently could’, she suggested.12 According to Robert Behrens, ‘There is certainly no doubt that following her early endorsement, in May 1975, of the Conservative party’s commitment to a directly elected assembly, Mrs Thatcher embarked upon a careful retreat.’13 She was also intimately aware of concerns amongst many backbench MPs and the general sense that Conservative policy had moved too far in favour of devolution. The eventual break-up of the Union remained the key concern. In October 1975 Thatcher’s Parliamentary Secretary William Shelton reported that ‘There is a clear and growing concern among a good many of our colleagues about devolution.’14 Nonetheless, for now there was little she could do about it. Such an important policy could not be dispatched overnight. In addition to these internal factors, the party position was also influenced to a large extent by wider political pressures. Shelton was amongst those who saw devolution as an issue which the Conservatives could use to try to spilt the Labour Party.15 Thatcher herself agreed: Labour was itself hopelessly divided over devolution, and it was clear that the tactical balance of advantage had swung away from proclaiming its virtues towards using it as an issue on which to embarrass the Government.16

When the government published its White Paper in November 1975, the Conservatives had to decide how to respond. Whitelaw presented the Shadow Cabinet with three basic options: oppose all devolution, support a directly elected assembly with legislative but not executive powers (the option seemingly closest to where the party was and had been in recent years), or accept the likely Labour proposals which would go further and include real executive powers.17 The second line was clearly the most straightforward for the party to take. However, under the influence of Lord Hailsham and his particular concern with constitutional reform, a fourth option with a greater focus on the defence of the UK emerged. Whilst it had long been accepted that devolving some powers to a local level would result in better government across the whole country, Hailsham argued that the devolution question should not be seen as a simple problem of short-term legislation. Rather, in order to truly protect the UK, real devolution in a much more meaningful sense and major constitutional reform were needed. The extent of Hailsham’s concern was clear: ‘At all events I hope we may avoid any more fiascos like the Alec Home proposals’.18 This of course, was still the basis of the official party line being developed by Whitelaw. The practical point about defending the UK more strongly was taken up but the more detailed policy argument was not. In addition, the Conservatives would highlight a number of other issues including the future role and responsibilities of the Scottish Secretary, the lack of Westminster oversight for Scottish legislation and the potential unforeseen consequences for public spending. This last concern was remarkably prescient; the

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next Conservative government would be greatly concerned about efforts to reduce expenditure being undermined by local authorities. Whilst in opposition, it was essential to the party’s wider economic approach that new spending on such a scale as devolution might entail was looked upon cautiously. The basic commitment to the principle of devolution remained the same, but in the short term the Conservatives were able to wait it out politically. However, this approach was complicated by the need to actually come to a decision about what to do in Parliament in response to Labour’s proposals. This would engender real conflict. As Nick Edwards, the party’s Wales spokesman, described in December 1975: I fully understand the great difficulty in reconciling the various views within the Party but we all agree, Welsh, Scottish and English, that the proposals are unworkable, bureaucratic and likely to lead to the break up of the United Kingdom. It would be quite extraordinary if, believing that and despite all the things that we will have said, we sat silent and did not record a vote.19

Other voices suggested that the consequences of actually voting en masse against any form of devolution, despite the flaws in specific proposals, would be unwelcome. For example, Gilmour was clear around this time that ‘The views of some of our English Members seem to me to be divorced from reality, and I do not believe that we should embrace their delusions.’ ‘On this issue at least’, he argued, ‘I think principle and consistency should be put before party unity.’20 The potential pitfalls for the leadership were clear. Such concerns foreshadowed internal problems that would soon emerge again. By the time of the key debate on the Scotland and Wales White Paper in January 1976, the Shadow Cabinet was ‘deeply divided’ about how to respond and whether it was best to restate the commitment to devolution in an amendment, or to avoid any mention of this and try, with Labour abstentions, to defeat the government. As an issue devolution was not above party politics. For now, Thatcher continued to acquiesce in the pro-devolution line.21 At the 1976 Scottish conference Whitelaw and Thatcher again publicly reaffirmed the party’s commitment to devolution as a whole, demonstrating continued caution in not reversing it, whilst also setting out Conservative ideas. They were less substantial than Labour’s, with a new assembly seen as being an addition to Parliament, able to scrutinise Scottish legislation but having no new executive powers and not allowed to challenge Westminster. Any scheme based on the White Paper or which undermined the Union was clearly out. Towards the end of 1976, the publication of The Right Approach afforded the opportunity to give a somewhat more detailed and philosophical consideration of the devolution issue. The Conservative Party was and would remain a strong defender of the United Kingdom but, as the document made clear, ‘in our view the Union is more likely to be harmed by doing nothing than by responding to the wish

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Scottish devolution149 of the people of Scotland for less government from the centre’.22 A directly elected Scottish assembly, with some legislative power, was advocated. Briefing notes on the document prepared by CRD emphasised that the party line was that the process was not the answer to all the nation’s ills.23 At this stage pro-devolutionists still appeared relatively content. They were having to compromise, but the official support for devolution was still in place and still real. For example, Buchanan-Smith wrote of an earlier draft of The Right Approach that ‘I am broadly agreeable with the treatment in view of the delicacy of the subject, though personally I would have liked more!’24 Edwards was more sceptical, seeing the devolution section as poor and inaccurate.25 However, this was soon to change, and again, as a result of short-term political developments. According to Behrens, ‘The suspicion that they were merely whistling in the dark to keep up their spirits was confirmed in December 1976’.26 A crucial decision to oppose and vote against Labour’s proposals on a three-line whip had then been taken by the party leadership, with all its consequences, and much of the subtlety of the earlier situation had been lost. The Shadow Cabinet had four long discussions about the upcoming debate on the Scotland and Wales Bill and the position that the party should adopt. However, in her memoirs Thatcher describes the debate as being solely about whether or not to impose the three-line whip. As she made clear, ‘Our position could be fudged no longer’.27 Thatcher’s own opinions had apparently been further honed in the course of the year by meetings with constitutional experts and examination of the opinion polls, which suggested that there was not enough popular support for changes as important as devolution.28 There was apparently no possibility of enforcing a less strict line, abstaining or laying different amendments. A marathon meeting into the early hours produced a dissenting minority, and as a result Buchanan-Smith and Malcolm Rifkind left their front bench roles, the former after a demand from six Conservative MPs that he be given special dispensation to not vote against the Bill was refused. The resignations of four others were not accepted.29 The consistently moderate voice of Gilmour had been amongst those warning of the dangers of such an approach: A 3-line whip would also, I think, place some of our prominent Scottish colleagues in considerable difficulty, as well as serving to highlight the wide differences of opinion in the Party. And, while our present position on the issue is the best that could be hoped for if a semblance of unity is to be preserved, it is not a position, I think that you could as Prime Minister maintain.30

As devolution slipped down the immediate political agenda and relations between Scotland and the Conservatives at Westminster changed this would prove to be possible, but Gilmour’s concern speaks to the significance of the problem prior to 1979. For her own part, Thatcher was less than remorseful about the resignations, later writing that ‘I wanted to minimise them, but not at the expense of failing to

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lance the devolution boil’.31 Of her speech during the second reading debate on 13 December she recalled that ‘I said as little as possible about our proposals, making only minimal reference to our residual commitment to an Assembly in Scotland, and saying a great deal about the internal contradictions and inconsistencies of the legislation’.32 The failure of the Conservative front bench to offer any real alternative to the government’s proposals did not go unnoticed. On 15 December The Times reported that Teddy Taylor, who now spoke for the party on Scottish issues, had ‘developed an uncharacteristic coyness. To all inquiries on the subject he had only one reply: “What we are discussing today are the Government’s proposals”.’33 In the event the Bill passed its second reading fairly comfortably, by 294 votes to 249, but the picture within the division was complicated. Twenty-seven Conservatives abstained and five voted for the Bill (a number of others were paired). Many Conservatives still felt strongly on this issue and had little doubt that the signal given by the leadership was intended to be clear, despite the caveats of general support for devolution that remained. Heath himself certainly felt that the Bill could be improved by amendments at the committee stage, and that the attitude of the front bench was merely positioning such that the underlying commitment could be reversed.34 Others were close to resigning over the issue too. Hailsham’s diaries reveal that he had threatened to go over the imposition of the three-line whip. Even prior to this he had written a long unsent letter to Thatcher outlining his views on what the party should do during the second reading of the Devolution Bill which, unfortunately, became overridden by events.35 Angus Maude, the Deputy Chairman of the party and Chair of CRD, asked him not to resign and defended the official position: At one stage I formed the impression that you simply deplored the splitting of the party by the refusal to allow a free vote. If that were so, I must tell you that my information suggests that a free vote now would be likely to cause a far worse split later on.36

Hailsham’s passionate reply again highlighted the likely negative consequences for the party in Scotland and focussed on the ‘blithe way’ that the decision had been taken. Demonstrating a practical appreciation of the political difficulties, he went on, ‘When will we realise that it is not necessary in opposition to strain consciences by imposing three-line whips on subjects on which the party is not united’.37 In the end, after a series of correspondence with Maude, Hailsham was persuaded to stay, although he made clear that this was largely out of loyalty to Lord Carrington and his front bench colleagues in the House of Lords.38 He recorded in his memoirs of Thatcher that ‘I had one serious disagreement with her on the subject of devolution’, but, as Hailsham described, ‘she proved to have popular opinion on her side’.39 His political instincts and concern about the future of the UK led him to believe that the front bench approach was wrong. Douglas Hurd, then a young MP, has also since recalled how ‘I was cross and thought of resigning my frontbench job when the party finally ditched its commitment to Scottish devolution. I had two angry arguments with Willie Whitelaw … before coming round.’40

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Scottish devolution151 In the wider party the situation was not clear-cut. Although there was scepticism about the devolution process in England, there was plenty of principled support in Scotland. The Duke of Buccleach was amongst those to raise concerns, telling Thatcher that ‘I feel I must write to tell how dreadfully worried I am by the news of outright opposition’.41 The pro-devolution position had been too well established to be reversed without damaging the party north of the border, he felt. Lord Crawford also made clear that ‘I deeply regret the decision that has been taken’, and he told Thatcher that ‘You are giving much fine leadership to the Party – but in this matter I am really grieved’.42 Similarly, in a series of correspondence with the leader, Michael Ancram, then of the Scottish Conservatives, had warned that the non-­­too-­subtle attempt to shift the policy had been understood and not appreciated, and could lead to the party losing support and credibility.43 Nonetheless, despite these difficulties there was still evidence that the move was popular on the backbenches. For example, Julian Amery, an influential MP closely associated with the anti-­devolution cause, relayed to Thatcher at the height of the debate that at a party meeting there had been ‘strong support for the Front Bench decision to reject a Free Vote or a reasoned amendment and to put down a 3-­Line Whip’.44 Eldon Griffiths MP wrote to Thatcher ‘simply to say that I am one of the many Conservative Members who think you took absolutely the right decision on devolution’.45 The Selsdon Group also declared its support, and there is evidence of contact with the Confederation of British Industry, Chambers of Commerce and local Conservative Associations, as well as campaign groups such as Scotland is British­­– ­­a committee formed by influential Scottish Conservatives such as Iain Sprout, Michael Clark Hutchinson and Betty Harvie Anderson­– w ­ hich had put up a ‘strong challenge’ at the 1976 Scottish Conservative conference.46 Furthermore, Heath’s attitude did not endear him to some of his colleagues. After highlighting his dislike for trends in Conservative thinking and calling for more positivity about the devolution process, Behrens noted that ‘Being positive also involved Mr Heath in defying the Conservative Party’s three-­line whip’. Heath’s argument that the principle of the Bill was worthwhile and that it went some way to achieving devolution was followed with the observation that ‘When revised provisions were introduced a year later following the demise of the first legislative effort, Mr Heath was travelling around the country promoting two of his books’.47 Lord Burton described how ‘Mr Heath’s behaviour is, to many of us, quite despicable on this matter. The sooner he joins Mr Powell the better.’48 A key result of the divisions and resignations was the appointment of Teddy Taylor as Buchanan-­Smith’s successor as spokesman for Scottish Affairs. He was known to be much more sceptical about devolution. According to Behrens, ‘To those who had watched Mr Taylor’s spirited and good-­natured attack on Scottish assemblies at successive party conferences it was obvious that either Mr Taylor had undergone a sudden conversion or that Conservative policy was about to move on’.49 The decision to impose the three-­line whip in December 1976, and the less

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than secret wish to move away from devolution, could not bring about a complete reversal of the party’s position, but official policy did subsequently evolve into support for an all-­party convention on decentralisation. As such, by March 1977 the departed Buchanan-­Smith and twenty-­seven others were still passionately warning the leader that the party must keep its options open; ‘To do otherwise would be gravely resented by many of the Party’s most active supporters in Scotland and would lead to public displays of disunity at a time when every effort should be made to minimise our differences’.50 In her relatively robust reply Thatcher described Buchanan-­Smith’s letter as ‘very realistic’ but focussed on the political justification for having a flexible position: I do not think it would be sensible to put forward detailed proposals at this stage because the situation is changing all the time. Exactly what we say in an election campaign must depend upon the circumstances at the time of that election; the progress of the all party talks; and the proposals, if any, the government has advanced in the meantime.51

On the principle of devolution, she was also clear: Our commitment to the principle of a directly elected assembly for Scotland, as outlined in the Shadow Cabinet statement of December 8th, and on numerous other occasions, stands. I have not retracted it and I do not intend to do so.52

The fact that the pro-­devolutionists needed to address the leader in such terms demonstrates how concerned they were about the future of their cause. Thatcher had to be cautious and continued to reaffirm the basic principle that they wanted. Nonetheless, the commitment was now minimal. A pledge to help bring about a specific form of devolution was no longer promoted. The next Scottish Conservative conference again provided an important moment in the development of policy. In April 1977, the Shadow Cabinet had ‘agreed’ that ‘there had to be a completely fresh approach to the problem on the basis of agreement between and within the parties at Westminster’. Nonetheless, ‘after that Conference we would have to consider a further refinement of our policy’.53 Francis Pym, who spoke for the party on devolution, subsequently negotiated with Michael Foot, then responsible for the government’s proposals, and discussed the possibility of a new Select Committee to consider the whole issue of devolution. There were concerns that Labour would seek to use this device simply to legitimise its own agenda, and so Pym was charged with suggesting that the committee should actually ‘consider all proposals made for the improvement of the government of Scotland and Wales’. Furthermore, ‘This proposal did not commit us to accept the principle of legislative devolution: it would be open for the Select Committee to decide that the only practicable solution was further administrative devolution’.54 The high principle of devolution dreamed of by some was now a long way off. At the conference Pym described the commitment to a directly elected assembly itself as ‘inoperative’,55 although he later clarified his remarks:

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Scottish devolution153 It should be remembered that our often repeated commitment to a directly elected assembly has never been withdrawn. What I said at Perth was that it was inoperative in the context of all Party talks, just as the commitments of all the other Parties were inoperative. At present no one Party can carry through any commitment on its own.56

The promise might be increasingly irrelevant, but it was still present. Further pressure to develop the party line came in October 1977 as the government prepared to publish new Bills for Scotland and Wales which would reintroduce the devolution debate to Parliament. In outlining a new set of options to the Shadow Cabinet, Pym identified the key issue facing the party: The problem is that in Scotland the vote on second reading is seen entirely as a vote on the principle of devolution whereas in the Commons it is seen as a vote on the principle of a particular method of devolution.57

Rather than outline a detailed set of policies of its own, a position which was still just about tenable, Pym proposed that the party should instead announce the proposals that it would put to the all-­party committee, based on a directly elected but scrutinising and non-­legislative assembly subordinate to Westminster, which would be less significant but might still be seen as a meaningful step forward. As he described: For as long as that is credible and for as long as there is a chance the Government’s scheme may go through anyway so that our ideas are academic, there is no point in moving to a commitment to detailed proposals.58

As such, the directly elected assembly remained, but was more of a policy preference than a firm commitment. All this would help to foster a situation in which it would be more acceptable for the Conservatives to move a reasoned amendment and vote against the Bills on a three-­line whip. Nonetheless, such moves came at the cost of some coherence. As William Miller has described, ‘The Conservatives appeared to have an endless series of inconsistent positions on devolution. When their spokesman, Mr Pym, tried to define their policy in 1977 The Economist headlined its report of his speech “Pym’s Number 101”.’59 The uncertainty that the party had created by November 1977 was also demonstrated by the questions raised internally by Chris Patten during his detailed review of strategy; ‘Do we have a policy on devolution? Could we get one? Do we want one?’60 The new Scotland and Wales Bills were subsequently described by Thatcher as ‘Banquo’s ghost’.61 After many twists and turns they did eventually bring about the defeat of the Labour government, but the situation was also hugely complicated and potentially dangerous for the Conservatives. As Patten identified: Our credibility as a united and confident party, poised to form the next government, may be dented by the ructions over these bills in the coming session. It may not be a very glorious posture, but our objective should surely be to minimise friction over these questions.

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He followed this up with an observation that can hardly have gone down well with a number of his colleagues: ‘The relationship between Mr Heath and the rest of the Conservative Party remains a matter of electoral interest. The Shadow Cabinet’s view on devolution ­… could obviously have some bearing on this relationship.’62 The implication was that the party had moved on, that Heath had recognised this and was upset, and that it should therefore not worsen the relationship by hardening the line on devolution any further. Practical considerations were still to the fore therefore; the coming general election could not be jeopardised at any cost. On 25 January 1978 the infamous Cunningham amendment to the Scotland Bill, which would impose the requirement for at least 40 per cent of the electorate to support devolution in the proposed referendum was moved, and strongly opposed by the government, presenting another dilemma for the Conservatives. The front bench abstained whilst a number of Conservatives voted for and four voted against, including Heath. The amendment was unexpectedly carried. Nonetheless, a further change of heart for political purposes was evident when the government later attempted to delete the amendment at the Report stage of the Bill and the Conservatives turned out in support, with the Labour motion defeated by 298 votes to 243.63 A further opportunity to damage the government and make devolution along Labour lines a little more unlikely was clasped with both hands. It may also have been telling that a short time later the Preparation for Government group did not consider devolution amongst the ‘major and controversial’ or even the ‘minor and more technical’ pieces of legislation that a Conservative government would seek to introduce. There were many other issues of greater importance.64 Nonetheless, Scotland and Wales and other constitutional issues were taking up a great deal of parliamentary time. Pym therefore considered further options for the party in December 1978, but the main thrust of the approach remained the same; general support for devolution on some level, but opposition to the specific Labour proposals. On the coming referendums in Scotland and Wales the official line appears to have been that the Conservatives would now accept that they needed to go ahead but that the results would not be binding on any future government. As such, the Conservatives argued for a ‘no’ vote whilst also indicating that such a result would primarily be a judgement on Labour’s p­ roposals and not the principle of devolution itself. Such an approach was successful to the extent that the referendums failed, but how the party might actually proceed as a result was still not clear. The 1979 general election manifesto contained only one simple line in relation to devolution, which stated that ‘We are committed to ­discussions about the future government of Scotland’. There was no direct promise of a devolved administration, and now little open evidence of a philosophical case for devolution. Conservative devolution policy did change recognisably between 1974 and 1979. At the end of that period the party’s commitment to a directly elected assembly in Scotland was much less clear than it had been at the beginning. Support for such an institution was more circumstantial and qualified. After the results of the

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Scottish devolution155 1979 referendums, there must have been real questions about whether it was even a worthwhile proposition. The disappointment and disquiet of pro-­devolutionists and the relative satisfaction of anti-­devolutionists also testify to this perceived shift. Philosophical arguments in support of the process appear to have been employed less often. Whilst for many Conservatives devolution had actually been a positive move which would strengthen the Union and head off calls for Scottish independence, by the end of the period, and least on an official level, the focus was overwhelmingly on the negative consequences of Labour’s specific devolution proposals. What of those who had been passionate about devolution? By the early 1980s Bogdanor was reflecting on what he saw as the remarkable inconsistency that the party had demonstrated over a long period of time. Its apparent tradition of recognising Scottish nationalist feelings and supporting decentralisation, even if largely from the starting point of opposition to London-­based centralisation rather than any great love of Scottish autonomy, had by the end of the 1970s been lost to an essentially negative Unionist position, he argued: This uncertainty of touch can be traced back not only to a basic lack of awareness of Scottish conditions by a predominantly English leadership, but also to the failure to articulate clearly a principle of dispersal of power which ought to be fundamental to Conservatives.65

These failings had led the party to neglect a position which was theoretically a complement to unionism, not a threat to it. Bogdanor, Gilmour and others would then be extremely disappointed with the relationship between Scotland and the Conservative Party that had emerged during the 1980s and 1990s. From their point of view, that there would be no Conservative MPs in Scotland by 1997 and serious questions about whether Thatcher and her party actually cared about Scotland at all, a generational impression which arguably would not begin to show signs of reversal until 2016 and 2017, was testament to the fact that this kind of positive change had not been brought about. According to Findley, by failing to make Thatcherism adaptive to unionism and Scottish patriotism, ‘For many Scots, Thatcher’s Britishness was indistinguishable from Englishness’. As such, ‘it is hard to avoid the conclusion that Scottish Conservatives were authors of their own fate’.66 However, some subtlety is required when examining this period. This outcome was not irreversibly decided by the end of the 1970s. The commitment to devolution may have become limited under Thatcher but it was not jettisoned altogether. That eighteen years of Conservative government in which nothing was done about devolution followed, was not quite as inevitable at the time as it may have later appeared. The stand made by Thatcher and the front bench in December 1976 for example, although significant, might also be seen as less fundamental than it first appeared. The leadership was almost always concerned with preserving internal

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unity as best it could. The debate inside the party was real, meaningful and at times divisive, but a balanced official approach was always still necessary. Devolution was not rejected outright. The Conservatives may have come to be more sceptical about the process, but the evidence suggests that this was not necessarily the result of a thorough reassessment of party policy going back to first principles. It may simply have been a natural consequence of moving back into opposition. As with many areas of policy, the election of Margaret Thatcher as party leader in February 1975 could be seen as something of a turning point. Time would certainly tell that she was much less convinced of the political case for devolution than her predecessor Heath had been. However, there were a range of other factors which also influenced developments in Conservative policy. It is not clear that the commitment would have been retained had Heath remained leader. It was closely associated with him personally and was not an essential policy for the majority of his colleagues. The passion of the wider party for devolution was always likely to wane somewhat from a less than secure foundation. There were already differences in terms of the timescales on which such changes should be made and the urgency with which they should be pursued. Backbench Conservatives were most sceptical about devolution and also had an important role to play. According to Bogdanor: It is generally assumed that Mrs Thatcher’s accession to the leadership was the crucial factor leading to the abandonment of the Conservative commitment to devolution. But this is only a partial explanation. For both the change of leadership and the abandoning of the commitment were themselves consequences of back-­bench dissatisfaction with the personality and style of leadership offered by Mr Heath ­… When English members came to be aware of the implications of devolution they were almost unanimously hostile, as were the Welsh Conservatives. Even the sixteen Scottish Conservative MPs were deeply divided on the issue, and little love was lost between the factions.67

The fluid dynamics of the period are also reflected in Norton’s argument that damage to the Conservatives’ electoral prospects was successfully limited by the use of skilful tactics in Parliament: Despite instances of notable disagreement in some divisions, the Conservative spokesman on devolution, Francis Pym, and his deputy Leon Brittan, managed generally to keep the party together during the passage of the Scotland and Wales Bills, with regular cross-­votes or abstentions by only a very small number of pro-­devolutionists and a sizeable dissenting vote by anti-­devolutionists in a few divisions, such disagreement being masked on occasion by the use of free votes. Although Mr Pym and the party leadership were to be accused of cynically employing tactics designed solely to hold the party together (a criticism not confined to the opposition), the approach was to be successful. ­… With the various defeats on the Bills and the results of subsequent referendums, attention became centred on the Government’s difficulties, and the Opposition emerged with few apparent lasting scars; the pro-­devolutionists had at least the knowledge of the party’s commitment to the principle involved­– ­and when

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Scottish devolution157 the party gained office in May 1979 they were to find their stance on the issue no bar to being selected for ministerial office­– ­while the anti-­devolutionists were to find their opposition to the legislation largely vindicated by events.68

The fact that Labour was now making the running was crucial. Individuals and ideology played an important role, but changes were primarily a response to political events. Short-­term considerations, whether political opportunism or a desire to defeat the government, were often significant. There were also a number of threads running throughout the period which helped to shape party thinking. The preservation of the Union was predominant amongst these, and this instinct could be adapted according to circumstances. At the beginning of the period, when in government or new to opposition, the Conservatives could support their own version of devolution as it would help to defend the Union. After time, when Labour’s specific proposals became central, the Conservatives only needed to decide how to respond, and they could be opposed on the grounds that they would actually threaten the integrity of the Union. Between 1975 and 1979 therefore, the Conservatives had a waning enthusiasm for devolution at an official level and edged away from firm commitments on the subject. However, this was largely explicable, and devolution was not yet dispensed with entirely as a positive prospect. Notes  1 R. Finley, ‘Thatcherism, Unionism and Nationalism: A Comparative Study of Scotland and Wales’ in B. Jackson and R. Saunders (eds), Making Thatcher’s Britain (Cambridge, 2012) p. 165.  2 I. Gilmour, Inside Right: A Study of Conservatism (London, 1977) p. 127.  3 Finley, ‘Thatcherism’ p. 167.  4 V. Bogdanor, ‘Devolution’ in Z. Layton-­Henry (ed.), Conservative Party Politics (London, 1980) p. 80.  5 T. M. Devine, ‘The Challenge of Nationalism’ in T. M. Devine (ed.), Scotland and the Union 1707–2007 (Edinburgh, 2008) p. 144.  6 Bogdanor, ‘Devolution’ p. 81.  7 Ibid. p. 87.  8 Firm Action for a Fairer Britain, February 1974 General Election Manifesto.  9 Quoted in V. Bogdanor, Devolution in the United Kingdom (Oxford, 2001) p. 137. 10 M. Thatcher, The Path to Power (London, 1995) p. 322. 11 Thatcher Papers, THCR 2/6/1/156, Study Group on Devolution, Interim Report, 2 May 1975. 12 Thatcher, Path p. 323. 13 R. Behrens, The Conservative Party From Heath to Thatcher: Policies and Politics 1974– 1979 (Farnborough, 1980) p. 116. 14 TP, THCR 2/6/1/86, Shelton to Thatcher, 29 October 1975. 15 Ibid.

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16 Thatcher, Path p. 323. 17 Thatcher Foundation, ‘Shadow Cabinet: Circulated Paper (Willie Whitelaw on Devolution Study Group)’, 4 November 1975. 18 Hailsham Papers, HLSM 1/1/10, ‘Devolution’, 6 November 1975. 19 TP, THCR 2/6/1/86, Edwards to Thatcher, 19 December 1975. 20 TP, THCR 2/6/1/68, Gilmour to Thatcher, 31 December 1975. 21 Thatcher, Path p. 323. 22 The Right Approach, 1976 p. 49. 23 TP, THCR 2/6/1/215, The Right Approach Briefing Notes, 24 September 1976. 24 TP, THCR 2/6/1/215, Buchanan-­Smith to Patten, 22 July 1976. 25 TP, THCR 2/6/1/215, Edwards to Thatcher, 22 July 1976. 26 Behrens, Conservative Party p. 116. 27 Thatcher, Path p. 324. 28 Ibid. 29 Thatcher, Path p. 325. Philip Norton identified the junior front benchers Hector Munro, George Younger and John Corrie, and the Chairman of the Scottish Conservative Party Russell Fairgreave as those who had their resignations refused, although Corrie was later successful. 30 TP, THCR 2/6/1/86, Gilmour to Thatcher, 22 November 1976. 31 Thatcher, Path p. 325. 32 Ibid. 33 P. Norton, Dissension in the House of Commons, 1974–1979 (Oxford, 1980) p. 454; The Times, 15 December 1977 p. 2. 34 E. Heath, The Course of my Life (London, 1998). 35 HP, HLSM 2/7/64. 36 HP, HLSM 1/1/11, Maude to Hailsham, 9 December 1976. 37 HP, HLSM 1/1/11, Hailsham to Maude, 12 December 1976. 38 HP, HLSM 1/1/11, Hailsham to Maude, 20 December 1976. 39 Lord Hailsham, A Sparrow’s Flight (London, 1990) p. 406. 40 D. Hurd, Memoirs (London, 2003) pp. 274–5. 41 TP, THCR 2/6/1/86, Buccleach to Thatcher, 2 December 1976. 42 TP, THCR 2/6/1/86, Crawford to Thatcher, 9 December 1976. 43 TP, THCR 2/6/1/86, Ancram to Thatcher, 16 December 1976. 44 TP, THCR 2/6/1/86, Amery to Thatcher, 7 December 1976. 45 TP, THCR 2/6/1/86, Griffiths to Thatcher, 8 December 1976. 46 TP, THCR 2/6/1/88; Bogdanor, ‘Devolution’ p. 89. 47 Behrens, Conservative Party p. 104. 48 TP, THCR 2/6/1/86, Burton to Thatcher, 7 December 1976. Enoch Powell had finally left the Conservative Party in 1974. 49 Behrens, Conservative Party p. 117. 50 TP, THCR 2/6/1/86, Buchanan-­Smith to Thatcher, 31 March 1977. 51 TP, THCR 2/6/1/86, Thatcher to Buchanan-­Smith, 5 April 1977. 52 Ibid. 53 TF, ‘Shadow Cabinet: Minutes of 160th Meeting’, 27 April 1977. 54 TF, ‘Shadow Cabinet: Minutes of 164th Meeting’, 25 May 1977.

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Scottish devolution159 55 Pym quoted in Bogdanor, Devolution p. 137. 56 TP, THCR 2/6/1/161, ‘Devolution’, 21 October 1977. 57 Ibid. 58 Ibid. 59 The Economist, 8 October 1977 quoted in W. Miller, ‘What Was the Profit in Following the Crowd? The Effectiveness of Party Strategies on Immigration and Devolution’, British Journal of Political Science, Vol. 10 No. 1 January 1980. 60 TP, THCR 2/6/1/246, ‘Some Thoughts on Strategy and Tactics’. 61 Thatcher, Path p. 430. 62 TP, THCR 2/6/1/246, ‘Some Thoughts on Strategy and Tactics’. 63 Bogdanor, Devolution p. 187. 64 TP, THCR 2/6/1/194. 65 Bogdanor, ‘Devolution’ p. 75. 66 Finley, ‘Thatcherism’ p. 179. 67 Bogdanor, ‘Devolution’ p. 87. 68 Norton, Dissension p. 455.

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8

Education

A remote utopian ideal Education was one of the most important and most divisive issues in British politics during the 1970s. It may also have been the one area of policy in which there was such a coherent, persistent and persuasive campaign to bring about a fundamental re-­thinking in Britain. If the 1960s had been dominated by progressive conceptions of bringing about a fairer and more open society, then by the following decade these had been overthrown by reactionary concerns about simply improving standards and getting value for money.1 Changes in education could also be seen in terms of the wider tropes of the 1970s: economic decline and fear for Britain’s future; a lack of morality at the heart of society; a shift towards the individual over the collective, and a declining trust in the ability of government to deliver successful outcomes. Changes in education may have been a further indicator of the breakdown of the post-­war consensus. The informal coalition that pushed this alternative agenda included educationalists, journalists, novelists, historians, academics and politicians. This pressure came to rest most tellingly on the Labour government, but it also directly affected the Conservative Party in opposition. This chapter will examine how Conservative policy came to develop as a result. The whole trajectory of education in post-­war Britain had been set by the 1944 Education Act, which established a system of grammar schools, secondary modern and secondary technical schools. Direct grant schools, often independent, which accepted some government funding in exchange for offering free places were also created.2 The aim had been to establish a modern universal system with wider opportunities which could cater for all pupils; as such, the school leaving age was raised to fifteen and students were allocated to the school best suited to their abilities after taking the eleven-­plus. Closely associated with the paternalist ‘One Nation’ Conservative R.A. Butler, the Act was arguably a key part of the burgeoning post-­war settlement.3 During the 1960s, concern about the differences in standards between grammar schools and secondary moderns, and the principle of selection, led the Labour government under Harold Wilson to place much more emphasis on comprehensive schools, which had existed and been experimented with since the 1940s but would now become the central focus of government policy. 1965’s

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Education161 Circular 10/65 requested that local authorities begin converting their existing grammar and secondary moderns into comprehensive schools, which would not select pupils on the basis of their academic aptitude.4 No new schools would receive funding unless they were comprehensives. This, it was thought, would widen opportunity. However, it fell to the Conservatives to oversee most of these changes between 1970 and 1974.5 The then Education Secretary, Margaret Thatcher quickly made sure that decisions about comprehensives were taken locally and not dictated from the centre, hoping to ensure that there would still be variety and choice in secondary education. Nonetheless, there was no attempt to reverse the trend towards comprehensivisation which was now well underway, and Thatcher famously oversaw the establishment of more comprehensive schools than any other Education Secretary; only 9 per cent of requests for a change were rejected.6 However, these changes were vehemently opposed by some critics. The wider debate about education that endured during the 1970s, at least on the Right, was hugely influenced by the Black Papers; a series of publications that brought together a wide range of influential voices and presented a passionate case against ‘progressive’ trends in education. The first had been published in 1969 and edited by the outspoken academics C.B. Cox and A.E. Dyson.7 The negative allusion to official White Papers was telling under the then Labour government, with the partisan nature of the initiative further suggested by the fact that there were no publications under Heath, before more Black Papers appeared in 1975 and 1977.8 Cox had by then been joined by the Conservative MP and former headmaster Rhodes Boyson, a central figure in party considerations of education questions. The pamphlets contained attacks on modern teaching methods and strident arguments in favour of selection, setting, tougher standards and equality of opportunity, but for Boyson, and those around him, the apparent imposition of comprehensives had been particularly unnecessary and unwelcome.9 The influence of socialism was thought to be iniquitous: We should not be shocked or angry that such an ideology is espoused, or that its proponents wish it to be the basis of their children’s education. What should anger us is their attempt to impose this ideology universally, and to ignore or distort the evidence of its real effects when it is put into practice. The attempt to build an immediate practical system around such a remote Utopian ideal is absurd. If it is not halted we can look forward to the collapse not only of our educational system, but of our society as well.10

The reactionary, populist style of the Black Papers helped them to reach a wide audience.11 However, one of the defining features of the 1970s was the fact that it was not just Conservatives that were increasingly interested in many of these issues. Concern had been unfolding for a while, predominantly on the Right but also across the political spectrum. The speech by Prime Minister Jim Callaghan at Ruskin College in October 1976 has often been seen as an important moment which marked ‘a dramatic break with post-­war orthodoxy’.12 His intention had

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been to begin a ‘Great Debate’ about the future of education. That the Labour Prime Minister attacked permissiveness, progressive teaching methods and talked openly about the need for better value for money, higher standards and a return to traditional values, demonstrated the extent to which criticisms of the trends of the last thirty years had become widely accepted.13 For those familiar with the work of the Black Papers, there was little doubt where the real influence had come from. In The Spectator, Callaghan was praised for his conversion to ‘educational realism’, but, the historian and headmaster T.E.B. Howarth suggested, it was rather quaint of him to suggest that he was starting a debate when one had been going on since at least the early 1960s.14 What did all of this mean for Conservative policymaking between 1974 and 1979? As we shall see, the period was not typified by dramatic change in policy terms. The Conservative position was underpinned by pragmatism throughout. The party essentially moved from a position in which standards and choice were at the centre of its approach to education but it had gone with the grain of e­ xpanding the number of comprehensive schools in Britain, to one in which they felt even more strongly about standards and choice, and were clearly more sceptical about the need to impose comprehensives on unwilling parents and pupils, but still did not, or could not, commit to seriously undoing many of the most important changes. The party therefore looked for alternative ways in which standards and choice could both be improved, once the types of school that parents would have to choose from in their local community had become less of a factor. This chapter will examine those alternative policies, such as an assisted places scheme, educational vouchers and a Parents’ Charter. It will also be demonstrated that in this area short-­term political factors often had the greatest immediate impact on Conservative policy. To a large degree the Conservatives were part of a wider, growing agenda, heavily influenced by the reactionary Black Paper-­type critique of the pattern of education in the post-­ war period, which was increasingly shared by many across British politics and society.15 That some kind of change based on higher standards and wider choice had to be delivered was widely accepted. There were also developing trends in terms of government intervening more at a national level to set the agenda that it wanted to see in education, whether more formal inspections or different examinations, alongside the introduction of some modest competition and market forces. The Conservatives pursued their own particular path during this period, but it was one based on their recent traditions and the developing pressures of the time. Educational standards The key theme which defined popular and political perceptions of education during the 1970s was standards in British schools. In simple terms, this was a concept which had been central to Conservative thinking at the beginning of the period and would continue to be so at the end. In difficult economic times, standards could

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Education163 be discussed under the guise of ensuring better value for money, with an emphasis on improving standards rather than just on increasing the amount of money that was put into education. However, at a time when the wider social role that schools played was seen to be increasingly important and there were popular concerns about the differences between a small number of good schools and a large number of poor schools, higher standards could be evoked in terms of educational attainment; better results in reading and maths, and in terms of reducing truancy and improving discipline. The Conservatives also focussed a great deal on the importance of choice. Philosophically of course, there was no reason why the party could not emphasise both higher standards and greater choice; they were often thought to be closely linked. But at times it was necessary for some important voices to remind their colleagues that standards were not only the most important thing in their own terms, but also that they provided much the easier political message. As Ian Gilmour wrote of a draft of The Right Approach, ‘Since the great majority of parents are going to have little choice in education, rather more emphasis on maintaining standards and less talk about choice would, I think, be tactful’.16 The document itself, when it was released, had ‘standards’ right at the centre of its consideration of education policy.17 Perhaps most significantly, however, it was not just the Conservatives that were increasingly interested in the importance of standards. The need for improvement had been at the heart of Callaghan’s October 1976 Ruskin College speech.18 Norman St John-­Stevas, the shadow education spokesman, welcomed the speech and in an open letter suggested, ‘If you and your colleagues now genuinely wish to initiate a new non-­political era in British educational history, you will have the full support of the Conservative Party.’19 We can see the extent to which there was a political crossover in much of the analysis contained in the speech therefore, but also in the fact that the Conservatives felt that they had been on the right course for a lot longer. Callaghan had apparently toned down some of his language in order not to be seen to be pandering to the Right, and he made it clear the speech was not ‘a clarion call to Black Paper prejudices’.20 Nonetheless, it was appreciated by Conservatives and perhaps unsurprisingly as Boyson had also outlined this kind of thinking in much of his own work, arguing that falling standards, an increasing lack of discipline and what amounted to social experimentation had led to a real breakdown in education. Furthermore, as Callaghan had spoken of parental fears, Boyson too argued that standards were not just a concern for elite observers: ‘One does not need to be a follower of Ivan Illich or the Black Papers to realise that there is rising doubt about both the effectiveness and the values of much modern education. One only needs to talk to pupils, parents, employers and the general public.’21 In February 1977 the Conservatives used a supply day debate in the House of Commons to focus on ‘Educational Standards’ and continued many of these themes. Conservative Research Department notes outlined how MPs should focus

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on declining reading standards and discipline, which were thought to be linked to the quality of teaching and increasing use of informal teaching methods, something which Callaghan and others had also picked up on.22 As well as parental choice, which will be discussed in greater detail below, the solutions were to be found in programmes to ensure that children entered secondary school with basic skills in the ‘3 Rs’, national standards for inspections, an enquiry into the size of schools and the use of streaming, improved teacher training, clearer disciplinary guidelines and the retention of ‘rigorous’ exams.23 The Conservatives would also argue that the one-­year probationary period for new teachers should be applicable in any school not just the state sector.24 The Right Approach had highlighted the simple ‘common sense’ of Conservative ideas and discussed the reintroduction of national standards for reading, writing and maths, as well as greater central oversight from the Department of Education to monitor schools’ performance.25 That this increasing focus on standards was the general direction of travel politically and culturally was further emphasised by scandals like the ‘William Tyndale affair’, which was the subject of huge press coverage, and demonstrated the potential of a populist appeal based on results and teacher competence. Dominic Sandbrook describes the battle over the school as ‘an irresistibly symbolic confrontation between two very different visions of education’, whilst John Davies has seen it as a ‘turning point in modern education history’.26 In 1974 experimental teaching methods had been introduced at the North London primary school, with young pupils apparently enjoying a great deal of freedom in what and when they learned. The idealistic liberalism and co-­operative instincts of some of the teachers led to disputes with parents and the local authority, whilst stories of chaotic scenes in classrooms soon surfaced. Enquiries heard how discipline at the school had ‘vanished overnight’ after the children were encouraged to ask questions rather than ‘obey orders’, and that one of the teachers, Brian Haddow, had ‘made no secret of his aim to change society through the children he taught’.27 The Auld Report, published in June 1976, was ‘unsurprisingly withering’, criticising the school’s managers, the local authority and the teachers who had ‘pursued their ideological objectives with contemptuous indifference to the interests of their pupils’.28 William Tyndale thus provided further ammunition to those who were concerned about local authorities losing control over their schools, and reinforced assumptions about the need for tougher inspections, assessments and greater accountability. In this environment it was only natural therefore, that standards were at the centre of Conservative thinking.29 That there was a political opportunity in focussing on standards was further recognised by St John-­Stevas in March 1978. As he described, ‘Despite the apparent shift in the Government’s area of concern from structures to standards there has been little change in their actual policies … ­ they are taking no effective action to raise standards’.30 In addition to the centrally overseen national minimum standards there should be ‘an all-­out effort to raise standards of discipline and reduce

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Education165 levels of truancy’, he argued, with a greater emphasis on keeping order as part of teacher training and clearer directions over sanctioning pupils.31 However, despite the fact that many Conservatives had problems with militant sections of the profession, it would also be necessary to work with teachers in order to bring about the changes that the party wanted to see: Too often in the past public statements by prominent Conservatives have been critical of teachers and the false impression has been created that the party is in some way ‘anti-­teacher’. We should take every opportunity of showing our support for the teaching profession and our concern and sympathy for their problems.32

This would be needed in order to raise standards, but it would also have important political implications: There are today about 500,000 teachers; they have considerable influence in the community; and they are severely disillusioned with the Labour Government. In particular we have an opportunity to improve relations with the Teachers Unions with whom we have been in continuous dialogue. Our theme with regard to teachers should be that of promoting greater professionalism.33

These themes continued to underpin Conservative thinking right up until 1979. The party’s final general election manifesto focussed less on philosophical questions and more on simple statements of intent, indicating that moves set in motion by the Labour government to improve standards, testing, inspections and teacher training would be continued.34 As suggested, however, standards, although hugely significant, were only one part of the Conservatives’ approach to education. A belief in the central importance of choice was also significant. That a child’s parents should have the greatest possible say over the education that he or she received was intrinsic to Conservative thinking. Such choices were thought to be particularly important in terms of the types of school that were available, and to some extent, although less fundamentally, in terms of the kind of education that a child would receive. Comprehensive schools As discussed, although there was great hostility towards comprehensive schools across various shades of opinion on the Right, and amongst many outspoken Conservatives, not all were so vehemently opposed. On this hugely divisive issue therefore, the party could be seen to have maintained a remarkably consistent line during this period. On many occasions it was made clear that the Conservatives, at least on an official level, would not oppose comprehensive schools in principle. There were never any plans to reverse the changes that had already been brought about; a huge number had been introduced under both Labour and Conservative governments and there was no desire to try to reintroduce grammar schools in any real sense. That question had already been settled. The mix of schools that had been established could not now be changed without an unacceptable amount of

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d­ isruption. That this was the case also helps to explain why the standards in those new comprehensive schools were thought to be so important. What the party did not support was the imposition of further new comprehensive schools from the centre. Conservatives were also more than willing to defend the rights of those grammar schools that remained to remain as they were. Parental choice was seen to be the crucial factor. As long as there was a balanced range of good schools in a particular area, then, ultimately, the kind of schools they were was less important. Back in February 1974, this pragmatic approach had already been evident. Under Heath the party had argued that local authorities that wished to change the nature of schools would have cases judged ‘on their merits’, because, as the manifesto made clear, it was ‘educationally unwise to impose a universal system of comprehensive education on the entire country’.35 In October 1974, an enquiry into the success of comprehensive schools was promised, but once again it was made clear that the Conservatives did not oppose them in principle, only their ‘ruthless imposition’.36 A telling line that would endure throughout the opposition period was that ‘We wish to move the debate away from the kind of school which children attend and concentrate on the kind of education they receive’.37 Significantly, however, the Labour government pushed ahead with wider changes and, in an attempt to force more grammar schools into becoming comprehensives, the 1976 Education Bill sought to impose the requirement to bring forward plans for increasing comprehensivisation on every local authority.38 The Conservatives were forced to engage further therefore. The party sought to delete this clause in the Bill on the grounds that it would place too much power in the hands of the Secretary of State and allow he or she to essentially dictate the type of schools that they wanted to see. As was described in the official briefing notes for MPs ahead of the parliamentary debate, ‘This makes a nonsense of the idea that the local people know best what educational provision is required for their area’.39 Another option given some consideration was a twelve-­month waiting period before the Education Bill received royal assent, either for plainly political reasons so that it could be reversed if there happened to be an election in the meantime, or else to allow more time for local authorities to prepare for the incoming changes.40 St John-­Stevas had earlier written to his colleagues and praised a petition against the Education Bill and, hoping to employ their ‘expertise’, asked for amendment ideas from ­supporters ahead of the upcoming committee stage.41 By the following year he was able to argue that the passage of the Bill had been delayed for several months due to the opposition which was ranged against it. The national petition for variety in schools had also reached 500,000 signatures in just ten weeks.42 Confidential notes prepared by the CRD also outlined how the Bill was thought to be coercive and demonstrated that the government was undermining local democracy. Flexibility was seen as the key to the Conservative position.43 As mentioned above, another briefing also highlighted the 1944 Education Act, and discussed how Conservatives might use the principle established in Section 76, which

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Education167 was thought to have settled the question of parental choice, in order to oppose moves towards greater comprehensivisation.44 St John-­Stevas picked up this theme during the debate: Whether he knows it or not, the Secretary of State is elevating himself­– ­I do not intend this as a compliment­– i­ nto a species of educational pope. He is destroying the balance carefully constructed by Lord Butler and the late Mr Chuter Ede in various sections of the 1944 Act … ­ The purpose of that settlement was to harmonise in a careful balance the rights and duties of parents, local authorities, voluntary schools, Churches and the Secretary of State. It is that balance which this Bill upsets, whether the Secretary of State will admit it or not.45

Later that year therefore, the question of imposing comprehensive schools was framed in terms of an unacceptable shift in the balance of power between local and central government which needed to be redressed. The Right Approach stated clearly, ‘This legislation should be scrapped’.46 However, perhaps unsurprisingly, there is some evidence of limited disquiet with this line. During the drafting of the document, Sir Keith Joseph stated simply, ‘I am anti-­comprehensive­– ­and I don’t know whether I am the only one.’47 We can see therefore, that a serious debate about the possibility of addressing the comprehensive question in a different way had probably not even taken place. By February 1978 St John-­Stevas was still able to argue that there was not much that the party could do about comprehensives, even if the will had been there: Although we are likely to return to power before many authorities have completed their reorganisation it is likely that most will wish to continue along that path even when compulsion is removed. Rather than unscrambling comprehensive reorganisation already carried out, we should therefore encourage local authorities to carry out practical improvements to see that comprehensive schools really do work for children of all abilities.48

Significantly, the idea of launching a major enquiry into the success of comprehensives, which had been party policy since 1974, was also now dropped on the grounds that it was no longer needed. In May 1978, St John-­Stevas outlined party thinking in The Times under the title ‘How the Tories Would Reform Secondary Education’.49 Here, he argued that as 80 per cent of children were now being educated in comprehensive schools, it would be ‘unthinkable to subject them to yet another upheaval’.50 If there ever had been any doubt about the moderation of Conservative policy on comprehensive schools then it had long ended. By the time the Conservatives returned to power, the same balance was still in place. Adam Ridley’s ministerial dossier on Education made it clear that ‘Officials should bear in mind that a Conservative Secretary of State will not consider favourably schemes which do away with “schools of proven worth” ’. This could apply to removing any remaining grammar schools or to taking back successful comprehensives.51 We can see therefore, that despite the presence of voices like Joseph’s at the top of the party

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and despite the pressures imposed by Labour’s pressing ahead with further comprehensivisation, the Conservative approach, with St John-­Stevas in the key position, remained highly pragmatic. Parental choice and local decision-­making were to the fore, but not at any cost. The assisted places scheme Whilst they were most concerned that there was a sufficient mix of schools in any particular area, so that parents might have some kind of choice, the Conservatives also recognised that this might not be enough to ensure the best education for some children. Although there were unlikely to be any new grammar schools, the party still believed very strongly in the positive role played by those that remained.52 Back in 1974, direct grant schools, those that received part of their funding from the state but still operated a measure of selection, had been defended as they ‘helped to provide increased opportunities for able children irrespective of their parents’ means’.53 That Labour were thought to be ‘examining ways of destroying’ them prompted the riposte that a ‘Conservative Government will instead strengthen them’.54 How this might be done was, however, another question. The number of direct grant schools continued to dwindle during the late 1970s as the Labour government forced them to choose whether to become comprehensives or to join the independent sector. In 1976 The Right Approach continued to defend the ability of direct grant schools to increase opportunity and pledged to restore the status of 170 in England and Wales, and to reopen the direct list for other schools that wished to apply for the status.55 An assisted places scheme in order to help a number of children into those schools was also suggested.56 When this idea had been proposed earlier in the year it was seen to have ‘“flown a kite” and been “well received” ’.57 By 1978, St John-­Stevas was suggesting that an assisted places scheme would help to ‘restore the direct grant ideal’.58 Much the same line found its way into the party’s 1979 election manifesto. There was no longer a promise to re-­found direct grant schools, only to restore the ‘principle’.59 Opportunity would still be improved, as ‘Less well-­off parents will be able to claim part or all of the fees at certain schools from a special government fund’.60 Needless to say, the Conservatives also strongly defended the rights of parents to pay for their child’s education if they saw fit throughout this period. We can see therefore, that here too policy remained highly pragmatic. The Conservatives continued to support direct grant schools, whilst also recognising that they would not be able to do anything significant to increase the number of them in the current climate. The smaller measure of an assisted places scheme was developed as an alternative.61 Selection On the controversial issue of selection, which for many may have been essentially the same debate as that around grammar schools, the Conservatives would consist-

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Education169 ently argue that the general principle was valuable and worthy of defending, but would stop short of reintroducing particular aspects that had declined over time. For example, the party did not see the need for a national eleven-­plus but would not accept its removal at independent schools where it was still employed. As such, rather than instigating a broad and principled debate, Conservatives would sometimes look for opportunities to strategically promote selection. Briefing notes for MPs ahead of debates on the Education Bill outlined how the party would oppose an amendment designed to allow the selection of disabled students and enable schools to provide for a broad range of pupils, on the principle that it did not make sense for selection to be allowed in this way but not on the grounds of intellectual ability.62 The question could be raised as to whether selection should be allowed for pupils specifically just to do ‘O’ or ‘A’ levels at a certain school, it was suggested.63 This might provide a loophole through which a broader debate could be opened up, and arguments about the need for selection made.64 Specialisation might have been another means of achieving something similar. By early 1978 St John-­Stevas was arguing, for example, that ‘Comprehensive schools should be encouraged to specialise and should be able to select the pupils most likely to excel at the school’s speciality, whether that is science, languages, swimming or woodwork’.65 The crucial point about selection and specialisation was the effect they were thought to have in terms of providing a healthy degree of competition between schools, which in turn was linked to rising standards and wider choice.66 These were relatively small, pragmatic steps, though. The Conservatives did not press for the reintroduction of selection more widely even though they supported the principle. Vouchers Perhaps the most radical policy that the Conservatives considered during this period was the education voucher; the process by which parents would be allocated a certain amount of funding with which to apply to have their child educated at the school of their choice. The party was not unique in its flirtation with the idea; during the 1960s the Liberals had given different voucher systems great thought, and the concept was closely associated with influential names such as Milton Friedman, Arthur Seldon at the Institute of Economic Affairs, and many others.67 The authors of the Black Papers had been aware of the potential of vouchers, seeing them as a means to increase choice and competition; in October 1975 John Ranelagh recorded that ‘My feeling is that the whole question of a voucher system has mushroomed with the Conservative Party largely in proportion to Dr Boyson’s forceful character.’68 There is also significant evidence of broader engagement amongst leading Conservatives.69 Introducing more of a competitive market-­based approach in education was at least on the policy agenda. St John-­Stevas had also come around

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to the idea of vouchers, such that the official party line became that experiments were needed to see if they might be a viable policy option.70 However, the potential problems with vouchers were very clear. CRD highlighted the issue of cost, especially if independent schools were to be included in any scheme, and also the question of what would happen in areas where there was only one good school or where oversubscription was a significant problem, meaning that many parents might not end up having a real choice at all.71 As such, the official Conservative attitude to education vouchers was cautious, and over the course of the period, the party, whilst recognising the potential of such a scheme, consistently argued that further experiments were needed. When vouchers were mentioned they were usually seen as ‘one way being canvassed to increase parental choice’.72 As the 1976 briefing notes for MPs made clear: There is no commitment either way to vouchers in Conservative policy, but we have said that the next step ought to be sensible experimental schemes for the various ways of applying the voucher principle. There is not one voucher scheme but several.73

Boyson sought to insert a clause into Labour’s Education Bill which: would authorise those local education authorities keen to carry out an educational voucher scheme to do so, and would require the Secretary of State to monitor the results of any such scheme. It does not commit anyone to a universal voucher scheme, only to test out the several possibilities.74

Perhaps to make the idea more acceptable to his colleagues, he also highlighted the links with choice in simple terms: Even if members have no strong position for or against vouchers, the debate gives a renewed opportunity to emphasize parental choice and the need to ensure that such choice is real and effective, and to expand on the educational advantages on the exercise of such parental choice.75

We can see that there was, as yet, little official support for the real move towards the marketisation of education that a true voucher scheme would have represented. Nonetheless, it was practical concerns and the need for political caution rather than the underlying principle itself which appear to have been the main source of concern. The difficulties of arguing clearly in favour of vouchers had been amply demonstrated by Boyson during the Commons debate when, to the great scepticism of Labour and Liberal MPs, he had suggested that if such a scheme had been in operation, scandals like that at William Tyndale would not have taken place because discontented parents would have withdrawn their support and funding from the school long before the problems became so serious.76 Despite this, there were also other more radical and contentious proposals for education reform being discussed in some party circles. For example, in May 1976 the Conservative MP Philip Goodhart had outlined his idea of ‘Educational Mortgages’.77 In a paper passed on to Thatcher he had argued that by the time the

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Education171 party returned to office many grammar schools would have become independent and that Labour would be able to reverse any changes that the Conservatives had made when they next formed a government anyway. As such, ‘A pledge that the direct grant list will be reopened will not, therefore, have much practical impact’.78 No doubt this is what many Conservatives would have instinctively preferred. However, for Goodhart there was an alternative. His proposals centred on a National Education Finance Corporation which would lend to the parents of children attending direct grant schools that became independent.79 The money would be directly paid to the school and go towards the cost of educating the child, with the loan being repaid over time by the parents. There would be some limits and some reference to means, but a typical repayment might have been at 3 per cent interest over the course of seven years.80 Goodhart estimated that such a scheme would help around 150,000 children, whose parents were already effectively subsidising school places that they themselves were not able to take up, and prevent them from falling into the state sector. He also argued that at a cost of around £60 million per year, such was the scale of government spending in this area that money might actually be saved in the long run.81 The underlying principles, though controversial, were ones with which the party should have felt instinctively comfortable. As Goodhart described, ‘The introduction of an educational mortgages scheme on the lines I have outlined would extend the possibility of independent education to many families who cannot afford it at the moment. This must be a good Conservative policy.’82 That the party would have a more positive attitude towards the private sector was already clear­– t­ he assisted places proposals demonstrated as much – but that scheme would only help a relatively small number of bright pupils escape the state sector, and the justifications for it were somewhat less philosophical than those used by Goodhart. The Parents’ Charter If ‘choice’ were to be a truly meaningful concept then, in addition to having a range of schools to pick from, parents would need sufficient information about them, apart from what kind of school they were and how much it would cost, in order to make an informed decision. Furthermore, the Conservatives also recognised that there would need to be some mechanism for parents who had seemingly exercised their choice but were not happy with the outcome to fall back on. As such, a new ‘Parents’ Charter’ was proposed. Under St John-­Stevas’s influence the October 1974 manifesto had discussed the possibility of conveying additional rights to parents, and this approach would remain central to Conservative thinking for the rest of the period.83 The central principle was that local authorities should take parents’ wishes into account. As such, it was suggested that a new independent panel should consider appeals about place allocations, whilst parents would also have the right to sit on governing bodies.84 Here it was understood to be inherently positive for there

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to be fewer specialist appointments by local authorities and more representatives of the local community. Schools would also be required to publish exam results and attendance records and to produce prospectuses and annual reports, to provide parents with better information with which to judge the quality of schools. It was thought that teachers would focus more on educational outcomes and improving standards as a result.85 The Conservatives wished to see therefore, what could be described as an increase in ‘parent power’, or at least a rebalancing in the relationship between parents and local authorities. The tools that would be used by future governments to ensure that this was the case and that parents had as much information as possible were not yet officially on the agenda, however.86 As discussed, national standards in reading, writing and maths were suggested, with central monitoring of schools’ performances. Though it was recognised that there should be a core curriculum, with all children required to take major subjects, the Conservatives were, as yet, still opposed to overt interference by government on the fine detail of the curriculum, preferring it to be set locally. There would be national standards for inspections in order to aid comparisons between schools, but suggestions of a common exam for all pupils at sixteen were opposed on the grounds that it could not meet the needs of both academically able and less able students, and might actually weaken the available comparisons between schools. The Conservatives still believed in the O-­level and the academic rigour and attainment that was thought to come with it. The implication of all this was that there should be a greater element of competition between schools than was currently being allowed by Labour. Choice and standards went hand in hand. As was described in 1976, ‘Parents should be allowed to exercise their judgement on the quality of schools and follow that judgement through “with their feet”. It would soon show up what schools, what reading methods, and what standards are preferred by the parents.’87 That the answer might simply be ‘good’ and that many parents would be unable or unwilling to take advantage of these extra responsibilities was seemingly not a major consideration. Nonetheless, it was recognised that there was a political opportunity in promoting greater choice. In 1978 St John-­Stevas had noted that Shirley Williams, then Labour Education Secretary, had ‘failed to convince her Cabinet colleagues of the need for legislation on parental choice’ and that ‘The field thus remains open to us’.88 It is clear therefore, that in overall terms Conservative education policy did not change dramatically between 1974 and 1979. At the beginning of the period the party’s ideas had been underpinned by the two key principles of standards and choice and this remained the case at the end. There were notable developments within this basic framework but there was no revolutionary upheaval. On comprehensive schools, the new Thatcher-­led party was constrained by the Conservatives’ recent record in office, not least that of the former Education Secretary herself, but even so there was no real will or desire to take a radically different approach. No doubt many Conservatives, and many more outspoken figures on the Right, deeply

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Education173 resented the introduction of the comprehensive system and would have liked to see it undone, but by the late 1970s the debate was essentially over. Any serious attempt to reopen it and try to reverse the status of many comprehensive schools would only have resulted in great disquiet and probably large expense, and this was consistently recognised on an official level by the Conservatives. Similarly, the party believed passionately in the important role of direct grant schools and began by suggesting that a number could be restored, and the status could once again be made available to other schools. However, once the practical problems with this approach became clear and the Labour government had further eroded the principle, the focus shifted instead to the policy of an assisted places scheme which would simply help to restore the direct grant ‘ideal’. This also explains why the wider focus on standards and choice was so important. If the range of schools available to parents was already settled, then the best thing that the Conservatives could do was to try to ensure that every school was of a high standard. Alongside this imperative there was also the fact that many of those applying pressure from the Right on education matters, as well as the popular press, were increasingly focussing on the importance of standards. In the wake of scandals like that at the William Tyndale School, it was only natural for the Conservatives to redouble their own efforts in this area. Here, greater choice was also important, as parental pressure was also thought to be central in pushing up standards. As such, the Conservatives were more than happy to see some competition in education provision. But this was also very far from being a free market free-­for-­all. Much more controversial ideas that would have gone further down this road, like education vouchers, were given some tacit support but not fully accepted. There was still a great deal of caution in Conservative thinking. It was also the case that, at the same time as the party was supporting greater choice, that is, the state getting out of the way and allowing parents to decide what was best for their own children, in other areas there was actually likely to be more interference and greater central oversight, whether stricter inspections or national standards in reading, writing and maths, in order to create the framework in which choice and limited competition could operate. As such, education appears to be an area in which Andrew Gamble’s concept of the free market and the strong state appears to be particularly relevant.89 We might also see most of these developments in terms of the Conservatives operating in the particular context of the 1970s, and as one part of a wider agenda. Beneath the rhetoric, there may often have been little real difference between the basic approaches of the Labour and Conservative parties, particularly after 1976 and Callaghan’s symbolic Ruskin College speech. This kind of analysis also suggests that, once again, it was short-­term political factors which had the greatest immediate impact on Conservative policy. Wider ideology was clearly driving a passionate debate, which did influence the Conservative Party; its explicit focus on standards and choice was a clear philosophical decision, but much of this kind of thinking had

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already been in place by the late 1970s. It may have been refined and enhanced as a result of internal and external pressure, but there was no great shift of Conservative policy in a fundamentally new direction. There would be no radical unwinding of the settlement in education that the Conservatives were likely to inherit. Notes  1 C. Knight, The Making of Tory Education Policy in Post-­War Britain 1950–1986 (London, 1990) p. 85.  2 The 1944 Act would remain an important reference point well into the future. Conservatives would often refer to the provisions around local authorities having a duty to provide a range of different schools that had been outlined in 1944, when they were thought to be under threat by the late 1970s.  3 Lord Butler, The Art of the Possible (Harmondsworth, 1973) pp. 116–26; D. Lawton, The Tory Mind on Education (London, 1994) pp. 20–5; K.O. Morgan, The People’s Peace: British History 1945–1990 (Oxford, 1990) p. 19.  4 Morgan, Peace pp. 311–12.  5 For more detail see R. Lowe, ‘The Social Policy of the Heath Government’ in S. Ball and A. Seldon (eds), The Heath Government, 1970–74 (London, 1996) pp. 210–13.  6 A.W. Turner, Crisis? What Crisis? Britain in the 1970s (London, 2008) p. 260; A. Beckett, When the Lights Went Out: Britain in the Seventies (London, 2009) p. 262; M. Thatcher, The Path to Power (London, 1995) pp. 165–93. Lawton also points out that although Thatcher passed a large number of comprehensive schemes, she also did all she could to delay many more and was never personally converted to the idea: Lawton, Mind p. 34.  7 C.B. Cox and A.E. Dyson (eds), Fight for Education: A Black Paper (London, 1969); C.B. Cox and A.E. Dyson (eds), Black Paper Two: The Crisis in Education (London, 1969); C.B. Cox and A.E. Dyson (eds), Black Paper Three: Goodbye Mr Short (London, 1970). See also Lawton, Mind pp. 36–7.  8 C. B. Cox and R. Boyson (eds), Black Paper 1975: The Fight for Education (London, 1975); C.B. Cox and R. Boyson (eds), Black Paper 1977 (London, 1977).  9 Cox and Boyson, 1975; Cox and Boyson, 1977. 10 F. Naylor, ‘Comprehensive Mythology’ in Cox and Boyson 1975 p. 1. 11 D. Lawton, Education and Labour Party Ideologies, 1900–2001 and Beyond (Abingdon, 2005) p. 85. 12 D. Sandbrook, Seasons in the Sun: The Battle for Britain, 1974–1979 (London, 2012) p. 685. 13 Beckett, Lights pp. 406–7; Turner, Crisis? p. 261; Lawton, Labour pp. 91–3; The Times, ‘Mr Callaghan Seeks Wide Debate on Education’, 18 October 1976 p. 4; The Times, ‘Mr Callaghan Calls For Improved Educational Standards’, 19 October 1976 p. 1. 14 The Spectator, ‘Mr Callaghan Joins the Debate’, 23 October 1976 p. 12. 15 Knight, Making p. 86. 16 Thatcher Papers, THCR 2/6/1/215, Gilmour to Patten. 17 The Right Approach, 1976 pp. 61–5. 18 Beckett, Lights pp. 406–7; Turner, Crisis? p. 261.

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Education175 19 The Times, ‘Mr Callaghan Seeks Wide Debate on Education’, 18 October 1976 p. 4. 20 Sandbrook, Seasons p. 686. 21 R. Boyson, The Crisis in Education (London, 1975) p. vii. 22 TP, THCR 2/6/1/100, ‘Supply Day Debate, Educational Standards, Thursday 17 February 1977’, 14 February 1977. 23 Ibid. 24 Ibid. 25 The Right Approach p. 62. 26 Sandbrook, Seasons p. 206; J. Davies, ‘The Inner London Education Authority and the William Tyndale Junior School Affair, 1974–1976’, Oxford Review of Education, Vol. 28, No. 2&3, 2002 p. 275. 27 The Times, ‘School Discipline “Vanished Overnight” ’, 6 January 1976 p. 3 and ‘Tyndale Teacher “Brought Class Consciousness” ’, 24 January 1976 p. 3. 28 Sandbrook, Seasons p. 210. 29 Newspapers often carried stories which emphasised the lack of discipline or non-­ competitiveness in schools during this period. See for example Turner, Crisis? pp. 260–1. 30 TP, THCR 2/6/1/100, ‘Conservative Policy on Education and the Arts’, 8 March 1978. 31 Ibid. 32 Ibid. 33 Ibid. 34 1979 General Election Manifesto. 35 Firm Action for a Fairer Britain, February 1974 General Election Manifesto. 36 Putting Britain First, October 1974 General Election Manifesto. 37 Firm Action for a Fairer Britain. 38 A. Marwick, British Society Since 1945 (Harmondsworth, 1990) p. 236; I. Gilmour, Inside Right: A Study of Conservatism (London, 1977) pp. 126–7. 39 TP, THCR 2/6/1/99, Briefing notes on Education Bill, June 1976. 40 Ibid. 41 TP, THCR 2/6/1/99, St-­John Stevas to colleagues. 42 TP, THCR 2/6/1/100, St-­John Stevas statement, 27 January 1977. 43 TP, THCR 2/6/1/99, ‘Education Bill Debate’, 2 February 1976. 44 TP, THCR 2/6/1/99, Briefing on 1944 Education Act. A great deal of information about the 1944 Act, the Bill that preceded it and cabinet discussions about education can be found on the National Archives website. Section 76 established the principle that children should be educated in accordance with their parents’ wishes. 45 Hansard, HC Debate, 4 February 1976, v.904, c.1237. 46 The Right Approach p. 63. 47 TP, THCR 2/6/1/215, Joseph to Patten. 48 TP, THCR 2/6/1/100, ‘Conservative Policy on Education and the Arts’, 8 March 1978. 49 The Times, ‘How the Tories Would Reform Secondary Education’, 9 May 1978 p. 20. 50 Ibid. 51 Ridley Papers, Education and the Arts Dossier, 2 May 1979. 52 Marwick, Society p. 237. 53 Firm Action for a Fairer Britain. 54 Putting Britain First.

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55 The Right Approach p. 63. 56 Ibid. p. 64. 57 TP, THCR 2/6/1/99, Briefing notes on Education Bill, June 1976. 58 TP, THCR 2/6/1/100, ‘Conservative Policy on Education and the Arts’, 8 March 1978. 59 1979 General Election Manifesto. 60 Ibid. 61 A means tested assisted places scheme, allowing the brightest pupils to move from the maintained to the independent sector, was subsequently established in 1980, and stood right up until 1997. 62 TP, THCR 2/6/1/99, Briefing notes on Education Bill, June 1976. 63 Ibid. 64 Ibid. 65 TP, THCR 2/6/1/100, ‘Conservative Policy on Education and the Arts’, 8 March 1978. 66 TP, THCR 2/6/1/100, ‘Conservative Policy on Education and the Arts’, 22 March 1978. 67 M. Francis, ‘The Influence of Ideas: Neoliberalism and Post-­War British Politics’, unpublished PhD thesis, University of Nottingham, 2012. 68 Joseph Papers, KJ 11/1, Ranelagh to Nigel Forman, 21 October 1975. 69 Joseph had a series of correspondence with Vernon Bogdanor during November and December 1975 about his paper ‘Some Objections to Proposals for Vouchers in Education’. He also received a series of papers on vouchers from the economist Alan Maynard: JP, KJ 11/1. The Thatcher Papers also contain copies of numerous articles, with the focus often on the ideas and experience emanating from the U.S.: TP, THCR 2/6/1/99, J. Areen and C. Jenecks, ‘Education Vouchers: A Proposal for Diversity and Choice’; S.F. Overlan, ‘Regulated Compensatory Voucher Plan’; K.B. Clark, ‘Alternative Public School Systems’. 70 TP, THCR 2/6/1/100 Prof. Jack Wiseman to St John-­Stevas, 15 February 1977. 71 TP, THCR 2/6/1/100, ‘Supply Day Debate, Educational Standards, Thursday 17 February 1977’, 14 February 1977. 72 TP, THCR 2/6/1/99, Briefing notes on Education Bill, June 1976. 73 Ibid. 74 Ibid. 75 Ibid. 76 HC Debates, 21 July 1976, v.915 cc.1889–970. 77 TP, THCR 2/6/1/99, Neave to Thatcher, 25 May 1976, Philip Goodhart ‘A Proposal for Educational Mortgages’. 78 Ibid. 79 Ibid. 80 Ibid. 81 Ibid. 82 Ibid. 83 Putting Britain First. 84 The Right Approach p. 63. 85 Ibid.

Education177 86 A national curriculum, league tables and centrally managed targets were still some years away, but the genesis of these kinds of policies can arguably be seen in this period: R. Lowe, ‘Education Policy’ in A. Seldon and K. Hickson (eds), New Labour, Old Labour: The Wilson and Callaghan Governments, 1974–79 (London, 2004) p. 137. 87 TP, THCR 2/6/1/99, Briefing notes on Education Bill, June 1976. 88 TP, THCR 2/6/1/100, ‘Conservative Policy on Education and the Arts’, 8 March 1978. 89 A. Gamble, The Free Economy and the Strong State: The Politics of Thatcherism (Basingstoke, 1988).

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Conclusion

The aim of this book has been to examine the development of Conservative Party policy between 1974 and 1979. It has sought to contribute to two burgeoning debates about the significance of the 1970s as a decade and the origins of Thatcherism. This period has often been seen as one of significant change in Britain, with Conservative policy one part of much wider and more significant developments. However, if the 1970s, and this period in particular, are looked at in detail, then much of this change appears less dramatic than one might expect. Although the popular picture of the decade has often been a negative one, not least during the period itself, there was more to the 1970s than is often recognised. Despite serious problems, the social, cultural and political foundations of the decade remained relatively stable. Nonetheless, it was an impression of crisis that many observers, not least many Conservatives, took away. A number of key themes or preoccupations could be seen to define the period, therefore. The breakdown of the post-­war consensus, economic decline, the ungovernability of Britain and a loss of morality in national life formed important ideological conditions. However, we have also seen that established practices, traditions, ways of approaching certain problems and the practical short-­term political context of the period, which often engendered pragmatism, were also crucial. In specific policy terms, we have seen that monetarist ideas became increasingly central to the Conservatives’ anti-­inflation policies, but that ideas around the government’s role in mediating pay claims were not dispensed with entirely. In economic policy, there was a little more acceptance of the need for tough spending cuts and some more philosophical arguments about the need to reduce taxation and support the free market system, but the party was not ready to slash public spending at all costs, and many of the lasting changes that would be brought about by the Thatcher governments had not been worked out in detail prior to 1979. The Conservative position on the trade unions was often rhetorically negative and changes to the laws on picketing, the closed shop and trade union elections were proposed, but it was also conceded that trade unions had a positive role to play and would need to be involved in some form of consultation with government about its economic goals. The Conservatives consistently argued that levels of immigration

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Conclusion179 needed to be reduced, but they did not wish to use extreme policies, damage race relations or renege on promises that had been made to immigrants in the past. The party’s commitment to devolution may have become limited under Thatcher but it was not jettisoned altogether. In relation to education policy, the Conservatives were strongly opposed to the imposition of comprehensivisation from the centre, fearing its impact on standards and parental choice, but there was no clear promise to restore grammar schools. By comparing the policies outlined by the Conservative Party in February 1974 and in May 1979 therefore, we can see that there were real developments during this period, but few truly dramatic changes. How does this picture appear if we follow the broad principles suggested by Anthony Seldon is his chapter ‘Ideas are not Enough’, as suggested in the introduction? Seldon described how change would occur when the right combination of ideas, individuals, circumstances and interests were in place.1 The interplay between these four concepts can be seen throughout this book. Ideas were certainly not in short supply during this period. The Conservatives were fully engaged with debates about monetarism, economic liberalism, trade union power and governability, the concepts of nationality and race, and choice and burgeoning marketisation in education. There can also be little doubt that there were key individuals at the heart of this story who were in a position to be the conduits of change. Margaret Thatcher, Keith Joseph and Geoffrey Howe in particular have long been the subjects of deserved attention. They clearly had a significant role in moving Conservative policy, especially in relation to the economy. Nonetheless, this book has hopefully shown that it is possible to consider change in Conservative policy in many more areas and think more specifically about the scope and terms of its immediate development, rather than focus on the battle of ideas and leading individuals. However, it is also the case that individuals were significant in another sense. As we have seen, the more pragmatic, moderate voices in the Shadow Cabinet, and especially those with particular policy briefs, had an important impact. Good examples are provided by Jim Prior at Employment, Willie Whitelaw at Home Affairs and Norman St John-­Stevas at Education. The differences between them and their colleagues were often not great. As leading Conservatives, they were in line with the general tenor of the party’s approach in their area, whether a tough line on the trade unions, restrictions on immigration or improved standards and choice in schools. But greater differences did occur from time to time, over particular issues or particular public statements made by other Conservatives, and they did sometimes prevent party policy from changing quite as much as it would otherwise have done. As suggested, in terms of circumstances the economic, intellectual and ideological environments of the 1970s in which the Conservative Party was operating were often propitious to change. The Conservatives were usually moving in the wake of, or alongside, evolutionary administrative or analytical changes that were already underway, or being brought about under the Labour government. In political

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terms, circumstances were also important with regards to a natural desire to move on from recent defeats and look to different policy solutions. It may also have been that during the 1970s the electorate were more willing to listen to alternative political messages. However, the electoral interests of the Conservative Party meant that change could only be proposed to an extent which the public was willing to accept. The party could not appear to be too controversial or out of touch. The short-­term political interests of the party­– ­the need to have a comprehensible position, however imperfect, which could be held up in comparison with that of the Labour government at important moments, particularly in Parliament­– ­were also significant in determining the ways in which party policy developed, and often brought about a great deal of pragmatism in official thinking. The smaller the timeframe that is considered, the more important these short-­term political factors appear to be. As a whole therefore, it appears as though many of the right conditions for change were in place during the mid-­to late 1970s, but that they were not lined up in such a way as to precipitate truly radical political change. Conservative policy did develop in a number of important ways, but it often remained pragmatic and cautious as well. With this in mind, and as suggested at the beginning of this book, how significant a turning point does the Conservative victory in 1979 now appear to be? Many have suggested that it was a seminal moment in post-­war British history. To what extent did a kind of collective experience during the 1970s, shaped by the political, social and economic developments, help to bring about the ‘decline of one established order in politics and the rise of another’?2 As discussed, even in quite simple terms we can now see that the result of that general election was an important one; it led to the return of Britain’s first woman Prime Minister, and the Conservatives won with a significant swing of electoral support behind them. The rhetoric of the period was also important. There was certainly an impression that the Conservatives represented a ‘change’ of some kind, whilst the hegemonic success of Thatcherism during the 1980s and beyond certainly suggests that 1979 demonstrated significant change in ideological terms. It was also the case that the electorate returned a Conservative government with its own set of ideas and its own particular range of policies that would clearly have an impact. However, as this book has demonstrated, in a number of key areas we need not necessarily see those policies as being dramatically different from those that had been pursued by the Conservative Party in its recent history, or as being out of line with the overall trends of policymaking in Britain during the 1970s. 1979 may well have been a turning point in political terms, in electoral terms, in rhetorical terms and in terms of popular perception, but in terms of policy detail, though important, it does not appear to have been as dramatic a turning point as we might expect.

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Conclusion181 Notes 1 A. Seldon, ‘Ideas are not Enough’ in D. Marquand and A. Seldon (eds), The Ideas That Shaped Post War Britain (London, 1996). 2 P. Addison, The Road to 1945: British Politics and the Second World War (London, 1994) p. 9.

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Index

1970s contemporary views of 12–16 reassessment of 3–5, 12, 15–16, 178 Advisory Committee on Policy 8 A Giant’s Strength 94 Amery, Julian 151 Ancram, Michael 151 Anderson, Benedict 122 Anti-Nazi League 15, 122 APEX 106, 107 assisted places scheme 168 Auld Report 164 Authority of Government group 102 Bacon, Roger 67 Barber, Anthony 32 Barnett, Corelli 18–19 Bell, Ronald 127 Black Papers 161, 162, 163, 169, 170 Bogdanor, Vernon 155 Booker, Christopher 13, 14 Boyson, Rhodes 161, 163, 169 Bretton Woods system 32 British Nationality Act (1981) 128, 134 British National Oil Corporation 68, 81, 83 Brittan, Samuel 31 Brown, George 13 Buccleach, Duke of 151 Buchanan-Smith, Alick 146, 149, 152 Budd, Alan 31 Burton, Lord 151 Butler, Adam 108 Butler, R.A. 8, 160, 167 Callaghan government 55 Callaghan, James 2, 107, 161–2, 163, 164, 173 Carrington, Lord 102, 150

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cash limits 62–3 Castle, Barbara 94 Centre for Policy Studies (CPS) 14, 31, 70, 87, 93, 100 ‘City of London’ 32–3, 68 Clegg Commission 61 closed shop 106–8 Clutterbuck, Richard 21–2 Cold War 5, 67 commodity price boom 19, 32 communism 5, 67 Community Affairs Department 132–3, 136 comprehensive schools 165–8 Concerted Action 34, 46–7, 63, 94, 97–9, 105, 114 Concordat (1979) 104, 109 Confederation of British Industry (CBI) 68, 112, 151 Congdon, Tim 31 Conservative Research Department (CRD) 7–8, 34, 37, 39, 42, 45, 46, 57, 58, 61, 68, 96, 98, 99, 104, 108, 109, 112, 126, 149, 150, 163–4, 166, 170 Crawford, Lord 151 Davies, John 101 Declaration of Perth 144 decline 18–22 Dobbs, Michael 8, 112 Douglas, James 39 Drabble, Margaret 13 Economic Reconstruction Group (ERG) 8, 41, 42, 45, 46, 48, 62, 65, 93, 97–8, 110 Education Act (1944) 160, 166–7 educational standards 162–5 education vouchers 169–71 Edwards, Nick 148, 149

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Index

192 Eltis, Walter 67 Employment Policy Group 107, 110 European Monetary System 47 exchange controls 68 Eyres, Stephen 112 feminism 23–4 Foot, Michael 152 free enterprise 66–9 Gardyne, Jock Bruce 39 general elections 1970 35, 79, 84, 124 February 1974 94 Firm Action for a Fairer Britain 7, 35–6, 64, 67, 79, 85, 94, 109, 125, 145, 166, 168 October 1974 2 Putting Britain First 7, 36, 57, 64, 79–80, 85, 95, 109, 166, 171–2 1979 1, 2, 3, 180 Conservative manifesto 7, 44, 46, 61–2, 66, 68, 83, 87–8, 105, 109, 110, 136, 154, 165, 168 Gilbert, Robbie 43, 108 Gilmour, Ian 16, 17, 34, 40, 42, 93, 101, 112, 129, 133–4, 144, 148, 149, 155, 163 Goodhart, Philip 170–1 Gouriet, John 110, 111 Griffiths, Brian 31 Griffiths, Eldon 151 Grigg, John 97, 113 Grunwick dispute 93, 105–13 Hailsham, Lord 16, 21, 23, 112–13, 127, 133, 147, 150 Harris, Ralph 31, 39, 87 Haviland, Julian 129 Hayhoe, Barney 108 Healy, Denis 38, 57, 58, 59, 64, 66, 99 Heath, Edward 35, 36, 37, 78, 85, 144 145, 150, 151, 154, 156 Heath government 21, 35, 41, 64, 94–5, 109, 113, 127, 145 Heseltine, Michael 87 Home, Alec Douglas 145 Home Ownership Policy Group 86 Hoskyns, John 100, 104 housing 84–8 Howe, Geoffrey 8, 34, 38, 42, 43, 47, 58, 63, 66, 71–2, 94, 96, 98, 100, 102, 103, 179 Howell, David 37, 43, 45, 57, 63, 70

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Hurd, Douglas 150 Hutber, Patrick 20 IMF crisis 19, 32–3, 42, 59 Immigration Act (1971) 124, 125, 134 Immigration Policy Group 125 incomes policy 31, 33, 34, 35, 37, 38, 39, 41–2, 43, 44, 96, 99 Industrial Relations Act (1971) 94, 95, 106–7 Institute for Economic Affairs (IEA) 31, 87, 92, 93, 169 James, Robert Rhodes 43 Joseph, Keith 8, 14, 16, 17, 18, 34, 36, 40, 42, 43, 45, 46, 57, 68, 87, 93, 100, 103, 107, 108, 112–13, 126, 128, 166, 179 King, Anthony 20–1 Lawson, Nigel 48, 61, 69, 98, 100, 130 Macleod, Iain 8 McWhirter, Norris 110 Maude, Angus 150 Maudling, Reginald 40–1 Meade, James 39 Minford, Patrick 31 Monckton, Walter 94 Monday Club 124, 127 monetarism 1, 30–1, 33–4, 35, 37, 40, 41, 43–4, 46, 47–9, 92–3 Mont Pelerin Society 92 morality 22–6 Morris, Michael 86 Mount, Ferdinand 131 Nairn, Tom 122 National Association for Freedom (NAFF) 93, 106, 107, 108, 110, 111 National Front (NF) 121, 122, 127, 130, 132 Nationalised Industries Policy Group 110 nationalised industry 78–84 neoliberalism 1, 4, 5, 55, 91–2, 94, 105, 114 nineteen-seventies see 1970s North Sea oil 68, 79, 81, 83 oil price shock 19, 32, 35 Parents’ Charter 171–2 Parris, Matthew 8 Patten, Chris 8, 37, 42, 45, 57, 96, 99–100, 103–4, 112, 129, 130, 153–4

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Index193 Pepper, Gordon 31 picketing 108–9 Policy Group for the Nationalised Industries 78–9, 80, 81–2 Portillo, Michael 8 post-war consensus 1, 16–18 Powell, Enoch 8, 123, 124, 133–4 Preparation for Government Group 60, 66, 136, 154 Prior, Jim 34, 38, 42, 43, 44, 45, 93, 99–100, 101, 107, 108, 111, 113, 129, 179 Public Housing Sector Policy Group 86 Public Sector Policy Group 61 public spending 56–62 Pym, Francis 152–3, 154, 156 Raison, Tim 86–7 Rees, Merlyn 128 referendums Scotland 1979 154, 155 Wales 1979 143, 154, 155 repatriation 125–7 Ridley, Adam 8, 38, 40, 42, 43, 46, 48, 58, 61, 68, 70, 71, 98, 99, 167 Ridley, Nicholas 78, 80, 83 Rifkind, Malcolm 149 ‘right to buy’ 78, 84–5, 86, 87, 88 Rock Against Racism 15, 122 Rowe, Andrew 132–3, 136 Ryder, Richard 98, 112 Scarman Report 112–13 Scotland is British 151 Seldon, Arthur 31, 169 selection (education) 168–9 Selsdon Group 87, 112, 127, 151 Shelton, William 147 Sherman, Alfred 14, 23, 31, 100–1, 102–4, 112, 130, 135–6 Social Contract 38, 43, 97, 105 ‘Stepping Stones’ 101–2 Stirling, David 21 St John-Stevas, Norman 163, 164–5, 166, 167, 168, 169–70, 171, 172, 179 Strauss, Norman 100–1 taxation 64–6 Taylor, Teddy 150, 151–2 Thatcherism hegemony 1, 24, 84, 180 legacy 78 morality 24–5

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origins 4–5 Scotland 155 women 24 Thatcher government 33, 55, 72, 92, 102, 178 Thatcher, Margaret Concerted Action 98 Education Secretary 161, 172 Grunwick dispute 107, 110–13 Immigration 129, 130–2 morality 25 outside advice 39 Party leader 16, 156 post-war consensus 17 Prime Minister 1, 60 public spending 72 Scottish devolution 146–7, 149–50 Shadow Environment Secretary 85–6 taxation 71 The Right Approach 7, 41–2, 59, 70, 80–1, 87, 97, 128, 129, 148–9, 163, 164, 166, 168 The Right Approach to the Economy 7, 43, 44, 45, 46, 59–60, 65, 66, 68, 82, 99 Thistle Group 145 Thorneycroft, Lord 129 Thorpe, Jeremy 39 trade union democracy 109–10 ungovernability 20–2 Walden, Brian 112 Walker, Peter 86 Walker, Walter 21 Walters, Alan 31 Ward, George 106, 107, 110, 111, 112 Wass, Douglas 48 Whitehouse, Mary 25 Whitelaw, Willie 25, 85, 101, 127–8, 129, 134–5, 146, 147, 148, 150, 179 Wider Share Ownership Committee 79 Wider Share Ownership Group 83 Williams, Shirley 172 William Tyndale Junior School 164, 170, 173 Wilson government 32, 36, 55, 94, 123 Wilson, Harold 36, 39, 160 Winter of Discontent 44, 61, 102–3, 104, 106, 109 World in Action 130–2 Worsthorne, Peregrine 92 Younger, William McEwan 145 Zweig, Konrad 46, 97–8

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