Margaret Thatcher: Power and Personality (82 page)

Then she launched into an even sharper attack on the excesses of the Commission, firing a none-too-veiled broadside at Jacques Delors, who must have been precisely whom she had in mind when she attacked ‘those who see European unity as a vehicle for spreading Socialism’.

She reworked the line that had brought her the biggest headline at Bruges, but now with extra touches of political spice. ‘We haven’t worked all these years to free Britain from the paralysis of Socialism only to see it creep in through the back door of central control and bureaucracy from Brussels.’

She concluded by telling the Conference, ‘Ours is the true European ideal.’
²⁷

From the seventeen-minute standing ovation given to her speech, you might have thought that the entire Conservative Party was fired up with enthusiasm for Margaret Thatcher’s new vision for Europe as defined at Bruges. In fact, she had exposed the fault-line on the issue, magnifying the tensions between Europhiles and Eurosceptics into a full-blown split.

The trouble was that the party in Parliament took a different view from the party activists at the conference. Although some fifty Eurosceptic MPs who made up the Conservative European Reform Group sent the Prime Minister a fulsome letter of congratulations on her new approach, we were in a minority. For a larger number expressed their concerns to their whips that ‘Margaret had gone too far’ or ‘gone over the top’.
²⁸

A handful of Heseltine supporters claimed to be outraged by the anti- European nature of the crucial paragraphs in the speech, although perhaps they were secretly pleased that they had a new reason for championing their master’s cause. For this was a time when Michael Heseltine was behaving more and more like an alternative king over the water, with his courtiers quietly counting heads while the pretender himself remained indefatigable in his speech-making, particularly in the constituencies of disaffected colleagues.

Bruges therefore turned up the heat on the simmering discontent within the party at Westminster. Europe was not the only cause of the unease. There were plenty of other reasons for restlessness about her leadership. They included the poll tax legislation, the sore feelings amongst overlooked or ignored colleagues on the backbenches and the feuds within the cabinet. These became sharper and more bitter in the aftermath of Bruges.

REFLECTION

Her swing towards Euroscepticism was accompanied by a swing towards hubris. As she approached her tenth anniversary of becoming Prime Minister, she was increasingly intolerant of dissent, especially from her most senior colleagues. But these disagreements had not yet become particularly troublesome.

If she had retired, as Denis wanted her to do, after ten years as Prime Minister, she would have departed to a level of public acclaim unequalled by any other previous occupant of No. 10. But the last thought in her head was giving up the job she loved. Having no interests outside politics, she was determined to remain at the helm. In taking such a position, she was worrying a growing number of her cabinet and parliamentary colleagues, many of whom wanted to soften her stance on both Europe and the poll tax. The most worried of all was Geoffrey Howe, who felt thwarted in his European sympathies, and frustrated in his personal ambition to succeed her. So, while she stayed on and on with rising unpleasantness towards him, he began scheming against her with increasingly clandestine cunning.

33

Boiling over on Europe

THE FALL-OUT FROM BRUGES

The Bruges speech and its aftermath revealed a three-way split at the top of the cabinet. Sir Geoffrey Howe was not merely ‘dismayed’.
¹
In his quiet but feline way, he was extremely angry with the Prime Minister. He found it impossible to understand how she could reconcile her trumpet blasts of Euroscepticism at Bruges and Brighton with Britain’s continuing membership of the European Community.

In Howe’s view, Margaret Thatcher’s support for the SEA should have logically led to her support for EMU, and eventually to a single European currency. The precursor to this was entering the ERM, to ensure a reasonable degree of currency stability among member states. On a wider front, the Foreign Secretary thought that his Prime Minister’s call for the European Community to be run through ‘willing and active cooperation between independent sovereign states’
²
was an unrealistic misrepresentation of the status quo, which already existed, thanks to texts and treaties that Britain had signed.

If Geoffrey Howe was smouldering with what he later called his ‘conflict of loyalty’, Nigel Lawson was in a similar state of mind, although for different reasons. He had long been an opponent of EMU. Indeed, in November 1985 he had strongly advised the Prime Minister not to agree to any words in the SEA, which referred to it, since this would be the slippery slope towards a common currency and a common Central Bank. Margaret Thatcher ignored his advice on EMU because she thought she had reached a pragmatic understanding with Chancellor Helmut Kohl that the references to it were harmless and meaningless. This proved to be one of her greatest mistakes.

Another damaging concession, in Lawson’s view, was her agreement at Hanover in June 1988 to the setting up of a committee to report on the next steps on EMU under the chairmanship of Jacques Delors. Margaret Thatcher only went along with this committee of ‘wise men’ because she thought it would be a good way of kicking the issue into the long grass. Unfortunately, the wise man she appointed to the committee, the Governor of the Bank of England, Robin Leigh-Pemberton, went native in her eyes and supported the Delors line. This was a Thatcher own-goal.

A more effective strategy for heading off the growing momentum towards EMU, according to Nigel Lawson, would be to reach an agreement between sovereign states to accept but then go no further with the limited stage one of the Delors plan. This involved the completion of the single market, closer monetary co-ordination with Europe and membership of the ERM for all member states. It was this last condition that brought the Chancellor, a long-standing advocate of Britain joining the ERM, back into head-on collision with the Prime Minister.

The collision was strange, because Margaret Thatcher and Nigel Lawson were united in their opposition to EMU and the single currency. That unity, by all the forces of political logic, should have led them to be equally opposed to ERM. For Jacques Delors, and the leaders of every other member state in the EC, saw ERM not just as a tool for economic management but also as the first political step towards EMU. Lawson, however, remained in denial about this political objective of ERM. He insisted that it was purely an economic mechanism, which would work by co-operation between member states. This was a massive error of judgement by the Chancellor. He should have foreseen, as Margaret Thatcher foresaw, that ERM was an instrument to subordinate the sovereignty of member states, not to encourage co-operation between them. As later events were to prove, Britain could never work with such economic subordination, hence the disastrous but inevitable exit from the ERM that the successors of the Thatcher government were forced to make in 1992.

In 1989, however, the three-way split on these issues between the Prime Minister, the Chancellor and the Foreign Secretary were creating unbearable tensions. The first two opposed the single currency and EMU. The last two supported ERM. Geoffrey Howe alone wanted EMU. Margaret Thatcher alone opposed ERM. This was a recipe for chaos. Something had to give.

In an effort to resolve this impasse, on 3 May 1989, Margaret Thatcher met Nigel Lawson for their weekly bilateral without officials present. It was a disaster. They began with a discussion about the Delors Report on EMU, which they both agreed proved a grave danger to Britain. But after that their views polarised. She was implacably opposed to his idea of setting a deadline for UK membership of the ERM, which she thought to be ‘particularly damaging’.
³
It would not strengthen her chances of resisting EMU. Nor would it help her to achieve her overriding aim of reducing inflation, which she believed had been increased by the Chancellor’s policy of shadowing the Deutschmark.

She continued to see the argument in highly personal terms. Joining the ERM would be perceived as a defeat for herself and a victory for her Chancellor. ‘I do not want you to raise the subject ever again’, she insisted with her voice rising to a crescendo. ‘I must prevail.’
⁴

Nigel Lawson left the room after this outburst, saying that he would end the ERM discussion then and there, but would reserve his right to return to the subject. It was a bad end to a bad meeting, with the Prime Minister’s last three words, ‘I must prevail’, hanging like a sword of Damocles over the future of their relationship. Margaret Thatcher did prevail for the next big event in the calendar of British politics. This was the European election campaign of June 1989. It was to prove her least successful encounter with the electorate since becoming leader of the party in 1975.

The Conservative Manifesto – described by the Prime Minister as ‘an unexciting document’ – was prepared by Geoffrey Howe and Chris Patten.
⁵
It kept to the middle ground of the increasingly uneasy Tory consensus on Europe, with carefully compromised wording about the difficult areas such as the ERM.

Margaret Thatcher never liked to fudge. So she fought the election in her own words, which often bore little relationship to the words of the manifesto. On the ERM, she told the opening press conference that she would not be joining it until inflation was back under control, to which she added ‘and maybe not even then’.
⁶
Her departure from the carefully agreed script was interpreted as another gratuitous sideswipe at Nigel Lawson. As a result, the campaign began with a flurry of headlines about further Tory splits.

The splitter-in-chief was Ted Heath, who travelled around the country ridiculing the Bruges speech. Margaret Thatcher, by contrast, concentrated her fire on the Delors Report and returned time and again to her mantra, ‘We haven’t
rolled back the frontiers of socialism in this country to see them re-imposed from Brussels’.
⁷

Some Tory MEPs seeking re-election contradicted their leader. But she was undeterred, apparently drawing strength from the populist response to her anti-European rhetoric, which included sharp criticism of ‘the utterly feeble’ European Parliament itself. The campaign culminated in a Central Office poster campaign proclaiming the slogan, ‘Stay at home on June 15 and you’ll live on a diet of Brussels’.
⁸
As a message it was confusing, but the general impression was that the Tories were running against the European Community under its present management.

The voters were more concerned with the management of the British government. It was unpopular for reasons quite unconnected with Brussels. The poll tax, the return of inflation, rising interest rates and a feeling that Margaret Thatcher, after ten years as Prime Minister, might be approaching her sell-by date were the key factors in the poor results on election day, 15 June 1989. The outcome was that Labour topped the poll with 40 per cent of the vote, while the Conservative Party held on to only 34 per cent – its lowest share in any national election since the beginning of universal suffrage.

Thirteen Tory seats out of forty-five were lost, and Labour won a majority of British MEPs in the European Parliament.
⁹
For the first time since 1979, Conservative MPs at Westminster began to wonder out loud whether Margaret Thatcher might herself be turning into an electoral liability.

The troubles caused by the bad results in the European elections spilled over into worsening relations between the Prime Minister and her senior cabinet colleagues. The Foreign Secretary and the Chancellor had been upset by her tactics and her tone on the hustings. They wanted to rein her in from the galloping Euroscepticism that now seemed to be the course on which she was set.

Geoffrey Howe decided to take the initiative of embarking on some Machiavellian moves designed to rein in the Prime Minister. By doing so, he believed he could constrain her and change her policy towards Europe. Despite his low voltage style, he showed passion and cunning when trying to get his way.

By contrast, Margaret Thatcher showed equal if not greater passion and cunning in sticking to her new-found Eurosceptic principles. Moreover, she believed, perhaps paranoiacally, that the machinations of her Foreign Secretary were aimed at fulfilling his long-held ambition to take over her job.

The combination of passion, principles and paranoia set the scene for an episode of high drama with explosive consequences. It took place in and around Madrid.

HIGH NOON IN MADRID

‘On Wednesday 14 June 1989, just twelve days before the European Council in Madrid, Geoffrey Howe and Nigel Lawson mounted an ambush.’
¹⁰
This was Margaret Thatcher’s reaction to receiving a joint minute from her two most senior cabinet ministers requesting a meeting to discuss Britain’s tactics at Madrid.

The two authors of the minute demanded that the Prime Minister should strike an acceptable compromise on the Delors EMU proposals by agreeing only to stage one, and thwarting progress to further stages by announcing that sterling would join the ERM by 1992.

Fuming about this ‘ambush’, the Prime Minister first held a meeting of her No. 10 advisers, including Sir Alan Walters and Brian Griffiths. They fortified her resolve to see off her two most senior cabinet colleagues. Then she met Howe and Lawson on 20 June, where she rejected their advice but formally agreed to ‘reflect further’.
¹¹

The next day she sent them a paper, largely written by Alan Walters, setting out her detailed view of the conditions, which would need to be met before joining the ERM. Howe and Lawson regarded these new conditions as an obstructive delaying mechanism. They insisted on a further discussion, which took place at 8.15 on the morning of Sunday 25 June – a few hours before the Madrid summit was due to open. At this ‘nasty little meeting’, as Margaret Thatcher called it, passions ran high.
¹²

Geoffrey Howe began by restating his demand for an announcement that Britain would enter the ERM on a fixed date. He was again rebuffed by the Prime Minister, in angry language. Then he said that if she had no time for his advice he would have no alternative but to resign. At this point Nigel Lawson chipped in to say, ‘You should know, Prime Minister, that if Geoffrey goes, I must go too’.
¹³

Although incandescent with internal rage at what she regarded as a well-rehearsed conspiracy to destroy her authority, Margaret Thatcher counter-bluffed with surprising coolness. In the icy silence that followed the joint resignation
threats, three thoughts went through her head: ‘First, I was not prepared to be blackmailed into a policy which I felt was wrong. Second, I must keep them on board if I could, at least for the moment. Third, I would never, never allow this to happen again.’
¹⁴

Concentrating on the second of these thoughts, the Prime Minister declined to set a date for ERM entry on the grounds that to do so would give a field day to currency speculators. She then fell back on the formula she had used before, promising to ‘reflect further’ on what she should say at Madrid. The meeting then ended abruptly with no further discussion or agreement. The shoot-out at the Downing Street Corral was over with no dead bodies or resignations. According to Margaret Thatcher, ‘They left; Geoffrey looking insufferably smug’.
¹⁵
If that was a correct description of the Foreign Secretary’s demeanour, he evidently had not considered that the Prime Minister might prefer to take her revenge as a dish best served cold.

Deep-frozen would have been a better description of Howe–Thatcher relations as they travelled on the same RAF VC-10 aircraft to Madrid. They did not speak in the VIP departure lounge. On the flight they were isolated from each other in two separate compartments. Whenever the buff curtain, which divided the two entourages, slid open due to the movement of the plane, a No. 10 staffer would get up and ostentatiously close it.

On arrival at Madrid, the impression that the Prime Minister and her Foreign Secretary were at daggers drawn intensified. Their non-speaking deteriorated into political apartheid. ‘Charles and Bernard, come with me’,
¹⁶
was Margaret Thatcher’s command to her senior aides in the airport lounge.

As the trio swept off to their hotel, their unexpected departure greatly disconcerted the British Ambassador to Spain, Lord Nicholas Gordon Lennox, who had organised an open-air supper for his eminent visitors. He was dismayed to discover that the Prime Minister did not even wish to be in the same garden as Sir Geoffrey.

She absented herself from the Embassy’s party, and remained closeted in her hotel suite with Bernard Ingham and Charles Powell as they worked on the draft of her speech. ‘Don’t show it to anyone’,
¹⁷
she instructed.

The result of this edict was that when the Prime Minister rose to deliver her opening remarks at the Madrid summit, her Foreign Secretary did not have the slightest idea what she was going to say.
¹⁸

To the surprise of Geoffrey Howe and to most participants at Madrid, Margaret Thatcher’s speech was conciliatory in tone. Privately she remained ‘opposed root and branch to the whole approach of the Jacques Delors Report’ on EMU.
¹⁹
Publicly, this was not apparent. For she made disarming genuflections in his direction, praising the report for its staged approach towards EMU, and announcing that Britain was ready to make an early start on stage one.