Margaret Thatcher: Power and Personality (87 page)

Margaret Thatcher went into overdrive once this legal view was established as watertight. A cabinet committee decided to cap local authorities if their rate of spending resulted in a Community Charge above £379. This was an expensive solution requiring extra public expenditure of £3 billion. Yet it was a workable outcome, which would probably have allowed the new Community Charge to bed down and become established.
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But the ‘panico’ faction among the fractious Tory back-benchers was in no mood to listen to compromise solutions. They wanted the poll tax scrapped – period. So the summer of discontent rumbled on, and Margaret Thatcher remained vulnerable.

HER LAST ROW ON EUROPE

Before Margaret Thatcher’s last great row with Europe she made an important concession. She agreed to join the ERM. Her persuader in chief for this
volte- face
was John Major, who had become convinced of the case for entry by his Treasury officials and by the Bank of England. Coaxing the Prime Minister towards the view that the time was right was a difficult and sensitive enterprise. Douglas Hurd was also a strong advocate of it. As she listened to her two most senior ministers, Margaret Thatcher must have had at the back of her mind the realisation that she could not possibly afford to lose another Chancellor or another Foreign Secretary. Even though Major and Hurd were too gentlemanly to play this card, she was aware that the ace of trumps was up their sleeve. So she began to move.

According to her memoirs, her movement was reluctant. But this was revisionism. Her Chancellor John Major recalled:

It is a myth to say that she was un-persuaded. She had come to realise that there was no other way of getting inflation down that was likely to be successful. When we were
approaching the decision to go in she actually brought forward the announcement by one week. She also advocated a higher and therefore more punitive sterling–Deutschmark exchange rate because she wanted to bear down on inflation even harder. These were not the actions of a prime minister being bullied into joining the ERM. The fact of the matter is that she was enthusiastic and committed on the day we joined. She changed her mind afterwards.
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The only obstacle to Margaret Thatcher’s conversion to joining the ERM was her insistence that the announcement of entry should be accompanied by the announcement of an interest-rate cut. Although both the Treasury and the Bank of England opposed this linkage on economic grounds, the Prime Minister’s view prevailed. She used the one point reduction in interest rates as her political fig leaf. When she made the announcement outside No. 10 with her Chancellor standing silently beside her, Margaret Thatcher made it sound as though the interest-rate cut and the ERM entry were two sides of the same coin, as she claimed, ‘The fact that our policies are working and are seen to be working have made both these decisions possible’.
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The instant reaction by politicians of all parties and by the media bordered on the ecstatic. Neil Kinnock welcomed the ERM decision as ‘momentous’. Many newspaper commentators used similar adjectives. The CBI and the TUC applauded. The stock market soared. But there were a few dissenting voices. William Keegan, Economics Editor of the
Observer
, predicted trouble because Britain had entered at too high a rate (DM2.95).
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John Major’s Parliamentary Private Secretary Tony Favell MP resigned in protest.
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Teddy Taylor and other leaders of the Conservative European Reform Group demanded to know what our exit strategy was if ERM pressures became intolerable.

Margaret Thatcher listened with some sympathy to these Eurosceptic concerns, saying privately that we could easily realign. She would not favour using either significant reserves or higher interest rates to defend the exchange rate. Her off the record comments were a revealing indication of her lack of commitment to the policy she had announced a few days earlier. But she justified the decision to enter the ERM on the curious grounds that it would make it easier for her to continue to block moves toward European Monetary Union (EMU).

This last view was soon shown to be flawed. It was exposed by what became known as the ‘Italian ambush’ at a meeting of the European Council in Rome
on 28 October. At this summit, contrary to all prior expectations and assurances, the Italians brought forward a firm timetable for implementing EMU. They suddenly proposed that the Delors Plan for stage two of monetary union should start on 1 January 1994, and that the single currency should begin in 2000. This zeal for announcing a fast track towards a monetary and political union that had not been agreed became infectious.

The leaders of eleven member states, headed by Chancellor Kohl and President Mitterrand, were all ready to sign up to the Italian timetable on the spot. Britain was isolated. The Prime Minister was shocked to be in this position, but had no qualms about standing alone. Asked what she felt about being the sole objector among twelve member states to the plan, her reply was: ‘Sorry for the other eleven!’
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The way she said ‘No’ added insult to injury. At her press conference in Rome, she let fly. She attacked the Italians for managing the summit incompetently, declaring it to be ‘a mess’.
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She taunted the Commission for proposing firm timetables for implementing schemes for monetary and political union, but without receiving any agreement on the substance of these schemes. ‘People who get on a train like that deserve to be taken for a ride’, she declared, adding that the train appeared to be heading for ‘cloud cuckoo land’.

These robustly expressed criticisms were right. The Italian ambush had been chaotic and procedurally absurd. The cart of Euro-dreams had been put before the horse of substantive negotiations on EMU, and before a number of far more pressing issues such as the GATT
^†
round of negotiations and the crisis in the Gulf. Even the pro-European Foreign Secretary Douglas Hurd was shocked by the management of the summit and by the muddle of its declaratory outcome.

By the time the Prime Minister made a statement on the European Council to the House of Commons twenty-four hours after her return to London, she was riding on a high horse of righteous indignation. She was not merely smarting from the Italian ambush. She had decided in her mind that the outcome of the meeting marked what she called the beginning of ‘the ultimate battle for the future of the Community’.
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It was a battle she was determined not to lose.

Parliamentary statements on the outcome of European Council meetings are notorious for the tedium of their language and detail. Not this one. In my seventeen years as an MP I had never seen the House more electrified, except by the debate immediately after Argentina’s seizure of the Falkland Islands. For, when answering questions, the Prime Minister threw caution to the winds. With eyes flashing, gestures flamboyant and vocal chords stretched to a timbre fit for sounding the last trumpet, she transformed herself into Queen Boadicea driving her chariot against the Roman invaders with a combination of passion and fury.

During the ninety minutes she blazed away from the despatch box that afternoon, she slaughtered one sacred Euro-cow after another. The single currency was dismissed as ‘not the policy of this Government’. The alternative British proposal for a parallel currency, known as the hard ECU, fared little better, for she dismissed it with the withering comment: ‘In my view, it would not become widely used … Many people would continue to prefer their own currency.’
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Her Chancellor, John Major, who had spent months promoting the hard ECU, said he ‘nearly fell off the bench’
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in reaction to this surprise declaration, because he realised it would wreck all his recent efforts at economic diplomacy.

But Margaret Thatcher had by no means finished. At various stages in these exchanges she asserted that the Commission was ‘striving to extinguish democracy’ and planning to take us through ‘the back door to a federal Europe’. She declared, ‘We have surrendered enough’ to the Community. For good measure, she added, ‘It would be totally and utterly wrong’ to agree to ‘abolish the pound sterling, the greatest expression of sovereignty’. She fired her biggest guns at Jacques Delors, bombarding him with a salvo of triple negatives:

The President of the Commission, M. Delors, said at a press conference the other day that he wanted the European Parliament to be the democratic body of the Community, he wanted the Commission to be the Executive and he wanted the Council of Ministers to be the Senate.
No. No. No
.
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The mounting crescendo with which she so passionately delivered those last three words was greeted by a chorus of cheers in all parts of the House. The Tory Eurosceptics were in ecstasy, for they sensed a conversion moment in the
Prime Minister, and perhaps within their own party. For it appeared from the tide of the exchanges that the Europhiles were in a minority and in retreat.

Those appearances were to prove deceptive in at least one important case. But at the time, there seemed to be a sea change in parliamentary opinion that was by no means confined to the government’s side of the House. A good number of anti-Brussels Labour MPs were cheering. The Ulster Unionists, encouraged by Enoch Powell, were in a similarly exultant mood.

Perhaps the question that best caught the mood of the House came from the SDP Leader, David Owen. ‘Is it not perfectly clear that what was being attempted at Rome was a bounce which led only one way – to a single federal united states of Europe? … Would not Britain be entitled and right to use the veto?’

‘I totally agree with the right hon. Gentleman’, replied the Prime Minister.
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As she left the chamber that afternoon to continuous ‘hear, hear’ and waving of order papers, Margaret Thatcher must have felt that she had routed her critics and redefined where she and her government stood on the issue of progress towards monetary and political union in Europe.

If there was any one single moment when EMU and its successors, the euro and the eurozone, were decisively rejected by the British political system, that afternoon in the House of Commons on 30 October 1990 was it.

The consequences of what happened in Parliament that day were to have profound implications for the future of Britain’s long-term relationship with Europe. But in the short term there were even more momentous consequences for Margaret Thatcher. The impact on her immediate future came from the reactions of Sir Geoffrey Howe.

HOWE PREPARES TO STRIKE

Sir Geoffrey Howe had long been a believer in the need for Britain to be a full participant in European economic and political union. He supported the single currency. He gave the impression of approving the vague declaratory outcomes of the Italian summit. At the time when the Prime Minister was denouncing the possibility of a single currency in Rome, Howe spoke live on London Weekend Television to Brian Walden, saying that Britain was not opposed to the idea, and implying that Margaret Thatcher would probably be won round to it.
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She characterised his intervention as ‘either disloyal or remarkably stupid’.
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As a result of this clash over the airwaves, the Deputy Prime Minister and the Prime Minister were once again at loggerheads. Just before she rose to deliver her statement on the European Council, Neil Kinnock tried to expose their divisions during Prime Minister’s Questions by asking whether Sir Geoffrey Howe enjoyed her full confidence. ‘My right hon. and learned Friend the deputy Prime Minister is too big a man to need a little man like the right hon. Gentleman to stand up for him’, she retorted.
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It was hardly a ringing endorsement. Howe suspected that she was deliberately distancing herself from him in a manner she had used before when undercutting Nigel Lawson.

It was revealing to watch the Deputy Prime Minister’s body language on 30 October, as he sat on the front bench alongside his boss when she opened fire on Jacques Delors and all his works. When she reached her explosive punch line of ‘
No. No. No
’ Howe’s normally sphinx-like imperturbability crumbled. His wincings of dismay were plain for all to see. The only Member of the House who seemed not to notice his discomfort was the Prime Minister.

The following day, Sir Geoffrey resolved to resign. His motives for this decision were the cause of much speculation. He himself pinned his reasons to the 30 October statement, citing his distaste for ‘the increasingly nationalist crudity of the Prime Minister’s whole tone’.
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Margaret Thatcher believed that her Deputy was shaken by the shift in opinion of Conservative MPs towards a much more Eurosceptic position. As she put it, ‘Perhaps the enthusiastic – indeed uproarious – support I received from the backbenchers convinced him that he had to strike at once, or I would win round the Parliamentary Party to the platform I earlier set out in Bruges.’
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It is more probable that the reasons for Howe’s exit from the government were a longer-term mixture of pent-up anger and political frustration. Ever since his removal from the job of Foreign Secretary, which he loved, growing bitterness had been fermenting within his soul. This rancour was largely created by Margaret Thatcher’s style of man-management, which was both deplorable and unpleasant towards Sir Geoffrey. Yet he was not without fault in their relationship. Not only did he fail to confront or at least reason with her about her excesses of aggressive behaviour. He had a long history of shutting up in masochistic silence, but then putting up in public with coded attacks on the Prime Minister when she became a vulnerable target. Rather like a hunter-killer submarine, HMS
Howe
spent long periods lurking secretively below the surface
until he suddenly launched his torpedoes at a moment when he could inflict maximum damage. His Walden interview on 29 October was an example of this deliberate yet unexpected style of clandestine counter-attack.