Margaret Thatcher: The Authorized Biography (97 page)

Both sides rejoiced at the visit. ‘It was a great success,’ Henderson remembered. ‘They saw completely eye to eye.’
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‘We needed a crowbar to pull them apart,’ remarked Reagan’s press secretary, Jim Brady.
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‘I believe a real friendship exists between the P.M. her family & us,’ Reagan commented.
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The essence of this friendship was simple and effective. They believed the same things, and they both wanted to work actively to bring them about. ‘I have full confidence in the President,’ Mrs Thatcher scribbled at the bottom of a thank-you note to Henderson. ‘I believe he will do things he wants to do – and he won’t give up.’
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They also had compatible, though utterly different, temperaments – he the relaxed, almost lazy generalist who charmed everyone with his easygoing ways, she the hyperactive, zealous, intensely knowledgeable leader, who injected energy into all her doings but also displayed what Reagan considered to be the elegance of a typical, gracious English lady. They shared a moral outlook on the world and also, in their emphasis on formality, dressing smartly and being what Americans call classy, a sort of aesthetic. The personal chemistry was undeniable. ‘He treated her in a very courteous and sort of slightly flirtatious way, to which she responded,’ recalled Robin Butler.
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It turned out that they would often disagree about tactics, and that his more optimistic and her less sunny view of the possibilities of a non-nuclear future would lead to problems, but their basic personal trust and sense of common purpose never failed.

Yet, for all her enthusiasm and affection for the leader of the free world, Mrs Thatcher was not blind to his limitations. Lord Carrington recalled their meeting on the first day:

After the arrival ceremony we went into the Oval Office and I remember Reagan saying: ‘Well of course, the South Africans are whites and they fought for us during the war. The blacks are black and are Communists.’ I think even Margaret thought this was rather a simplification … She came out and she turned to me and, pointing at her head, she said, ‘Peter, there’s nothing there.’ That wasn’t exactly true, because there was something there and she no doubt didn’t really mean that.
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Mrs Thatcher came to realize that Reagan’s strengths and mental abilities were very different from her own, but she never lost her underlying admiration for him. To the typed letter of thanks she sent him, she added, in her own hand: ‘We shall never have a happier visit.’
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She felt she had
a powerful friend. She knew that he would help in the economic and political struggles ahead. Her pleasure and gratitude were genuine.

In November 1980, John Hoskyns had minuted Mrs Thatcher reminding her that she had herself spoken of the need for a ‘shock package’. ‘The UK economy’, he wrote, ‘is simply unmanageable until the underlying structure of trade union power, public spending, and public sector indexing commitments, and nationalised industry/union monopoly power, is changed. That is why Governments fall.’ Her administration kept underestimating the scale of the problem, he went on, and therefore ‘We have 18 months’ leeway to make up and the 1981 Budget/PEWP [Public Expenditure White Paper] are our last chance to start doing so.’
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Sending her a copy of Peter Jenkins’s article about the ‘dawning of disbelief’ in Thatcherism, nine days later, Hoskyns pushed his argument about the 1981 Budget further: ‘On the one side, we can start to move increasingly towards what is “politically possible” but simply inadequate for solving the problem. On the other, we will have to find ways of doing things which appear to be “politically impossible” but which are essential if we are to have the slightest chance of getting back onto our strategic course.’
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Events in the ensuing months appeared to drive the government ever further from that strategic course. The capitulations to the miners, to BL and to other nationalized industries, the rows about how to measure the money supply, the growing mutterings from the Wets, the damp squib of Prior’s January green paper on trade union immunities, which seemed to offer no solutions, and of course the continuing rise both in public spending and in unemployment, all seemed to force the government in the direction of the increasingly narrow path of what was ‘politically possible’ against which Hoskyns had warned.

In reality, however, there were two reasons why the situation was not quite as bad for Mrs Thatcher as most people believed. The first was political. At the end of January 1981, at a special conference in Wembley, the Labour Party confirmed new rules for electing the leader of the party which finally drove away its rebellious moderates. The ‘Gang of Four’ proclaimed a Council for Social Democracy. On 25 January, Roy Jenkins, Shirley Williams, David Owen and Bill Rodgers produced their Limehouse Declaration, which announced that ‘the need for a realignment of British politics must now be faced.’ A new political party, though not explicitly promised, was expected by the summer.
The Times
published a mock death notice: ‘In Memoriam: Labour … after a long illness’.
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The immediate result was
a collapse in Labour’s opinion poll lead, which fell from 16 per cent over the Conservatives to 2 per cent. On 1 February, a poll in the
Observer
said that 45 per cent would support a new centre party if it emerged. Although these developments seemed to make it more likely that the Tories would be squeezed out by the new entity in the centre, they also took some of the heat off the government. The Social Democrats, as they were formally to become at the end of March, were almost all refugees from Labour
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and it was with Labour that they had their quarrel. Public attention focused on Labour extremism and Labour divisions and the weakness of Michael Foot’s leadership.

The truth was that the Gang of Four did not give very much thought to Mrs Thatcher. With the partial exception of David Owen, who, under the influence of Jim Callaghan and Peter Jay, had been impressed by the importance of monetarism, they more or less ignored her. ‘Roy and Shirley and Bill thought Mrs Thatcher was an aberration and they were looking ahead to the next bit. They assumed that they would come through the middle when Thatcherism failed.’
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Jenkins, who was in charge of economic affairs, looked forward to the return of a prices and incomes policy. Owen could not remember ‘any specific discussion of her’ as they made their plans.
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At a time, therefore, when Mrs Thatcher and her government were extremely unpopular, they were also, to some extent, ignored. None of her political opponents in the other parties had any strategy for undermining her: they blindly assumed that she would fall. This catastrophic
misjudgment of the most formidable politician of the age afforded her some space.

The second factor which helped Mrs Thatcher to survive was that the key members of her team did not have serious doubts about their direction of travel. Although Hoskyns and others complained, with some justification, about the lack of strategy, and although there were fierce arguments about questions such as how best to measure and control the money supply, the main people – above all, Geoffrey Howe and Mrs Thatcher herself – did not consider that they could or should abandon the path they had chosen. Beleaguered though they were, they retained more intellectual confidence than their critics, especially the critics within their own party. There was even, despite all the strains, a good esprit de corps. In the memory of Robin Ibbs, men such as Hoskyns, Tim Lankester and Clive Whitmore were ‘a joy to work with’, and ‘we did not believe that her experiment would collapse.’
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There was, despite everything, a belief in the leader. Mrs Thatcher drove everything on. As Andrew Duguid, in the Policy Unit, recalled: ‘Force of personality was the most striking thing about her – almost too powerful for easy rational discussion to take place.’
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The very impossibility of some of Mrs Thatcher’s demands and moods – her veering between excessive caution and dangerous boldness – fostered a camaraderie among those who worked closely with her. Some of her womanly qualities inspired a loyal affection. When times were particularly rough, and people felt at the end of their tether, Ian Gow would say, ‘Our girl’s tired this evening,’ and the inner circle would feel the urge to protect her and help even more. Ronnie Millar would protest, ‘Beware pity!’, but succumb to it himself.
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In a government losing its way, Nigel Lawson’s speech in Zurich on 14 January 1981 would have been impossible. As Financial Secretary to the Treasury (and someone who, ten days earlier, had been baulked, for the time being, of his expected promotion to the Cabinet), Lawson, though important, was not senior. Yet he made himself the first government minister, he claimed, to use the word ‘Thatcherism’ in public, giving his speech the title ‘Thatcherism in practice’. He chose the moment of greatest perturbation to give what he saw as ‘the first detailed and coherent account of the Government’s economic policy’.
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This self-description was unlikely to appeal very much to Howe, from whom Lawson withheld the speech until the very last moment. He might have seen such an account as his business. But it pleased Mrs Thatcher, and impressed observers who felt in need of guidance.

Lawson sought to explain to people how Thatcherism contained not only ‘monetarism’ but also, accompanying the battle against inflation, the
attempt to create what Lawson was eventually to christen the ‘enterprise culture’. He did this, he later explained, because ‘a necessary precondition of economic success is a fundamental business optimism based on self-belief and the will to succeed. Defeatism, the characteristic of pre-Thatcher Britain, is invariably self-fulfilling.’
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More narrowly, he tried to prepare opinion for the toughness of the coming Budget. He said that the problem with government borrowing had so far been greater than expected and admitted that the government had ‘so far, on balance,
increased
the real burden of taxation overall’.
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Yet for all Lawson’s articulation of a common purpose, even of sunlit uplands, the immediate problems were desperately serious. That weekend, at a Chequers seminar on 17 January to discuss Hoskyns’s latest strategy paper, Geoffrey Howe changed the subject with a warning. To the assembled company – Mrs Thatcher, Keith Joseph, Alan Walters (who had by now arrived as her economic adviser), Terry Burns, Robin Ibbs, David Young,
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Norman Strauss and Hoskyns – he explained, as Hoskyns recorded it at the time, that ‘all the latest forecasts said that public expenditure is continuing to “run away from us” and we can’t see any end to it. So, in Keith’s words, we “face a cliff edge in two or three years” … As we spoke, Margaret said, “We should really have taken some of these measures a year ago.” ’
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‘It now looked as if we were heading,’ Hoskyns later recalled, ‘for a replay of the sort of crisis that had overwhelmed Denis Healey and the Labour Government in 1976’ – a funding crisis caused by a loss of confidence in the government’s ability to control the public finances. ‘With the Budget due on 10 March we had less than eight weeks to break out of the box. If we failed, we were finished.’
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While economic policy necessarily took centre stage during Mrs Thatcher’s early years as prime minister, it was only part of what she saw as the struggle to restore the strength and freedom of the Western way of life. The global backdrop to all her efforts was the weakness of the West. The Cold War dominated everything. She wanted to make sure that Britain was in a position to fight it properly.

Within days of becoming prime minister, Mrs Thatcher received a recommendation from the Foreign Secretary, Lord Carrington. President Leonid Brezhnev
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had been ‘re-elected’ (the post was not, needless to say, contested) as chairman of the Praesidium of the Supreme Soviet, and Carrington wanted the Queen to send a message of congratulation, since other European leaders were doing so. On the margin of the letter, Mrs Thatcher wrote: ‘Please
not
. Some election. Let the Foreign Secretary write or send a message through our Ambassador.
Not the Queen
.’
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Under this pressure from No. 10, Carrington eventually decided to send no message at all.

As was often her way, Mrs Thatcher was using a small thing to make a bigger point. She had arrived in office at a delicate moment in the progress of the Cold War. She had shown with her ‘Iron Lady’ speech at the beginning of 1976 that she was extremely suspicious of détente, because she did not believe in the good faith of the Soviet Union. The ensuing years had only strengthened her view. She believed that the Soviets were working hard, both politically and militarily, to achieve world mastery, and that the West should not bargain with them unless it could bargain from strength. On the other hand, she also believed that the disunity of the NATO alliance was the prize which the Soviet Union sought most. So, while she was worried by what she saw as the weakness of NATO leadership, she decided to bite her lip in public. Besides, although she intended to fulfil her mani
festo commitment to increasing Britain’s spending on NATO defence by 3 per cent per year in real terms, she was prime minister of a country that was broke. Britain was not in a position to set as strong an example as she would have liked.

In refining her ideas, Mrs Thatcher drew on two, often opposing sources. The first were her ‘irregulars’. As Carrington put it, ‘her problem with Russia was that she didn’t really trust the Foreign Office. When she started off, she had her own gurus, who were never really part of the FCO.’
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Of these the most important was Robert Conquest. When she moved into Downing Street, she took the unusual step of shifting the file of her correspondence with Conquest into No. 10, whereas most files from opposition were sent off to Conservative Central Office for storage. In June 1979, she wrote to Conquest thanking him for his advice and adding: ‘Now that the battle has begun I shall need your encouragement more than ever before.’
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For a major speech on foreign policy she made in Brussels as Opposition leader in June 1978, she had drawn extensively on an advance manuscript of a new book Conquest was working on. Writing to thank him later, she told Conquest that ‘your book and draft provided the meat of the text in the places where it really mattered.’
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Conquest published the book, entitled
Present Danger
,
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in 1979 and dedicated it to Mrs Thatcher. Its message, as summarized by the author, was ‘There’s nothing the Russians can do so long as we keep our level of arms right.’
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This was the essence of her own approach.