1982: the improving economy
"SDP joiners" at budget cabinet, 9 March 1982, "their fox shot"
The economy had definitely begun to improve by the beginning of 1982, easing political difficulties of all kinds. At the budget cabinet on 9 March (by tradition not minuted, but helpfully recorded by Alan Walters) the Chief Whip commented that there were still three potential “SDP joiners” – backbench Conservative MPs who might defect – namely, Hugh Dykes, Robert Hicks and David Knox, “bellyaching ... on about social benefits”. Howe commented “PSBR has a fascination for Dykes, Knox, Hicks” and Whitelaw summed the situation up with obvious satisfaction: “Had their fox shot. If join SDP then best quickly”.
None of them did of course. All the same, care was taken to deny them the claim that they couldn't get a hearing for their views: Hicks and Dykes were invited to drinks with the PM on 19 Jan in a small group loaded to make for a loyal majority, Knox turning down a similar invitation for 28 April “because of a long-standing previous engagement”. As things turned out MT was herself otherwise engaged that day.
The budget itself was reckoned so great a success politically that the party’s Liaison Committee judged there was a risk of overselling it (minutes, 10 March). There was a MORI poll that day showing a sharp increase in Conservative support, putting the party ahead of Labour by four points, though this turned out to be a blip or a rogue poll. At the budget’s centre was a reduction in employers’ National Insurance, which Chris Patten had publicly made a key demand of the party left the previous year, and which had powerful support within the official Treasury. At the backbench Finance Committee, as noted by the all-seeing Gow, even Stephen Dorrell gave it “qualified approval”, while asking for bigger income tax cuts, and Norman St-John Stevas made a big show of congratulating Howe.
MT seems to have worried, with Walters’ encouragement, that the Treasury might abort the recovery by raising interest rates to defend sterling. She seems to have suspected that monetary targeting had been altogether abandoned by the Treasury in favour of an undeclared sterling target, rather than reformed to dilute the stress on the wayward aggregate, £M3, as she and Walters desired and was formally the policy of the government. She sent Howe a sharply worded personal minute on 7 Jan 1982 insisting that Walters always be included in interest rate discussions and that she should always be consulted before decisions were taken.
Out of the blue Peter Walker sent her a lengthy indictment of economic policy on 16 Feb, titled “Memorandum on a Conservative Strategy for the Next Two Years”. This doom-laden document has the air of one written for posterity, or to be cited in a post-election leadership campaign as proof that its author had done all he could. Gow as well as MT read it, and supplied caustic commentary (“which taxes do you want to put up?”) Surprisingly, though, on one point Walker found common ground with MT: he also worried that the Treasury had silently adopted a sterling target and would raise interest rates to hit it.
MT took her summer holiday at Schloss Freudenberg at Lake Zug in Switzerland, her first real break since the Falklands, where she once again lunched with the Swiss monetary economist Karl Brunner; a similar event in 1980 resulted in a traumatic dressing down for the Bank of England on her return. Although the fall-out was less dramatic this time, Brunner remained highly critical, backing Walters’s view that monetary policy was too restrictive. “The anti-inflationary programme proposed by the Prime Minister does not require such harsh measures”. This time MT returned to a gloomy cabinet discussion on 9 September of long-term spending prospects, and the leak of the CPRS report on the topic which triggered a classic ‘Conservative cuts’ argument. Ingham warned her that the press would ask difficult questions of this cabinet, and that he would need to put out an immediate statement so that others would not fill the vacuum. MT accordingly made a lengthy note of cabinet discussions. These made the point that future policy depended crucially on assumptions as to economic growth. Interestingly all ministers are referred to by their title rather than their name – save one, ‘Nigel’. Either she had forgotten what job she had given Lawson or she liked him more than the others. The CPRS report seems to have been an embarrassment rather than a secret masterplan and only deepened MT's doubts about the value of the institution, which she abolished the following year.
Employment Secretary Norman Tebbit made his own trip to Switzerland in Jan 1982, to attend a seminar at Davos. Unfortunately this meant that he was out of the country when the December unemployment figures were due for release and earned him a distinct rebuke from No.10 (see 13 Jan Whitmore letter). MT made amends by attending the Second Reading of his Employment Bill on 8 Feb, at Gow’s suggestion.
A downbeat CBI Quarterly Survey on 28 Oct produced a comforting comment from the head of the Central Statistical Office, Sir John Boreham, that he heavily discounted it, adding that he “was beginning to be clear that October was a turning-point and that an annualised 2 per cent growth in the economy has begun again”.
On 23 December MT took delivery of “Five Year Forward Looks” from each cabinet minister - essentially material for the next manifesto - Robin Butler begging her not to read them over Christmas, probably without success. Howe’s is the most interesting, copied to her alone. Here he revealed something of his hand for the next Parliament, if he had stayed at No.11, which of course he did not. "Particular options that I want to keep open in my own field concern the VAT base, mortgage relief ceilings ['NO' MT wrote], life assurance premium relief, fringe benefits and perks, and the abolition of (as distinct from reduction) of any significant tax".
1982: labour, trade unions & the alliance
There is a file on the NCB’s planning applications to mine the Vale of Belvoir. Energy Secretary, Nigel Lawson, himself a Leicestershire MP, strongly pressed for the applications to go through, hoping to strengthen the position of Midlands coalminers in the NUM. He minuted Gow for the PM on 27 Jan warning of the “critical importance” of the decision in ensuring that "that the present majority for moderation within the NUM membership remains in existence". Arthur Scargill (shortly to succeed Gormley) was "going all-out to engineer a full-scale confrontation over the NUM's 1982 pay claim this autumn/winter". The decision lay in the hands of Michael Heseltine, acting in a quasi-judicial role so that great care had to be taken in approaching him. Heseltine did indeed take his own line and the outcome was not exactly as Lawson wished. The applications were largely rejected, though with scope for reformulation. Joe Gormley reinforced the case for a positive decision, warning that his departure was imminent.
Labour MP Robin Cook sent MT his copy of The Odyssey to reinforce a point he had made in Parliamentary debate. She replied on 1 March (scrupulously returning the book): "Book XII is particularly interesting reading, and if you have another look at it I am sure you will understand what I said to the EEF "[Engineering Employers’ Federation]. "I think the moral of this is that if you stick to the road you have chosen, and resist temptation, you will reach home base in the end". Book XII tells how Odysseus resisted the Sirens' song and navigated Scylla and Charybdis. Coincidentally Homer came up in a speech draft around the same time. Invited to admit that she knew less about him than Gladstone, she crossed out the paragraph. Perhaps this is why.
Labour put forward Tony Blair as its candidate at the Beaconsfield by-election in May 1982, his first Parliamentary campaign, but the extensive briefing Central Office prepared on the seat failed even to mention the party’s future nemesis, focussing instead on local factors – gravel extraction, waste disposal, aircraft noise and “a feeling of dislike for Slough”. In fact the dominant theme in the by-election was the Falklands, the Conservative candidate being adopted on 10 May. The first appearance of his name in the Thatcher MSS is in a list of the candidates dated 27 May (“Blair (SOC)”).
MT had many letters during the year from Labour MP Tam Dalyell, a prolific correspondent, to put it politely, though it seems only one focussed on the topic of the General Belgrano with which he later became so strongly associated, to which she replied on 20 December. Her letter noted the efforts made to convince him he was wrong about the sinking, which included having it all explained to him personally in a private briefing by the commanders of the Task Force at the Ministry of Defence on 23 Nov. When the war broke out they seem to have been on remarkably good terms. He was one of only a handful of Labour MPs she addressed by his first name, and her esteem for him was noted by an official earlier in the year. During the war his line was one of extreme pessimism as to the outcome. "There will be massive casualties", he warned, talking of "a possible defeat of the first magnitude … something of the order of the 1905 Russo-Japanese war in which we are in the role of the Russians. Because we are in entrenched positions, we could be faced with Dieppe 1942 or worse". Michael Foot fired him as a frontbencher on 25 May 1982. Central Office carefully collected embarrassing Falklands quotes by Labour MPs and issued them as an Insight on Labour briefing, 24 September.
Sharply though she disagreed with Tam Dalyell, a much nastier confrontation took place with the Labour MP for Leith, Ron Brown, on 1 September. On a visit to Glasgow she agreed at the last minute to see a TUC deputation at the Holiday Inn, an hour ahead of a pre-arranged meeting with the Scottish CBI. Brown was there and lunged towards her in a threatening way. Five police pinned him to a wall and he was later convicted and fined £50. MT was visibly shaken. Afterwards she went on to Balmoral where security was better, “a different world”, as she put it to Lady Moore, wife of the Queen’s Private Secretary.
Although most economic indicators were improving, unemployment was not. In fact it continued to increase until 1986 (although employment began increasing in 1983). She pulled out of an oil rig launch at Hunterston on this Scottish visit because it was apparent that the yard was likely to close at the end of the year and that some of the lay offs would have been announced a fortnight before her arrival, all but guaranteeing demonstrations.
Some Labour opinion shifted sharply in her direction because of the war. Astonishingly the Labour peer Fenner Brockway, a veteran pacifist, sent her an admiring message via Lord Boothby on 18 June. Ingham also discerned a Falklands factor on the left when he visited Tyneside on 7 September, receiving the gift of a plate for the PM from the Lady Mayoress; MT conscientiously followed through by writing to thank the woman.
The Alliance was of course the principal loser from the Falklands, dropping a cool 18.5 points from January to September 1982, all of it shifting to the Conservatives. Their last big by-election success came at Glasgow Hillhead in March when Roy Jenkins returned to Parliament on a swing of 16.8 per cent, impressive but immediately and unfavourably compared with the 25.6 per cent Shirley Williams had achieved the previous year. Jenkins’s return to Parliament tended if anything to diminish his reputation, or the aura that surrounded him, as Gow noted on 19 May.
In March there was a minor argument about a leak of the plan for President Reagan to address both Houses of Parliament from the Royal Gallery. MT wrote in apology to other party leaders, who had yet to be consulted, and received from David Owen a generous reply, along the lines of “well never mind, these things happen, he is welcome anyway”. Gow was mightily impressed: "1. My opinion of the doctor has risen ten fold. 2. He is only one to have behaved with decency and honour".
On 7 December Christopher Monckton at Central Office sent Ian Gow a computer forecast of Conservative gains at next election, seat by seat. At this point the prediction was 52 gains, all from Labour, yielding a majority of 147. This was strikingly close to the final result in June 1983.
MT had the closest possible dealings with the Speaker, former Labour cabinet minister George Thomas, who sent messages, letters and greetings of all kinds at every opportunity. He dined with the Thatchers at Chequers and No.10, privately on one occasion, and even offered to resign the Chair if it would make life easier for the government in the last session before the General Election (letter 14 Oct). This was evidently an offer not meant to be taken up and she duly persuaded him to stay. He was strongly supportive of her during the Falklands, and she valued it.
1982: defence, europe & THE U.S.
With a General Election not far away and Cruise arriving, the Conservatives geared up for a major campaign against CND. There is a file of minutes from the Liaison Committee, a body designed to bring ensure that government and party sang the same song, much of which focus on this question. In September John Nott announced his decision to stand down as an MP, so a new defence minister was going to be in place to lead the charge – Heseltine, as it turned out, of course. That month Central Office undertook a huge constituency survey of Conservative members' views on "Modernising Britain's Defences", noting that CND had established itself in almost every part of the country. Its membership "now included professionals, teachers and church activists as well as the usual 'long haired brigade' who had been characteristic of the movement in the past. As a result their arguments were a great deal more persuasive and therefore more dangerous". There was no Falklands factor in relation to CND: a Central Office observer who quietly attended one of its demonstrations in London on 6 June minuted the party chairman the following day: "I think it would be hard to maintain that, on the evidence of yesterday, CND's existing support has been seriously damaged by the Falklands crisis". Indeed, in one respect the Falklands dragged the right into territory usually associated with the left, because one of the striking things revealed by the party's internal survey in September was the anti-American feeling the war had generated among Conservatives. "Their [the Americans'] ambivalence and vacillation had proved conclusively to the groups that as allies they were somewhat unreliable", an argument seen as strengthening the case for keeping our own deterrent.
Anti-Americanism was an unusual thing to find expressed so openly and widely on the right in Britain, but it was a perennial feature in European politics, of course, and it was a tendency MT naturally combatted wherever she found it. On 29 March Robert Armstrong reported a preparatory meeting for the Versailles G7 Summit in June at which Jacques Attali, one of Mitterrand’s closest advisers, explained that the French hoped to establish as a ‘theme’ of the meeting “the selfishness of United States monetary policy”, alongside the “selfishness of Japan’s trade and economic policies”, an unpromising agenda. The Germans were almost as negative. Predictably enough, the summit was not a success. Reagan was deeply irritated by European failure to match his proposed sanctions against the Soviets over Poland, which he extended radically the moment he returned to the US, greatly to MT’s dismay. She had hoped to see a compromise emerge at Versailles.
A despatch from Oliver Wright, Britain's new Ambassador to the US, in place of the outstandingly successful Nicko Henderson, reflected on the debacle and suggested that the man who had caused most damage was Schmidt, despite Mitterrand's best efforts to claim that title for himself. "Word circulated quietly in Washington that what really made Reagan mad at Versailles was that Helmut Schmidt made it all too obvious that he thought what Reagan was saying was not worth listening to. So when Mitterrand went public [saying that there was nothing new in the summit agreement on East-West trade, contrary to what the Americans were claiming], the President whose credibility he put at risk was already an angry man". MT had been on the receiving end of such treatment herself from Schmidt at the Dublin European Council in November 1979, and probably other times too, so she knew how that felt. One gets the flavour from Attali's published diary, which has Schmidt saying to Mitterrand of Reagan on 5 June: "Ce type me fatigue. Il est nul!" ["This guy tires me out. He is nothing".] (Attali, Verbatim, volume 1, p242).
Unfortunately the Ambassador's despatch itself was not free of a certain loftiness of tone where the President and his Administration was concerned, describing Reagan as "the quintessential sunbelt President" and offering insights only fractionally distant from the common taunt that the former actor thought he was living in a movie. "In foreign affairs, California is not isolationist but simplistic: it is on the look-out for baddies and the Soviet Union is Public Baddie No.1". "Reaganomics may be unsophisticated and its component parts self-contradictory, but they are deeply rooted in how the West was won". MT read the despatch, and kept it in her personal files, so must have seen some significance in it, perhaps as to Wright's thinking if nothing else. Recent events had reminded her how very important the person in his post could be.
Policy and personalities were not the only difficult things at the Versailles G7. Falklands situation reports were supposed to reach MT at set times during the summit, but were often late, a lapse which will have been deeply felt by an anxious PM and which No.10 immediately took up with the FCO when they were all back in London. MT decided in advance of arriving that the situation in the Falklands required her to leave the summit early, so as not to be seen enjoying the grand evening entertainment concluding the summit, opera and fireworks against the sumptuous backdrop of the palace. She took Pym with her, but Armstrong and Howe sacrificed themselves and stayed to fly the flag. And there were delicate issues of staging, as ever. The summit concluded on a Sunday, so shouldn't the heads of government go to church? The French came up with a plan by which, rather than separate into denominations - a painful bit of symbolism - the leaders would attend an ecumenical service, thus demonstrating unity and generosity of outlook. But there was a problem. "They do not know what to do about Mr Suzuki". In the end the idea was dropped.
George Shultz, who successfully brokered the ending of the sanctions dispute in September, came to visit MT at Chequers in May as an envoy of the President. Haig left office at the end of June. It is not clear whether she realised Shultz was a Secretary in State in waiting, but whether she did or not, his letter of thanks suggests he was favourably impressed, partly by her deploying a powerful diplomatic weapon evidently neglected by her peers on occasion - simple good manners. "Perhaps you can imagine what a thrill it is for me to drive up to the front entrance of that historic estate to see a smiling Prime Minister in the doorway". He was to prove a very considerable friend in the years to come, a far from 'simplistic' Californian who sometimes found the new British Ambassador a trial.
On 31 July MT paid a visit to HMS Resolution, one of the four Polaris submarines carrying Britain's strategic nuclear deterrent, a visit held so secret in advance that her appointment diary was left blank for the day: we only have timings for it because she kept the tiny engagement card she received each morning detailing the appointments for the day ahead. (Generally those cards do not survive.) Admiral Fieldhouse accompanied her and afterwards she wrote to him (10 Aug):
It was a marvellous experience - made wonderful by the superlative and yet modest qualities of the commander and crew. The feeling of comradeship and yet discipline and respect were marvellous to see. We are fortunate indeed in the high personal qualities of our ordinary folk - if ordinary is the word to use: they all seem so able to demonstrate extraordinary qualities when called upon to do so. // I hope you told Lady Fieldhouse that I "made" the bridge! I feel that once is enough for some experiences! Thank you very much.
Helmut Schmidt left office after defeat in a vote of confidence on 1 October. Curiously, almost his last act was to send MT a letter pleading for the release of Rudolf Hess, on compassionate grounds (30 Spt). The British, French and Americans seem to have been agreeable to the idea, but the Soviets stood in the way; he died in gaol at Spandau in Aug 1987. Schmidt’s farewell letter to MT was notably cool: "Over the last two years we have held, I believe, some very intensive talks". She wrote more generously "everywhere your leadership has been outstanding".
She travelled to Bonn and Berlin in November, making her first visit to the Wall; we release and publish here the despatch describing events from the British Military Government. This visit saw her first meeting with Kohl as Chancellor also. The Governing Mayor of the city, Richard von Weizsacker – a future President – made a speech praising the British stand for the international rule of law in the Falklands, making a connection to Berlin and the defence of the West as a whole. Kohl’s speech was silent on the topic.
Under the terms of the treaty arrangements which then governed Berlin, the Chancellor had to visit the city as MT’s guest, which must have been irksome for him. Even then the Soviets made a fuss about it all and the East German STASI opened a file on her, which was released a few years back; it shows they rather admired her toughness. Kohl irritated Weizsacker by attending his meeting with MT without invitation (bringing Frau Kohl to it as well).
On 4 December Gow sent her some Central Office poll results, commenting: "1. Herewith latest Gallup and MORI polls. 2. The really interesting one is about the Common Market. 3. We must not present ourselves - and I know that you will not - as unconditional supporters of the EEC. The Community becomes daily less popular". 54 per cent would vote to leave; if it broke up 34 per cent would be indifferent and 42 per cent relieved; 54 per cent thought the government were "not tough enough" in dealing with it.