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Release of MT's private files for 1987 - (4) conference, poll tax, the economy

Swiftly returning to earth, if she had ever left it, MT had mixed experiences in the second half of the year.

The conference saw a moment of great authority, and rare unity as to domestic strategy. In some respects everyone was Thatcherite now. But the poll tax caused immediate troubles, and the strong performance of the economy could not conceal her distance from the Chancellor, Nigel Lawson.


"Tonight we celebrate victory ... Celebrate not only victory / Conviction. Will to succeed"
MT private speech to Conservative Agents, 5 Oct 1987

There are many files on the preparation of the 1987 conference speech, which is among the best documented of any she made to that gathering. As always, she wrote some parts herself in hand and fed the work into the drafting process. On this occasion Inner Cities was one theme that attracted her pen, the one she had picked out on election night at Central Office. (Since we are on the topic of Thatcherite humour – presence/absence thereof - she managed to mangle a good joke for that section by speechwriter John O’Sullivan. He wanted her to talk of the bleak surroundings of city estates, setting up the line “muggers rush in where pedestrians fear to tread”. In the final speech this became “windswept piazzas where pedestrians fear to tread”. Poor man.)

There are interesting notes she made for her annual speech to Conservative Agents, an event to which the press was not invited. She allowed herself a little more satisfaction than was possible in public perhaps, calling for celebration not merely of victory but of conviction and the will to succeed, her own preeminent virtues. She revealed that the alternative date for the election had it not been 11 June would have been 15 October. There is a throwaway comparison between Kinnock, Scargill and Gorbachev which in the circumstances was rather unflattering to the latter.

Understandably – and correctly – MT’s 1987 conference speech was expected to set the tone and lay out the direction for the next Parliament. The opening section of the speech did just that, declaring in characteristically Thatcherite terms her determination not to stand on past achievements:

I have reminded you where the great political adventure began and where it has led. But is this where we pitch our tents? Is this where we dig in? Absolutely not. Our third election victory was only a staging post on a much longer journey. And I know with every fibre of my being that it would be fatal for us just to stand where we are now.

All very predictable, classic Maggie - and yet the files show that the opening of the speech was mostly the work of Chris Patten, including these very words. The text of the Patten draft is on this site, incidentally a fine example of a worked over section of a big MT speech - amended and scribbled on to an impossible degree, scissored and sellotaped to the point of illegibility. True, Patten was writing for her, but it is fair to say that consolidation was no one’s programme in 1987. (Geofffey Howe’s memoirs make this point also.) Left and right of the Conservative Party were united in wanting to push ahead, indeed many of the party divisions on domestic policy so significant in the early 1980s no longer made sense politically. In particular, the Keynesian wet position had all but collapsed and disappeared from view. Within the Conservative Party Thatcherism had won the economic argument, emphatically so. Around this time MT was sent a poignant letter from Jim Prior, written to one of her former PPSs who had congratulated him on elevation to the Lords. Prior had been one of the most formidable of the wets, but he now wrote:

Despite my reservations this has been the best period of post war govt, and Margaret the outstanding Prime Minister. Long may it continue – there is now a generation of thrusting young entrepreneurs who have never known anything other than a Thatcher Govt. A real improvement on all that went before.

Nor was it an accident that the Major Government privatised coal and the railways when MT held back, even though its leading lights were Major, Heseltine and Clarke, all well to the left of her in party terms. There remained a right-left division within the Conservative Party, but increasingly it turned on the issue of Europe rather than the economy. Quite often in years to come MT found herself in an unfamiliar and uncomfortable role, acting as a brake on the more radical instincts of her colleagues.

Feb-Dec 1987: POLL TAX

The Scottish Community Charge received Royal Assent just after the election was called, as we have seen. The third Thatcher term opened with legislation for England and Wales in the offing. There were already difficulties. In February 1987 the Environment Secretary’s (Nick Ridley’s) Special Adviser wrote to MT’s Political Secretary at No.10 warning that the proposals were far from popular among Conservative councillors in England, many fearing it would be a nightmare to administer and that the perception of unfairness would be hard to dispel. During the election campaign itself Ridley himself successfully argued for the Treasury to confirm a 20 per cent level for the minimum charge, believing it would blunt what were expected to be powerful Labour attacks. It was an expensive concession, one of a multitude to come as it turned out, though it perhaps helped to keep the issue from doing much damage to the Conservative campaign.

Within weeks of the election, Ridley was talking with worried Conservative backbenchers and No.10 sent the resulting record. It must have made unhappy reading. Although the most prominent critics were on the left of the party, the “usual suspects” with a pronounced leaning toward Heseltine, an open critic of course, that was by no means true of all. Reservations about one or more aspects were widespread even among those who rated themselves ‘pro’, Ian Gow among them. Ridley’s performance cannot have helped because it left some at the meeting expecting a major concession before the Bill was introduced, lifting teachers’ pay off council budgets altogether and funding it from the centre – something MT was forced swiftly to deny. Opinion polling published on 27 July showed support for the charge collapsing, from majority favourable 45:39, to 54:28 against.

A parliamentary rebellion developed against the Bill, focussed on an amendment in favour of banding the charge, put down by Sir George Young, a Conservative MP close to Heseltine, a junior minister when he was Environment Secretary. Archie Hamilton, MT’s new Parliamentary Private Secretary, attended a meeting of Conservative MPs addressed by Environment ministers prior to the rebellion and commented that they did “extremely well”, confining the ranks of the rebellion “to the usual list of disillusioned”. An air of some complacency surrounds the topic in the No.10 files of this date, sometimes one of unreality. What is one to make of an attempt to persuade government statisticians not to treat the Charge as a tax in the national accounts? Officials squashed that one with some force, copying to Hamilton, who seems to have been inclined to question it, jotting down a list of charges that occurred to him, revealing one of his leisure activities perhaps: "Firearms Certificate, Dog License, Shotgun License". Even MT, ordinarily the master of detail, handled the matter in a way that implied a certain remoteness, assuring Conservative MPs in her summer speech to the 1922 Committee that “same level of service and same level of efficiency will mean same community charge”, a fine declaration of the theory, unfortunately not borne out in practice.

There is nothing in the files on the decision made after the Party Conference to end “dual running” of the community charge alongside the rates, closing off the option of lengthening the transition period or aborting altogether. MT later bitterly regretted that decision.

A vital role in the origin of the community charge was played by Lord Rothschild, former head of the CPRS or “Think Tank” which MT had abolished in 1983. One might almost call the poll tax Rothschild’s Revenge, or at least the Think Tank’s. As the disaster began to unroll he features in her correspondence files – lending her fine silver for the study at No.10.


The strong performance of the economy in 1987 was a great asset to the Conservative General Election campaign, and if anything it strengthened further over the summer – a post-election rather than a pre-election boom. One might have thought all would be set fair between No.10 and No.11 in such circumstances, but of course there were severe tensions between MT and Lawson over the economy, particularly British membership of the ERM and associated issues of monetary policy.

There are some interesting documents on that topic in this release, several relating to the Stock Market crash on Monday 19 Oct 1987, which took place while MT was in Dallas visiting her newly-married son and daughter-in-law. Those close to MT on economic questions – Alan Walters and Brian Griffiths to the fore – placed a lot of the blame for the crash on attempts to manage currencies via the G5, most recently by the so-called “Louvre Agreement” of Feb 1987. This was Lawson’s policy, and under their influence MT was growing ever more uncomfortable with both the policy and its author.

But a showdown was something she sought to avoid at this point. Lawson was in many ways the star of the General Election campaign, or co-star perhaps one should say. There were even a few people in 1987-88 talking of him as a future leader of the party. Relations were eased by intermediaries acting where possible – it is striking that the Chief Economic Adviser, Terry Burns, dealt directly with No.10 when MT was writing her speech for the Lord Mayor’s Banquet. Once upon a time the Chancellor himself would have dropped in for a chat in person. There was at least some common ground on the topic of the need to rein in the US federal deficit.

Tensions were revealed in a ludicrous incident during the drafting of the speech. MT found her audience of titans of industry and finance at the Guildhall something of a struggle and was always looking for stories and funny lines that would actually work with them, often supplied by a former No.10 official John Vereker. Her draft speech, sent for Treasury comment, included the following jingle, à propos Black Monday:

The rain it raineth on the just
And also on the unjust fella
But more upon the just because
The unjust steals the just’s umbrella.

Surprisingly, the Chancellor objected to the rhyme, at some length, doubtless on good grounds in policy terms but with a singular lack of humour. MT dug in, but compromised. She insisted on using the rhyme, but had it removed from the press release.

A further step in the decline of the Thatcher-Lawson relationship may - or may not - have taken place on 20 Nov 1987. MT gave an interview to journalists from the Financial Times, a more or less annual fixture. We are now releasing the full text of the meeting, which was transcribed from tape. You can see the point at which the journalists showed her a graph demonstrating that sterling had been shadowing the Deutschmark, holding steady at about 2.99 since the budget.

MT afterwards maintained that she had not realised until this point what was going on. Lawson denies it – on his account she already knew about the shadowing – but the transcript does certainly suggest that something about this bit of the conversation was difficult for her. Either her account is corrrect, or – if she did already know about the shadowing - perhaps this was the moment she realised that the secret could not be kept, that people outside government knew about it too. All you needed really was to look at the graph. ... (the moment would appear to be on ff11-12, MT asks “what is the cross rate on the DM?” INTERVIEWER replies: “2.99 you see. That is why we think …”).

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