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MT's private files for 1990 - (2) a way back from the dead, perhaps

Plainly there was a need to change the story.

Inhgam had a plan and it involved the ERM.

MAR-APR 1990: EUROPE AND ERM

Ingham's suggestion

Ingham addressed the question in a long minute to MT on 28 March, which Turnbull (the official head of No.10, the Principal Private Secretary) commended to her with the thought, underlined by MT: “Political support is like unemployment – getting it moving in the right direction is just as important at this stage as the level”. Less bleak than Bell’s letter, more practical and focussed on action, Ingham’s minute nevertheless belongs to the same genre.

Ingham’s ideas for a fightback evolved during the year, but the core stayed the same. He encouraged MT to get off the back foot, to show confidence, energy, commitment to the future. He excoriated the Parliamentary Party (“the Government’s worst enemy for nigh on 12 months”), looked without much hope for a line to be drawn under the poll tax (“We badly need to find firm ground – soon”), and preached a more positive attitude to the EC. For him the ERM was key.

Entry into the ERM is probably the issue which would really confound your critics and confuse your enemies. It would certainly kneecap the Labour Party and transform your relations with the EC. You are committed to entry once certain conditions have been fulfilled. It is therefore a question of timing ….

He saw the press as ready for a new story. “After the slump of 1989-90 the media would revel in writing ‘Maggie comes back from the dead’. That, in fact, is the next major political story waiting to happen. The problem is how to engineer it”.

Ingham’s views on the ERM aligned him on this topic with Chancellor Major, and it is no accident that his 28 Mar minute urged MT to sharpen economic policy presentation by involving Major, and Wakeham, in a weekly meeting between the Treasury and No.10. There is no sign that this was ever done, but Major’s own line on ERM was forcibly put to MT through a very private conversation he had with Charles Powell, which the latter recorded in a “Strictly Personal” minute on 8 April (see Charles Moore Margaret Thatcher: Herself Alone pp580-81). ERM membership was really now a matter of when rather than if. This was the price for MT of losing Lawson, or one of them: she could not afford to lose another Chancellor, and Major understood the power he now had. The question became how to extract maximum political benefit from the act of joining.

But Powell’s minute has much to say than that. He went on to discuss economic and monetary union (EMU), and made the case for her engaging in the process, much as she had with the Single Market. Essentially he was urging her to take the road to Maastricht. And there is a further document that suggests she was at least beginning to think on those lines. Her last meeting with Kohl as Prime Minister, on 19 Nov during the Paris CSCE summit, contained a specially sensitive discussion minuted separately. She told Kohl:

It was quite possible that there would be elections in the United Kingdom in 1991 or, at latest, by the summer of 1992. It would be very inconvenient for her if the IGCs were brought to a conclusion rapidly. … Chancellor Kohl said that he absolutely got the point and would of course want to be helpful. He asked how long the Prime Minister envisaged spinning out the discussions. Would it be enough to say that the IGCs should not be brought to a conclusion in 1991? He thought it might be difficult to hold up a conclusion longer than the early part of 1992. The Prime Minister said this would indeed be very helpful. She realised that the IGCs could not go on for ever. But if that on EMU at least could be extended until early 1992, it would make an enormous difference in political terms in the United Kingdom.

She was in other words looking to create the space in which an agreement might take place. That is not to say there would have been one, but it is suggestive all the same.

Powell made a final point of great interest in this note. He urged her to find a common ground with Major before others were involved, notably Hurd. She had to stay close to this Chancellor, even if that meant following him to places she did not wish to go.

APR-MAY 1990: LOCAL ELECTIONS

Just how bad things were for MT at this stage is revealed in a strange personal minute she wrote to the Chancellor on the same day as Powell’s minute discussed above. The subject was the Community Charge, about which her feelings were now nothing short of frantic. She demanded Major force the independent body which administered the Retail Prices Index to alter the RPI ino take account of reliefs (thus reducing its inflationary effects), and also that he review a sudden brainwave of hers, to surcharge those on incomes of £50,000 or over so as to deal with perceptions of unfairness in the fundamental design of the charge. She showed the document to the Chief Whip, who swiftly talked her out of it. In truth both of these ideas were impossible.

The Conservatives were predicted to suffer massive losses in the May local elections. But they were the beneficiaries of rock-bottom expectations, and also had the advantage of a low base – the seats up for election had last been contested in 1986, post-Westland and weeks after the Libyan bombing, a very difficult time for the party. Accordingly there was relief and a sense of reprieve in May 1990 when the results proved “so much better than expected”, in Whittingdale’s words. Ingham reported: “overall there is little doubt that the outcome of the local elections has strengthened your position”. Major began talking of interest rate cuts later in the year. Better still, Heseltine wrote a newspaper article offering his alternative to the Community Charge which got “an appalling press”. Suddenly there was a little more political space in which to manoeuvre.

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