Speeches, etc.

Margaret Thatcher

Speech to Conservative Agents (Lawson’s "foremost fan")

Document type: Speeches, interviews, etc.
Venue: Lancastrian Suite, Imperial Hotel, Blackpool
Source: The Times, 10 October 1989
Journalist: Robin Oakley and Philip Webster, The Times, reporting
Editorial comments: 1930 onwards.
Importance ranking: Major
Word count: 748
Themes: Executive, Economic policy - theory and process, Monetary policy

Falling pound puts Lawson under pressure

A catalogue of financial gloom last night greeted Conservatives gathering in Blackpool for what has become a critical party conference.

Mrs Thatcher and her ministers arrived after a day in which the pound fell six pfennigs against the Deutschemark to 2.9787, its lowest against the mark for 18 months. It dropped more than two cents against the dollar.

The trade-weighted index fell sharply from 91.4 to 89.8—and to compound the gloom, the stock market FT-SE 100 index closed at 2247.0, down by 30.5.

Meanwhile the Halifax, Britain's largest building society, went ahead with the expected rise in mortgage rates, lifting its rate 1 per cent to 14.5, making it certain that others would follow.

However, Mrs Thatcher spoke in Blackpool last night at a dinner for Conservative agents of her continued belief in Mr Nigel Lawson, her Chancellor of the Exchequer.

“I'm his foremost fan,” she said. “I respect his judgement and what he has done for Britain.” She urged her party activists to give Mr Lawson “open support at this particular time” .

Mr Lawson, in his remarks to the agents, said that there was no truth whatsoever in the suggestion of any difference between him and Mrs Thatcher on economic policy. “There is no disagreement about raising the basic rate.”

The Prime Minister, in what was described as a “bullish” speech, also said that the economy was stronger than ever. Living standards were higher than ever and people had only to look at the number of new jobs created and the increase in investment. It was a totally different situation to the one the Government had inherited.

Mrs Thatcher defended the interest rate rise as a necessary step, saying. “This Government always does what is necessary.” The current situation had to be regarded in the light of the Government's record and the underlying strength of the economy.

The apparent failure of last week's rise in bank base rate to stem the fall of the plummeting pound added to the intense pressure on Mr Lawson as he prepares for his critical conference speech on Thursday. Mr Kenneth Baker, the party chairman, rallied to the Chancellor's defence at a press conference to launch the agenda for the week.

He said in Blackpool last night that the rise in interest rates had been the right decision in Britain's short and long-term interests. But because of the burden in mortgage rates it was unpopular. He added: “This Government has never shunned doing unpopular things which it believes to be right.”

However, ministerial nervousness over yesterday's budding sterling crisis was evident as Mr Baker refused numerous opportunities to make further comment either on the level of the pound or on interest rates.

Despite the public support for Mr Lawson, his conduct of the economy was coming under serious question from the assembling Conservative activists. They fear that he might be forced during this conference week into yet another base rate rise, yet with no guarantee that that would bring respite to the pound.

Ministers, in some trepidation about the course of a conference which is opening in the most difficult circumstances most could recall, were hoping that the crisis was now so serious that the party would pull together in unity. But few expected Mr Lawson to escape without a mauling in Thursday's economic debate.

Mr Baker, whose task today is to lift party spirits after Labour's successful conference in Brighton last week, insisted last night: “I am not down-hearted. I am not gloomy.” But he conceded that the Tories' private polling confirmed Labour's comfortable lead of six to 11 percentage points in public support.

He said the conference gave a chance to talk about the successes of the past 10 years, and to expose the “sham” of Labour's alternative.

Rigorous security checks awaited conference representatives as they arrived last night. Around 2,000 police, armed forces, personnel and security officials were involved in an operation given a new urgency by the barracks bombing at Deal.

Mr Michael Heseltine, who will address a conference fringe meeting today, said he would be ready to accept the “huge honour” of becoming party leader but there was no vacancy. Mrs Thatcher would lead the Conservatives into the next election and win it.