one side, more than a better-off family in a public-rented house on the other, and more than a widow in some better-run place across the street. London was absurdly run, more or less by Whitehall but with fifty non-elected bodies and a general misunderstanding as to what made Paris work. Only a fifth of people on the various boards were elected, and there was the usual modern English problem that acronyms mean mess.
Was there not some way of sorting out the mess? There were wrangles between government and local government, especially London and Liverpool, where high spenders proposed to ignore government guidelines for the control of inflation. The only way to deal with this was to set a rates ‘cap’ and here there were battles, one problem being that if the government ‘capped’ rates, it would necessarily be responsible for the ‘cuts’ that followed — old folks’ homes closed, etc. How could this problem be solved? There had been inquiries, six since the war, but there seemed to be no alternative to rates, from property. In the USA there was a local sales tax, and the country was easily large enough to have endless variety. Neither there nor in Germany did central government take detailed control of local finance, and in both cases there were large units, ‘states’, which produced somewhat different and healthily competing ways of doing things. The Heath government had attempted a reform along these lines, ending up with things that were too large to be changed or too small to be effective. Local government was an unrewarding karst of a subject, and the matter was now dealt with in an almost casual way. Had local government’s powers been confined, what followed might have made sense. As matters came to a head, there emerged the most absurd piece of reactionary triumphalism since Charles X of France, in 1830, had appointed as prime minister a man who had visions of the Virgin and decreed a closure of the press. The revolution of 1830 quickly ensued.
It was called a service charge. In theory, high-spending and inefficient councils would be penalized by their own voters, because the service charge would be so high, higher than in comparable areas. Nigel Lawson and one or two others demurred, but in January 1986 the plan was introduced, with preparation time of ten years. Parliament’s system of select committees strangely allowed it through, and a one-time Heathite, scorned by Sherman, and greatly promoted thereafter, introduced the Bill more or less without criticism, so long as he was given money (over ?5bn) to smooth its passage. There were to be safety nets and rebates, complications that made the Bill very difficult to understand. Nigel Lawson argued that the best thing would be to remove education from local government responsibility, as it accounted for half of its spending. At any rate, serving bills for several thousand pounds on a family not used to paying anything at all was not a sensible method of gaining popularity, especially as so much of local government was inefficient and pointless (Oxford had forty times as many AIDS ‘counsellors’ as there were AIDS victims). By 1989 a large number of Conservative MPs were feeling their heads. The details, as monks, the disabled, etc. had to be exempted, were surreal.
All of this amounted to a
The point as to the ERM was that it was the product of a world of two decades before, the failure of the Bretton Woods system. It could only really be made to work if there were real partnership, i.e. if the German Bundesbank agreed to support currencies such as the pound that were based on very different economies from the high-saving German one. Any restriction of credit, in pursuit of exchange rate stability through higher interest rates, would mean unemployment, but the ERM had become a sort of totem, and the Americans, who had invented its original version, were in support. ‘Europe’ was a sort of
A Sir David Hannay was apparently deputed to ‘Europeanize’ Margaret Thatcher, to inform her of the advantages of the institutions of what was supposed to be a united Europe. She took up the invitation to address the training school for European bureaucrats, the College d’Europe, at Bruges, in Belgium. Even then, she went not out of enthusiasm but because she had to be in Luxemburg anyway. Just then, the ‘president’ of the European Commission, Jacques Delors, was promoting his own candidacy for renewal quite vehemently: Germans, latterly, had been collecting such functions (as Manfred Worner had done with NATO) and Delors wished to keep his. He went the rounds, making European speeches, announcing that within six years there would be a real government and a real parliament, responsible for ‘80 per cent’ of all laws passed in Europe. A few weeks later, the British Trades Union Congress gave him a standing ovation, as he sketched a picture of a left-wing Europe, with social benefits and low unemployment. In September 1988 Margaret Thatcher made her Bruges Speech, having lost from the draft a good part of the Foreign Office emollients, and made a characteristic assessment of Europe as she saw it — she played up the British contribution, but then told truths, to the effect that Brussels had been painfully slow and reluctant as regards the freeing of markets and capital movements, and that ‘we have not successfully rolled back the frontiers of the state in Britain only to see them reimposed at a European level, with a European super- state exercising a new dominance from Brussels’. It was a good swan-song; but the fact was that she had already lost the campaign. ‘Europe’ was marching on regardless, and even Geoffrey Howe, the Foreign Secretary, regarded the speech with ‘a weary horror’.
There were Europeans of some enthusiasm in influential positions all around; they, too, were somewhat shocked. It was put about that there was no such ambition for a European federal state, that ‘federal’ meant something different to the Germans in particular, that it was all xenophobic fantasy. In 1988-9, interest rates were rising, with inflation, and the ERM appeared to be the solution. It was quite widely advocated by very influential people, and the Americans, by now, were in favour of it, because it would support their own efforts to control the dollar’s value abroad. In the spring of 1989 a report, given the name the ‘Delors Report’, outlined what should be done to unify the Continent and its various currencies. Robin Leigh-Pemberton, Governor of the Bank of England, had signed it. It outlined ‘stages’ towards unity, in a manner supposed to be non-committal but in practice very influential. The fact was that a very powerful establishment wanted the Europeans’ ‘stages’, and certainly the ERM. Margaret Thatcher had, as ever, a large voting army. But many of her senior officers were near mutiny. The Delors Plan was supposed to be discussed by European heads of government in Madrid, in June 1989. The Spanish expected to make their first important mark at this, their first presidential European ‘summit’. The Prime Minister rejected this, but then found that even in private the people to whom she listened disagreed. Both Howe and Lawson asked for a joint interview on 25 June 1989 and threatened to resign. She gave way. At Madrid, she did agree to ‘Stage One’, though privately adding to Charles Powell, ‘We can’t stay in this bloody common market any longer.’ The full-scale European Monetary Union had been postponed, but ERM, as a stage towards it, had been in effect endorsed.
That summer, the post-war Conservative Party started to disintegrate. The Poll Tax was supposed to take effect in the spring (1990) and the party stood low in the opinion-soundings. At that point, one of her few remaining allies, Nicholas Ridley, spoke indiscreetly, as he was wont to do, and denounced the ERM as ‘a German racket designed to take over the whole of Europe’. The sentiment was wildly expressed, and it was an exaggeration: but, as with much that Ridley said, there was truth in it, in so far as German credit conditions would have to be valid for
