Cabinet committee, chaired by herself, to consider further measures of relief, but she still refused to consider any serious retreat from the basic principle. The only alternative was to keep on dishing out money from the Treasury to try to reduce the impact in the second year, which was likely to be election year. In July Patten secured from John Major – the new Chancellor, following Lawson’s resignation the previous October – a further ?3.2 billion to extend transitional relief to another four million people (making eleven million in all). This was a grotesque inversion of Thatcherite economics. By now the charge had become a fiasco from which the only escape seemed to be through ditching the Prime Minister herself.
Nothing did more than the poll tax to precipitate Mrs Thatcher’s downfall. It seemed to epitomise the least attractive aspects of her political personality – a hard-faced inegalitarianism combined with a pig-headed authoritarianism – and at the same time demonstrated a fatal loss of political judgement. The last was the most surprising. Despite her cultivated image of bold radicalism and unbending resolution, she had actually shown herself, in office and before that in opposition, a very shrewd and cautious politician who had always taken care not to get too far ahead of public opinion. The poll tax was the one issue on which her normally sensitive political antennae really let her down. It was the most spectacular failure of Mrs Thatcher’s premiership and it cost her her job.
Permanent revolution
As if it had not already got enough on its plate with the reform of education, the health service and local taxation, the third Thatcher Government was also hyperactive on practically every other front of domestic politics. As is the way with Governments when things start to go wrong, however, practically all of these restless interventions ran into difficulties of one sort or another.
Privatisation had been the unexpected triumph of the second term. But the attempt to maintain momentum after 1987 led the Government into more problematic territory. British Steel, sold back to the private sector in December 1988, was the last relatively straightforward operation. At least Mrs Thatcher had the political sense not to rush into privatising the railways: she left that poisoned chalice to her successor. But she was committed to privatising water and electricity, both of which raised sensitivities which had not applied to telephones or gas.
Water was a particularly emotive issue – rather as she had found milk to be when she was Education Secretary. The public had a strong instinctive feeling that water, unlike gas and electricity, was a precious natural resource, a God-given necessity of life like air itself, which should not be owned or even distributed for profit but held by the Government in trust for everyone. Most of this was irrational: water supply was a customer service like any other, and one crying out for new investment to replace antiquated pipework, sewage treatment plants and the like: it made sense to seek this from the private sector. It was not widely realised that a quarter of the industry was privately owned already; or that, as Mrs Thatcher never tired of pointing out, water was privately run in many other countries: ‘Even Socialist France knows that privatised water is a better deal than nationalised water.’31 Nevertheless, there persisted a deeply held belief that private companies were not to be trusted with public health. There were also concerns about continued access to rivers and reservoirs for leisure use: millions of anglers feared being barred from private property.
The solution was not simply to sell off the nine existing Water Authorities, but to separate the commercial business of supplying water from the environmental responsibility for monitoring purity and pollution. Public opinion remained resolutely hostile, and in March 1989 Mrs Thatcher admitted that ‘the subject of privatisation of water has not… been handled well or accurately’.32 One of the first acts of Chris Patten, on taking over as Environment Secretary in July, was to write off the industry’s debts to the tune of ?4.4 billion and promise another ?1.1 billion of public money – described as a ‘green dowry’ – to tempt investors to risk their money. With this inducement the sale went ahead successfully in December 1989, with a second instalment the following July. Over the next ten years, when steeply increased charges failed to prevent hosepipe bans in summer and flooding in winter, the water companies were regularly criticised for putting profits before investment. But the fact was that much higher investment went into the water industry after privatisation than before; while fears about public health largely melted away.
Electricity posed different problems. The minister responsible in this case was the rehabilitated Cecil Parkinson, who was keen to demonstrate that his Thatcherite credentials were unimpaired. But Mrs Thatcher herself was torn between the desire of Nigel Lawson, on the one hand, to break up the industry (as Peter Walker had failed to do with gas) and the equal determination of Lord Marshall, the chairman of the Central Electricity Generating Board and one of her favourite businessmen, to keep it together. Parkinson devised a compromise involving just two new companies, PowerGen and National Power, the larger of which (the latter) would keep control of nuclear power. The problem was that, when subjected for the first time to proper commercial analysis, the cost of nuclear power turned out to be prohibitive: the private sector would not take it on without open-ended guarantees which the Government could not give. First Parkinson had to remove the cost of decommissioning the nine oldest power stations from the package; then John Wakeham, who succeeded him in July 1989, was forced to exclude nuclear power from the scheme altogether and postpone the planned flotation of the twelve new distribution boards from the spring to the autumn of 1990. This was a huge embarrassment, particularly in view of Mrs Thatcher’s personal commitment to nuclear power. The sale of the two new generating companies, twelve regional distribution companies and the National Grid eventually went ahead in 1991. The nuclear industry was finally privatised in 1996.
If privatisation was one Thatcherite policy which was running into rougher water the longer it went on, the reverse was true of trade-union legislation. Norman Fowler, in 1998, followed by Mrs Thatcher’s sixth and last Employment Secretary, Michael Howard, in 1990, tied up some loose ends. Fowler’s Act reinforced the requirement to hold strike ballots, strengthened the rights of individual members against their union and banned the misuse of union funds; Howard’s finally outlawed the closed shop and ended the unions’ legal immunity from civil damages. The fact that these Bills were passed with scarcely a murmur of protest was a measure of how thoroughly the unions had been cowed since 1979.
Another important area of national life which Mrs Thatcher was determined to sort out was broadcasting. Thwarted in her attempt to commercialise the BBC, she still wanted to break up the cosy BBC/ITV duopoly. As Home Secretary, Douglas Hurd weakly allowed himself to be bullied into auctioning off the existing ITV franchises to the highest bidder – with results which even Mrs Thatcher regretted. Meanwhile, she did everything she could to help Rupert Murdoch dominate the new medium of satellite television. Just as John Biffen had allowed Murdoch to buy
Other botched reforms between 1987 and 1990 – all of which bore the stamp of the Prime Minister’s personal initiative – included a misguided scheme to require football supporters to carry identity cards; an attempted shake-up of the legal profession, largely abandoned in the face of professional resistance; the ill- considered Child Support Agency, intended to force absent fathers to meet their obligations; and an impractical attempt to pursue elderly war criminals. All these, on top of the poll-tax fiasco, contributed to a mounting impression of a government which had lost its way. Hitherto Mrs Thatcher had been seen as hard-faced but competent. Now after ten years in office she suddenly appeared as alarmingly incompetent – especially since the economic achievement on which her authority depended was suddenly going wrong.
