resented the loss of national independence in being tied, officially or unofficially, to the Deutschmark. Where chauvinism and economics pulled her different ways, the former generally prevailed; but both chauvinism and economics led her to distrust Lawson’s hankering to manage the markets by international agreement. ‘Something always goes wrong,’ she complained, ‘when Nigel goes abroad.’42
But she was – on her own admission – isolated. Most of the Cabinet would have happily gone along with the judgement of the Chancellor and the Foreign Secretary, supported by the overwhelming consensus of Fleet Street and the City, in favour of joining the ERM as soon as possible. She had imposed a personal veto in 1985, and maintained it until 1990; but she could not stop Lawson working to achieve the same result by informal means. Part of her problem was that currency management was the jealously guarded preserve of the Treasury and the Bank; but that had never worried previous Prime Ministers with more amenable Chancellors. Her real difficulty was that Lawson was intellectually and politically too strong for her. After five years in the job – and two more as Financial Secretary before that – he had, as she acknowledged, ‘complete intellectual mastery of his brief’ and complete confidence in his own ability.43 Mrs Thatcher was not often at a disadvantage, but she lacked the technical expertise to argue successfully with Lawson, even when all her instincts told her he was wrong. She could not bully him, as she did most of her other ministers. Moreover, his reputation gave him an unusual independence. He was widely believed to have no further political ambition but to be only waiting for his moment to step down for a lucrative job in the City. So long as the party and the press believed that he could do no wrong she could not afford to lose him, let alone sack him. She had no choice but to go along publicly with his policy while doing her best to undermine it from within – rather as she had done with Heseltine, and ultimately with the same result.
For another year, therefore, the Government was hobbled by this damaging rift at its heart. Nicholas Ridley – now almost Mrs Thatcher’s last uncritical ally in the Cabinet – describes the ‘deep and mutual hostility’ that now existed between the Prime Minister and the Chancellor and their ‘considerable feat of acting’ in broadly concealing it from the rest of their colleagues.44 Publicly she continued to endorse him in lavish terms – ‘I fully, gladly, joyfully, unequivocally, generously support the Chancellor,’ she declared in June 1989 – though the extravagance of her language only confirmed that the Lady did protest too much.45
In terms of immediate policy, in fact, they were no longer so far apart during 1989 as they had been the previous year. Bitterly as she blamed Lawson’s misguided exchange-rate policy for having let inflation take hold again, she had no doubt that, since it had taken hold, bringing it back under control must be the Government’s paramount priority. Since she continued to rule out joining the ERM so long as inflation was high, she had no alternative to Lawson’s only other anti-inflationary instrument, the use of interest rates. There are hints that she might have preferred to raise taxes instead, repeating the formula of Howe’s 1981 budget, which she increasingly looked back on as her Finest Hour. But Lawson had no intention of reversing what he regarded as the crowning achievement of his Chancellorship. His reliance on interest rates was widely condemned, most memorably by Ted Heath, who compared him to ‘a one-club golfer’. Criticism from Heath, however, was usually enough to convince Mrs Thatcher that she was on the right track. She was clear that inflation, misguidedly unleashed, must be wrestled down again whatever the pain involved. ‘I don’t want Nigel to go,’ she told Wyatt. ‘He has got to finish what he started first.’46
In retrospect she realised that she should either have let him go or sacked him. It was clearly an intolerable position to have the two dominant personalities of the Government locked in fundamental disagreement, neither trusting the other, each determined to prevail. Mrs Thatcher’s partisans maintain that she, as Prime Minister, held the ultimate authority: Lawson was arrogant and overweening to set his will against hers and she would have had every right to sack him. Lawson, on the contrary, insisted that in managing the exchange rate in preparation for entering the ERM he was following the Government’s declared policy: it was Mrs Thatcher who was covertly undermining it. If she wanted to change the policy she should have done so openly, by agreement with the Cabinet or at least – as in 1980 – 81 – with an inner group of economic ministers. Instead she continued to pay lip service to joining the ERM ‘when the time is ripe’ and winked at his policy which, he insists, she was perfectly aware of.
Like the dispute with Heseltine over Westland, the issue in the end was not the rights or wrongs of policy but the way the Prime Minister ran her Government. In her central dispute with Lawson, Mrs Thatcher may well have been right: her instincts were sometimes sounder than his intellectual chutzpah. He unquestionably let the economy run out of control in 1987 – 8. Faced with a strong minister whom she could not dominate, however, she once again worked to undermine him instead of confronting him. In 1986 Heseltine kicked over the traces and walked out. Lawson stuck to his post, probably longer than he should have done; but in the end she made his position untenable by openly preferring the advice of her private adviser. By this time she was doing much the same in foreign policy, listening to Charles Powell rather than Geoffrey Howe and the Foreign Office. Fundamentally the problem was that she did not trust her colleagues. Heseltine, Tebbit, Lawson, Howe – she saw them all in turn as challenges to her authority; and she could not tolerate rivals. It was this inability to lead a team which ultimately brought her down. Lawson unquestionably made mistakes and overplayed his hand. But the responsibility for resolving the dispute within the Government was hers: instead she let it fester. It was no way to run a Government and it eventually destroyed her.
23
A Diet of Brussels
The declaration of Bruges
MARGARET Thatcher’s aggressive style of politics was founded on the identification of enemies. Her success was measured by the trophies stuffed and mounted on her walls: Ted Heath in 1975; the ‘wets’ and General Galtieri in her first term;Arthur Scargill and Ken Livingstone in her second. For the third term she lit on a new antagonist worthy of her mettle: the President of the European Commission, Jacques Delors.
In most respects Delors was perfectly cast for the role: he was both a foreigner and a socialist, so that by fighting him she united in one crusade her two great causes, British patriotism and the defeat of socialism – a combination with maximum populist appeal to her supporters. But Delors turned out to be a more difficult opponent than Scargill or Galtieri, partly because she had been instrumental in appointing him in the first place, preferring him to his French rival Claude Cheysson in 1985; still more because she had taken a leading role in driving forward the first tranche of his reform of the Community, the Single European Act, in 1986; but above all because in anathematising Delors she was taking on a powerful section of her own party and the wider political establishment which was committed to Britain’s role in Europe. Hitherto the Tory grandees, though sceptical of her policies and wary of her moral fervour, had been willing to let her fight their battles for them: they had no convincing alternative to her economic policies, but were agreeably amazed when they proved successful without provoking revolution. Now that she was directly challenging a central tenet of their faith, however, they stirred themselves to more active resistance which ultimately brought her down.
In her memoirs Lady Thatcher claimed that the European Community changed fundamentally in the later 1980s, and that Delors was ‘a new kind of European Commission President’ with grander ambitions than his predecessors – determined, now that the single market was agreed if not yet fully functioning, to press on to the next objectives enshrined in the founding treaties: economic and monetary union (EMU) and the harmonisation of social policy and labour law. The Treaty of Rome had set the nebulous objective of ‘ever-closer union’, building into European institutions the belief that there must always be movement – sometimes rapid, sometimes stalled, now in one area, now in another, but always in the direction of closer integration. Mrs Thatcher tried to portray Jacques Delors as a power-hungry bureaucrat determined to expand his empire. ‘The French socialist,’ she reflected grimly, ‘is an extremely formidable animal.’1 Certainly Delors was ambitious to maintain momentum: he had no intention of letting the single market settle down before seeking fresh areas of advance. But he could have done nothing without the active encouragement of the leaders of the major countries of the
