the whole Delors process from going on to Stages 2 and 3. And if I did not agree to their terms and their formulation they would both resign.’22 ‘The atmosphere was unbelievably tense,’ Lawson confirms:
Margaret was immovable. Geoffrey said that if she had no time whatever for his advice… he would have no alternative but to resign. I then chipped in, briefly, to say, ‘You know, Prime Minister, that if Geoffrey goes I must go too.’ There was an icy silence, and the meeting came to an abrupt end, with nothing resolved.23
‘I knew that Geoffrey had put Nigel up to this,’ Lady Thatcher wrote. ‘They had clearly worked out precisely what they were going to say.’24 Lawson does not deny it, but insists that this was ‘the only instance in eight years as Cabinet colleagues when we combined to promote a particular course of action’.25 All they were doing, in the first instance, was asking – as Chancellor and Foreign Secretary – to be consulted.Yet she bitterly resented what she called ‘this way of proceeding – by joint minutes, pressure and cabals’.26 It is difficult to argue with Percy Cradock’s verdict that the fact that ‘a ministerial request for consultation could be construed as a conspiracy… illustrated an alarming breakdown of communication and trust within government’.27
Prime Minister and Foreign Secretary flew together to Madrid, but Mrs Thatcher did not speak to her colleague on the plane and when they got to the British Embassy she closeted herself all evening with Powell and Ingham, while Howe enjoyed a relaxed supper downstairs with the Ambassador and his staff. When she spoke in the Council the next morning, ‘her Foreign Secretary still had not the least idea what she intended to say’.28
In fact she was unwontedly conciliatory and constructive. It was widely suggested that following her rebuff in the European elections she came to Madrid with ‘diminished clout’ and conducted herself less stridently as a result – though she of course denied it.29 She insisted afterwards that she had defied Howe and Lawson’s ‘blackmail’ by still refusing to set a date for joining the ERM. But in reality she did move most of the way to meet them, by advancing from the vague formula that Britain would join ‘when the time is right’ to a much more specific set of conditions – not, as she had threatened on 20 June, the final completion of the single market, but merely further progress towards completion, plus British inflation falling to the European average, progress by other countries towards the abolition of exchange controls, and further liberalisation of financial services. These new tests were much more flexible and open to interpretation than her stance hitherto, as was demonstrated just over a year later when John Major was able to persuade her that sufficient progress had been made to declare that the conditions had been met.
On the wider issues at Madrid, EMU and the Social Charter, Mrs Thatcher congratulated herself that she had stood firm. She claimed to have prevented President Mitterrand fixing a timetable for the second and third stages of the Delors Report before the first stage had been completed.
The faithful Wyatt thought that she had done ‘brilliantly’.30 But she had not really achieved anything at all, as the following year showed. Whether, as Lawson and Howe believed, she would have gained herself more leverage at future meetings by agreeing to set a clear timetable to join the ERM cannot be proved. The fact is that Britain was now isolated, however she conducted herself. She did not significantly hold up progress towards EMU by being marginally more constructive; but neither would she have achieved any more by being intransigent. It was too late.
Her fury was reserved for Howe and Lawson, who had backed her into a corner and demonstrated that they had the power to bring her down. At the time she pretended that she had called their bluff. In fact there was no need for resignations since the threat had achieved most of what they wanted. Years later she admitted: ‘They overpowered me.’31 She knew she could not have survived either or both of them resigning. But she vowed, ‘I would never, never allow this to happen again.’32 Four weeks later she employed the Prime Minister’s ultimate power to break the Howe – Lawson axis. She resolved to punish Howe – and warn Lawson – by removing him from the Foreign Office. But it was a messy operation.
She was due for a reshuffle anyway – she normally held one before the summer holidays – but this was exceptionally sweeping. Only eight out of twenty-one Cabinet ministers stayed where they were. Two she removed, and two more left voluntarily. The other nine were switched around. Into the Cabinet for the first time came Peter Brooke, Chris Patten, John Gummer and Norman Lamont. Of these only the last could be called a Thatcherite. The overall effect of the changes, Lady Thatcher noted in her memoirs, was that the balance of the Cabinet ‘slipped slightly further to the left’. But ‘none of this mattered’, she assured herself, ‘as long as crises which threatened my authority could be avoided’.33
But all this minor juggling was overshadowed by the removal of Geoffrey Howe from the job he had held for the past six years. Howe had no warning of what was coming. It was a brutal way to treat one of her most loyal colleagues, her shadow Chancellor in opposition and the architect of the 1981 budget, who in his quiet way had borne the heat of the early economic reforms. The debt she owed Howe’s dogged persistence for her survival and success was incalculable; yet Mrs Thatcher had come to despise but simultaneously fear him, believing that he was positioning himself to replace her.
Having decided to remove Howe from the Foreign Office she offered him the choice of becoming Leader of the House or Home Secretary. He accepted the former, but held out for the consolation title of deputy Prime Minister to salve his pride. With hindsight she thought she should have sacked him altogether, rather than leave him bruised but still in a position from which he could wound her fatally the following year. Howe, too, quickly realised that he would have done better to make a clean break. By becoming deputy Prime Minister he hoped to inherit the sort of position within the Government that Willie Whitelaw had occupied before his illness. If Mrs Thatcher had not by this time lost all sense of Cabinet management she would have invited him to fill that crucial vacancy: Howe would have made a very good Willie, had she been prepared to trust him. But ‘because Geoffrey bargained for the job,’ she sneered, ‘it never conferred the status which he hoped’.34 Bernard Ingham made a point of telling the press that there was no such job as deputy Prime Minister anyway.
And that was not the end of it. If she was determined to remove Howe, Douglas Hurd was by far the best- qualified replacement. After Peter Carrington, Francis Pym and Howe, however, Mrs Thatcher did not want another pro-European toff at the Foreign Office; and at this point she was still strong enough to appoint whomever she wished. She wanted a Foreign Secretary with no ‘form’, who would uncomplainingly do her bidding. So she appointed John Major.
She had already identified Major as a possible long-term successor. As Chief Secretary at the Treasury since 1987 he had impressed her with his quiet mastery of detail and calm judgement. Always on the lookout for competent right-wingers, she had persuaded herself that he was more of a Thatcherite than he really was. ‘He is another one of us,’ she assured a sceptical Nicholas Ridley.35 In fact, though dry on economic issues, Major was by no means a Thatcherite on social policy; he was also unenthusiastic about the poll tax. Even if she had been right, however, thrusting him into the Foreign Office at the age of forty-five, with no relevant experience or aptitude, was bad for him and also bad for her: he could not help looking like her poodle.
Altogether the 1989 reshuffle was a political shambles which antagonised practically all her colleagues, dismayed her party and delighted only the opposition. Loyal supporters like Ian Gow foresaw trouble ahead;36 while even Wyatt worried that ‘she has made a bitter enemy of Geoffrey Howe’.37 For her part Mrs Thatcher quickly recognised that by leaving Howe in office she had got the worst of all worlds. Meanwhile the rest of the Cabinet felt that if she could treat Howe like that, none of them was safe.
From now on Mrs Thatcher took a positive delight in flaunting her hostility to all things European. When France hosted a G7 summit in Paris that summer to coincide with the bicentenary of the French Revolution she took the chance to deliver a patronising lecture on the superiority of the British tradition of human rights going back to Magna Carta.Then at Strasbourg in December she unilaterally vetoed the adoption of the Social Charter. She was happy to accept common rules in some areas, like health and safety and freedom of movement, but she rejected the harmonisation of working hours, compulsory schemes of worker participation and the like. More importantly, however, she was unable to block the next stage of progress towards EMU. It needed only a majority of member countries to call an Intergovernmental Conference (IGC) to set a definite timetable. But she still insisted that it would require unanimity for the conference to decide anything, and so long as she was there this was out of
