respect in itself, since Carter did not normally receive opposition leaders. She could not help liking him and was impressed by a mastery of detail equal to her own; but she was dismayed by his determination to pursue a nuclear test ban treaty and did not let him get a word in for forty-five minutes while she told him so. Even Carter, however, was constrained by the evidence that the Soviets were flouting the assurances they had given at Helsinki. Several prominent dissidents, including the founder of the Helsinki monitoring group,Yuri Orlov, were sentenced to long spells in labour camps. Despite her enthusiastic reception in 1975, Mrs Thatcher’s influence in Washington should not be exaggerated. She was only a British opposition leader, and Carter had very good relations with Jim Callaghan. Yet by pointing out loudly and repeatedly the nature of the Soviet regime she certainly contributed to a general stiffening of Western resolve, evidenced in NATO’s decision to increase defence spending by 3 per cent a year from 1977 and the agreement of West Germany and other European countries to accept American nuclear missiles on their soil to counter the Soviet deployment of SS-20s. These were both decisions which Mrs Thatcher strongly supported in opposition and implemented when she came to power.
Another sign of hardening American opinion was the emergence of Ronald Reagan as a presidential challenger. Mrs Thatcher first met Reagan soon after her election as leader, when he happened to be visiting London and called on her at the House of Commons. Their meeting was scheduled to last forty-five minutes, but actually lasted twice as long. ‘We found’, Reagan told Geoffrey Smith, ‘that we were really akin with regard to our views of government and economics and government’s place in people’s lives and all that sort of thing.’24 In fact, Mrs Thatcher already knew of Reagan’s reputation as a successful Governor of California who had got rid of a lot of controls and cut expenditure: Denis had heard him speak to the Institute of Directors back in 1969. ‘In a way’, she recalled, ‘he had the advantage of me because he was able to say: “This is what I believe! This is what I have done!”’25 Yet in 1975 few took the former film star seriously as a potential President. They met a second time when Reagan next came to London three years later, and again got on exceptionally well. This time their conversation ranged across international as well as domestic politics, defence as well as economics: on both their views instinctively tallied. It was not until five years later that Reagan, two years into his Presidency, called the Soviet Union ‘the evil empire’. But those two words precisely encapsulated what Mrs Thatcher had been saying in her speeches ever since Chelsea.
In March 1976 the nature of Mrs Thatcher’s domestic task suddenly changed when Harold Wilson unexpectedly resigned. When told the news, Mrs Thatcher thought for a moment that the whole Government had resigned. Instead she had to pay gracious tribute to Wilson and adjust to the challenge of a new antagonist in Number Ten.
She immediately tipped Jim Callaghan to win the succession and predicted that he would be the hardest of the contenders to beat.26 She was right on both counts. Four years older than Wilson and thirteen years older than Mrs Thatcher, Callaghan was the first Prime Minister ever to have held all three of the senior offices of state before finally reaching the premiership. Mrs Thatcher found him just as patronising as Wilson and even harder to come to grips with. As Barbara Castle – no admirer of Callaghan – wrote in her memoirs: he ‘ran rings round an uncertain Margaret Thatcher, metaphorically patting her on the head like a kindly uncle’.27
When she lectured him on what he ought to know, he thanked her ironically for the information but told her that it was not possessing information which mattered, but what one did with it.28 By now she was much less shy of intervening, since Callaghan was not so skilful as Wilson at turning her questions against her. On the contrary, Labour MPs increasingly complained that she was monopolising Question Time by always taking her permitted three bites at the cherry. She scored one palpable hit when Callaghan called her a ‘one-man band’. ‘Is that not one more man than the Government have got?’ she retorted.29 But she rarely succeeded in disturbing Callaghan’s masterly impersonation of a wise old statesman calmly in control of events, while she fussed about details like a terrier yapping at an elephant.
The 1976 sterling crisis gave Labour a bad nine months, as further rounds of spending cuts and raising the minimum lending rate to 15 per cent failed to stop the pound sliding to a low point of $1.56 in late October.After rapidly exhausting two previous standby credits from the IMF, the Chancellor of the Exchequer, Denis Healey, could only secure a third on stringent conditions. In the short term this apparent humiliation – as Mrs Thatcher strenuously portrayed it – actually served Callaghan well, enabling him to make a stand against the left and taking much of the wind out of Mrs Thatcher’s sails. In her speech at the Tory conference she was inhibited from making her usual slashing condemnation of the Government by the need not to appear to be talking down the pound. By contrast Callaghan had boldly told his conference the previous week that Keynesianism was dead: the Government could no longer spend its way out of recession.
For the next two years, under IMF tutelage Healey enforced a regime of strict financial discipline which Mrs Thatcher could only – through gritted teeth – applaud. She was obliged to welcome the Chancellor’s conversion to the importance of controlling the money supply – ‘the only final way in which inflation can be held and reduced. He knows it and we know it.’30 The one benefit of the Government’s conversion to monetary virtue, she wrote in her memoirs, was that ‘it outflanked on the right those of my own Shadow Cabinet who were still clinging to outdated nostrums of Keynesian demand management’.31
In March 1977 Callaghan lost his Commons majority, but managed to secure the Government’s survival for another two years by means of a pact with the Liberals. This frustrated Mrs Thatcher at the time, but in fact this twilight period worked to her advantage in the long run. Had she come to power in 1977 she personally would have been less experienced, less confident and less prepared for office than she was in 1979, while the tide of intellectual and public opinion which eventually carried her into Downing Street and made possible – just – the uncompromising economic policies which she and Geoffrey Howe pursued in 1980 – 81, would not have been so strong. When the Tories did return to power, it was immensely helpful that Healey and Callaghan had already been keeping a tight grip on monetary policy for the past two years. It is a recurring pattern in politics that when one party reluctantly adopts the other’s policies, the electorate tends to go for the party which actually believes in them. ‘If you want a Conservative government’, she told listeners to Jimmy Young’s morning radio programme in 1978, ‘you’d better have a Conservative government and not a half-hearted Labour government practising Conservative policies.’32 By May 1979 Callaghan and Healey had made much of her case for her.
8
Thatcherism under Wraps
Cautious crusader
THE years of opposition were a peculiarly difficult and ambiguous time for Margaret Thatcher. She was a woman of strong convictions and a powerful sense of mission whose instinct, once she unexpectedly found herself leader, was to lead from the front.Yet at the same time, she was very conscious of the weakness of her political position, a little frightened of her own inexperience and the heavy responsibility which had suddenly been thrown upon her, and well aware of the formidable combination of habit, convention and vested interest that was ranged against her. She did not have the authority to impose a thoroughgoing free-market agenda on the Tory party, let alone project it unambiguously to the country. Moreover, even if she had been in a position to proclaim her long-term vision, there was a huge gap between knowing what was right in theory and translating that knowledge into practical policies that could be compressed into a manifesto.
Even after she achieved power, and a political dominance she could never have imagined in 1975, it still took her the best part of two terms, with the full resources of the Civil Service at her command, to begin to frame an explicitly ‘Thatcherite’ programme. So long as she was in opposition her overriding priority was to make sure she did not lose the General Election, whenever it came. She could not risk getting too far ahead of her party, so had to disclaim objectives which might alarm the voters or allow her opponents to label her ‘extreme’. She had to be prepared to fight on a vague prospectus that gave only the broadest hint of her true ambition. As a result, for
