The Iron Lady

The first ‘banana skins’ began to afflict the Government as soon as the new Parliament met. On the very first day Mrs Thatcher was rebuffed over the choice of a new Speaker. She was sorry to see George Thomas retire, and made the mistake of allowing it to be known that she did not favour his deputy, Bernard Weatherill, to succeed him. She had hoped to use the job as a suitably dignified niche for Francis Pym or, when he declined, one of the other ex-ministers she had put out to grass. But the House of Commons is jealous of its independence and Tory and Labour backbenchers alike rallied to Weatherill. ‘What seems to have clinched his election,’ The Times commented, ‘was the discovery by his fellow MPs that he did not have the Prime Minister’s full approval.’¹

There quickly followed two more parliamentary rebuffs. On 13 July the Government gave the new House an early opportunity to debate the reintroduction of capital punishment. With a large influx of new Tory Members, supporters of hanging, including the Prime Minister, hoped that this time – having failed in 1979 – they might be able to restore the death penalty, at least for terrorist murders and the killing of policemen. The new Home Secretary, Leon Brittan, reversed his previous opposition and spoke in favour of restoration. In the event capital punishment was still rejected by unexpectedly decisive majorities.

The second slap in the face was on the question of MPs’ pay. The Government threw out a recommendation by the Top Salaries Review Body that would have given Members an increase of 31 per cent. ‘We thought that Ministers could not possibly take increases of that magnitude,’ Mrs Thatcher explained. ‘And we trusted that Members of Parliament would take the same view.’² She was too sanguine. The Government’s offer of just 4 per cent provoked fury on both sides of the House. In the event John Biffen was able to negotiate a compromise: increases of 5.5 per cent every year for the 1983 Parliament. This was further evidence that Mrs Thatcher’s swollen majority would not always do her bidding, at least where their own interests were involved.

Just before the summer recess Lawson signalled his arrival at the Treasury by announcing a ?500 million package of emergency spending cuts designed to reassure the City that there was to be no loosening of monetary policy. The cuts fell most heavily on defence and on the NHS, thus angering both the Tory right and the opposition simultaneously. The health cuts caused particular outrage, coming so soon after an election at which Mrs Thatcher had promised that the NHS was ‘safe’ with the Tories.

For some time Mrs Thatcher had been suffering from a torn retina in her right eye, which was affecting her vision. So, at the beginning of August, she underwent a laser operation at a private hospital in Windsor. This time she was obliged to stay in for three days – she was said to have done some work on the third day – and emerged wearing tinted glasses. She then went to Switzerland for a full two-week holiday to recover.

During September she visited first Holland and Germany, then the United States and Canada, returning just in time to face a new headache when Private Eye broke the story of Cecil Parkinson’s adulterous affair. Mrs Thatcher tried hard to save him – she was remarkably relaxed about sexual matters – but in the end he was forced to resign. ‘The only person who comes out of the affair with any credit is the Prime Minister,’ Norman St John Stevas wrote in the Sunday Express. ‘She has been compassionate, concerned, tolerant and Christian.’³ By insisting that Parkinson should go back to his wife she was represented as fighting for the sanctity of marriage. In truth she too was fighting for her man. Parkinson was not just a personal favourite, but her chosen heir, whom she had been grooming for the eventual succession. Even after his resignation she remained keen to bring him back as soon as possible.

Parkinson’s downfall necessitated the first unintended Cabinet reshuffle. Norman Tebbit moved to the DTI; Tom King took over the Department of Employment; and Nicholas Ridley finally made it to the Cabinet, taking King’s place at Transport. In addition Mrs Thatcher had already taken the precaution, before the conference, of appointing a new party chairman: her surprising choice was the youthful but lightweight John Selwyn Gummer. Her reasoning was that she needed someone young – Gummer was forty-four – to combat Kinnock, Steel and Owen;⁴ but Gummer was not a success and lasted only two years in the job. John Major, at the time an assistant whip, remembers being ‘astonished’ at Ridley’s elevation: he had ‘an original mind’ but was ‘wonderfully politically incorrect’.⁵ Once arrived, Ridley was to remain one of the Prime Minister’s most loyal disciples until one final indiscretion brought him down just before her own fall.

The worst embarrassment of all was the American invasion of Grenada – a Commonwealth country – to put down a Communist coup, with minimal reference to Britain. Both Geoffrey Howe, who in the Commons just the day before had confidently ruled out any prospect of American action, and Mrs Thatcher herself, whose vaunted special relationship with President Reagan was called into question, were publicly humiliated. ‘There are always banana skins,’ Mrs Thatcher had told the BBC’s John Cole in May, ‘but you don’t have to tread on them.’⁶ Since June she seemed unable to avoid them.

From bust to boom

Amid all the Government’s minor embarrassments, however, the central political front was, as always, the economy: and here there were definite signs of recovery. An OECD (Organisation for Economic Cooperation and Development) report in December showed Britain enjoying the fastest growth in Europe. GDP, Mrs Thatcher told the Commons, was now back to its 1979 level – a somewhat limited success after four and a half years, but one which had been achieved, she pointed out, ‘with 1.7 million fewer people in the workforce’.⁷ In other words unemployment was up, but so was productivity. She insisted that unemployment would soon start to fall with the creation of new jobs.

In Nigel Lawson she now had a Chancellor who shared her own ability to project a bullish sense of optimism. Her relationship with Lawson was very different from that with Geoffrey Howe. Whereas she was frequently impatient with Howe’s pedestrian manner, knowing that he was no more of an economist than she was, she respected Lawson’s expertise to the extent that she was slightly in awe of him. This was a recipe for trouble in the long run, since their views increasingly diverged; but for the moment she was happy to indulge him

Lawson’s first budget, in March 1984, delighted her. In their respective memoirs he recalled that the Prime Minister was ‘ecstatic’, while she characterised it as ‘Nigel at his brilliant best’.⁸ Though no further cut in the basic rate was possible just yet, the new Chancellor boldly signalled his ambitions as a tax reformer. First, he took Howe’s switch from direct to indirect taxation a stage further by raising personal thresholds, taking 850,000 low earners out of income tax altogether, compensating by raising excise duties and extending VAT. More important, he cut corporation tax; abolished the 15 per cent surcharge on investment income; and completed Howe’s phasing out of the National Insurance surcharge (the so-called ‘tax on jobs’). One friendly commentator called this ‘the most Thatcherite’ budget so far.⁹

Clever tax changes, however, did nothing – at least in the short term – to meet the rising clamour for action to tackle unemployment. The Falklands Factor was now double-edged: if Mrs Thatcher could spend millions recapturing and now defending some barely inhabited islands in the South Atlantic, it was asked, why could she not apply some of the same resolution to conquering the great social evil on her doorstep? She now enjoyed a huge majority; the recession was officially over and the economy was supposed to be recovering; yet unemployment was still rising. She was running out of alibis. Just before the summer recess, Mrs Thatcher was forced to make an unusually defensive reply to Neil Kinnock’s first no-confidence motion since becoming Labour leader.

‘Creating new jobs is the main challenge of our time,’ she acknowledged. But the Government was meeting it by tackling the ‘fundamental causes’ of unemployment, not just the symptoms. Thanks to the ‘prudent financial policies’ of Howe and Lawson, she insisted, ‘the prize of lower inflation has been won, and we shall not put it in jeopardy now. Stable prices remain our eventual goal.’ New jobs would come from new technology, but she accepted an obligation to mitigate the hardship of transition ‘by generous redundancy payments, by retraining and by helping to create new businesses’.¹⁰

This was all very well, but it did not cut much ice against the relentlessly rising headline figure of 3.2 million unemployed. In August Mrs Thatcher bowed to pressure to be seen to be doing something by appointing David Young from the Manpower Services Commission (MSC) as an unpaid Minister without Portfolio to head a new ‘Enterprise Unit’ in the Cabinet Office – or, as Bernard Ingham encouraged the press to spin it, ‘Minister for Jobs’.