difference. I was not senior enough for it to be other than the littlest ‘local difficulty’. All the more reason for me to pay tribute to people like Jock Bruce-Gardyne, John Biffen, Nick Ridley and, of course, Enoch Powell who did expose the folly of what was happening in Commons speeches and newspaper articles.
There is also a direct connection between the policies pursued from March 1972 and the very different approach of my own administration later. A brilliant, but little-known, monetary economist called Alan Walters resigned from the CPRS and delivered not only scathing criticism of the Government’s approach but also accurate predictions of where it would lead.[29]
One more blow to the approach we adopted in 1970 had still to fall: and it was not long in coming. This was the effective destruction of the Industrial Relations Act. It had never been envisaged that the Act would result in individual trade unionists going to gaol. Of course, no legal provisions can be proof against some remote possibility of that happening if troublemakers are intent on martyrdom. It was a long-running dispute between employers and dockers about ‘containerization’ which provided the occasion for this to happen. In March 1972 the National Industrial Relations Court (NIRC) fined the Transport and General Workers’ Union (TGWU) ?5,000 for defying an order to grant access to Liverpool Docks. The following month the union was fined ?50,000 for contempt on the matter of secondary action at the docks. The TGWU maintained that it was not responsible for the action of its shop stewards, but the NIRC ruled against this in May. Then, out of the blue, the Court of Appeal reversed these judgements and ruled that the TGWU was
The Left were merciless. Ted was shouted down in the House. Sympathetic strikes spread, involving the closure of national newspapers for five days. The TUC called a one-day general strike. On 26 July, however, the House of Lords reversed the Court of Appeal decision and confirmed that unions were accountable for the conduct of their members. The NIRC then released the five dockers.
This was more or less the end of the Industrial Relations Act, though it was not the end of trouble in the docks. A national dock strike ensued and another State of Emergency was declared. This only ended — very much on the dockers’ terms — in August. In September the TUC General Congress rubbed salt into the wound by expelling thirty-two small unions which had refused, against TUC instructions, to de-register under the Act. Having shared to the full the Party’s enthusiasm for the Act, I was appalled.
A U-TURN TOO FAR
In the summer of 1972 the third aspect — after reflation and industrial intervention — of the new economic approach was revealed to us. This was the pursuit of an agreement on prices and incomes through ‘tripartite’ talks with the CBI and the TUC. Although there had been no explicit pay policy, we had been living in a world of ‘norms’ since the autumn of 1970 when the ‘n—1’ was formulated in the hope that there would be deceleration from the ‘going rate’ figure in successive pay rounds. The miners’ settlement had breached that policy spectacularly, but Ted drew the conclusion that we should go further rather than go back. From the summer of 1972 a far more elaborate prices and incomes policy was the aim, and more and more the centre of decision-making moved away from Cabinet and Parliament. I can only, therefore, give a partial account of the way in which matters developed. Cabinet simply received reports from Ted on what policies had effectively been decided elsewhere, though individual ministers became increasingly bogged down in the details of shifting and complicated pay negotiations. This almost obsessive interest in the minutiae of pay awards was matched by a large degree of impotence over the deals finally struck. In fact, the most important result was to distract ministers from the big economic issues and blind us with irrelevant data when we should have been looking ahead to the threats which loomed.
The period of the tripartite talks with the TUC and the CBI from early July to the end of October did not get us much further as regards the Government’s aim of controlling inflation by keeping down wage demands. It did, however, move us down other slippery slopes. In exchange for the CBI’s offer to secure ‘voluntary’ price restraint by 200 of Britain’s largest firms, limiting their price increases to 5 per cent during the following year, we embarked on the costly and self-defeating policy of holding nationalized industry price increases to the same level, even though this meant that they continued to make losses. The TUC, for its part, used the role it had been accorded by the tripartite discussions to set out its own alternative economic policy. In flat contradiction to the policies we had been elected to implement, they wanted action to keep down council rents (which would sabotage our Housing Finance Act — intended to bring them closer to market levels). They urged the control of profits, dividends and prices, aimed at securing the redistribution of income and wealth (in other words the implementation of socialism), and the repeal of the Industrial Relations Act. These demands, made at the TUC Congress in September, were taken sufficiently seriously by Ted for him to agree studies of methods by which the pay of low-paid workers could be improved without entailing proportionate increases to other workers. We had, in other words, moved four- square onto the socialist ground that ‘low pay’ — however that might be defined — was a ‘problem’ which it was for government rather than the workings of the market to resolve. In fact, the Government proposed a ?2 a week limit on pay increases over the following year, with the CBI agreeing maximum 4 per cent price increases over the same period and the extension of the Government’s ‘target’ of 5 per cent economic growth.
In any case, it was not enough. The TUC was not willing — and probably not able — to deliver wage restraint. At the end of October we had a lengthy discussion of the arguments for now proceeding to a statutory policy, beginning with a pay freeze. It is an extraordinary comment on the state of mind that we had reached that, as far as I can recall, neither now nor later did anyone at Cabinet raise the objection that this was precisely the policy we had ruled out in our 1970 general election manifesto. Yet no one could accuse Ted of not being willing to go the extra mile. Only with the greatest reluctance did he accept that the TUC were unpersuadable. And so on Friday 3 November 1972 Cabinet made the fateful decision to introduce a statutory policy beginning with a ninety- day freeze of prices and incomes. No one ever spoke a truer word than Ted when he concluded by warning that we faced a troubled prospect.
The change in economic policy was accompanied by a Cabinet reshuffle. Maurice Macmillan — Harold’s son — had already taken over at Employment from Robert Carr in July 1972, when the latter replaced Reggie Maudling at the Home Office. Ted now promoted his younger disciples. He sent Peter Walker to replace John Davies at the DTI and promoted Jim Prior to be Leader of the House. Geoffrey Howe, an instinctive economic liberal, was brought into the Cabinet but given the poisoned chalice of overseeing prices and incomes policy. It has been said that I was thought of for the job; if so, I can only be thankful that I wasn’t asked.
For a growing number of backbenchers the new policy was a U-turn too far. When Enoch Powell asked in the House whether the Prime Minister had ‘taken leave of his senses’, he was publicly cold-shouldered, but many privately agreed with him. Still more significant was the fact that staunch opponents of our policy like Nick Ridley, Jock Bruce-Gardyne and John Biffen were elected to chairmanships or vice-chairmanships of important backbench committees, and Edward du Cann, on the right of the Party and a sworn opponent of Ted, became Chairman of the 1922 Committee.
As the freeze — Stage 1 — came to an end we devised Stage 2. This extended the pay and price freeze until the end of April 1973; for the remainder of 1973 workers could expect ?1 a week and 4 per cent, with a maximum pay rise of ?250 a year — a formula designed to favour the low-paid. A Pay Board and a Prices Commission were set up to administer the policy. Our backbench critics were more perceptive than most commentators, who considered that all this was a sensible and pragmatic response to trade union irresponsibility. In the early days it seemed that the commentators were right. A challenge to the policy by the gas workers was defeated at the end of March. The miners — as we hoped and expected after their huge increase the previous year — rejected a strike (against the advice of their Executive) in a ballot on 5 April. The number of working days lost because of strikes fell sharply. Unemployment was at its lowest since 1970. Generally, the mood in Government grew more relaxed. Ted clearly felt happier wearing his new collectivist hat than he ever had in the disguise of Selsdon.
Our sentiments should have been very different. The effects of the reflationary Budget of March 1972 and
