The Path to Power

But when I was in the car on the way from London to Tonbridge on Wednesday 28 August in order to record a Party Political Broadcast the bleeper signalled that I must telephone urgently. Ted apparently wanted a word. Willie Whitelaw answered the phone and it was clear that the two of them, and doubtless others of the inner circle, were meeting. Ted came on the line. He asked me to announce on the PPB the precise figure to which we would hold down mortgages, and to take it down as low as I could. I said I could understand the psychological point about going below 10 per cent. That need could be satisfied by a figure of 9? per cent, and in all conscience I could not take it down any further. To do so would have a touch of rashness about it. I was already worried about the cost. I did not like this tendency to pull figures out of the air for immediate political impact without proper consideration of where they would lead. So I stuck at 9? per cent.

It was a similar story on the rates. When we had discussed the subject at our Shadow Cabinet meeting on Friday 21 June I had tried to avoid any firm pledge. I suggested that our line should be one of reform to be established on an all-party basis through a Select Committee. I was the first to admit that this was not likely to set the world on fire. But even more than housing, this was not an area in which precipitate pledges were sensible. Ted would have none of this and said I should think again. The need for something clearer was indeed demonstrated by the Commons debate on the rates a few days later. We called for fundamental reform, some interim rate relief and a provision that water charges should qualify for rate rebate. In my speech I also argued for central government having the power to cap local government spending and then for a general inquiry into the rates. But though I emerged with my reputation as a parliamentarian intact, Tony Crosland, the Environment Secretary, arguing for an increased central government subsidy to local authorities without major reform of the system, was generally thought to have had the better of the debate. His victory was pyrrhic. For increased subsidies led not to lower rates but to higher local spending. Within a year Mr Crosland was announcing sternly: ‘The party is over.’

In July Charles Bellairs at the Conservative Research Department and I worked on a draft rates section for the manifesto. We were still thinking in terms of an inquiry and an interim rate relief scheme. I went along to discuss our proposals at the Shadow Cabinet Steering Committee. I argued for the transfer of teachers’ salaries — the largest item of local spending — from local government onto the Exchequer. Another possibility I raised was the replacement of rates with a system of block grants, with local authorities retaining discretion over spending but within a total set by central government. Neither of these possibilities was particularly attractive. But at least discussion revealed to those present that ‘doing something’ about the rates was a very different matter from knowing what to do.

On Saturday 10 August I used my speech to the Candidates’ Conference at the St Stephen’s Club to publicize our policies. I argued for total reform of the rating system to take into account individual ability to pay, and suggested the transfer of teachers’ salaries and better interim relief as ways to achieve this. It was a good time of the year — a slack period for news — to unveil new proposals, and we gained some favourable publicity.

It seemed to me that this proved that we could fight a successful campaign without being more specific; indeed, looking back, I can see that we were already a good deal too specific because, as I was to discover fifteen years later, such measures as transferring the cost of services from local to central government do not in themselves lead to lower local authority rates.

I had hoped to have a pleasant family holiday at Lamberhurst away from the sticky heat of London and the demands of politics. It would have been the first for three years. It was not to be. The telephone kept ringing, with Ted and others urging me to give more thought to new schemes. Then I was called back for another meeting at Wilton Street on Friday 16 August. Ted, Robert Carr, Jim Prior, Willie Whitelaw and Michael Wolff from Central Office were all there. It was soon clear what the purpose was — to bludgeon me into accepting a commitment in the manifesto to abolish the rates altogether within the lifetime of a Parliament. I argued against this for very much the same reason that I argued against the ‘9? per cent’ pledge on the mortgage rate. But so shell-shocked by their unexpected defeat in February were Ted and his inner circle that in their desire for re-election they were clutching at straws, or what in the jargon were described as manifesto ‘nuggets’.

There were various ways to raise revenue for expenditure on local purposes. We were all uneasy about moving to a system whereby central government just provided block grants to local government. So I had told Shadow Cabinet that I thought a reformed property tax seemed to be the least painful option. But in the back of my mind I had the additional idea of supplementing the property tax with a locally collected tax on petrol. Of course, there were plenty of objections to both, but at least they were better than putting up income tax.

In any case, what mattered to my colleagues was clearly the pledge to abolish the rates, and at Wilton Street Ted insisted on it. I felt bruised and resentful to be bounced again into policies which had not been properly thought out. But I thought that if I combined caution on the details with as much presentational bravura as I could muster I could make our rates and housing policies into vote-winners for the Party. This I now concentrated my mind on doing.

It was at a press conference on the afternoon of Wednesday 28 August that I unveiled our final proposals. I delivered the package of measures — built around 9? per cent mortgages and the abolition of the rates — without a scintilla of doubt, which as veteran Evening Standard reporter Robert Carvel said, ‘went down with hardened reporters almost as well as the sherry’ served by Central Office. We dominated the news. It was by general consent the best fillip the Party had had since losing the February election. There was even some talk of the Conservatives being back in the lead in the opinion polls, though this was over-optimistic. The Building Societies’ Association welcomed the proposals for 9? per cent mortgages but questioned my figures about the cost. In fact, as I indignantly told them, it was their sums which were wrong and they subsequently retracted. Some on the economic right were understandably critical, but among the grassroots Conservatives that we had to win back the mortgage proposal was extremely popular. So too was the pledge on the rates. The Labour Party was rattled and unusually the party-giving Tony Crosland was provoked into overreaction, describing the proposals as ‘Margaret’s midsummer madness’. All this publicity was good for me personally as well. Although I was not to know it at the time, this period up to and during the October 1974 election campaign allowed me to make a favourable impact on Conservatives in the country and in Parliament without which my future career would doubtless have been very different.

FIRST SECOND THOUGHTS

Although it was my responsibilities as Environment spokesman which took up most of my time and energy, from late June I had become part of another enterprise which would have profound consequences for the Conservative Party, for the country and for me. The setting-up of the Centre for Policy Studies (CPS) is really part of Keith Joseph’s story rather than mine. Keith had emerged from the wreckage of the Heath Government determined on the need to rethink our policies from first principles. If this was to be done, Keith was the ideal man to do it. He had the intellect, the integrity and not least the humility required. He had a deep interest in both economic and social policy. He had long experience of government. He had an extraordinary ability to form relationships of friendship and respect with a wide range of characters with different viewpoints and backgrounds. Although he could, when he felt strongly, speak passionately and persuasively, it was as a listener that he excelled. Moreover, Keith never listened passively. He probed arguments and assertions and scribbled notes which you knew he would go home to ponder. He was so impressive because his intellectual self-confidence was the fruit of continual self-questioning. His bravery in adopting unpopular positionsbefore a hostile audience evoked the admiration of his friends, because we all knew that he was naturally shy and even timid. He was almost too good a man for politics, except that without a few good men politics would be intolerable.

I could not have become Leader of the Opposition, or achieved what I did as Prime Minister, without Keith. But nor, it is fair to say, could Keith have achieved what he did without the Centre for Policy Studies and Alfred Sherman. Apart from the fact of their being Jewish, Alfred and Keith had little in common, and until one saw how effectively they worked together it was difficult to believe that they could cooperate at all.

I understand that Keith and Alfred first met in 1962 when Keith was Housing Minister and Alfred covered local government matters at the Daily Telegraph. From time to time they were in touch,