Margaret Thatcher: The Authorized Biography (68 page)

The Conservatives were relieved that the decision fell to Callaghan, whose party was beset by divisions on Europe, and not to them. But they nevertheless had to take up a position on the subject. The views of the party establishment were clear. The Heathites, who had got Britain into the EEC in the first place and carried the day in the 1975 referendum on whether or not to stay in, were still intent on developing their project. In the summer of 1978, Adam Ridley wrote a memo to Mrs Thatcher which, though raising technical difficulties, presented the choice as being between Britain playing a ‘constructive and positive part’ or ‘increasing obscurity on the fringes’.
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In the autumn, as the decision approached, Ridley wrote to her again emphasizing that the question was 95 per cent politics rather than economics, and advocating, rather boldly for an adviser whose chief purpose was technical and economic, that Britain should ‘leap before you look’.
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Two days later, the shadow ministers chiefly concerned – Howe, Pym, Nigel Lawson and John Nott, with Lord Soames (as a senior Tory with relevant knowledge as a former European commissioner) and Adam Ridley in attendance – met to discuss the ERM. In the background was a recent speech by the consistently Powellite Eurosceptic John Biffen which attacked the ERM as a strengthening of the Franco-German axis in Europe. Lawson was extremely cautiously in favour of some sort of mechanism: ‘We have to decide first whether it would work or not; then if terms were right, if we should join.’
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Nott was worried about unpopular devaluations imposed from abroad. Soames and Pym were in favour of the ERM, as was Geoffrey Howe, a strong pro-European all his political life. Howe is recorded as saying: ‘the answer to Biffen’s original threat of a Franco-German axis was to put us on the other end and make a real triangle.’

Lawson and Howe then wrote separately to Mrs Thatcher. Lawson sought to steer a course between ‘Eurofanatics and Europhobes’ and advocated that ‘we should avoid committing ourselves to any firm position on the EMS
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for as long as possible … it is a hideously complex and awkward
issue, both economically and (more important) politically.’ ‘A case can be made’, he went on, ‘… that no British Government will – in practice – feel able to maintain a sufficiently tight monetary and fiscal policy unless buttressed by the external constraint of a fixed exchange rate.’ On the other hand, the ERM conditions might render the EEC ‘so unpopular as to make support of continuing EEC membership political suicide’. He compared the situation with Britain’s decision to go back on to the gold standard in 1925, and worried about an ‘artificially high sterling parity’. But, by not joining, Britain would ‘risk abdicating for good the leadership of Europe’. Lawson coolly added that the best hope was therefore a quick collapse of the system so that ‘we could propose some alternative and more sensible framework for European economic convergence’. It would be better for the Tories, he thought, if Labour were to enter, but if they did not, the Conservatives could attack Callaghan ‘for being afraid of the big bad Benn’. He concluded: ‘we should not give any undertaking that … we will bring Britain into the EMS. To give such an undertaking would gratuitously split the party.’
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Geoffrey Howe, by contrast, was unequivocal. He supported the ERM both economically and politically: ‘Fundamentally, we do believe in German principles of economic management and should be able to get ourselves alongside them.’ The Tories, he said, should ‘pronounce in favour’ of the ERM for ‘providing greater currency stability and encouraging convergence of economic policies’. He went on: ‘The political case for this conclusion is a strong one: the alternative means surrendering the direction of the EEC … to the Franco-German high table.’ In terms of tactics, Howe argued that it would be impossible to make Britain’s ERM entry conditional on reform of the Common Agricultural Policy (CAP), which fixed agricultural subsidy systems throughout the EEC, and of Britain’s contributions to the EEC budget because ‘our bargaining position is far too weak.’
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As was usual with her correspondents on matters of policy, Mrs Thatcher wrote no reply, but her marginal notes on Howe’s letter made her feelings clear. Against his claims about currency stability and economic convergence, she wrote ‘Why?’ Beside his view that budget and CAP concessions could not be used as a price for ERM entry, she wrote ‘Can’t do it afterwards.’ Beside his proposition about the Franco-German high table, she wrote simply ‘No.’
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Thanking Sir George Bolton, the former Deputy Governor of the Bank of England, who had given her his views on the subject, on 13 November 1978, she said: ‘It’s the most illuminating memorandum I have had on the practical problems of an EMS. They look well-nigh insuperable at the moment.’
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In practical terms, Jim Callaghan made the question easy for the
Conservatives. He decided against British entry into the ERM, reporting this to the House of Commons on 6 December 1978. It was simple enough for Mrs Thatcher to say that the failure to join was a sign of Britain’s economic weakness and of Labour’s divisions and ‘a sad day for Europe’,
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and leave it at that. But the documents and letters quoted above perfectly foreshadow – in tone, in content, in personalities, even in the choice of words – the matter which was to cause such extreme bitterness and division in her Cabinets towards the end of the 1980s. Even before she became prime minister, Mrs Thatcher was suspicious of the project of European integration, but was surrounded by senior colleagues who disagreed with her.

The Tory argument about the ERM remained private at this stage, but these documents exhibit Mrs Thatcher’s habit – one could almost call it a technique – of setting the terms of policy discussion by expressing opinions more trenchant than those of her colleagues. Often, she did this in public. The subject of immigration gave her a notable opportunity. Ever since Enoch Powell’s ‘Rivers of Blood’ speech in 1968, the question had been toxic in Conservative politics, but public feeling against immigration (and continuing wide working-class support for Powell) was real enough. Indeed, it began to grow again because of Labour relaxation of the rules. For example, the permission given by the Home Secretary, Roy Jenkins, to fiancés of Asian women to enter the country quickly became a means of abusing the system. When Jenkins temporarily left British politics in 1977 to become president of the European Commission, the by-election campaign in his former constituency of Stechford was dominated by the question of immigration. The Conservative candidate, Andrew Mackay,
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sent out 30,000 leaflets headlined ‘Stop immigration’. The Tories dramatically gained the seat from Labour, but it was also notable that the virulently anti-immigration National Front, the forerunner of today’s BNP, won 8.1 per cent of the vote.

By the end of 1977, with Labour’s measures of economic restraint having some effect, the Conservative lead in the opinion polls had more or less vanished. This seems to have prompted Mrs Thatcher to pay more attention to non-economic issues where there was public discontent.
According to Richard Ryder, ‘She felt hemmed in on incomes policy, so she thought she would take a free hit on immigration.’
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In an interview for Granada’s
World in Action
which was broadcast on 30 January 1978, she noted that there would probably be 4 million Pakistani and New Commonwealth immigrants in Britain by the end of the century. This was ‘an awful lot’, she said, and British people feared that they ‘might be rather swamped by people with a different culture and, you know, the British character has done so much for democracy, for law, and done so much throughout the world that if there is any fear that it might be swamped people are going to react and be rather hostile to those coming in.’ She added that she had been brought up in a small town of 25,000 people, and that about twice that number was entering the country every year. ‘We are a British nation,’ she said, ‘with British characteristics.’
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There was widespread outrage in the broadsheet press and at Westminster, and widespread approval in the country. The person in the most difficult position was Willie Whitelaw. He was furious both at the tone of Mrs Thatcher’s remarks and at the fact that she had made them without warning him. He would have liked her to qualify them, but he knew that the circumstances of the interview, which had not been recorded live, had given her the opportunity to erase her own remarks before she went on air; she had not done so. Characteristically, Whitelaw went round talking of resignation, but did not actually resign. He told Roy Jenkins ‘how absolutely ghastly life was with that awful woman, how he was thinking of resigning’,
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but continued much as before. In private, Chris Patten, at the Conservative Research Department, expressed the perturbation felt by everyone on the more liberal wing of the party. ‘Just imagine’, he told Michael Portillo, ‘if she’d said we were being swamped by Jewish people.’
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In the House of Commons, the excitable Labour MP Andrew Faulds was ordered by the Speaker to ‘control himself’ in his attacks on Mrs Thatcher. Faulds shouted back: ‘With that bloody woman in the House, how can you expect it?’
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His phrase ‘that bloody woman’ was taken up by many who did not like Mrs Thatcher, often abbreviated to ‘TBW’. Her remarks were significant not for any change in policy – most Tories agreed that immigration controls should be strengthened – but for her choice of language. The way a person talked about immigration was a touchstone of other attitudes then, as it remains today. As with her personal support for capital punishment – a conscience issue on which there could be no party policy – Mrs Thatcher knew this, and was happy to stand up against the chattering classes. There was a sense in which she enjoyed being ‘TBW’. She considered herself to be saying what others sought to conceal.
Twenty-five years later, remembering the ‘swamping’ interview, she quoted Kipling’s poem ‘The Fabulists’:

When all the world would keep a matter hid

Since Truth is seldom Friend to any crowd,

Men write in fables, as old Aesop did.
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Enoch Powell considered that Mrs Thatcher had quickly backed away from her own position on immigration under pressure from her party – because the Tory bosses were ‘Athenian oligarchs who would always sacrifice culture for class’.
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In fact, however, she stood by her words, and used the occasion to reiterate her belief that the National Front, far from being the authentic, or even the perverted, voice of the patriotic right, was ‘a socialist front’,
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concerned to bring about a siege economy and state control. She was interested in the fact that the word ‘Nazi’ was short for National Socialist, and felt that the socialist aspect was dangerously ignored. She saw the issue of immigration as one where a politician must attend to people’s legitimate fears, and where people were entitled to greater certainty about numbers and commitments. The Conservatives shot up in the opinion polls from neck and neck with Labour to an eleven-point lead and Callaghan, sensing political vulnerability, invited Mrs Thatcher to all-party talks on immigration which she, recognizing an attempt to smother the subject, rejected. The immigration issue helped the Tories win the Ilford North by-election in February 1978. From the whole ‘swamping’ controversy, she took away a growing belief, most annoying to her Shadow Cabinet, but undeniably validated by voters, that ‘I must trust my own judgment in crucial matters, rather than necessarily hope to persuade my colleagues in advance; for I could expect that somewhere out in the country there would be a following and perhaps a majority for me.’
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The only way, of course, that Mrs Thatcher could prove that there was ‘a majority for me’ was in a general election. With this in mind, in the early
spring of 1978 the party made a bold decision in its choice of advertising agency. Three companies were invited to pitch for the account, but Gordon Reece, to whom the party Chairman Lord Thorneycroft, doubting the value of having an advertising agency at all, had delegated the work, did not like pitches. ‘My experience in commercial advertising’, Reece later wrote, ‘had told me that agencies put their best efforts into the pitch when they should be putting it into the client’s business.’
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He made sure that Saatchi and Saatchi, the only one of the three to refuse to pitch, got the account. The Saatchi brothers, Maurice
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and Charles,
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who owned the company, were completely outside the world of the Conservative Party. Born into a family of Baghdad Jews, they had no previous political involvement. When Reece offered Maurice Saatchi the account, Saatchi rang his chairman, Tim Bell,
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the only known Tory at the top of the company, who was on holiday in Barbados, to ask his opinion. Bell, who had worked with the Conservative Party in another agency in the Macmillan era, thought it was a bad idea. There was no money in it, he said, and a great deal of aggravation. He thought the Saatchi brothers were not Conservatives and felt socially uneasy with Tories because they feared they would be seen as ‘upstart Jewboys’. Would they be able to put their heart into it?
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Bell was overruled, however, and quickly became the link man with Reece. The Saatchis stayed in the background, Maurice meeting Mrs Thatcher only once before the election of May 1979, and Charles not at all. Alistair McAlpine, the treasurer, shocked Saatchis by saying to them: ‘If we win the election, we’ll pay you. Otherwise not.’
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But he was actually one of the most enthusiastic for their work. When trying to drum up money from rich men for the election, he would go round to them with a sheaf of the best Saatchi suggestions for posters and ask, ‘Which one of these would you like to pay for?’
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