Margaret Thatcher: The Authorized Biography (91 page)

For the rest of the day, telephone calls ricocheted back and forth. Joseph rang back with the Lord Chancellor Lord Hailsham’s suggestion that a charge of unlawful affray be brought against Scargill. To this Mrs Thatcher replied that ‘It might suit Mr Scargill very well to be charged.’ The new picketing clause she sought would follow the better route of allowing injunctions to be taken out. Joseph then said that what the record calls ‘the other man’ – a reference to Prior – would be putting in his proposals in the coming week. Mrs Thatcher ‘said she feared that Mr Prior was trying to push the Government into a Court of Inquiry’ over the steel strike. Increasingly heated, she rang the Attorney-General, Michael Havers. At 9.30 p.m., Whitelaw rang her and she told him that ‘the
People
leader was right. The Hadfields situation had not been a matter of mass picketing but of mass intimidation … The Prime Minister said that the Chief Constables should meet the Law Officers. The Home Secretary said that this would have to be treated with great care, as the Chief Constables could not take direction from the Law Officers.’ Mrs Thatcher then demanded a Cabinet or Cabinet committee the next day because it was too urgent to wait till Tuesday. At 10.45, Whitelaw rang her again to tell her about the state of the Sheerness steelworks, also threatened with mass picketing. The Chief Constable of Kent was ‘quite determined to keep Sheerness working: he hoped that Ministers would support him though he feared they would not.’ Mrs Thatcher repeated her desire for a civil law remedy: ‘The Sheerness steelworks had at present no basis on which to seek an injunction. The proposed new law would provide this. She had just received a telegram from Sheerness wives.’

The record of this hectic, semi-coherent day suggests that Mrs Thatcher was really alarmed. The fact that Arthur Scargill, who appeared for five minutes on the scene at Hadfields, had successfully organized the picket made her fear that she was suffering her own Saltley. Here was the defeat by the unions which she dreaded. Here was the fate of Ted Heath staring her in the face, and here, thanks to Prior, was a government which had not provided itself or employers or, she feared, the police with the necessary legal powers. That was why she was casting about so desperately for last-minute remedies. A special meeting of E the next day agreed that the Attorney-General would remind the Commons of the criminal law about picketing, but that a separate Bill about picketing would not be brought forward. In an additional shaft of rage, announced at Prime Minister’s Questions the next day without consulting Prior, Mrs Thatcher said that the rules would be changed so that strikers claiming benefit would be deemed to have been paid by their union. In an interview with Robin Day on
Panorama
a few days later, Mrs Thatcher was asked about comments
by Prior critical of British Steel’s management which had leaked from an off-the-record lunch. ‘I think it was a mistake,’ she said, ‘and Jim Prior was very, very sorry indeed for it, and very apologetic. But you don’t just sack a chap for one mistake.’
¹²⁹
Perhaps not, but the fact that she spoke about sacking him at all subconsciously reflected her state of mind.

As it turned out, though, the militants’ victory at Hadfields did not signal a wider war between government and unions. The failure to achieve a similar success at Sheerness was very important. The essentially moderate steel union was looking for a deal, not a bloodbath, and British business found ways of getting enough steel to keep going. The government’s policy of not intervening in nationalized industry disputes, but leaving it to management and unions to sort them out, paid off. The expectation had built up over many years of Labour and Conservative government that the secretary of state would come forward with ‘new money’. This did not happen. Keith Joseph stayed out of the negotiations, and the ISTC began to look for a way out. A penalty for the government’s non-intervention was that there was little it could do when the British Steel Corporation wanted a court of inquiry into the dispute. This resulted in a pay award greater than the government would have liked. But although the financial costs of the settlement were too high, the political winner, on points, was the government. The huge internal tension about trade union reform, though the issue was still completely unresolved, eased for a few months. A TUC Day of Action in May 1980 against government policies proved a damp squib. The steel dispute had failed to reverse government policy; indeed, it probably accelerated change. The BSC losses were so bad that the government had a freer hand than before in reorganization. In April a Scottish American businessman called Ian Macgregor
*
was appointed, at Jim Prior’s recommendation, to succeed the outgoing Sir Charles Villiers as BSC chairman. Mrs Thatcher referred to him in public as a ‘mighty man’, a favourite phrase of Denis about anyone he admired.
¹³⁰
Macgregor had the opportunity and the ability to turn BSC into a functioning business.

Even bigger, and therefore even more disastrous, than British Steel was the car-manufacturer British Leyland. The unhappy product of an amalgamation by the Labour government in 1968, the company employed 160,000 people when Mrs Thatcher came into office. About the same number of jobs again were directly dependent on the company’s existence. Leyland’s
UK market share, which had been 33 per cent in 1974, had fallen to 20 per cent by 1979. It was not technically a nationalized industry, but the government owned the controlling share, and paid ever more for the privilege. Although it contained promising bits, such as Land Rover and Jaguar, Leyland was chiefly an unsuccessful volume car maker, with such low levels of productivity, caused mainly by terrible trade union problems, that it could not compete with the likes of Vauxhall and Ford or foreign manufacturers. It was operating under the Ryder Plan for expansion, devised in 1975 to inject £1.7 billion of government money over seven years, and opposed by the Conservatives at the time. Mrs Thatcher was not well disposed to the company. Its dynamic chairman, Sir Michael Edwardes,
*
who had taken over in 1977, had her to lunch with his board in early 1979, when she was still leader of the Opposition: ‘I put her opposite me so that I could get a dialogue going, but I didn’t have to wait long. She said, “Well, why should I give you any money?” ’
¹³¹
Once she became prime minister, this was essentially the question which Mrs Thatcher kept asking, and she never felt that she received a wholly satisfactory answer. Nevertheless, she did give the money – more than once and in large quantities.

All Mrs Thatcher’s inclinations, and those of her economic advisers, were that BL should close, or be broken up and its workable bits sold off. Robin Ibbs,
^†
who advised her on the subject from the CPRS, remembered that BL offended her beliefs: ‘She had a practical mind, and she had Denis.’ Denis was good at reading company documents, and telling her what they really meant. In BL’s case, they meant disaster. Ibbs and, in more lurid terms, Alfred Sherman told her that BL was ‘just a sink’, but it was also ‘an appalling problem which no one knew what to do with’.
¹³²
The political difficulty confronting Mrs Thatcher in relation to BL was twofold. How could she introduce economic reality without job losses which would cause the Conservatives to lose every seat in the west midlands where people were dependent on the company for their living? How, also, could she support the tough and necessary things which Michael Edwardes was doing to bring about sane industrial relations and at the same time pull the plug?

In September 1979, a new BL ‘Recovery Plan’ sought more money
(eventually, an extra £300 million for 1980) on top of what Ryder had promised. John Hoskyns wrote Mrs Thatcher a briefing note setting out the dilemmas. ‘Refusal to rescue’ would produce a wave of industrial unrest, job losses and the loss, short term, of foreign exchange earnings. ‘Rescue’, on the other hand, would weaken the government’s credibility, have a bad impact on the PSBR and mean that ‘we can be 95 per cent certain that the whole problem will come round again.’ Hoskyns considered that there was a third way – a form of rescue which ‘buys us other advantages in terms of
more responsible union behaviour
’ (words which Mrs Thatcher underlined), and would put pressure on unions in other industries to change. If the company were later to collapse, blame would then lie at the door of the unions, not the government. Hoskyns acknowledged that this strategy would conflict with that of Edwardes: ‘His objectives and ours would be quite different. He has nailed his flag to BL’s mast, where we would be using BL simply as a lever for a much larger strategy.’
¹³³

In October, Edwardes called a ballot on the plan. ‘
Please – no hostages to fortune
,’ Mrs Thatcher begged Keith Joseph as he planned his response to the ballot result,
¹³⁴
but of course the government could not ignore the ballot result: 87.2 per cent voted to accept Edwardes’s plan. As Hoskyns put it:

The main difficulty about closing BL now is a psychological one and related really to Edwardes’s own personality and image … In a sense he symbolises the possible renaissance of British management … The BL ballot was seen as the workers putting their faith in good managers instead of politically motivated union activists. To reward Edwardes’s efforts and his work-force backing with closure would seem to be a deliberate blow against everything the Government is trying to encourage.
¹³⁵

Edwardes strengthened his position by firing Derek ‘Red Robbo’ Robinson, the hard-left convenor of the shop stewards at the Longbridge plant and master of much of the union disruption.
*
Mrs Thatcher was pleased, but continued to object to suggestions for saving BL. She wrote ‘Why?’ on documents advocating rescue and put heavy underscorings of approval against suggestions of sell-off. But, shortly before Christmas, she followed political logic and accepted Joseph’s recommendation. The £300 million
extra was promised. The condition was that Edwardes sign a letter agreeing that the Plan would be abandoned – resulting in total closure – if thrown off course by strikes.

By February 1980 a strike over Robinson threatened and the car market was continuing to fall. Ministers began to consider aborting the Plan, but did not do so. Just as Mrs Thatcher wanted to get away from ‘beer and sandwiches at No. 10’, by which trade unions took part in the making of government policy, so she wanted an almost equally arm’s-length relationship with the heads of nationalized industries. She therefore had no substantive meeting with Edwardes at all until, at Keith Joseph’s prompting, she gave dinner to the BL board on 21 May. By this time, Edwardes had successfully faced down the strike threat, but the dinner was still combative. In advance, Hoskyns had advocated ‘deliberate brinkmanship’, seeing the dinner as the moment ‘To increase, through Edwardes’s understanding and cooperation, our chances of … “Sell or Merge” ’.
¹³⁶
At the dinner, Edwardes told her that the planned Mini Metro, to be launched in the autumn, would be the saving of the company. He was working on a collaborative deal with a German company which he would not name (it was BMW), but even so cash flow would fall well short of the plan. The exchange rate was very damaging. The company would need up to £500 million extra over the next three or four years. This ‘immediately established a frosty atmosphere’.
¹³⁷

Mrs Thatcher’s manner was ‘somewhat reminiscent of the Spanish Inquisition’.
¹³⁸
She told him she was ‘very disturbed’.
¹³⁹
There could be ‘no presumption’ that extra funds would be provided. ‘What worried her’, Edwardes recalled, ‘was that I wasn’t presenting a budget … We weren’t ready because of the changes in the exchange rate … and that annoyed her. We had to talk in generalities whereas she wanted hard figures.’
¹⁴⁰
She appeared unhelpful. After dinner, the party moved to the drawing room:

Suddenly she turned everything on its head … She turned to Geoffrey Howe and said, ‘Geoffrey, how much have we got in the contingency fund?’ Geoffrey said, ‘Do you think it is proper for them to know?’ ‘Get on with it. Tell Michael how much is in there,’ she said. There was actually two or three billion in it … I walked out of there knowing that I had had an indication … I was confident that the battle was won and confident that we would get the money.
¹⁴¹

It is probably true that Mrs Thatcher found Edwardes persuasive enough to want to go on giving BL a chance, but in fact things got very much worse. In December 1980, Joseph reported to colleagues that BL’s demand for 1981–3, which had been £130 million in the 1980 Corporate Plan, was
now £1,140 million. For each car produced, BL was losing £600. Mrs Thatcher peppered Joseph’s document with exclamation marks and wrote, in reference to Jaguar and Land Rover, ‘
Sell off
.’
¹⁴²
‘I seem to remember he [Edwardes] told us he would come to govt if he could not carry out the previous corporate plan. He never came.’
¹⁴³

Cabinet ministers disagreed among themselves. John Nott, at Trade, told Mrs Thatcher that if the government paid out the extra sum demanded ‘we would be ridiculed, and rightly so, since such an investment will be seen to be wholly contrary to the industrial and economic policy which we have been promoting for the past five years.’
¹⁴⁴
Keith Joseph, agonized, went back, somewhat half-heartedly, on his pre-Christmas belief that more money should be advanced, and argued that it should not be. At the beginning of the year, Mrs Thatcher had brought her rising ally, Norman Tebbit, into the Department of Industry to be Joseph’s minister of state. ‘Norman,’ she told Tebbit, ‘I want you to look after Keith – dear Keith, they are so unkind to him, and he needs someone to protect him.’
¹⁴⁵
Observers noted that, much as she loved Joseph, Mrs Thatcher was not above being unkind to him herself, as he groaned and hesitated and tried to reconcile his beliefs in economic necessity with his personal humanity. But at a meeting on 12 January 1981 Geoffrey Howe argued that further subsidy would be no worse for the PSBR than closure and Mrs Thatcher, using a phrase not often associated with her, sought the ‘middle way’ in which, in return for support, Edwardes would agree to sell or merge the company. The meeting thought that ‘closures in the steel and shipbuilding industries should have higher priority; and it was not politically possible to achieve all at once.’
¹⁴⁶