Downing Street Years - Margaret Thatcher [74]
* The Ryder Plan, dating from 1975, proposed the investment by government in phases over seven years of £1.4 billion to modernize BL plant and introduce new models.
* See pp. 679–80.
CHAPTER V
Not for Turning
Politics and the economy in 1980–1981
NO U-TURNS
At 2.30 on the afternoon of Friday 10 October 1980 I rose to address the Conservative Party Conference in Brighton. Unemployment stood at over two million and rising; a deepening recession lay ahead; inflation was far higher than we had inherited, though falling; and we were at the end of a summer of government leaks and rifts. The Party was worried, and so was I. Our strategy was the right one, but the price of putting it into effect was proving so high, and there was such limited understanding of what we were trying to do, that we had great electoral difficulties. However, I was utterly convinced of one thing: there was no chance of achieving that fundamental change of attitudes which was required to wrench Britain out of decline if people believed that we were prepared to alter course under pressure. I made the point with a line provided by Ronnie Millar:
To those waiting with bated breath for that favourite media catchphrase, the ‘U-turn’, I have only one thing to say. ‘You turn if you want to. The lady’s not for turning.’ I say that not only to you, but to our friends overseas — and also to those who are not our friends.
The message was directed as much to some of my colleagues in the Government as it was to politicians of other parties. It was in the summer of 1980 that my critics within the Cabinet first seriously attempted to frustrate the strategy which we had been elected to carry out — an attack which reached its climax and was defeated the following year. At the time that I spoke, many people felt that this group had more or less prevailed.
ARGUMENTS ABOUT PUBLIC
EXPENDITURE
Battle was to be joined over the next two years on three related issues: monetary policy, public spending and trade union reform. The ‘wets’ argued that because we had embraced a dogmatic monetary theory that inflation could only be brought down by a fierce monetary squeeze, we were squeezing the economy in the middle of a recession. Such dogmatism, they argued, similary prevented our using practical tools of economic policy like prices and incomes control and forced us to cut public spending when, as Keynes had argued, public spending should be increased to lift an economy suffering from lack of demand.
The most bitter Cabinet arguments were over public spending. In most cases those who dissented from the line which Geoffrey Howe and I took were not merely intent on opposing our whole economic strategy as doctrinaire monetarism; they were trying to protect their departmental budgets. It had soon become clear that the public expenditure plans announced in March 1980 had been far too optimistic. In particular, the large turn round from losses towards profitability in the nationalized industries was not going to come about; local authorities, as usual, were overspending; and the recession was proving deeper than expected, increasing spending on unemployment and other benefits. Government borrowing for the first quarter of 1980 looked like being very large. In addition, Francis Pym, Defence Secretary, was pressing for an increase in the Ministry of Defence (MoD) cash limit.
We had decided to have a general economic discussion in Cabinet on 3 July 1980, before our first collective discussion of the 1981–2 public expenditure round on 10 July. Our aim was to confront spending ministers with the full implications for taxation of a failure to control spending, and to smoke out the arguments for reflation,