Downing Street Years - Margaret Thatcher [78]
Two days later, Cabinet met again to continue the discussion. The financial position of the nationalized industries had worsened even in the short time since we had begun our spending review. Public sector pay was still a headache. If we managed to hold future public service pay increases to 6 per cent, as we wished, we could still expect a PSBR of £12 billion in 1981–2, compared with the £7.5 billion implied by the MTFS. It would not be possible to finance a PSBR of this size and reduce interest rates at the same time. Therefore, in order to avoid high interest rates substantial tax increases would be needed. In my summing up I noted that the position would be still worse, if reductions still under discussion — including defence, social security and education — were not actually agreed. In fact, Cabinet made the final decisions about the package the following week.
The Autumn Statement on 24 November 1980, therefore, contained some highly unpopular measures. Employees’ National Insurance Contributions had to go up. Retirement pensions and other social security benefits would be increased by 1 per cent less than the rate of inflation next year if they turned out to have risen by 1 per cent more in the present year. There were cuts in defence and local government spending. It was announced that a new supplementary tax would be introduced on North Sea oil profits. However, there was some good news: the further employment measures — and a 2 percentage point cut in MLR.
DISSENT BY LEAKS
Few members of the public are experts in the finer matters of economics — though most have a shrewd sense when promises do not add up. By the end of 1980 I began to feel that we risked forfeiting the public’s confidence in our economic strategy. Unpopularity I could live with. But loss of confidence in our capacity to deliver our economic programme was far more dangerous. We were now spending more when we believed in spending less; inflation was high when we proclaimed the primacy of bringing it down; and private industry was faltering when we had been saying for years that only successful free enterprise could make a country wealthy. Of course, we could point to factors over which we had little or no control, and above all to the world recession; and on inflation and pay settlements there was movement in the right direction. But our credibility was at stake. And the very last thing I could afford was well-publicized dissent from within the Cabinet itself. Yet this was what I now had to face.
Public dissent from the ‘wets’ was phrased in what was obviously intended to be a highly sophisticated code, in which each phrase had a half-hidden meaning and philosophical abstractions were woven together to condemn practical policies by innuendo. This cloaked and indirect approach has never been my style and I felt contempt for it. I thrive on honest argument. I am interested in practical options. And I prefer to debate my opponents rather than to undermine them with leaks. I do not believe that collective responsibility is an interesting fiction, but a point of principle. My experience is that a number of the men I have dealt with in politics demonstrate precisely those characteristics which they attribute to women — vanity and an inability to make tough decisions. There are also certain kinds of men who simply cannot abide working for a woman. They are quite prepared to make every allowance for ‘the weaker sex’: but if a woman asks no special privileges and expects to be judged solely by what she is and does, this is found gravely and unforgivably disorienting. Of course, in the eyes of the ‘wet’ Tory establishment I was not only a woman, but ‘that woman’, someone not just of a different sex, but of a different class, a person with an alarming conviction that the values and virtues of middle England should be brought to bear on the problems which the establishment consensus had created. I offended on many counts.
The economic and public expenditure discussions of 1980 repeatedly found their way into the press; decisions came to