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By Root 2646 0

1982–3, below the totals derived from the March white paper. The result was one of the bitterest arguments on the economy, or any subject, that I can ever recall taking place at Cabinet during my premiership. The ‘wets’, of course, argued their case with redoubled vigour, strengthened by the lack of any evidence that our policies had turned things round. Some argued for extra public spending and borrowing as a better route to recovery than tax cuts. There was talk of a pay freeze. Even those, like John Nott, who had been known for their views on sound finance, attacked Geoffrey Howe’s proposals as unnecessarily harsh. All at once the whole strategy was at issue. It was as if tempers suddenly broke. I too became extremely angry. I had thought that we could rely on these people when the crunch came. I just was not interested in this kind of creative accounting that enabled fair-weather monetarists to justify an about-turn. Others, though, were as loyal as ever, notably Willie, Keith and, of course, Geoffrey himself who was a tower of strength at this time. And indeed it was their loyalty that saw us through.

I had said at the beginning of the government ‘give me six strong men and true, and I will get through.’ Very rarely did I have as many as six. So I responded vigorously in defence of the Chancellor. I was prepared to have a further paper on the issue of tax cuts versus public spending. But I warned of the effects on international confidence of public expenditure increases or any departure from the MTFS. I was determined that the strategy should continue. But when I closed the meeting I knew that there were too many in Cabinet who did not share that view. Moreover, after what had been said it would be difficult for this group of ministers to act as a team again.

Much of this bitter disagreement found its way into the press — and not simply in reports of what had been said in Cabinet derived from nonattributable ministerial comments, but also in the form of scarcely coded public speeches and statements. There were particularly embarrassing comments from Francis Pym and Peter Thorneycroft, who between them were meant to be responsible for the public presentation of our policies. At Francis’s suggestion I had authorized the recreation of the ‘Liaison Committee’, at which ministers and Central Office were supposed to work together to achieve a coherent message. In August it became clear that these arrangements were actually being used to undermine the strategy.

Geoffrey Howe had said in the House of Commons that the CBI’s latest Industrial Trends Survey provided evidence that we were now at the end of the recession — a remark which may have been slightly imprudent, but which was strictly true. The following weekend Francis Pym in the course of a lengthy speech observed: ‘there are few signs yet of when an upturn will occur. And that recovery when it comes in due course may be slower and less pronounced than in the past.’ This forecast would have been bold even from an economist; coming from Francis it verged on the visionary. For good measure he added that ‘in our industrial policy we must work as partners with industry and with the trade unions to identify the key sectors of the economy and the most promising export markets’ — the kind of neo-corporatist incantation which signified total rejection of the economic strategy. Even Peter Thorneycroft, who had been a superb chairman of the Party in Opposition, joined the ‘wet’ chorus, describing himself as suffering from ‘rising damp’ and saying that ‘there [was] no great sign of [the economy] picking up.’ Given that these comments came from the two men in charge of presenting government policy, they were extremely damaging and easily seen (in that inevitable metaphor) as ‘the tip of the iceberg’.

Trade union reform was another subject of Cabinet disagreement. We had issued a green paper on trade union immunities on which comments were to be received by the end of June 1981. When they came in, these showed a desire among businessmen for further radical action to bring trade