The main theme of all her speeches in these years was simple. One day very soon – ‘and it will be a day just like any other Thursday’ – the British electorate would face a simple choice between opposed governing philosophies: on the one hand what she loosely labelled socialism, and others would call social democracy, corporatism, Keynesianism or the mixed economy; on the other ‘what socialists call capitalism and I prefer to call the free economy’.6 When a Labour MP interrupted her in the Commons to ask her what she meant by socialism she was at a loss to reply.7 What in fact she meant was Government support for inefficient industries, punitive taxation, regulation of the labour market, price controls – everything that interfered with the functioning of the free economy. She accepted that many of these evils were in practice unavoidable. Even so, there were in principle, as she put it in a speech to the West German Christian Democrats, ‘only two political philosophies, only two ways of governing a country’, however many party labels might be invented to obscure the fact: the Marxist-socialist way, which put the interest of the state first, and the way of freedom, which put people first.8
Moderate Western forms of democratic socialism as practised by the German Social Democrats or the British Labour party she regarded contemptuously as merely watered down versions of Marxism without the courage of Moscow’s convictions. It fitted her political model perfectly that the Labour Party – under the influence of its increasingly dominant left wing – was becoming ever more openly Marxist.True to Hayek, she believed that socialism was a slippery slope – literally the road to serfdom – which would lead inexorably to Communism if the slide was not halted and reversed. Hence she did not, like other Tory leaders in the past, attribute the failures of the Labour Government merely to incompetence or inefficiency, but to fundamental error, which in her more generous moments she could recognise as well-intentioned. Labour Governments, she believed – and Tory ones when they fell into socialist fallacies – inevitably caused inflation, unemployment and stagnation because socialism was by its very nature simply wrong. It was wrong in practice, since self-evidently it did not work: and the reason it did not work was because it was morally wrong. It was essentially immoral and contrary to everything that she believed was best in human nature.
The Right Approach
Meanwhile, despite her determination not to saddle herself with specific commitments, the opposition had to have some policies. In keeping with the strategy of presenting a moderate face to the electorate, and the necessity of keeping the party outwardly united, Mrs Thatcher was content to leave the official process of policy-making in the hands of the Conservative Research Department fed by a network of backbench committees. Some were more active than others, and the process was nothing like so thorough as Heath’s comprehensive policy exercise in 1965 – 70; but Mrs Thatcher was happy to encourage it as a harmless way of keeping her MPs out of mischief.
Meanwhile, the important policy work was being done on a freelance basis by shadow ministers, particularly Geoffrey Howe and his shadow Treasury team. Some of this Mrs Thatcher followed closely; other ideas appear to have been worked up without her direct knowledge. In between there was a lot of thinking, planning and discussion which she was more or less aware of; but very little of this work found its way into her public pronouncements. Though she was evidently persuaded, for instance, that exchange controls should be abolished as soon as possible after winning office, the proposal never appeared in any policy document. Howe, with Nigel Lawson and others, was working on the practicalities of abolition long before the election, but Mrs Thatcher made no commitment, in public or in private. The battle for her approval had to be undertaken from square one the day after she entered Number Ten.
Likewise Howe and Lawson were working on the theory and practice of measuring and controlling the money supply, laying the foundations of what became the Medium Term Financial Strategy, introduced in 1980; and Lord Cockfield, the Tory party’s long-standing taxation expert, was working with Howe on possible tax reforms, above all the proposed switch of emphasis from direct to indirect taxation. In retrospect the biggest dog that scarcely barked before 1979 was privatisation – or, as it was then known, ‘denationalisation’. In his memoirs Lawson insists that he and others all saw privatisation as ‘an essential plank of our policy right from the start’; but he admits that ‘little detailed work [was] done on the subject in Opposition’, on account of ‘Margaret’s understandable fear of frightening the floating voter’.9
Mrs Thatcher’s nervousness of the subject was demonstrated in March 1978 when Howe floated the suggestion that a Tory Government might sell some of the Government holding in British Petroleum. She firmly denied any such intention.10 Soon afterwards, ironically, the Labour Government started selling BP shares as a way of raising money for the Treasury. In 1979 the Tory manifesto promised to ‘offer to sell back to private ownership the recently nationalised aerospace and shipbuilding concerns, giving their employees the opportunity to purchase shares’; to try to sell shares in the National Freight Corporation; and to open up bus services to private operators. Beyond that it promised only that a Tory Government would ‘interfere less’ with the management of the nationalised industries and set them ‘a clearer financial discipline in which to work’.11 For all Mrs Thatcher’s brave talk of reversing socialism, the thrust of Howe and Lawson’s preparatory work in opposition – as it remained for the first three years in government – was on ways of controlling the cost of the public sector, not on fantasies of eliminating it.
Mrs Thatcher actually allowed only one general statement of Conservative policy to be officially published by the party between February 1975 and the 1979 manifesto. This was The Right Approach, a studiously bland document whose sole purpose was to paper over the evident differences in approach between the two wings of the party before the 1976 conference. Launching The Right Approach at Brighton, Mrs Thatcher stated that the party’s first task would be to ‘put our finances in order. We must live within our means.’12 But she was at pains not to make this prescription sound too draconian or harsh. Moreover with memories of the three-day week still vivid, it was imperative that the Tories should be seen to be able to ‘get on’ with the unions.
There was no subject on which Mrs Thatcher’s public words were at greater variance with her real views. ‘Let me make it absolutely clear’, she promised in 1976, ‘that the next Conservative Government will look forward to discussion and consultation with the trade union movement about the policies that are needed to save our country.’13 In private conversation and off-the-record interviews, by contrast, she made no secret that she regarded the trade-union leaders as full-time Labour politicians who would never have any interest in cooperating with a Tory Government. She left no doubt of her wish to see the overmighty unions confronted; and if she could not in the short term confront them herself, she gave covert support to a variety of ginger groups on the fringe of the Tory party which were not so inhibited. She took a close interest, for instance, in the work of the Institute for the Study of Conflict, founded in 1970 to expose Trotskyist subversion in industry and the Communist links of left-wing Labour MPs; she also gave private encouragement to the National Association for Freedom (later renamed the Freedom Association) founded by Norris McWhirter in 1975.
Yet she remained reluctant to commit herself to the strategy urged on her by John Hoskyns and Norman Strauss in a secret paper entitled Stepping Stones, which argued that everything an incoming Tory Government hoped to do would depend on facing down trade-union opposition. Right up to the end of 1978 the only piece of new legislation she was prepared to sanction was the introduction of postal ballots for union elections. She ruled out legislation on the closed shop, strike ballots or intimidatory picketing, let alone the unions’ legal immunities or the political levy. Had Callaghan gone to the country in October 1978 no trace of Stepping Stones would have found its way into the Tory manifesto. It was only the industrial anarchy of the Labour Government’s last winter which shifted the debate in favour of the Tory hawks and persuaded Mrs Thatcher that it was safe to come off the fence.