The immigration issue itself, as we recognized in discussion in Cabinet after the Commons defeat, had been fuelled by discontent on a whole range of other issues. To understand how this had occurred it is necessary to turn back to economic matters.
REVERSING COURSE
January and February 1972 saw three events which together tried the Government’s resolve and found it wanting — the miners’ strike, the financial problems of Upper Clyde Shipbuilders (UCS) and the unemployment total reaching one million. It is always a shock when unemployment reaches a new high figure, especially one as dramatic as a million. Unemployment is what economists call a lagging indicator. Although we did not know it at the time, it had just peaked and was to begin a downward trend. The rise of unemployment in 1971 was in fact the consequence of Roy Jenkins’ tight fiscal and monetary policies of 1969–70. Since monetary policy had already been significantly eased in 1971, largely as a result of financial decontrol, we could have sat tight and waited for it to work through in lower unemployment from 1972 onwards. In fact, Ted never bought this analysis, and he greatly underestimated the stimulating effects of removing credit controls. He felt that emergency fiscal measures were necessary to boost demand and reduce unemployment. And this conviction influenced his decisions across the board. Ironically, because it led to higher inflation whose main effects were suffered under the following Labour Government, and because inflation destroys jobs rather than preserves them, it ultimately led to higher unemployment as well.
In particular, the approach of the Government to Upper Clyde Shipbuilders flowed from fear of the consequences of higher unemployment. But because it was also seen as caving in to the threats of left-wing militants, it added a new charge against us. When we first discussed the company’s problems in December 1970 the Cabinet gave a fairly robust response. It was agreed that existing Government support for the UCS Group would not be continued, though there was a lifeline: we would continue with credit guarantees so long as the management agreed to close the Clydebank yard and separate out Yarrow Shipbuilders from the rest of the group. Yarrow — an important Royal Navy supplier — seemed salvageable. But by June 1971 the UCS Group was insolvent and its liquidation was announced. There followed a protest strike on Clydeside. In July trade unionists led by militant shop stewards occupied the four UCS shipyards.
There was further discussion in Cabinet in the autumn of 1971, and the Government allowed itself to be sucked into talks with the trade unions, who it was believed might be able to influence the militant shop stewards behind the occupation. The Economic Committee of the Cabinet had agreed that money should be provided to keep open the yards while the liquidator sought a solution, but only on condition that the unions gave credible undertakings of serious negotiations on new working practices. There was strong criticism of this from some of my colleagues, rightly alert to the danger of seeming to give in on the basis of worthless undertakings. But the money was provided and negotiations went ahead.
It was the unemployment prospect rather than the prospects for shipbuilding which by now were undisguisedly foremost. In November Ted Heath affirmed in a Party Political Broadcast that the ‘Government is committed completely and absolutely to expanding the economy and bringing unemployment down’. The fateful one million mark was passed on 20 January 1972. On 24 February at Cabinet we heard that the Economic Committee had agreed the previous day to provide £35 million to keep three of the four yards open. John Davies openly admitted to us that the new group had little chance of making its way commercially and that if the general level of unemployment had been lower and the economy reviving faster, he would not have recommended this course. There was tangible unease. It was pointed out that we could expect a rough reception from our supporters for the decision. But Cabinet endorsed it and at the end of February John announced the decision. It was a small but memorably inglorious episode. I discussed it all privately with Jock Bruce-Gardyne, who was scathing about the decision. He regarded it as a critical, unforgivable U-turn. I was deeply troubled.
But by now we all had other things to worry about. In framing the Industrial Relations Act we had given too much emphasis to achieving the best possible legal framework and not enough to how the attacks on our proposals were to be repelled. The same mentality prevailed as regards the threat which the National Union of Mineworkers (NUM) posed to the Government and the country. We knew, of course, that the miners and the power workers held an almost unbeatable card in pay negotiations, because they could turn off the electricity supply to industry and people. Industrial action by the power workers in December 1970 had been settled after the setting-up of a Court of Inquiry under Lord Wilberforce which recommended a large increase in February the following year. Within the NUM, however, there was a large militant faction at least as interested in bringing down the Conservative Government as in flexing industrial muscle to increase miners’ earnings. The NUM held a strike ballot in October 1970 and narrowly turned down an offer from the National Coal Board (NCB). Fearing unofficial action, Cabinet authorized the NCB to offer a productivity bonus to be paid in mid-1971. The NUM again turned the offer down, following which Derek Ezra, the NCB Chairman, without consulting ministers, offered to pay the bonus at once and without strings attached to productivity. Cabinet accepted this fait accompli. Perhaps John Davies and other ministers continued to monitor events. If they did I heard nothing about it. Nor does what subsequently happened suggest that any monitoring was accompanied by forward thinking.
Only in early December 1971 did the issue of miners’ pay surface at Cabinet, and then in what seemed a fairly casual way. The NUM’s annual conference earlier that year had significantly revised the rules which provided for an official strike, so that now only a 55 per cent, as opposed to a two-thirds, majority was required. The NUM ballot, which was still going on, had, it was thought, resulted in a 59 per cent majority vote for strike action. Yet nobody seemed too worried. We were all reassured that coal stocks were in any case high.
Such complacency proved unwarranted. At the last Cabinet before Christmas Robert Carr confirmed to us that the NUM was indeed calling a national strike to begin on 9 January 1972. There was more trouble over pay in the gas and electricity industries. And we only needed to glance outside to know that winter was closing in, with all that meant for power consumption. But there was no real discussion and we all left for the Christmas break.
There was still some suggestion over Christmas that the strike might not be solid and would be concentrated in the more militant areas. But two days after it began it was all too clear that the action was total. There was then discussion in Cabinet about whether we should use the ‘cooling off’ provisions of the Industrial Relations Act. But it was said to be difficult to satisfy the legal tests involved — ‘cooling off’ orders would only be granted by the courts if there was a serious prospect that they would facilitate a settlement, which in this case was doubtful. The possibility of using the ballot provisions of the Act remained. But there was no particular reason to think that a ballot forced on the NUM would lead to anything other than a continuation of the strike, and perhaps also a hardening of attitudes. It was an acutely uncomfortable demonstration of the fragility of the principal weapons with which the Act had equipped us. Moreover, important parts of the Act had yet to come into force, and we were also aware that there was a good deal of public sympathy with the miners.