None of this pleased me. But our inability to resist trade union power, whether exerted through irresponsible wage demands which forced companies into liquidation and workers out of jobs, or through strikes which brought the country to a halt, was now manifest. The Industrial Relations Act itself already seemed hollow: it was soon to be discredited entirely. Like most Conservatives, I was prepared to give at least a chance to a policy which retained some of the objectives we had set out in 1969/70. I was even prepared to go along with a statutory prices and incomes policy, for a time, to try to limit the damage inflicted by the arrogant misuse of trade union power. But I was wrong. State intervention in the economy is not ultimately an answer to over-mighty vested interests: for it soon comes to collude with them.
It is unusual to hold Cabinets on a Monday, and I had arranged a long-standing scientific engagement for Monday 20 March 1972, so I was not present at the Cabinet which discussed the Budget and the new Industry White Paper on that day. Both of them signalled a change in strategy, each complementing the other. The Budget was highly reflationary, comprising large cuts in income tax and purchase tax, increased pensions and social security benefits and extra investment incentives for industry, It was strongly rumoured that Tony Barber and the Treasury were very unhappy with the Budget and that it had been imposed on them by Ted. The fact that the Budget speech presented these measures as designed to help Britain meet the challenge opened up by membership of the EEC in a small way confirms this. It was openly designed to provide a large boost to demand, which it was argued would not involve a rise in inflation, in conditions of high unemployment and idle resources. Monetary policy was mentioned, but only to stress its ‘flexibility’; no numerical targets for monetary growth were set.
On Wednesday 22 March John Davies published his White Paper on Industry and Regional Development, which was the basis for the 1972 Industry Act. Even more than the Budget, this was seen by our supporters and opponents alike as an obvious U-turn. Keith and I and probably others in the Cabinet were extremely unhappy, and some of this found its way into the press. As far as I can recall there had been no prior discussion of the White Paper in Cabinet: it was presented to the Commons in the Budget statement and its preparation within Government was subject to all the secrecy usually applied to Budget measures. From this point on I was conscious that on the Labour benches enmity had been transformed into contempt. I was not in the House at the time, but I read The Times report which sums up the reaction to John Davies’s speech on the Bilclass="underline"
Lame ducks never looked healthier as Mr Davies, Secretary of State for Trade and Industry, opened today’s debate on the Second Reading of the Industry Bill with possibly the most remarkable speech heard in the Commons during the life of the present Government. At the end, the cheers from the Labour benches and the almost total silence from Conservative MPs showed more clearly than anything the Opposition could say how complete had been the Government volte face on intervention in industry and on aid to the regions.
I was not, I know, the only Conservative to squirm on reading stuff like this. Should I have resigned? Perhaps so. But those of us who disliked what was happening had not yet either fully analysed the situation or worked out an alternative approach. Nor, realistically speaking, would my resignation have made a great deal of difference. I was not senior enough for it to be other than the littlest ‘local difficulty’. All the more reason for me to pay tribute to people like Jock Bruce-Gardyne, John Biffen, Nick Ridley and, of course, Enoch Powell who did expose the folly of what was happening in Commons speeches and newspaper articles.
There is also a direct connection between the policies pursued from March 1972 and the very different approach of my own administration later. A brilliant, but little-known, monetary economist called Alan Walters resigned from the CPRS and delivered not only scathing criticism of the Government’s approach but also accurate predictions of where it would lead.[29]
One more blow to the approach we adopted in 1970 had still to falclass="underline" and it was not long in coming. This was the effective destruction of the Industrial Relations Act. It had never been envisaged that the Act would result in individual trade unionists going to gaol. Of course, no legal provisions can be proof against some remote possibility of that happening if troublemakers are intent on martyrdom. It was a long-running dispute between employers and dockers about ‘containerization’ which provided the occasion for this to happen. In March 1972 the National Industrial Relations Court (NIRC) fined the Transport and General Workers’ Union (TGWU) £5,000 for defying an order to grant access to Liverpool Docks. The following month the union was fined £50,000 for contempt on the matter of secondary action at the docks. The TGWU maintained that it was not responsible for the action of its shop stewards, but the NIRC ruled against this in May. Then, out of the blue, the Court of Appeal reversed these judgements and ruled that the TGWU was not responsible, and so the shop stewards themselves were personally liable. This was extremely disturbing, for it opened up the possibility of trade unionists going to jail. The following month three dockers involved in blacking were threatened with arrest for refusing to appear before the NIRC. 35,000 trade unionists were now on strike. At the last moment the Official Solicitor applied to the Court of Appeal to prevent the dockers’ arrest. But then in July another five dockers were jailed for contempt.
The Left were merciless. Ted was shouted down in the House. Sympathetic strikes spread, involving the closure of national newspapers for five days. The TUC called a one-day general strike. On 26 July, however, the House of Lords reversed the Court of Appeal decision and confirmed that unions were accountable for the conduct of their members. The NIRC then released the five dockers.
This was more or less the end of the Industrial Relations Act, though it was not the end of trouble in the docks. A national dock strike ensued and another State of Emergency was declared. This only ended — very much on the dockers’ terms — in August. In September the TUC General Congress rubbed salt into the wound by expelling thirty-two small unions which had refused, against TUC instructions, to de-register under the Act. Having shared to the full the Party’s enthusiasm for the Act, I was appalled.
A U-TURN TOO FAR
In the summer of 1972 the third aspect — after reflation and industrial intervention — of the new economic approach was revealed to us. This was the pursuit of an agreement on prices and incomes through ‘tripartite’ talks with the CBI and the TUC. Although there had been no explicit pay policy, we had been living in a world of ‘norms’ since the autumn of 1970 when the ‘n—1’ was formulated in the hope that there would be deceleration from the ‘going rate’ figure in successive pay rounds. The miners’ settlement had breached that policy spectacularly, but Ted drew the conclusion that we should go further rather than go back. From the summer of 1972 a far more elaborate prices and incomes policy was the aim, and more and more the centre of decision-making moved away from Cabinet and Parliament. I can only, therefore, give a partial account of the way in which matters developed. Cabinet simply received reports from Ted on what policies had effectively been decided elsewhere, though individual ministers became increasingly bogged down in the details of shifting and complicated pay negotiations. This almost obsessive interest in the minutiae of pay awards was matched by a large degree of impotence over the deals finally struck. In fact, the most important result was to distract ministers from the big economic issues and blind us with irrelevant data when we should have been looking ahead to the threats which loomed.