That said, I could well understand how much was at stake politically. For example, on Tuesday 21 May I met 350 protesters from Northamptonshire — one from every town and village in the county — who were furious about rate rises of between 30 and 100 per cent. Several factors combined to raise the issue to such political prominence: there was the basic unfairness of a system which taxed a single widow at the same rate as a family with three grown-up working sons; our own rating revaluation in 1973 had led to inordinate rate rises;[31] and, more recently, Labour’s rate support grant settlement had treated the rural shire counties particularly harshly. There was, in short, on the rates issue as on housing, a full-scale middle-class anti-socialist revolt, and it was essential that it be harnessed, not dissipated. This I was determined to do.
The housing policy group had already held its seventh meeting and our proposals were well developed by the time the rates group started work on 10 June. I knew Ted and his advisers wanted a firm promise that we would abolish the rates. But I was loath to make such a pledge until we were clear about what to put in their place. Anyway, if there was to be an autumn election, there was by now little chance of doing more than finding a sustainable line to take in the manifesto.
Meanwhile, throughout that summer of 1974 I received far more publicity than I had ever previously experienced, mainly as a result of our housing policy. Some of this was inadvertent. The interim report of the housing policy group which I circulated to Shadow Cabinet appeared on the front page of The Times on Monday 24 June. On the previous Friday Shadow Cabinet had spent the morning discussing the fourth draft of the manifesto. By now the main lines of my proposed housing policy were agreed. The mortgage rate would be held down to some unspecified level by cutting the composite rate of tax paid by building societies on depositors’ accounts, in other words by subsidy disguised as tax relief. A grant would be given to first-time buyers saving for a deposit, though again no figure was specified. There would be a high-powered inquiry into building societies; this was an idea I modelled on the James Inquiry into teachers’ training. I hoped it might produce a long-term answer to the problem of high mortgage rates and yet save us from an open-ended subsidy.
The final point related to the right of tenants to buy their council houses. Of all our proposals this was to prove the most far-reaching and the most popular. The February 1974 manifesto had offered council tenants the chance to buy their houses, but retained a right of appeal for the council against sale, and had not offered a discount. We all wanted to go further than this; the question was how far. Peter Walker constantly pressed for the ‘Right to Buy’ to be extended to council tenants at the lowest possible prices. My instinct was on the side of caution. It was not that I underrated the benefits of wider property ownership. Rather, I was wary of alienating the already hard-pressed families who had scrimped to buy a house on one of the new private estates at the market price and who had seen the mortgage rate rise and the value of their house fall. These people were the bedrock Conservative voters for whom I felt a natural sympathy. They would, I feared, strongly object to council house tenants who had made none of their sacrifices suddenly receiving what was in effect a large capital sum from the Government. We might end up losing more support than we gained. In retrospect, this argument seems both narrow and unimaginative. And it was. But there was a lot to be said politically for it in 1974 at a time when the value of people’s houses had slumped so catastrophically.
In the event, we went a long way in Peter’s direction. The October 1974 manifesto offered council tenants who had been in their homes for three years or more the right to buy them at a price a third below market value. If the tenant sold again within five years he would surrender part of any capital gain. Also by the time the manifesto reached its final draft we had quantified the help to be given to first-time buyers of private houses and flats. We would contribute £1 for every £2 saved for the deposit up to a given ceiling. (We ducked the question of rent decontrol.)
It was, however, the question of how low a maximum mortgage interest rate we would promise in the manifesto that caused me most trouble. Although, for the reasons I have already outlined, I had convinced myself that some kind of pledge in this area was justified, I was very aware of how the cost to the Exchequer might escalate alarmingly if inflation and interest rates kept on rising. Ted and those around him seemed to entertain no such caution. On Thursday 1 August he summoned me back from Lamberhurst for a meeting at his new house in Wilton Street with Peter Walker, Ian Gilmour and Robert Carr. I was put under great pressure to go beyond the phrase which had by now been agreed for the manifesto of pegging the mortgage rate at a ‘reasonable’ level. Ted and the others wanted a specific figure. I argued strongly against, but in the end I had to concede a pledge that we would hold the rate ‘below 10 per cent’. Beyond that, I did not agree to a specific figure. I hoped it would be the end of the matter.
But when I was in the car on the way from London to Tonbridge on Wednesday 28 August in order to record a Party Political Broadcast the bleeper signalled that I must telephone urgently. Ted apparently wanted a word. Willie Whitelaw answered the phone and it was clear that the two of them, and doubtless others of the inner circle, were meeting. Ted came on the line. He asked me to announce on the PPB the precise figure to which we would hold down mortgages, and to take it down as low as I could. I said I could understand the psychological point about going below 10 per cent. That need could be satisfied by a figure of 9½ per cent, and in all conscience I could not take it down any further. To do so would have a touch of rashness about it. I was already worried about the cost. I did not like this tendency to pull figures out of the air for immediate political impact without proper consideration of where they would lead. So I stuck at 9½ per cent.
It was a similar story on the rates. When we had discussed the subject at our Shadow Cabinet meeting on Friday 21 June I had tried to avoid any firm pledge. I suggested that our line should be one of reform to be established on an all-party basis through a Select Committee. I was the first to admit that this was not likely to set the world on fire. But even more than housing, this was not an area in which precipitate pledges were sensible. Ted would have none of this and said I should think again. The need for something clearer was indeed demonstrated by the Commons debate on the rates a few days later. We called for fundamental reform, some interim rate relief and a provision that water charges should qualify for rate rebate. In my speech I also argued for central government having the power to cap local government spending and then for a general inquiry into the rates. But though I emerged with my reputation as a parliamentarian intact, Tony Crosland, the Environment Secretary, arguing for an increased central government subsidy to local authorities without major reform of the system, was generally thought to have had the better of the debate. His victory was pyrrhic. For increased subsidies led not to lower rates but to higher local spending. Within a year Mr Crosland was announcing sternly: ‘The party is over.’
In July Charles Bellairs at the Conservative Research Department and I worked on a draft rates section for the manifesto. We were still thinking in terms of an inquiry and an interim rate relief scheme. I went along to discuss our proposals at the Shadow Cabinet Steering Committee. I argued for the transfer of teachers’ salaries — the largest item of local spending — from local government onto the Exchequer. Another possibility I raised was the replacement of rates with a system of block grants, with local authorities retaining discretion over spending but within a total set by central government. Neither of these possibilities was particularly attractive. But at least discussion revealed to those present that ‘doing something’ about the rates was a very different matter from knowing what to do.