I was not involved at the beginning, though I gathered from Keith that he was thinking hard about how to turn his Shadow Cabinet responsibilities for research on policy into constructive channels. In March Keith had won Ted’s approval for the setting-up of a research unit to make comparative studies with other European economies, particularly the so-called ‘social market economy’ as practised in West Germany. Ted had Adam Ridley put on the board of directors of the CPS (Adam acted as his economic adviser from within the Conservative Research Department), but otherwise Keith was left very much to his own devices. Nigel Vinson, a successful entrepreneur with strong free-enterprise convictions, was made responsible for acquiring a home for the Centre, which was found in Wilfred Street, close to Victoria. Simon Webley, who ran the British/North American Research Association, ensured that the Centre’s publications never forgot the realities of industry and commerce amid the economic theories. Later in 1974 Gerry Frost, the present Director, also joined the CPS and established some administrative order out of what might have been a chaos of intellectuals. Other figures who made crucial contributions from time to time were Jock Bruce-Gardyne and Peter Utley. A further reason for the Centre’s success was the dedication of secretaries and cooks who twice a week provided some of the best low-cost meals in London. (Perhaps not always low-cost: Gerry Frost once complained in a memo: ‘We seem to be bent on disproving the dictum that there is no such thing as a free lunch.’) Increasingly, the CPS acted as a focus for a large group of free-market thinkers, by no means all of them Conservative, who sought to change the climate of opinion and achieve wider understanding of the role of the market and the shortcomings of statism.
It was at the end of May 1974 that I first became directly involved with the CPS. Whether Keith ever considered asking any other members of the Shadow Cabinet to join him at the Centre I do not know: if he had they certainly did not accept. His was a risky, exposed position, and the fear of provoking the wrath of Ted and the derision of left-wing commentators was a powerful disincentive. But I jumped at the chance to become Keith’s Vice-Chairman.
The CPS was the least bureaucratic of institutions. It could not properly be called a ‘think tank’ for it had none of the corporate grandeur of the prestigious American foundations which that term evokes. Alfred Sherman has caught the feel of it by saying that it was an ‘animator, agent of change, and political enzyme’. The original proposed social market approach did not prove particularly fruitful and was eventually quietly forgotten, though a pamphlet called Why Britain Needs a Social Market Economy was published. The concept of the social market was — like other terms of foreign provenance too literally translated — bedevilled with problems. How much was it simply a matter of restating the truth that only a successful market economy can sustain social improvement? How much did it signify a market economy with a high degree of ‘social protection’, i.e. regulation? Even its most prominent exponent, West German Chancellor Ludwig Erhard, apparently had his doubts about the way it was being implemented in later years.
What the Centre then developed was the drive to expose the follies and self-defeating consequences of government intervention. It continued to engage the political argument in open debate at the highest intellectual level. The objective was to effect change — change in the climate of opinion and so in the limits of the ‘possible’. In order to do this it had, to employ another of Alfred’s phrases, to ‘think the unthinkable’. It was not long before more than a few feathers began to be ruffled by that approach.
Keith had decided that he would make a series of speeches over the summer and autumn of 1974 in which he would set out the alternative analysis of what had gone wrong and what should be done. The first of these, which was also intended to attract interest among potential fund-raisers, was delivered at Upminster on Saturday 22 June. Alfred was the main draftsman. But as with all Keith’s speeches — except the fateful Edgbaston speech which I shall describe shortly — he circulated endless drafts for comment. All the observations received were carefully considered and the language pared down to remove every surplus word. Keith’s speeches always put rigour of analysis and exactitude of language above style, but taken as a whole they managed to be powerful rhetorical instruments as well.
The Upminster speech infuriated Ted and the Party establishment because Keith lumped in together the mistakes of Conservative and Labour Governments, talking about the ‘thirty years of socialistic fashions’. The last time anyone had been bold enough to speak like this was when Hayek wrote The Road to Serfdom in 1944. Keith pre-empted the criticism which would inevitably be levelled at him by accepting now and later his full share of the blame for what had gone wrong. One after the other he led the sacred cows to the abattoir. He said of the frantic pursuit of economic growth: ‘Growth is welcome, but we just do not know how to accelerate its pace. Perhaps faster growth, like happiness, should not be a prime target but only a by-product of other policies.’
He said bluntly that the public sector had been ‘draining away the wealth created by the private sector’, and challenged the value of public ‘investment’ in tourism and the expansion of the universities. He condemned the socialist vendetta against profits and noted the damage done by rent controls and council housing to labour mobility. Finally — and, in the eyes of the advocates of consensus, unforgivably — he talked about the ‘inherent contradictions [of the]… mixed economy’. It was a short speech but it had a mighty impact, not least because people knew that there was more to come.
A distinctive feature of Keith’s approach was that he went out of his way to avoid suggesting that malice had prompted the excessive state spending, nationalization, regulation, taxation and trade union power which had done so much harm to Britain. On the contrary, he argued, all this had occurred with the best of intentions. Perhaps in this he was over-generous, attributing his own high-mindedness to others. But the patent sincerity and charity which accompanied his devastating criticism of the politics of the last thirty years increased the effect. He returned to the same theme at Leith in August, by which time I was myself more actively involved in the CPS, attending Keith’s meetings, commenting on his suggestions and preparing my own notes and papers on the areas of education and social services which I knew best.
From Keith and Alfred I learned a great deal. I renewed my reading of the seminal works of liberal economics and conservative thought. I also regularly attended lunches at the Institute of Economic Affairs where Ralph Harris, Arthur Seldon, Alan Walters and others — in other words all those who had been right when we in Government had gone so badly wrong — were busy marking out a new non-socialist economic and social path for Britain. I lunched from time to time with Professor Douglas Hague, the economist, who would later act as one of my unofficial economic advisers.
At about this time I also made the acquaintance of a polished and amusing former television producer called Gordon Reece, who was advising the Party on television appearances and who had, it seemed to me, an almost uncanny insight into that medium. In fact, by the eve of the October 1974 general election I had made a significant number of contacts with those on whom I would come to rely so heavily during my years as Party Leader.
The third of Keith’s troika of policy speeches was delivered in Preston on Thursday 5 September (by which time he was Shadow Home Secretary). After some early inconclusive discussion in Shadow Cabinet of Keith’s various ideas, Ted had refused the general economic re-evaluation and discussion which Keith wanted. Keith decided that he was not prepared to be either stifled or ignored, and gave notice that he was intending to make a major speech on economic policy. Ted and most of our colleagues were desperate to prevent this. Geoffrey Howe and I, as the two members of Shadow Cabinet considered most likely to be able to influence Keith, were accordingly dispatched to try to persuade him not to go ahead, or at least to tone down what he intended to say. In any case, Keith showed me an early draft. It was one of the most powerful and persuasive analyses I have ever read. I made no suggestions for changes. Nor, as far as I know, did Geoffrey. The Preston speech must still be considered as one of the very few speeches which have fundamentally affected a political generation’s way of thinking.