Release of MT's private files for 1980 - (1) Economic struggles, political strains

Summary: What is being released?

Alongside her official papers as PM - stored in an office close to the Cabinet Room modestly titled "Confidential Filing" - MT kept a collection of personal documents at her No.10 flat. They included the aide memoires she wrote from time to time (notably on the Falklands War) as well as letters from friends and close advisers, and personal mementoes, such as her extensive collection of menus from lunches with presidents and grand official dinners. By the time she left office she had filled five or six mahogany filing cabinets.

These papers now form the core of her archive at the Churchill Archive Centre in Cambridge. And there is much more besides, because in fact No.10 comprises a whole collection of offices much of whose work has been archived in Cambridge. While key policy documents are handled by the Private Office (and become part of the National Archives in Kew), Cambridge now has the filing from her Political Office (which handled party business and was paid for by the party), the Press Office (including copies of off-the-record Lobby Briefings never previously kept), and the Policy Unit (advising mainly on economic policy). Finally, for the first time, the archive of the PM's Diary Secretary and the No.10 secretariat ("the Garden Room") escaped the shredder, giving us MT's appointment diaries and files for visits and engagements, packed with interest.

All told, these sources give us a far fuller picture of life at No.10 than has been available for previous PMs.

The Cambridge files are being released in tandem with those at Kew, staggered by a month or two. The second tranche covers 1980. Proposed changes to UK legislation mean that the bulk of her files will be released in the next five years, although it is possible that many sensitive documents will be extracted for longer closure.

A selection is being uploaded to coincide with release to the press: progressively more will appear on the site as the year goes on.

There is so much to comment on that it is best handled over multiple pages - you can jump from one to the next at the scroll end.

Economic struggles, political strains: economic background

Politics in 1980 was dominated by the poor state of the economy, with almost every indicator headed firmly in the wrong direction. The whole year was spent in recession (which ran from Q3 1979 to Q2 1981), with manufacturing industry in particular suffering a historic decline in output. Unemployment passed 2 million in August (continuing to rise steeply), while inflation reached 20 per cent (peaking in June) and the money supply easily exceeded the targets set in the Medium-Term Financial Strategy announced in the March budget, ironically vindicating monetarism - or making a mockery of it, according to taste.

If monetary policy seemed loose on some definitions, in another respect policy was exceptionally tight: sterling reached $2.40, imposing a painful squeeze on the trading sector. Business criticism of the government was predictably very heavy.

These circumstances set up multiple strains with party and government, registered again and again in the files about to be released. And it is clear from the files that some of that strain was felt personally by MT. There is evidence of a cheer-up-the-PM campaign in the second half of the year, with supportive letters from businessmen directed to her desk (mitigating the many written from a different point of view) and even a typically understated note of encouragement to his wife from Denis Thatcher, drawing attention to a "real life experience which shows … you're winning". The party whips mounted an unsubtle campaign to get her to take a proper holiday. Tact was not perhaps a particular strength in the machine at this time: forwarding a complaint from the Chief Whip about a disloyal backbencher, the PM’s Parliamentary Private Secretary Ian Gow accidentally sent her a topless picture from The News of the World.

Economic struggles, political strains: Wets vs Dries & the role of No.10

1980 was the year par excellence of "Wets vs Dries": although the terms weren't new, they came to dominate debate as ministers on the left made their dissent semi-public, Ian Gilmour to the fore with a lecture in Cambridge in Feb 1980, which he and others followed up throughout the year with unattributable briefings to journalists like Hugo Young, then of the Sunday Times.

There is a good deal about this revolt of the grandees in the files of Ian Gow, MT's PPS, 1979-83. He and the Chief Whip made sure she was closely informed of what they deemed disloyal statements and behaviour.

Jim Prior, then Employment Secretary, was a particular focus of Gow's attention. The files show that Gow encouraged Conservative backbench dissent against Prior's 1980 Employment Bill on the grounds that it did not go far enough (it banned secondary picketing but not other forms of secondary action). More remarkably still, in doing this Gow seems to have acted in collaboration with another minister - Sir Ian Percival, the Solicitor-General, whose role had been noted by the Chief Whip. This was living dangerously, vividly suggestive of a beleaguered outlook among the PM's immediate entourage. Indeed, Gow reflects at one point in a note to MT on the importance of keeping Prior within the government (better in than out the tent). His own actions might well have had the opposite effect, not least by providing Prior with very damaging grounds on which to resign - active resistance to his policy, which was the government's agreed policy, directed from within No.10. In those circumstances, Gow probably could not have remained in his position and MT would have suffered serious damage.

A coded note in the Hailsham diary, just released, reveals that Prior made a resignation threat during a discussion of strikers' benefits in full cabinet on 20 December 1979 (translated: "M. proposed a form of words which led J.P. to say he would go if that was said"). Hailsham provided strong support to Prior throughout the passage of the Employment Bill, decisively rejecting (with MT's agreement) rebel amendments in the Lords which Gow and Percival had encouraged. (His papers contain warm letters of thanks from Prior and his deputy, Paddy Mayhew.)

Gow's files also do something to bear out the story told by Alan Clark in his diary that he was being considered as a possible replacement PPS for MT if/when he was himself promoted to ministerial office, a mind-boggling what-if …? A note in August sees Gow going out of his way to bring Clark's name to the favourable attention of the PM.

Gow adopted a similar approach to Northern Ireland policy, where he kept open lines of communication to the Official Unionist Party, via its leader Jim Molyneaux and Enoch Powell, and encouraged dissent from the constitutional initiative being promoted by the Northern Ireland Secretary, Humphrey Atkins. He was perilously close to obstructing MT's own policy at this point. Gow left the government altogether when the Anglo-Irish Agreement was signed in November 1985.

There are two deeply unhappy letters in July from one of the wets, Norman St John Stevas, protesting the cabinet's handling of MPs' pay and parliamentary reform. Stevas had been one of her junior ministers when she was Education Secretary under Heath, but perhaps relied overmuch on this connection. Things were smoothed down at the time, but MT sacked him in the surprise reshuffle of January 1981.

Economic struggles, political strains: the "wasted/lost year"

Far less obvious to outsiders than the sparring between Wets and Dries, there were many other strains within the government, some within the inner circle of Thatcher advisers.

In November 1980 Gordon Reece departed Central Office to work for Armand Hammer. Last year's files showed he had struggled to get much meaningful access to MT once she was in office - it is hard really to believe that he was the Svengali-figure he is sometimes portrayed as being. This year's files show him sharply critical of planning by the No.10 press machine ("a complete waste of the Prime Minister's time … up market, and in media terms, useless"). But of course it was Ingham, not Reece, who held sway in these matters.

As often under political stress, issues of 'presentation' became a great focus for argument. Paymaster-General Angus Maude was nominally the minister responsible for these issues, but struggled to make much impact. A note by Richard Ryder of a meeting in Central Office shows that among his critics were the powerful figures of the the Party Chairman, Lord Thorneycroft and Edward Du Cann, chairman of the 1922. He left the government, it seems by mutual agreement, in the January 1981 reshuffle. One aspect of Maude's departure is revealed by an intriguing note he wrote MT at end of year 1980, explaining his difficulty persuading the Treasury to be anything other than utterly downbeat as to immediate economic prospects.

There is material in Ian Gow's files to suggest that No.10 was unhappy with presentation at Central Office. And novelist Michael Dobbs wrote Gow at his request, listing the qualities needed in a party chairman, which were conspicuously not those possessed by the incumbent, Lord Thorneycroft.

Treasury Chief Secretary John Biffen was reckoned a stalwart of the right at this point in his career, an impression largely based on his past as a card-carrying Powellite. But he was conspicuously at odds with other Treasury ministers over the direction of policy in 1980, commenting on the Medium-Term Financial Strategy at a private meeting of backbench Conservative MPs on 9 December: "it is all a foreign tongue to me". Gow passed on the Chancellor's concern at the remark. Biffen was moved from Treasury to Trade in January 1981, less than a month later.

Former Labour cabinet minister Reg Prentice, who had defected to the Conservatives in 1977, showed dissatisfaction at his post as a Minister of State at the DHSS, citing health problems but simultaneously angling for a seat in the Cabinet and a Party Vice-Chairmanship (letter to MT, Dec 16). He left the government three weeks later and never held office again.

The economic situation was discussed again and again in backbench Conservative committees during 1980, monitored by Ian Gow and Treasury special advisor Peter Cropper, who reported back to MT. Much comment from both wings of the party was critical, the left generally demanding reflation, the right often decrying the absence of a serious assault on public expenditure or tougher measures by the Bank of England. A common theme of comments was that the government had wasted its first year. In fact one of MT's closest colleagues, Sir Keith Joseph, insisted on saying very similar things (the "lost year") in public on several occasions, his press officer despairingly reporting the fact to Bernard Ingham. Ingham replied (1 December) that MT was "quite relaxed about it": "I believe she agrees with Sir Keith but for the sake of the Government and confidence in it does not say so". Ingham is an entirely credible source on this point: he knew MT's mind.