Release of MT's private files for 1981 - (2) Reshuffles & budget to remember

Reshuffle (1): January 1981

To hold two reshuffles in a single year was itself a symptom of party divisions.

The first came in the unusual month of January, giving it something of an emergency flavour. John Biffen was moved to Trade from the Chief Secretaryship (where his semi-public criticism of economic policy had cost him the confidence of the Chancellor, as shown by papers released here last year). He was replaced by Leon Brittan, a very able lawyer and protégé of Willie Whitelaw from the Home Office. Norman St John-Stevas was dropped altogether, to be replaced by Francis Pym, John Nott succeeding him at Defence.

We are releasing this year a planning note for the reshuffle by MT's Principal Private Secretary, Clive Whitmore, which sketches two scenarios, turning on the question of whether Pym would be moved or not - presumably the most difficult question. It was difficult to see the move as any other than a demotion for Pym, who stood well at that time in the Parliamentary Party. Unavoidably perhaps he was compensated by being given a lead role in the presentation of government policy, a move strongly endorsed by the party chairman, Lord Thorneycroft, and with the backing of MT's trusted PPS, Ian Gow. This proved a dangerously prominent position for a potential critic to occupy and, predictably enough, he quickly began to drift off-message from MT's point of view: within weeks she picked up on a phrase in a speech of his in Putney (1 Feb), contrasting the buoyant atmosphere in Washington at the time of Reagan's inauguration with the "different, diffident mood" in Britain. Thorneycroft's admission that he was suffering from "rising damp" came shortly after that (11 Feb).

The Whitmore notes suggest that if Pym hadn't been moved, Nott would have stayed put and Biffen would have become leader of the House of Commons, a job he occupied later. Had he stayed at Defence, it is very unlikely Pym would have become Foreign Secretary during the Falklands War.

Norman St John-Stevas was deeply hurt by his dismissal, as his obituaries the week of this release reminded us. He had been one of MT's junior ministers at Education under Heath and had felt the experience gave him some standing with her, if not exactly personal or political closeness. Papers released last year show him perhaps relying overmuch on that connection. MT genuined disliked causing personal pain and certainly understood that Stevas would take it badly. She seems to have at least considered the possibility of a conciliatory gesture: the Whitmore note suggests that she contemplated offering him the Arts portfolio - which he already held and much enjoyed - outside the Cabinet, but if the offer was made, it was rejected. Indeed, the blow to pride would have made it very hard to accept. The indignity of it all was emphasised by a published exchange of letters between them after his resignation when he complained that she had accused him in a TV interview of leaking and linked that to his dismissal; MT denied the interpretation, but the impression lingered. Later in the month, he declined an invitation to meet her when she visited Cambridge, a sad little letter carefully brought to her notice. "Unfortunately I shall be away as I am taking a brief rest after these rather traumatic events in order to recover and be able to do my work" [THCR 6/2/4/17 f3]. He duly emerged as a rebel in the sharp arguments over economic policy during the autumn of 1981, deploring the lost Disraelian legacy of the party, as he saw it.

March 1981: budget

There are important fragments in the Cambridge files on the crucial 1981 budget, adding to the picture we get from official material at Kew.

Alan Walters became MT's No.10 economic adviser at the beginning of Jan 1981. His papers are now at Churchill and are being released in tandem with the Thatcher papers. They include a brief daily diary, in a week-to-a page A4 format volume, which appears to have been written reasonably close to events, sometimes daily, sometimes after a longer gap. There are signs that he read through the diary from time to time and made additions to existing entries, but there is no attempt at concealing that these are later thoughts - he uses different pens. It is a credible contemporary source.

The very first entry, describing his first meeting with MT in the job, begins: "What should she do about Geoffrey. Who could she promote. No one" (6 Jan). That MT was even thinking in terms of possibly removing the Chancellor - that her relationship with him had soured to this degree, that early - is a shock. Later, on 23 Feb, Walters recounts her warning Howe "that he must get the PSBR down or 'you are for the chop'". But like John Hoskyns, at this stage, Walters was something of a sceptic about MT. He doesn’t think she will follow through on Howe. And later he notes: "She is very uncertain of herself. Did not want to discuss budget" (22 Feb), "I tell Paddie [his wife] we must be ready to go".

Walters told MT of the seminar at which the Swiss economist, Jurg Niehans, argued that British monetary policy was too tight and that £M3 was the wrong monetary aggregate to target, "MT very defensive: NO ONE must know about it - especially Bank of England. Why? Frightened of calls for relaxation or sops to the wets. Am rapidly learning the political game - never admit to an error" (8 Jan).

MT defended the budget in an improvised speech the day after (11 Mar), discarding her previously prepared text. At some point later she wrote the following on the first page of the old draft: "Departed from the text in as much as I said something to the following effect. Some Ministers have pestered the Government for more public spending. And when the time came to pay the bill - they had scarpered (couldn't be found)". That neatly summed her view of the politics of it all.  

Later some of the wets kicked themselves for not having resigned over the budget, Gilmour particularly. At this stage they contented themselves with briefing the press about cabinet divisions, a fact reported to MT by Bernard Ingham ("Some very clear briefing is being given"; six cabinet ministers said to be opposed, but only three actually spoke against in cabinet). Pym also got in on the act, "rather deftly" briefing the lobby in favour of an annual pre-budget cabinet discussion of economic policy, also carefully noted by Ingham.

Other ministers fumed silently, or almost silently. At the end of March Lord Carrington wrote her an angry letter - described by MT's Principal Private Secretary as 'really very silly' - complaining that he had been let down by an Ingham briefing, contrasting this shabby treatment with his own restraint in having gone out of his way "to avoid seeing the press or of giving any indication about differences on the budget or anything else".

Published polling was surveyed by Central Office alongside their private surveys. They headlined a Gallup poll for the Daily Telegraph, published 19 March, which showed the budget to be the most unpopular for 30 years. Only 24 per cent thought Howe was going a good job, well below the previous low, achieved by Selwyn Lloyd in 1961, the year before his removal in the "Night of the Long Knives". Some 73 per cent thought the budget unfair, 22 per cent fair (previous low 33 per cent for 1961). By far the most unpopular feature was the increase in petrol duty, of which a cool 87 per cent disapproved (10 per cent in favour). Concessions on fuel were announced during the Finance Bill.

Reshuffle (2): September 1981

There is some material on the second 1981 reshuffle, which took place on Monday 14 September 1981. The centrepiece was a purge of the wets, Gilmour, Soames and Carlisle leaving the government, Prior being shifted to Northern Ireland, Thorneycroft leaving the party chairmanship. Tebbit replaced Prior at Employment, Lawson joined the cabinet as Energy Secretary, Parkinson became chairman with a cabinet seat. Keith Joseph moved from Industry to Education. Pym was promoted, in a small way, swapping the Chancellorship of the Duchy of Lancaster for the more senior Lord Presidency of the Council, though in substance his job remained the same, Leadership of the House of Commons and coordinator of presentation.

This was a long-trailed event, perhaps too long: as early as 10 July Ingham warned MT that the lobby was "increasingly excited" at the prospect, and of course jockeying for position broke out, particularly for the party chairmanship which Thorneycroft was thought certain to be vacating. Although the latter had emerged as a critic of economic policy, it seems likely he was expecting to leave anyway - at 72, he had been chairman for six years, and any successor would need to be in place well before the next election, due in 1983/84. At the party conference MT paid him a warm tribute in her speech, after which he wrote her an equally warm letter of thanks. Heseltine and Tebbit were much talked of as possible replacements, so that Parkinson's appointment was a genuine surprise.

The character of the reshuffle was clear early on: Ian Gow told Alan Clark on 21 July to expect a "major reshuffle in the autumn and that The Lady would be bringing in many of her friends" (p249 Into Politics). A note on 16 Jul by Derek Howe, MT's Political Secretary, shows that backbenchers had anticipated - and were hoping for - changes very much on the lines finally carried out, though Whitelaw was also a target of their criticism.

On 18 Aug MT received some striking advice on this question from Charles Douglas-Home (then foreign editor of The Times), reporting private chats with Whitelaw, Prior, Pym, "J.N." (Nott): "I was left with an overwhelming feeling that you cannot let them go on like this: the whole thrust of the government is crippled - even subverted - by your ministers parading their consciences, frustrations, hysteria, snobberies, masculinity or ambitions before an audience". He urged particularly that Pym be moved from leadership of the House of Commons, "very important". (Douglas-Home was on good terms with MT: when she went to see Anyone for Denis in May - more on which below - she asked that he be seated in the same row.) On the other hand, he advised against a big reshuffle, urging that she face down ministers in one-to-one meetings, a series of summonses to the headmistress's office, an improbable tactic that worked none too well when tried on a later occasion.

Released this year are the documents MT had in front of her when meeting ministers, the discreet "Batting order" on a slip of paper drawn up by Clive Whitmore (already referred to, image above) plus detailed notes of the changes on sheets of A4. The letter 'E' at the top of the "Batting Order" probably refers to a concession she made to Prior, that in going to Northern Ireland he could stay on the cabinet's Economic Strategy committee, which was known as E Committee. Prior was plainly treated with special care: she gave him time to consult colleagues and family before making a final decision; in all they met three times during the day, including an evening drink. It must have been an exhausting day all round. She pulled back at the eleventh hour from some of the middle-order changes - e.g., not sacking Sally Oppenheim, leaving the Welsh Office team in place - but otherwise everything went as intended. Predictably perhaps Ian Gilmour spoke out publicly against his dismissal, in Downing Street itself where he commented memorably: "It does no harm to throw the occasional man overboard, but it does not do much good if you are steering full speed ahead for the rocks. That is what the Government is now doing." Later on the radio he warned that many people still in the Cabinet shared his criticisms of policy.

The big question, of course, was whether Prior would agree to move to Northern Ireland? Prior had allowed it to be publicly known that he didn't want the job, but it is striking that there is no sign of a Plan B in case he refused, such as leaving Atkins in Belfast. The batting order has MT seeing Gilmour first, then Atkins second, clearing the Northern Ireland Office for Prior. In truth she seems to have been confident he would take it. For one thing, as the Walters diary records (14 Spt), Prior's public rejection of the move had cost him the support of Willie Whitelaw, a key adviser in Thatcher reshuffles. "J.P. has been taken to task by Whitelaw for being disloyal and holding a pistol to PM's head. It was wrong, said W.W." And the offer of Northern Ireland was a clever one. MT's notes on the batting order include a reference to the hunger strikes. In the circumstances of 1981 it was a significant post, and also one difficult to turn down without seeming to run away from responsibility. Writing with some satisfaction to her Scottish friends, the Laings, three days later, MT said: "As you know, I have had a busy and difficult time since then. [i.e., since her visit to the Laings' home in Dunphail & to HMQ at Balmoral, 4-6 Spt] I hate "doing" reshuffles but alas they have to be done. In his heart I think Jim really rather wanted to try the Northern Ireland task and like a true patriot he has risen to the occasion and I understand has received a very warm welcome".