Conservative Party a sense of exasperation with the leadership was palpable.
I became prime minister because Margaret Thatcher fell. And her downfall was precipitated by two items on this list of troubles: the Poll Tax and Europe. I believe she could have survived either on its own. When they came together, she was trapped.
From the Falklands War onwards Margaret Thatcher had enjoyed an extraordinary dominance in the Conservative Party. Like all prime ministers, she had members of her party who disliked her style and some of her policies, but their opposition was muted by her three successive general election victories against a weak and disoriented Labour Party. Their unease had been a side-issue in the heyday of Tory triumph and Labour woe. But from 1989, as trouble piled upon trouble, their reservations seemed more valid and their numbers grew. In Parliament, they were joined by Members from the loyalist centre-right of the party – worried by the impact of the Poll Tax – and by colleagues uneasy at the Prime Minister’s stridency over European policy. This combination of concerns was the crucial change. Although many still venerated ‘the Iron Lady’, there was widespread dismay that, too often, she was wrongheaded, and a growing belief that her best days were over. These doubts about policy were reinforced by a dire opinion-poll position that suggested many Conservative seats would be lost at the forthcoming general election. Members’ instinct for self-preservation added to the sea of troubles facing the Prime Minister.
But, as the affection for her was strong, opposition tended to be more in sorrow than in anger. ‘If only she would listen,’ was the constant refrain. ‘Why doesn’t she soften?’ Had we but known it, this was the voice of a parliamentary party that did not like its unpopularity and was looking for a change. This sentiment did not make Margaret Thatcher’s removal a certainty, but it made the once unthinkable much more possible.
The signs had been there for some time. The Prime Minister had overwhelmingly defeated Sir Anthony Meyer’s token challenge for the leadership of the party in late 1989, but amidst the cheering most of us missed the significance of the result. A long-serving, hugely successful leader with three successive election victories behind her had been challenged – and sixty Conservative MPs had declined to support her.
Margaret’s campaign had been organised by Ian Gow, Richard Ryder and Tristan Garel-Jones. After it was over Tristan told me that, apart from the sixty malcontents, a further hundred members of the parliamentary party had needed to be ‘worked on’ to keep them on-side. I suggested to Tristan that he should see the Prime Minister to ensure that she knew this. He delivered his message on the Sunday evening following her victory. In his usual colourful style, he told the Prime Minister that pro-European Members were deeply unhappy with the ‘tone’ of her policy, and that dissatisfaction with the Poll Tax was everywhere. ‘Unless you’re careful,’ he warned her, ‘they’ll be back. Hezzie [Michael Heseltine] will run, and they’ll kill you.’ It was vintage Tristan. ‘It will be the daylight assassination of the Prime Minister.’
Margaret Thatcher did not react against the messenger, as she sometimes did. She defended the Poll Tax, and lambasted the Europeans. Tristan simply repeated the message. ‘I’m only the Deputy Chief Whip,’ he said as he left. ‘But I’m telling you – the daylight assassination of the PM.’
I was more aware of her danger in retrospect than at the time. As a former whip, I kept my network across the party, and I heard that there were rumbles. In fact it was worse than that: grumbling was maturing into strong opposition. As a new chancellor I had my hands full with the onset of recession and my first budget, and was having trouble trying to control public expenditure. We were new members of the ERM, and had to prepare for the economic impact of the Iraqi invasion of Kuwait. With these Treasury preoccupations, I was insulated from the scale of the growing distress in the Tea Room. Despite the political gossip that reached me, the Prime Minister had been so powerful for so long that I could not imagine her removal. I discounted much of what I heard as political froth.
The government had just announced its legislative programme in the Queen’s Speech, and the Prime Minister, with the coming general election in mind, was in no doubt that she would be in office to carry it out. She too was preoccupied with the imminence of a war in the Gulf. Talk of a challenge to her leadership, at fever-pitch in the spring, had died away in May after Labour’s opinion poll lead fell back, and Michael Heseltine had appeared to resolve the matter by announcing that he would not challenge her ‘this side of an election’. Anyone who did so, he said, would fail.
I supported Margaret Thatcher as prime minister. I was pleased to serve in her government and I defended her with conviction when criticisms were brought to me. Still, in private, I was uneasy; uneasy at Margaret’s increasingly autocratic approach. Her warrior characteristics were profoundly un-Conservative. In public, her utter certainties were off-putting. In private she was capable of changing her mind with bewildering speed until she had worked up her public position. Often this way of working served her well. But not always. There were occasions when arguments were put to her which were extremely good, but which ran into the slammed door of a closed mind. Too often, she conducted government by gut instinct; conviction, some said admiringly, but at any rate without mature, detached examination of the issues. She lost her political agility; the Poll Tax and crude anti-Europeanism were the policies that resulted.
It was the Poll Tax which sowed the seeds of her destruction. The theory of the tax was impeccable: everyone benefited from local government services, so everyone should contribute towards the cost of them. This had never been the case with domestic rates, where only a minority paid for local government. High-spending local authorities were insulated at the ballot box from the wrath of the few who had to pay by the many who did not. By giving every resident a financial stake in local government, it was hoped that voters would compel rotten boroughs to clean up their act.
Ken Baker, as Environment Secretary, had promised that the Poll Tax would cost many residents less than the rates. But as councils set their Community Charge levels, it became evident that average bills were going to be far higher than before. It was an extremely painful prospect. Tory MPs were coming back from their constituencies in despair, and even strong supporters of the reform were getting edgy.
The twists and turns as we dealt with the ravages of the tax dealt a body-blow to our reputation for efficiency. Some £1.5 billion of public money was lost setting up, administering and replacing the Poll Tax; the total transfer costs to the national taxpayer reached over £20 billion by 1993–94. The Poll Tax also left local government dependent on the Exchequer for 80 per cent of its finance. It was a wretched tale, and one in which, late in the day, I had a walk-on part. Eventually, although I played no glorious role in opposing the introduction of the tax, it was brought to an end under my leadership.
Why did Margaret press ahead with what turned out to be an act of political suicide? Even lemmings have their reasons. So did she, and they were compelling. In the outcry that followed the introduction of the Poll Tax, the unfairness of the old rating system was forgotten. It was riddled with anomalies: the elderly widow paying the same as four wage-earners next door was a much-quoted example. Conservative Members had bulging postbags denouncing the rates, and motions were tabled at every Conservative Party conference demanding their abolition.
Revaluation of rateable liability – which pushed up bills for millions – fanned the embers of this resentment into flame. It came first in Scotland in 1985, and brought public and political outcry, coupled with demands that the rating system should be abolished forthwith. In England, where the system was different, the impact of revaluation was likely to be even greater. The atmosphere of barely suppressed panic left no doubt that something had to be done, and quickly; fear of the impact of rating revaluation turned the Poll Tax from the inconceivable to the unavoidable.
So, in May 1985, when I was just a junior Treasury whip, Cabinet endorsed proposals from Kenneth Baker to replace the rates with a flat-level Poll Tax; Nigel Lawson dissented and was overruled. Ken Baker was a red-hot presenter of
