Mrs Thatcher’s Instincts

Barbara Wootton

  • Mrs Thatcher’s First Year by Hugh Stephenson
    Jill Norman, 128 pp, £6.50, June 1980, ISBN 0 906908 16 7
  • A House Divided by David Steel
    Weidenfeld, 200 pp, £6.50, June 1980, ISBN 0 297 77764 5

What have Margaret Thatcher and David Steel in common, apart from holding the leadership of their respective political parties? Both are highly intelligent and educated persons with academic qualifications – Thatcher in chemistry and law, Steel in arts and law. Both have been called to the bar, and for both politics has been the main preoccupation of their adult lives. Thatcher entered Parliament at the General Election of 1959 at the age of 34. Steel followed six years later at a by-election three days before his 27th birthday. Both are married: Thatcher has one son and daughter (twins) and Steel also has one son and one daughter.

These, however, are two very different books about two very different persons by two different authors. As editor of the Times Business News, Hugh Stephenson has clearly had access to information in government circles not accessible to the man in the street, and he has produced a narrative of remarkable objectivity and also of compelling readability. He begins with a vivid picture of our new PM embarking on a policy of ‘Tory Radicalism’ from the moment she entered No 10 in the firm conviction that for years the British people had been overgoverned, overtaxed, deprived of initiative, and threatened by the ever-growing power of the trade unions.

This policy was almost as foreign to the traditions of her own party as it was to her opponents. Hitherto, Stephenson says, she had ‘never shown signs of being a particularly original thinker’ and on ‘economic policy she had at that stage no views as all’. However, this deficiency she quickly made good by swallowing whole the monetarist doctrine and the fanatical devotion to the free market economy to which Keith Joseph had become converted. Under his guidance her economic studies seem to have been confined to the publications of the Institute of Economic Affairs and the teachings of Milton Friedman and Friedrich Hayek; but she had not ‘acquired the critical capacity to apply tests of commonsense when it came to putting ideas into action’. It may be tempting to think that, had her university course included economics in place of chemistry, she might have clung less obstinately to these doctrines: at least she would have heard alternatives persuasively argued (she was ten years old when the publication of Keynes’s General Theory of Employment created a revolution in university economics which endured for many years thereafter). However, since the old saying that whenever two or three economists are gathered together, there will be three or four opinions, holds good today more perhaps than ever before, Joseph’s influence might still have prevailed, particularly as, in Stephenson’s judgment, ‘he provided for her an intellectual framework that fitted her political instincts perfectly.’

One paradoxical effect of the new Tory Radicalism was the ‘culture shock’ that it inflicted on the Civil Service. Accustomed as the Service is ‘to think of itself as the guardian and trustee of national continuity’, ‘the arrival of Margaret Thatcher’s Government in the corridors of Whitehall in May 1979 was the biggest jolt that the Civil Service had experienced in living memory.’ Having for years tried to contain the radicalism of the Left, Whitehall now had to stand on its head in order to envisage the Conservatives as the radicals, while Labour was ‘manifesting itself as the party of the status quo’; and to make matters worse, the PM, in enforcing her policy, set about playing the game between politicians and officials according to a strict construction of the Whitehall rules, rather than as parodied in the BBC series Yes, Minister.

Economic naivety soon showed itself in the Government’s first Budget, which Stephenson finds to have been increasingly regarded as a serious mistake. In order to keep election promises, the government gave away sums estimated to amount in a full year to £4,610 million in income-tax reductions. In conflict apparently with the original plans of her Chancellor, Mrs Thatcher insisted that there must be some reduction of the basic rate, so that every taxpayer would get something. Nevertheless only £730 million of the total reductions went to the 41 per cent of taxpayers whose incomes did not exceed £4,000 per annum, whereas the 7 per cent of persons with over £10,000 per annum got £1,560 million (£690 million of this going to the 1 per cent with £20,000 or more per annum).

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