Labour and the Bouncers

Paul Foot

  • Prime Minister: The Conduct of Policy under Harold Wilson and James Callaghan by Bernard Donoughue
    Cape, 198 pp, £10.95, May 1987, ISBN 0 224 02450 7
  • Time and Chance by James Callaghan
    Collins, 584 pp, £15.95, April 1987, ISBN 0 00 216515 5

Bernard Donoughue records something said by James Callaghan, then Prime Minister, just before the 1979 General Election, as the two men were driving home to Downing Street in the official Rover:

You know there are times, perhaps once every thirty years, when there is a sea change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of. I suspect there is now such a sea change – and it is for Mrs Thatcher.

There certainly was such a change and eight years later there is very little sign of a change back again. The sea is still dark blue, and in places black with the despair that comes from extreme poverty and extreme riches, side by side. How have we got here? Why is Mrs Thatcher, a reactionary joke in the mid-Seventies, now one of the most influential figures ever to take the British political stage? Sea changes, after all, as the old sea dog Callaghan knows quite well, don’t just happen.

The causes of the shift to Thatcher are quite plain from both these books, which complement each other politically as much as the authors compliment each other personally. James Callaghan’s ability, his shrewdness and his patience were never in doubt. All of them were shattered by relentless powers against which his talents were quite futile. Listen to Callaghan himself, describing his feelings as he took office as Chancellor of the Exchequer in 1964, after Labour had won an election in peacetime conditions, when no one was out of work: ‘In all the offices I have held I have never experienced anything more frustrating than sitting at the Chancellor’s desk watching our currency reserves gurgle down the plughole day by day and knowing that the drain cannot be stopped ... It was like swimming in a heavy sea. As soon as we emerged from the buffeting of one wave, another would hit us before we could catch our breath.’

On and on went the buffeting, from the very moment he became Chancellor, forcing up the bank rate he had promised to keep down, until ‘Black Wednesday’ in July 1966, when cuts in much-vaunted public spending programmes and the wage freeze Labour had so consistently denounced were rushed in to head off the storm. In 1967, the Chancellor, who had regarded the sterling rate as sacrosanct, devalued the pound, set in train another range of cuts and re-introduced prescription charges. ‘The three years of struggle,’ he concludes, ‘had been of no avail.’ This aimlessness spread from the elected to the electorate: if Labour was being buffeted like a swimmer in the heavy seas of the market, why not try the Tories, who at least profit from the process? Before long, Callaghan was back in office to be buffeted once more, first as Foreign Secretary, then as Prime Minister, when his Policy Unit was staffed by what used to be known as ‘the brightest and the best’, headed by Bernard Donoughue.

Where Callaghan is buffeted, Donoughue is bounced – the notion is his, but where he talks of ‘the Treasury bounce’, ‘bouncers’ might have been more appropriate. The fluctuating money markets bounced Labour out of its opposition to incomes policy in 1975. In 1976, the International Monetary Fund twice bounced the Government into astonishing and unprecedented cuts in all the areas which Labour traditionally held most dear. The conclusions of the extremely moderate Policy Unit Chief were moderately extremist. ‘I should point out that we were not being paranoid in 1976 in our suspicion that the IMF was capable of launching economic “remedies” which could destroy governments (especially governments of the left).’ Donoughue goes on to describe how the IMF, fresh from its battles in Britain, turned its attention to the left-wing government of Mario Soares in Portugal.

The IMF and the multinational corporations it represented were not the only enemies of the elected government. Like Joe Haines, Harold Wilson’s adviser in the first part of the 1974-1979 Labour Government, Bernard Donoughue finds plenty of important people lurking in the background to defend the existing order from any levelling which the Labour Government might threaten. He reveals that in 1977 James Callaghan wrote a minute to the Department of Industry calling for an inquiry into the engineering industry. Back came an answer from the Department that they would not be holding an inquiry. When Donoughue spoke reprovingly to the Secretary of State for Industry, Eric Varley, Varley was shocked: he had asked his advisers to respond to the Prime Minister in exactly the opposite terms.

Despite all this buffeting, bouncing and swimming in high seas, however, Callaghan and Donoughue conclude that the Labour Government of 1974 to 1979 was a resounding success. Both men claim that they beat off the attacks of the speculators, the IMF, the civil servants and all the other top dogs who were ranged against them. The Treasury did not get the statutory wage restraint they wanted – they only got voluntary wage restraint. The IMF did not get the £11 bn cuts they wanted – they only got £8.7 bn.

The lie to the triumphalism of both books is apparent in their descriptions of the last days of the Labour Government; in their failure any longer to convince the unions with their appeals to national sacrifice; in their imbecilic decision not to go to the country in the late autumn of 1978 (a decision which, it seems from both books, was inspired by the desire for just a few more months of the trappings of office); above all, in their passive acceptance of the ‘sea change’ to the right which the apathy, impotence and cynicism of the Labour Government had helped to create and in which that government, in Bernard Donoughue’s words, ‘drifted to disaster’.

The style in which the two books are written matches up to the times they describe. Bernard Donoughue from first page to last is anxious to impress us with the qualities of his colleagues. Robert Armstrong (yes, Robert Armstrong) was ‘warm, complex, sensitive – a marvellous team member’. Robin Butler was ‘the most outstanding civil servant with whom I ever had to deal’ (and, some ninety pages later, ‘enormously able’). The staff supporting Donoughue were all ‘of rare calibre’. Joe Haines was ‘the toughest funniest and most loyal colleague I’ve ever known’. There were also, in the team, ‘three remarkable economists’, including Gavyn Davies, the Policy Unit’s ‘brilliant adviser’; Kevin Stowe was a ‘very able’ Principal Private Secretary, Elizabeth Arnot a ‘bright young education specialist’, John Lyons a ‘very able’ general secretary, and Tom McNally an ‘excellent political secretary’. They were all quite wonderful, brilliant and magnificent, but unfortunately they could not tackle the main issue: ‘There was part of the unemployment problem,’ Donoughue writes, ‘which we did not understand, and the part which we did understand, we could do little about.’

The Donoughue book is bland beyond belief. It is not a patch on Joe Haines’s The Politics of Power, which was written from much the same political position, but with great verve, mingled with a hearty dose of spite. The two men are both of working-class origin, both engaging raconteurs, and close friends. But there is another difference between them apart from writing style – indeed, it may explain the difference in style. When Haines left Downing Street, Harold Wilson offered him a knighthood. Haines refused. Bernard Donoughue is now Lord Donoughue.

If blandness is Donoughue’s problem, Callaghan’s is whimsy:

The Queen held an evening reception aboard Britannia and the Royal Marines beat the retreat, marching and playing as only they can. Once again, I felt my spine tingle as dusk fell and the ceremony drew to an end with the tune ‘Sunset’ blowing softly on the bugles. The Queen’s party was standing on deck in a rather ragged line to watch and, at the close, when the deck lights were switched on, I stepped back with the others so that the assembled crowd could see the Queen more clearly. Dickie Mountbatten seized me by the arm and propelled me forward. ‘Your place is up there,’ he said. It was a kindly gesture, but it was the Queen everyone wanted to see – certainly not me.

The tingle in my spine as I fought my way through innumerable passages just like that was brought about by an overwhelming itch to put the book down and reach for relief to the two diarist-contemporaries of Callaghan, Richard Crossman and Barbara Castle. Their less solid and perhaps even less accurate accounts are made so much more readable by the authors’ (perhaps unconscious) admissions of their own weaknesses. Sunny Jim plods cautiously on through his long and distinguished political career without a moment off the rails. He criticises Reginald Maudling for being ‘too uncritical of his business friends’, but cannot even spare a mention for his business friends – Sir Julian Hodge of the Commercial Bank of Wales, for instance, or the directors of the ill-fated Italian International Bank. Nor is there a single word about the controversy with his predecessor, Harold Wilson, over sinister forces in MI5 and the security services. Wilson was perplexed and angry about what he believed was interference by security officers of the extreme Right. The only serious request he made as he handed over to Callaghan was that there should be a full-scale inquiry into this, and that the right-wing gang, if it existed, should be brought to heel. Callaghan refused. Wilson took his allegations about burglaries of his staff to the Royal Commission on the Press, where they seemed most inappropriate. Why did Callaghan refuse such an inquiry and clear MI5 on the say-so of its own senior officers? Was it perhaps that he too was nervous of undercover inquiries and smears?