The Downing Street Years, 1979-1990

A POLITICAL MALAISE

Whatever long-term political gains might accrue from the successful outcome of the miners’ strike, from the spring of 1985 onwards we faced accumulating political difficulties. Matters of no great importance in themselves, and often of limited interest to the general public, were invested within the hyperactive and incestuous world of Westminster with huge significance. The phenomenon is by no means uniquely British: my American friends tell me frequently of the gulf which separates the priorities of the ‘beltway’ from those outside it. So any democratic politician must be able to distinguish between the two — and recognize the pre-eminence of the second.

That spring the Labour Party started to move ahead of us in the opinion polls. In the local elections in May we lost control of a number of shire counties, mainly to the benefit of the SDP/Liberal Alliance. Francis Pym took the opportunity to launch a new grouping of Conservative MPs critical of my policies. The group was officially known as ‘Centre Forward’. Its failure to come up with any coherent alternative, however, caused it to be dubbed in a Times editorial as ‘Centre Backward’. A number of Francis’s supporters hurried to disclaim any connection with the group and after the initial flurry of publicity it sank into oblivion. But that did not alter the fact that, as the columns of the press showed daily, there were rumblings of dissent within the Parliamentary Party. I could not ignore them.

Opinions frayed further in July — always a bad-tempered time in British politics as MPs become restless to return to their constituencies, or in some cases to their villas in Chianti-shire. On Thursday 4 July we had a spectacularly bad by-election result at Brecon and Radnor, which was won by the Alliance on a swing of almost 16 per cent from the Conservatives: our candidate came in third. It was described — not quite accurately — as the worst Tory defeat since 1962. By-election results always have to be taken seriously, even though they are a poor indication of what would happen at a general election when people know they are voting for a government rather than registering a protest. But the press was full of unattributable criticism of the Government and of me personally which, having about it an unmistakeable whiff of panic, confirmed that the Parliamentary Party had a bad case of the wobbles.

Then a fortnight later the publication of our acceptance of the Top Salary Review Board (TSRB) recommendations provided the occasion for a large back-bench revolt in the House of Commons. What caused the outrage was the large increases for top civil servants. There was no doubt in my mind that we could not retain the right people in vitally important posts in government administration unless their salaries bore at least some comparison with their counterparts in the private sector. The cost of doing this to the public purse was, of course, only a tiny fraction of even a modest increase to large groups of public sector workers. I came to the conclusion that it was best to put the anomaly right at one go. When the Labour Party erupted I reminded them that Jim Callaghan had done the same thing in 1978. That said, we did not handle the issue well. Fear of leaks meant that those entrusted with explaining the rationale of our policy simply did not know about it in time. Even Bernard Ingham had been kept in the dark which, when he raised the matter with me afterwards, I conceded was absurd. In future we handled the TSRB announcements much more carefully. But for this occasion the damage had been done.

Generally, a political malaise spreads because underlying economic conditions are bad or worsening. But this was not the case on this occasion. True, inflation had moved upwards from the low point it had reached after the election and unemployment, always a lagging indicator, remained stubbornly high; but the economy was growing quite fast. It became clear to me that the root of our problems was presentation and therefore personnel. Of course, there is a tendency for all governments — particularly Conservative governments — to blame presentation and not policy for their woes: but in 1985 it really was the case that some ministers were not in the right jobs and could not explain our policies to the people. So there was only one way of changing the image of the Government and that was by changing its members. A reshuffle was required.

THE 1985 RESHUFFLE

My first discussion about the 1985 reshuffle was with Willie Whitelaw and John Wakeham, now Chief Whip, over supper in the flat at No. 10 in late May. Willie and John were both shrewd and party to the gossip which constitutes parliamentary opinion. Each had his own personal likes and dislikes, which I would privately try to discount, but I listened to their advice very carefully. They urged on me a July reshuffle. I could not agree with them. I hated sacking ministers and I could not prevent myself thinking what it meant to them and their families, suddenly losing salary, car and prestige.[61] I used to like to feel that they would have the long summer recess in office before coming back in September to learn the bad news. The trouble was that the press would then spend the whole of that period speculating on who was to stay and who would go. So I eventually agreed to reshuffles at the end of July; but not yet.

Planning a reshuffle is immensely complex. There is never a perfect outcome. It is necessary to get the main decisions about the big offices of state right and then work outward and downward from these. Nor is it possible always to give the best positions to one’s closest supporters. Not only must the Cabinet to some extent reflect the varying views in the Parliamentary Party at a particular time: there are some people that it is better to bring in because they would cause more trouble outside. Peter Walker and, to a lesser extent, Kenneth Clarke are examples, precisely because they fought their corner hard. There is another problem: I generally found that the Left seemed to be best at presentation, the Right at getting the job done — although Norman Tebbit and Cecil Parkinson managed to do both.

I wanted to ensure that the Government’s policies were presented properly between now and the general election. This meant some movement in the most senior three posts — Chancellor, Foreign Secretary and Home Secretary. Nigel Lawson was turning out to be an effective tax-reforming Chancellor. Geoffrey Howe seemed a competent Foreign Secretary; I had not yet taken the full measure of our disagreements. Leon Brittan was the obvious candidate to be moved: however unfairly, he just did not carry conviction with the public. I knew that he would be devastated, but it had to be done.

I asked Leon to come to Chequers on Sunday afternoon 1 September where Willie, John and I were putting the final touches to the decisions. Willie is a good judge of character. He told me that the first thing Leon would ask when I broke the news to him was whether he would keep his order of precedence in the Cabinet list. To my surprise, this was indeed what he asked. Forewarned, I was able to reassure him. I was also able to say — and mean it — that with complex Financial Services legislation coming up to provide a framework of regulation for the City Leon’s talents would be well employed at the Department of Trade and Industry to which I was moving him.

I replaced Leon at the Home Office with Douglas Hurd, who looked more the part, was immensely reassuring to the police, and, though no one could call him a natural media performer, inspired a good deal of confidence in the Parliamentary Party. He had become a harder and wiser man through serving as Secretary of State for Northern Ireland. He also knew the department, having earlier been Leon’s number two there. By and large, it was a successful appointment.

I had to move Leon; but was I right to move him to the DTI? Although the main fault in what lay ahead certainly resided elsewhere, Leon’s attitude on going to his new department carried its own dangers. He was obviously shaken — friends later described him as somewhat demoralized — and determined to make his political mark. As a result he proved oversensitive about his position when the Westland affair blew up. All this made for errors of judgement when facing a ruthless opponent like Michael Heseltine. It turned out that the DTI had even more pitfalls for this civilized but not very streetwise politician than did the Home Office. At the time, however, it seemed that this was a job which would put Leon less in the limelight, while making the most of his formidable intellect and phenomenal industry, which was what I wanted. But even had Leon weathered Westland he would have found himself in difficulties over the question of privatizing BL.

Leon’s position turned out therefore to be the key to the plan for the reshuffle. It might have worked out differently. For I thought long and hard about bringing Cecil Parkinson back to the Cabinet. I missed his dry views and great presentational skills. But my advisers were divided on the merits of doing so and in the end I reluctantly concluded that it was too soon.

There were three departures from the Cabinet. Nigel Lawson had become almost as irritated with Peter Rees as Chief Secretary as Geoffrey Howe had been with John Biffen. Peter was an able tax lawyer and an amiable colleague. I always got on well with him. But I took the view that a Chancellor has the right to select his own subordinates. At Nigel’s request, I replaced Peter with John MacGregor. John had a good financial brain as he had shown as part of the Shadow Treasury team. Although I considered him very much a Ted Heath man, I had been impressed by his acumen and diligence and felt he would do this demanding job well — which he did.

Grey Gowrie — after only a year in Cabinet, as Leader of the House of Lords — to my great regret decided that he wanted to earn more than a Cabinet member who was a peer — and therefore had no MP’s salary — was able to do. He decided to go back into business. He had a fine, highly cultivated mind and great style. I had offered him the job of Secretary of State for Education, planning to keep Keith Joseph, who I knew was thinking of retirement, as minister without portfolio. But that was not to be. Keith agreed to stay at Education a little longer.

I regretted in a different way the loss of Patrick Jenkin. No one could have been more conscientious than Patrick — loyal, kind, selfless. But I could not have the constant haemorrhage of political support which his inability to put over a case in the Department of the Environment caused. I was becoming increasingly worried about what to do with the rating system which would be an even more difficult issue than GLC abolition. So I appointed Ken Baker to succeed Patrick. It was a good decision. Ken turned the tables on the Left, proved a superb communicator of our policies and was the foster-father of the community charge.

I had brought David Young into the Cabinet as minister without portfolio the previous year and I now had him succeed Tom King, who went to be Secretary of State for Northern Ireland. It is difficult to conceive of a greater contrast than David and Tom. I had started off with a wrong view of Tom King, inherited from Opposition. I had thought that he was a man with a taste for detail who, when I made Michael Heseltine Secretary of State for the Environment in 1979, would complement Michael’s very broad-brush approach. I then made the uncomfortable discovery that detail was not at all Tom’s forte, as the way in which we became steadily more enmeshed in almost incomprehensible formulae for rate support grant amply demonstrated. At Employment — in particular on the whole question of trade union political funds where he adopted a half-hearted compromise — he had not shown himself to best effect. Norman Tebbit, his predecessor, was unimpressed; and I felt rightly so. At Northern Ireland, Tom subsequently demonstrated the other side of his character, which was a robust, manly good sense that won even hardened opponents to his point of view, at least as far as is possible in Northern Ireland. Even though from the standpoint of Ulster affairs it was a slightly difficult time to put in a new Secretary of State, with negotiation of the Anglo-Irish Agreement in its final stages, Tom went with good grace and to good effect.

David Young did not claim to understand politics: but he understood how to make things happen. He had revolutionized the working of the Manpower Services Commission (MSC) and at the Department of Employment his schemes for getting the unemployed back into work made a major contribution to our winning the 1987 general election. He shared Keith Joseph’s and my view about how the economy worked and how jobs were created — not by government but by enterprise. He understood the relationship between the price of labour and the number of jobs. And he had that sureness of touch in devising practical projects which make sense in the marketplace that few but successful businessmen ever acquire. The ‘Action for Jobs’ programme was the single most effective economic programme we launched in my term in office. As a general rule I did not bring outsiders directly into Cabinet, feeling that previous experience of this — as with John Davies in Ted Heath’s Government — had not been altogether happy. David Young was an exception and proved eminently worthy of being so.

If the Government’s presentation was to be improved something had to be done about Conservative Central Office. Central Office rightly claims that it is a universal scapegoat for whatever goes wrong. It is blamed by the Government when the Party is restive or lethargic. It is blamed by the Party when the Government seems insensitive or out of touch. But equally there is no doubt that the performance of Central Office is variable and by this point it was causing alarm. John Gummer just did not have the political clout or credibility to rally the troops. I had appointed him as a sort of nightwatchman: but he seemed to have gone to sleep on the job. It was time for a figure of weight and authority to succeed him and provide the required leadership. In many ways, the ideal man seemed to be Norman Tebbit. Norman is one of the bravest men I have ever met. He will never deviate on a point of principle — and those principles are ones which even the least articulate Tory knows he shares.

There were, though, arguments against Norman’s appointment. He was still not well and would indeed have to undergo more painful surgery at a very difficult political time for us. He was not a first-class administrator. I later came to have some vigorous arguments with him. There were also those who said that he and I were too close politically. They argued that what was needed, in John Biffen’s foolish phrase, was a more ‘balanced ticket’, which seemed to me a recipe for paralysis.

But there was no doubt in my mind that Norman was the man for the job, and so it proved. I knew he wanted it, though he never asked me for it. I thought that one day he might succeed me if we won the election, though Party Chairmanships have generally been something of a poisoned chalice. Above all, I knew that the rank and file of the Party would give their all for Norman Tebbit, whom everyone admired for bearing his sufferings with such heroism, never complaining but never concealing either that, whatever politics might bring, it was his own family and Margaret Tebbit’s needs which came first. Norman was better than an inspiration: he was an example. So I appointed him Chairman of the Party; he remained a member of the Cabinet as Chancellor of the Duchy of Lancaster. At least for the moment, party morale soared.

Norman needed a Deputy Chairman who would be able to make those visits to the Party around the country which Norman’s health precluded him from doing. Only someone with a high profile already could do this successfully and I decided that Jeffrey Archer was the right choice. He was the extrovert’s extrovert. He had prodigious energy; he was and remains the most popular speaker the Party has ever had. Unfortunately, as it turned out, Jeffrey’s political judgement did not always match his enormous energy and fund-raising ability: ill-considered remarks got him and the Party into some awkward scrapes, but he always got himself out of them.

I also made quite a large number of changes in the ranks of junior ministers. Two future Cabinet ministers came into the Government — Michael Howard at the DTI and John Major who moved from the Whips’ Office to the DHSS. John Major was certainly not known to be on the right of the Party during his first days as an MP. When as a whip he came to the annual whips’ lunch at Downing Street with the other whips he disagreed with me about the importance of getting taxation down. He argued that there was no evidence that people would rather pay lower taxes than have better social services. I did not treat him or his argument kindly and some people, I later heard, thought that he had ruined his chances of promotion. But in fact I enjoy an argument and when the whips’ office suggested he become a junior minister I gave him the job which I myself had done first, dealing with the complex area of pensions and national insurance. If that did not alert him to the realities of social security and the dependency culture, nothing would.

I felt that the reshuffle had given the Party and the Government a lift. I believed that we had created a stronger administration, good at both policy and presentation, that could weather any storm and see us through to the next election. But it was not to be. ‘The best laid schemes o’ mice an’ men [and women], Gang aft a-gley.’

THE WESTLAND AFFAIR

There are differing views even now of what the Westland affair was really about. At various times Michael Heseltine claimed that it was about Britain’s future as a technologically advanced country, the role of government in industry, Britain’s relationship with Europe and the United States and the proprieties of constitutional government. Of course, these are all interesting points for discussion. But Westland was really about none of these things. Michael Heseltine’s own personality — not mine or any other member of the Government’s — alone provides a kind of explanation for what arose. Michael is one of the most talented people in politics. His talents are selective and cultivated to what always seemed to me the point of exaggeration. But anyone who has seen him on television or on a public platform will quickly accept that they are real enough.

Michael and I are similar in some ways, very different in others. We are ambitious, single-minded and believe in efficiency and results. But whereas with me it is certain political principles that provide a reference point and inner strength, for Michael such things are unnecessary. His own overwhelming belief in himself is sufficient. Shortly before Christmas 1985 when the Westland affair was rapidly getting out of hand he sent me a handwritten letter in which he wrote that he knew I would ‘understand the depth of [his] convictions in this matter’. He was all too correct.

My relations with Michael Heseltine had never been easy. When I became Leader of the Party in 1975 I wanted to move him out of his post as Shadow Industry spokesman where his interventionist instincts were out of place. He agreed to take the Environment portfolio on condition that he did not have to do so in Government. Working with Hugh Rossi — a great expert on housing — Michael presented our policy on the sale of council houses very effectively. After our election victory I offered him the Department of Energy — an important job at the time, since the fall of the Shah was sending oil prices sharply upwards. Hearing this, he said that if that was all, he would prefer to become Secretary of State for the Environment. I bowed to this. There Michael — assisted by Tom King — did not prove particularly successful in curbing local authority spending. He came up with no feasible alternative to the rating system, which was at the root of much of the problem since many voters did not pay local authority rates. But Michael was far less interested in local authority finance than in being ‘Minister for Merseyside’. In that capacity he made a great impression, which was undoubtedly politically helpful to us. Though for the most part his efforts had only ephemeral results, I would not blame him for that: Liverpool has defeated better men than Michael Heseltine. Apart from the sale of council houses and Merseyside, what came to obsess Michael was introducing new management systems into government. This seemed to me a most commendable interest and I encouraged him, arranging at one point a seminar with other ministers to discuss it.

But Michael was clearly restless and when John Nott told me that he did not intend to stand again for the next Parliament, I decided to give Michael his big chance and put him into Defence. There Michael’s strengths and weaknesses were both apparent. He defended our approach to nuclear arms with great panache and inflicted a series of defeats on CND and the Labour Left. He reorganized the MoD, rationalizing its traditional federal structure. Supported by me in the face of departmental obstruction, he brought in Peter Levene to run defence procurement on sound business lines.

These were real achievements. But Michael’s sense of priorities was gravely distorted by his personal ambitions and political obsessions. For while Michael Heseltine was becoming increasingly obsessed with a small West Country helicopter company with a turnover of something over £300 million, far more important issues escaped his interest. In particular, the Nimrod Airborne Early Warning System project which would have to be cancelled by George Younger in December 1986 after £660 million had been spent was running into grave difficulties while Michael Heseltine was at Defence. It would have been inconceivable for Leon Brittan, who was to fare so badly at Michael’s hands, to have let such a situation continue. The Nimrod affair constituted a unique — and uniquely costly — lesson in how not to monitor and manage defence procurement. A minister has to be prepared to work through the details if he is going to come to the right decisions and this Michael was always unwilling to do.

However complex the psychological drives of Michael Heseltine, the basic issue at stake in Westland was clear enough. It was whether the directors and shareholders of a private sector firm, heavily but not exclusively dependent on government orders, should be free to decide its future, or whether government should do so. In this sense an important issue was indeed at stake in Westland. If government manipulates its purchasing power, if it arbitrarily changes the rules under which a particular company’s financial decisions have to be made, and if it then goes on to lobby directly for a particular commercial option — these things are abuses of power. All my reading, thinking and experience has taught me that once the state plays fast and loose with economic freedom, political freedom risks being the next casualty.

The Westland helicopter company was small by international aerospace standards but it was Britain’s only helicopter manufacturer. Unlike the bulk of the aerospace industry it was never nationalized by the Labour Government and was reasonably profitable into the early 1980s. It then began to run into financial trouble. Mr Alan Bristow bid for the company in April 1985 and it was in the light of this that on 30 April Michael Heseltine informed me and other members of the Cabinet’s Overseas and Defence Committee of the Ministry of Defence’s view of Westland. Westland hoped to obtain an order from the Indian Government for helicopters partly financed from our Overseas Aid budget. But they were also looking to the MoD for crucial new orders: from Michael’s minute it was clear that they would look in vain. He made no suggestion at this stage that Westland was of strategic significance to Britain. Indeed, he emphasized that he would not wish to give the company extra orders for which there was no defence need. He added that even with the best will in the world it was difficult to see a single British specialist helicopter company competing in worldwide markets in the longer term.

In mid-June we learned that Mr Bristow was threatening to withdraw his bid unless the Government provided assurances of future MoD orders and agreed to waive its right to repayment of over £40 million of launch aid provided by the DTI for Westland’s latest helicopter. I held a series of meetings with Michael Heseltine, Norman Tebbit, Nigel Lawson and others. At the meeting on Wednesday 19 June Michael suggested a scheme by which we could provide £30 million in aid to the company, but explained that what was important to the defence programme was not the existing Westland company but rather Britain’s capability to service existing helicopters and to develop the EH101 project (see below). In spite of that, we all agreed that it was desirable to avoid Westland going into receivership, which appeared likely if the Bristow bid was withdrawn. In the end we decided that rather than provide aid to the company in the midst of a takeover bid (which in any case might have breached company law), Norman Tebbit should encourage the Bank of England to bring together the main creditors with the object of putting in new management and developing a recovery strategy as an alternative to receivership.

As a result Mr Bristow withdrew his bid and in due course Sir John Cuckney took over as Chairman, bringing his extraordinary talents to the task of securing Westland’s future. Shortly afterwards it emerged that a large privately owned American company was considering making a bid for Westland. The new Westland management opposed this particular bid. Norman Tebbit and Michael Heseltine were also against it. But while noting the general arguments against an American takeover I made it clear even at this stage that a different American offer would have to be judged on its merits.

The situation of Westland was one of the first difficult issues which Leon Brittan had to face when he took over at the DTI in September. On Friday 4 October Leon sent me a thorough assessment of the position. The matter was urgent. It seemed likely that the company would have to go into receivership if a solution could not be found before the end of November. Leon urged me to take up the issue of India’s proposed helicopter order with Rajiv Gandhi when he visited Britain in October. As part of the proposed financial reconstruction of the company the Government was asked to underwrite some helicopter sales. We would also have to decide what to do about the launch aid, which seemed unlikely to be recovered. What would be the most controversial aspect of the package put forward by Sir John Cuckney, however, was the introduction of a new large minority shareholder to raise new capital. No British company was prepared to take such a shareholding. The most likely candidate was the large American company, Sikorsky. Westland were in contact with their European counterparts, but the prospects of a European solution within the timetable did not look good.

It was from a note of a meeting on Wednesday 16 October between Leon Brittan and Michael Heseltine that I first read about Michael Heseltine’s concern that Sikorsky would turn Westland into ‘merely a metal bashing operation’. Michael did not wish to go so far as to oppose Sikorsky’s taking the 29.9 per cent in any circumstances, but he did think it important to make every effort to find an acceptable European shareholder instead. More ominously, he apparently did not think that Sir John Cuckney was the right person to deal with negotiations with the European companies, since the latter looked to their governments for guidance in such matters. Michael argued that the approaches needed to be made at a political level by the Ministry of Defence.

It was now becoming clear that the preference of the Westland board was likely to be for Sikorsky, while Michael Heseltine’s preference was very different. Other things being equal, we would all have preferred a European solution. Since 1978, European governments had agreed to make every effort to meet their needs with helicopters made in Europe. This did not, of course, mean that we were bound to rule out purchases of non-European helicopters, but it did obviously incline us in the European direction.

I still do not understand why anyone later imagined that the Westland board, Leon Brittan and I were all biased against a European option. In fact, the Government bent over backwards to give that option and Michael Heseltine every opportunity to advance their arguments and interests. Yet in the frenzy which followed there was almost no limit to the deviousness and manipulation we were accused of employing to secure Sikorsky its minority holding.

At the end of November the opposition between the Westland board’s views and Michael Heseltine came out into the open. Sikorsky made an offer for a substantial stake in Westland which the Westland board was inclined to accept. But entirely off his own bat Michael now called together a meeting of the National Armaments Directors (NADs) of France, Italy and Germany as well as the United Kingdom to agree a document under which the respective governments would refrain from buying helicopters other than those designed and built in Europe. This was more than a blatant departure from the Government’s policy of maximizing competition to get the best value for money: it also placed Westland in an almost impossible position. There was now an obvious risk that if Westland concluded its deal with Sikorsky it would not be deemed to meet the NADs criterion and would be excluded from all further orders from the four governments, including the UK. It was my view — and Leon Brittan’s — that the Government must not seek to prevent any particular solution to Westland’s problems: it must be for the company to decide what to do. Yet by a stroke of a pen Michael Heseltine was effectively ruling out the company’s preferred option for its future. If Westland were to be able to make a free decision it would be necessary for the Government to overrule the NADs decision. This, of course, meant overruling Michael.

I realized that we might have to do this. Although these were essentially matters for the company, the closer that we looked at the European option the less substantial did it seem. The three European companies concerned — Aérospatiale (France), MBB (West Germany) and Agusta (Italy) — were, as Michael certainly knew, subject to pressure from their own governments. Aérospatiale and Agusta were state-owned and MBB was substantially financed by the West German Government. All the European companies were short of work and promises of more work for Westland from Europe seemed likely to remain just promises. By contrast, Westland had been collaborating with Sikorsky for several decades and had produced a number of models under licence from them. Indeed, most of not just Westland’s but Agusta’s existing helicopter designs were of American origin. Michael Heseltine argued that if Sikorsky took even a minority stake in Westland they would use their position to put pressure on the Ministry of Defence to order American-designed Blackhawk helicopters. In fact, it was widely rumoured that the armed services would have liked the MoD to do just that rather than wait for the European equivalent which was now still only at the stage of feasibility study. My own personal view of all this was of little importance, but I could well understand, as would anyone else conversant with the facts, why Westland had their preference for the American option and how angry they and Sikorsky were with Michael Heseltine’s manoeuvrings.

Nor, by now, was the ‘American’ option American only. Sikorsky had been joined by Fiat in their bid. Not to be outdone, however, Michael Heseltine suddenly revealed that British Aerospace would be ready to join the European consortium, thus making it less ‘foreign’. There were several accounts of how precisely this had occurred: I had my own opinions.

I held two meetings with Michael Heseltine, Leon Brittan, Willie Whitelaw, Geoffrey Howe, Norman Tebbit and Nigel Lawson to discuss Westland on Thursday 5 December and the following day. (British Aerospace entered the field between the first and second meetings.) By the time of the second meeting Michael had totally changed his line from the one he had pursued in April. Suddenly the issue had become whether it was right to allow a significant British defence contractor to come under foreign control. But the real issue was whether the Government should reject the recommendation from the NADs, thus leaving Westland to reach their decision whether to accept the Sikorsky offer or that from the European consortium on straightforward commercial grounds. By the end of the second meeting it was clear that for most of us the argument had been won by Leon Brittan: the NADs decision should be set aside. But Geoffrey, Norman and, of course, Michael strongly dissented and so I decided that a decision should be reached in a formal Cabinet Committee. ‘E’(A)[62] enlarged as appropriate would meet on Monday 9 December.

Over the weekend the pace quickened and tempers frayed. Michael Heseltine blocked a joint MoD and DTI paper on Westland and had it redrafted to emphasize the risks of a Sikorsky bid. Leon Brittan was furious, but allowed it to go forward to ‘E’(A). This was a mistake. Michael said that the French Defence minister also telephoned over the weekend to place unspecified sub-contract work on the ‘Super Puma’ helicopter with Westland provided it was not sold to Sikorsky. Monday morning’s newspapers covered the row between Michael and Leon.

The main argument of substance which Michael Heseltine advanced was that the attitude of the Europeans to a Sikorsky deal would jeopardize future collaboration between Westland and the European defence companies. Some of this work was certainly important. Westland’s collaboration with Agusta on a large helicopter known as the EH101 was due to become the main basis of its business in later years. By contrast, the projected troop-carrying helicopter known as the NH90 was at a very early stage. In fact these fears were exaggerated. Though the NH90 was abandoned in April 1987, the EH101 subsequently went ahead successfully. Neither decision had anything to do with the ownership of Westland.

But the real sleight of hand was Michael’s suggestion that as a result of the recommendations of NADs two projected European battlefield helicopters — an Anglo-Italian model and a Franco-German one — could be rationalized and that the savings in development costs which for the UK might amount to £25 million over the next five years would become available for extra work for Westland. This would enable additional helicopter orders to be placed by the MoD to help fill the gap in production work. Whether or not one thought that this £25 million was in fact likely to be saved or whether this was the best way to spend it seemed almost beside the point. It appeared that for Michael Heseltine the procurement budget of the MoD and arrangements with other governments were to be manipulated in whatever way necessary to secure his own preferred future for this modest helicopter company. What small sense of proportion Michael possessed had vanished entirely.

At the ‘E’(A) meeting on 9 December Sir John Cuckney, who had been invited to attend and speak, brought matters down to earth. Westland needed fundamental reconstruction and an improved product range and it was the view of his board that this was best met by Sikorsky. The longer it took to make the decision the greater would be the pressure on the share price. Westland’s accounts were due to be published on 11 December and the company could not maintain market confidence if publication was delayed much beyond that.

There was a majority at the meeting in favour of overturning the NADs’ recommendation, but instead of terminating the discussion and summing up the feeling of the meeting in favour of that, I gave Michael Heseltine (and Leon Brittan) permission to explore urgently the possibility of developing a European package which the Westland board could finally accept. But if this had not been done and a package which the Westland board could recommend had not been produced by 4 p.m. on Friday 13 December, we would be obliged to reject the NADs recommendation.

In fact, the Westland board did not accept the European bid and chose to recommend that from Sikorsky-Fiat. But Michael had now developed another fixation or perhaps tactic. At the ‘E’(A) meeting it was recognized in discussion that the timetable would allow for another meeting of ministers before the Friday deadline. But there was no decision to call a meeting; and indeed none was necessary. What was the point? Westland’s board knew precisely where they stood: it was up to them and the shareholders. Michael had already started muttering. He urged John Wakeham to get me to call another meeting, saying it was a constitutional necessity under Cabinet government. It so happened that officials had rung round to see whether people would be available if a further meeting was called: but that was very definitely not a summons to a meeting, because no meeting had been arranged. This was of little consequence, however, because from this point on Michael became convinced that he was the victim of a plot in which more and more people seemed to be involved. Obviously, it now involved Cabinet Office civil servants. Who might be revealed as a conspirator next?

The next twist came soon. Without any warning Michael raised the issue of Westland in Cabinet on Thursday 12 December. This provoked a short, ill-tempered discussion, which I cut short on the grounds that we could not discuss the issue without papers. Nor was it on the agenda. The full account of what was said was not circulated, though a summary record should have been sent round in the minutes. Unfortunately, by an oversight this was not done. The Cabinet Secretary noticed the omission himself and rectified it without prompting. However, Michael Heseltine was not satisfied with the brief record, complaining that it did not record his ‘protest’. For Michael the plot was thickening fast.

Michael continued his campaign up to and over Christmas. He lobbied back-benchers. He lobbied the press. He lobbied bankers. He lobbied industrialists. GEC, of which Jim Prior was chairman, mysteriously developed an interest in joining the European consortium. The consortium itself came forward with a new firm bid. Each new development was adduced as a reason to review the Government’s policy. The battle was fought out in the press. There was an increasingly farcical air about the affair, which was making the Government look ridiculous. There was even a completely contrived ‘Libyan scare’. Michael Heseltine suggested that the long-standing involvement of the Libyan Government in Fiat raised security questions about the Sikorsky bid. In fact, Fiat would have owned 14.9 per cent of Westland and Libya owned 14 per cent of Fiat. Fiat already supplied many important components for European defence equipment. The Americans, who were even more sensitive than we were about both security and Libya, seemed quite content for Fiat to be involved with Sikorsky.

I rejected Michael’s argument that we needed now to come down in favour of the European bid. But the public row between Michael and Leon continued over Christmas.

Westland’s board were still extremely anxious about whether they could look forward to British and European government business. In answer to John Cuckney, I wrote to say that ‘as long as Westland continues to carry on business in the UK, the Government will of course continue to regard it as a British and therefore European company and will support it in pursuing British interests in Europe.’ Michael had wanted to include a good deal of other less reassuring material in my reply but I rejected this. Imagine, therefore, my admiration when I found early in the New Year that Lloyds Merchant Bank had sent him a letter which enabled him to make all the points in his published reply about what — in Michael’s view — would happen if Westland chose Sikorsky rather than the bid of the European consortium. It was in response to Michael’s letter that the Solicitor-General wrote to him of ‘material inaccuracies’. The leaking of the Solicitor-General’s letter to the press magnified the Westland crisis and eventually led to Leon Brittan’s resignation; but all that lay in the future.

I now knew from Michael’s behaviour that unless he were checked there were no limits to what he would do to secure his objectives at Westland. Cabinet collective responsibility was being ignored and my own authority as Prime Minister was being publicly flouted. This had to stop.

Westland was placed on the agenda for the Cabinet of Thursday 9 January. At that meeting I began by rehearsing the decisions which had been made by the Government. I then ran over the damaging press comment which there had been in the New Year. I said that if the situation continued, the Government would have no credibility left. I had never seen a clearer demonstration of the damage done to the coherence and standing of a Government when the principle of collective responsibility was ignored. Leon Brittan then Michael Heseltine put their respective cases. After some discussion, I began to sum up by pointing out that the time was approaching when the company and its bankers at a shareholders’ meeting had to decide between the two consortia. It was legally as well as politically important that they should come to their decision without further intervention directly or indirectly by ministers or by other people acting on their behalf. That must be accepted and observed by everyone and there must be no lobbying or briefing directly or indirectly. Because of the risks of misinterpretation during this period of sensitive commercial negotiations and decisions, answers to questions should be cleared inter-departmentally through the Cabinet Office so as to ensure that all answers given were fully consistent with the policy of the Government.

Everyone else accepted this. But Michael Heseltine said that it would be impossible to clear every answer through the Cabinet Office and that although he did not envisage making any new statements he must be able to confirm statements already made and answer questions of fact about procurement requirements without any delay. I suspect that no one present saw this as anything other than a ruse. No one sided with Michael. He was quite isolated. I again summed up, repeating my earlier remarks and adding that consideration should also be given to the preparation under Cabinet Office auspices of an interdepartmentally agreed fact sheet which could be drawn upon as a source of answers to questions. I then emphasized the importance of observing collective responsibility in this and in all matters. At this Michael Heseltine erupted. He claimed that there had been no collective responsibility in the discussion of Westland. He alleged a breakdown in the propriety of Cabinet discussions. He could not accept the decision recorded in my summing up. He must therefore leave the Cabinet. He gathered his papers together and left a Cabinet united against him.

I have learnt that other colleagues at the meeting were stunned by what had happened. I was not. Michael had made his decision and that was that. I already knew whom I wanted to succeed him at Defence: George Younger was precisely the right man for the job, which I knew he wanted.

I called a short break and walked through to the Private Office. Nigel Wicks, my principal private secretary, brought George Younger out; I offered him, and he accepted, the Defence post. I asked my office to telephone Malcolm Rifkind to offer him George’s former post of Scottish Secretary, which he too subsequently accepted. We contacted the Queen to ask her approval of these appointments. Then I returned to Cabinet, continued the business and by the end of the meeting I was able to announce George Younger’s appointment. Within the Cabinet at least all had been settled.

I had no illusion about the storm which would now break. And yet it remained a storm in a teacup, a crisis created from a small issue by a giant ego. Whether Michael Heseltine had come to the Cabinet having decided to resign I do not know. But the speed with which he was able to prepare the twenty-two-minute statement he delivered that afternoon, detailing my alleged misdemeanours, at least suggests that he was well prepared. I knew that, whatever disagreements there might be between me and other members of the Cabinet, they had witnessed for themselves that Michael was in the wrong.

As it happened, the main task of replying to Michael Heseltine fell to Leon Brittan. When the House reassembled on Monday 13 January, at a meeting that morning Willie, Leon, George, the Chief Whip and others discussed with me what should be done. It was decided that Leon, rather than I, would make a statement on Westland in the House that afternoon. It went disastrously wrong. Michael Heseltine trapped Leon with a question about whether any letters from British Aerospace had been received bearing on a meeting which Leon had had with Sir Raymond Lygo, the Chief Executive of British Aerospace. It was suggested (as it transpired quite falsely) that at his meeting with Sir Raymond Lygo Leon had said that British Aerospace’s involvement in the European consortium was against the national interest and that they should withdraw. The letter in question which had arrived at No. 10 and which I saw just before coming over to the House to listen to Leon’s statement had been marked ‘Private and Strictly Confidential’. Leon felt that he had to respect that confidence, but in doing so he used a lawyer’s formulation which opened him to the charge of misleading the House of Commons. He had to return to the House later that night to make an apology. In itself it was a small matter; but in the atmosphere of suspicion and conspiracy fostered by Michael Heseltine — who mysteriously knew all about this confidential missive — it did great harm to Leon’s credibility. I defended his action on the grounds that he had a duty to respect the confidentiality of the letter. The letter itself was subsequently published with the permission of its author, Sir Austin Pearce, but it contributed little to the debate since the day after that Sir Raymond withdrew his allegations as having been based on a misunderstanding. By then, however, Leon’s political position was all but irrecoverable.

But none of this made my life any easier when I had to reply to Neil Kinnock in the debate on Westland on Wednesday 15 January.

My speech was low-key and strictly factual. It demonstrated that we had reached our decisions on Westland in a proper and responsible way. Indeed, as I listed all the meetings of ministers, including Cabinet Committees and Cabinets which had discussed Westland, I half felt that I had been guilty of wasting too much of ministers’ time on an issue of relative unimportance. Although it set out all the facts, my speech was not well received. The press were expecting something more fiery.

Michael Heseltine spoke, criticizing the way in which collective responsibility had been discharged over Westland and quite ignoring the fact that he had walked out of a Cabinet meeting on Westland because he was the only minister unwilling to abide by a Cabinet decision.

Leon summed up for the Government in a speech which I hoped would restore his standing in the House and which seemed a modest success. The press, however, still kept up the pressure on him and there was plenty of criticism of me as well. It seemed, though, that given time we were over the worst. It was not to be. On Thursday 23 January I had to make a difficult statement to the House. It outlined the results of the leak enquiry into the disclosure of the Solicitor-General’s letter of 6 January. The tension was great, speculation at fever pitch. The enquiry concluded that civil servants at the Department of Trade and Industry had acted in good faith in the knowledge that they had the authority of Leon Brittan, their Secretary of State, and cover from my office at No. 10 for proceeding to reveal the contents of Patrick Mayhew’s letter. For their part, Leon Brittan and the DTI believed that they had the agreement of No. 10 to do this. In fact I was not consulted. It is true that, like Leon, I would have liked the fact that Michael Heseltine’s letter was thought by Patrick Mayhew to contain material inaccuracies needing correction to become public knowledge as soon as possible. Sir John Cuckney was to hold a press conference to announce the Westland board’s recommendation to its shareholders that afternoon. But I would not have approved of the leaking of a law officer’s letter as a way of achieving this.

In my statement I had to defend my own integrity, the professional conduct of civil servants who could not answer for themselves and, as far as I could, my embattled Trade and Industry Secretary. I never doubted that as long as the truth was known and believed all would ultimately be well. Yet it is never easy to persuade those who think that they know how government works, but in fact do not, that misunderstandings and errors of judgement do happen, particularly when ministers and civil servants are placed under almost impossible pressure day after day after day, as they were by Michael Heseltine’s antics.

Alas, Leon’s days were numbered. It was a meeting of the ‘22 Committee, not any decision of mine, which sealed his fate. He came to see me on the afternoon of Friday 24 January and told me that he was going to resign. I tried to persuade him not to; I hated to see the better man lose. His departure from the Cabinet meant the loss of one of our best brains and cut short what would have been, in other circumstances, a successful career in British politics. I hoped that he would return to the Government in due course. But I was by now thinking hard about my own position. I had lost two Cabinet ministers and I had no illusions that, as always when the critics sense weakness, there were those in my own Party and Government who would like to take the opportunity of getting rid of me as well.

But I also had staunch friends who rallied round. Not the least of these was President Reagan who telephoned me on Saturday evening at No. 10. He said that he was furious that anyone had the gall to challenge my integrity. He wanted me to know that ‘out here in the colonies’ I had a friend. He urged me to go out ‘and do my darndest’. I appreciated his call. I told him that this was indeed a difficult moment but I intended to put my head down and battle through.

I knew that the big test would come in the House of Commons the following Monday when I was to answer Neil Kinnock once more in an emergency debate on Westland. I spent the whole of Sunday with officials and speech writers. I went through all of the papers relating to the Westland affair from the beginning, clarifying in my own mind what had been said and done, by whom and when. It was time well spent.

Neil Kinnock opened the debate that Monday afternoon with a long-winded and ill-considered speech which certainly did him more harm than it did me. But I knew as I rose to speak that it was my performance which the House was waiting for. Once again, I went over all the details of the leaked letter. It was a noisy occasion and there were plenty of interruptions. But the adrenalin flowed and I gave as good as I got. The speech does not now read as anything exceptional. But it undoubtedly turned the tide. I suspect that Conservative MPs had by now woken up to the terrible damage which had been done to the Party. They would have found in their constituencies that weekend that people were incredulous that something of such little importance could be magnified into an issue which threatened the Government itself. So by the time I spoke what Tory MPs really wanted was leadership, frankness and a touch of humility, all of which I tried to provide. Even Michael Heseltine deemed it expedient to protest his loyalty.

Some of the details raised in Westland continued to fascinate the cognoscenti, but they were a small and shrinking band. Westland shareholders accepted the Sikorsky bid and though there were to be some difficult times for the company the doom-laden consequences for it and Britain’s industrial base about which Michael Heseltine had warned so eloquently never materialized.

Some said I should have sacked Michael weeks before his resignation. Certainly, there is weight in the criticism that I allowed Michael too much leeway, not too little. At a meeting in No. 10 on 18 December, Leon Brittan urged me to sack him and was brutally dismissive of those who on tactical grounds urged the opposite. But it is necessary to remember two things. First, to begin with the issues were not as clear-cut as they became. Although, as I was later to stress to the House of Commons, decisions on defence procurement are for the Cabinet as a whole not just for the Defence Secretary, Michael certainly did have a legitimate role to play in deciding Westland’s future. The problem was that he did not stick to the limits of that role and not only sought to impose his own views on a private company but did so without respect for collective responsibility in the Government. Second, Michael was at that time a popular and powerful figure in the Party. No one survives for long as Prime Minister without a shrewd recognition of political realities and risks. It seemed to me that I should weather the storm best by reacting to events as they occurred, not trying to bring about a crisis, but sticking to the essential issues. In retrospect, I think that this paid off. Michael gained plenty of publicity but did himself great damage by storming out as he did: if he had not gone voluntarily he might have been still more troublesome on the back-benches.

But the most damaging effect of the Westland affair was the fuel which had been poured on the flames of anti-Americanism. And that fire, once lit, proved difficult to extinguish.

The kind of rhetoric which had been used by Michael Heseltine and his supporters about the American industrial ‘threat’ in the helicopter industry certainly touched a raw nerve. The Left always thought the worst of American motives because they saw the United States as the most vigorous, powerful and self-confident force for capitalism. Some on the far right — Enoch Powell with whom I so often agreed on other matters was the most obvious example — distrusted America on narrow nationalistic grounds: and for some in the Tory Party the memories of America’s actions at the time of Suez remained for ever fresh. The more fanatical European federalists were anti-American for other reasons: they saw the strong cultural and sentimental links between Britain and the United States as detracting from our commitment to Europe. This was essentially an anti-Americanism of the political élites. But there was also a popular variety, which was more worrying. The British people by and large did not understand or properly appreciate President Reagan. And by now the emergence of Mr Gorbachev in the Soviet Union, someone with an unusual understanding of how to play on western public opinion and who as a communist would always receive the benefit of the doubt from the left-wing media, provided an apparently favourable contrast with President Reagan. There was a feeling that the Soviets were the model of sweet reason, the United States of recklessness. These were the rich seams which Michael Heseltine opened up in the Westland affair and which others were now to exploit.

BRITISH LEYLAND

On the heels of Westland came the question of privatizing British Leyland (BL).[63] Paul Channon, who had been Trade minister at the DTI and whom I appointed to succeed Leon, was faced within days of taking office with a fresh crisis and one which unlike Westland affected the jobs of many thousands of people and concerned a significant number of Conservative MPs, including ministers.

I had not always seen eye to eye with Norman Tebbit over BL. I felt that the company was continuing to perform badly and wanted to take a tougher line with it. There had certainly been improvements. Productivity was up, days lost by strikes were down, losses were smaller. But the management was still poor. Moreover, the same old bromides were used to justify failure. Next year or the year after was always the time when losses would be turned to profit as long as new investment was provided by the taxpayer today. The only alternative to going along with what BL management wanted was its complete collapse which they rightly thought we could not allow. Forecasts were always being revised downwards — and then not met. UK market share hovered around 17 or 18 per cent in spite of expectations that with its new models BL would have taken 25 per cent. The company’s 1984 results were unsurprisingly much worse than predicted. The Government had to stand behind BL’s large and increasing borrowings under the so-called ‘Varley-Marshall’ assurances.

I wanted to cut back BL’s investment programme and believed that one way of doing this was to buy in engines from Honda — with which BL planned to develop its existing collaboration — rather than for Austin Rover to develop its own new engines. In spite of several attempts during the spring and summer of 1985, I did not get very far. I did not feel that the DTI was sufficiently serious and I knew that BL itself was positively hostile. In such circumstances there is little a prime minister can do — even one so well advised as I was on these matters by my Policy Unit[64] and outside experts.

There must, I felt, be a new management and new Chairman at BL, tighter financial discipline and, above all, a renewed drive for privatization. From October 1985 on Leon Brittan concentrated closely on all these aspects but it was privatization which increasingly took centre stage. Jaguar had already been successfully sold off. Unipart, which handled BL’s spare parts, should have been privatized too, though BL seemed to be reluctant to move ahead with this. But, most important, we had secretly been in contact with General Motors (GM) which was interested in acquiring Land Rover, including Range Rover, Freight Rover (vans) and Leyland Trucks (heavy vehicles). These negotiations too seemed to drag on and on; so I was pleased when Leon sent me on 25 November his proposals for moving ahead with the deal.

Apart from (though having a bearing upon) the price, there were three tricky questions which required attention.

• First, we had to consider the consequences for jobs of the rationalization of the GM (Bedford) and BL (Leyland) truck businesses, which was undoubtedly one of the attractions for GM of their proposal. We thought that up to 3000 jobs might go: but the choice in an industry where there was great overcapacity was not between job losses and no job losses but between some jobs going and a possible collapse of one or other — or conceivably both — truck producers.

• Second, we had to consider the position of the rest of BL’s operations: the volume car business of Austin Rover, which would be left to pay off the accumulated debt, and which GM had no intention themselves of taking on.

• Third, the thorniest issue would be the future control of Land Rover, which GM were determined to acquire but on which public opinion would require safeguards that it should in some sense ‘stay British’.

Suddenly, however, we were facing an embarras de richesses. Before we had fully come to grips with the GM offer, code-named ‘Salton’, the still more intriguingly code-named ‘Maverick’ put in an appearance. At the end of November the Chairman of Ford of Europe came to see Leon Brittan to say that Ford were considering making an offer for Austin Rover and Unipart. The company fully recognized the political sensitivity of this and it probably also understood how much opposition to expect from BL, which would much prefer to stick with its cosier relationship with Honda. So Ford wanted the green light from the Government first. Leon Brittan, Nigel Lawson and I discussed what should be done at a meeting on the afternoon of Wednesday 4 December. There was no doubt in our minds of the political difficulties involved. Although Ford said that they intended to keep the main BL and Ford plants open there would be opposition from MPs fearful of job losses in the areas affected. Ford’s productivity was worse than BL’s, their newest models were not selling well and they were worried about Japanese penetration of their European markets. There might be problems about collaboration with Honda on which BL had come to depend. There were possible criticisms as regards the effect on competition in car manufacture. But for all that the Ford offer was certainly worth pursuing. Some people would say that once successful negotiations had taken place with Ford and GM we would have disposed of Britain’s own car-making capacity at a stroke. But others would welcome the privatization, which would end the drain on the public purse and secure a viable future for the car industry in Britain. So contacts with Ford went ahead.

Whether we could have succeeded in pushing through this ambitious privatization programme in a more favourable political climate must be a matter of speculation. But it could not have come at a worse time. To Paul Channon’s horror — and mine — at the start of February the weekend press was full of details of what was planned. BL had almost certainly leaked it when we were at our most vulnerable as a result of the Westland affair. On Monday 3 February Paul Channon had to confirm these contacts in an emergency statement to the House. All hope of confidential commercial discussion had been destroyed. Irrationality swept through the debate.

Paul had an almost impossible task, which, however, he undertook with great courage and skill. A kind of pseudo-patriotic hysteria swept politics and the media. Ted Heath talked of our responding to the efforts of workers and management at BL by saying, ‘now we will sell you out to the Americans.’ Not even the Cabinet was immune. Norman Fowler, whose constituency was affected by BL, let it be known that he was fighting the deal. When the Norman Fowlers of this world believe that they can afford to rebel, you know that things are bad.

I chaired an extremely difficult meeting of the Cabinet on Thursday 6 February in the course of which it became clear to me that there was no way in which the Ford deal could be put through. In these circumstances it was essential to limit the damage and try to press ahead with the negotiations with GM. Paul Channon told the House that afternoon that in order to end the uncertainty we would not pursue the possibility of the sale of Austin Rover to Ford. It was humiliating and did less than justice to Ford, which had provided so many jobs in Britain. But in politics you have to know when to cut your losses.

The question now was whether, having relieved the immediate pressure, we could still strike a satisfactory deal with GM. I saw Paul after his statement and said that we must push ahead as fast as possible with this and the sale of Unipart. Now the news was out, however, we were faced with a rash of alternative bids. Few of them were serious and all of them were an embarrassment rather than a help at this late stage. Most politically sensitive was the proposal for a management buy-out of Land Rover. GM remained — in our and BL’s view — by far the best option because that company was interested in all, not just some, divisions; because of its financial strength; and because of the access to its distribution network.

On Wednesday 19 February I set up a small ministerial group — what John Biffen would have called a ‘balanced ticket’ — to consider this increasingly complex and difficult matter. The main members were Willie Whitelaw, Nigel Lawson, Norman Tebbit, Peter Walker, John Biffen, Norman Fowler and of course Paul Channon. Paul remained in charge of the detailed negotiations with GM. These carried on well into March. Sometimes it looked as if we could gain a sufficient undertaking from GM as regards control of Land Rover. We had had to harden our position considerably, insisting that GM could have no more than 49 per cent voting strength and that GM’s right to manage the business would be subject to the overriding control of the (British) board.

GM in the end were not prepared to wear this and I do not blame them. They were not willing to proceed with a deal for Leyland Trucks and Freight Rover which excluded Land Rover and so the talks ended. When this was announced by Paul to the House of Commons on Tuesday 25 March, one after another of our back-benchers stood up to say that a great opportunity had been lost and that the GM deal should have gone through. I did not disguise my irritation with them and told several later that they should have spoken up when the going was rough.

This whole sorry episode had harmed not just the Government but Britain. Time and again I had drawn attention to the benefits Britain received as a result of American investment. The idea that Ford was foreign and therefore bad was plainly absurd. Their European headquarters was located in Britain, as was their largest European Research and Development Centre. All of the trucks and most of the tractors that Ford sold in Europe were made in Britain. Ford’s exports from the UK were 40 per cent more by value than those of BL. Would Britain have really been better off if BL had taken over Ford? The notion is ridiculous. But it was not just a matter of Ford. Over half the investment coming into Britain from abroad was from the United States. Both Ford and GM were offended and annoyed by the campaign waged against them. Britain just could not afford to indulge in self-destructive anti-Americanism of this sort. Yet it would continue and was shortly to be raised to fever pitch — not just in the area of industrial policy but that of defence and foreign affairs, where passions ignite more easily.

THE US RAID ON LIBYA

I was at Chequers on Friday 27 December 1985 when I learnt that terrorists had opened fire on passengers waiting on the concourse at the Rome and Vienna Airports, killing seventeen people. It soon became clear that the gunmen were Palestinian terrorists from the Abu Nidal group. They had apparently been trained in the Lebanon, but evidence soon emerged of a Libyan connection. Certainly, the Libyan Government did not stint in its praise for the attacks, describing them as ‘heroic actions’. We and the Americans already had a large amount of shared intelligence about Libya’s support for terrorism. The question was not whether Colonel Gaddafi headed a terrorist state but rather what to do about it. Britain had adopted a much tougher attitude towards Libya than other European countries ever since the murder of WPC Yvonne Fletcher in 1984. But the Americans wanted us and the rest of Europe to go further still by imposing economic sanctions, in particular ending purchases of Libyan oil, 75 per cent of which was bought by the Europeans.

On Tuesday 7 January the United States unilaterally imposed sanctions on Libya with little or no consultation and expected the rest of us to follow. I was not prepared to go along with this. I made it clear in public that I did not believe that economic sanctions against Libya would work. The US State Department was highly displeased and even suggested that Britain was the least helpful of their European allies — something which was quite unjust since we were already applying stiff measures against Libya as regards arms, credits and immigration and had closed down the Libyan ‘People’s Bureau’. One reason why the United States considered Britain particularly difficult was because of my un-European habit of straight talking when I disagreed. When I discussed how to deal with Libya with President Mitterrand in Lille in mid-January he sounded a good deal more hawkish than I was. No doubt the Americans were receiving a similar impression.

In late January, February and March tension between the United States and Libya rose as US naval forces started manoeuvres in an area of the Gulf of Sirte which Libya, in violation of international law and opinion, claimed as its own territorial waters. On Monday 24 March US aircraft were attacked by Libyan missiles fired from the shore. US forces struck back at the Libyan missile sites and sank a Libyan fast patrol boat.

I had to consider what our reaction would be. I was conscious that we had 5,000 British subjects in Libya, while the United States had only 1,000. I was also aware of the possibility of Libyan action against our base in Cyprus. But I told Cabinet that in spite of this we must endorse the right of the United States to maintain freedom of movement in international waters and air space and its right to self-defence under the UN Charter.

Meanwhile, the Americans may have started to see who their true friends were. I learned that the French were expressing reservations about any policy of confrontation with Colonel Gaddafi, arguing that any US military action would win Libya Arab support and urging the need to avoid ‘provocation’.

Then in the early hours of Saturday 5 April a bomb exploded in a discothèque frequented by US servicemen in West Berlin. Two people — one a US soldier — were killed and some 200 others — including 60 Americans — were injured. US intelligence, confirmed by ours, pointed to a Libyan involvement. For the Americans this was the final straw.

Just before 11 p.m. on the night of Tuesday 8 April I received a message from President Reagan. He requested our support for the use of the American F1–11s and support aircraft based in Britain in strikes against Libya, and he asked for an answer by noon the following day. At this stage there was nothing to indicate the precise nature of US objectives and targets. I immediately called in Geoffrey Howe and George Younger to discuss what should be done. At 1 a.m. I sent an interim reply to the President. Its main purpose was to ask him to think further. I emphasized that my basic instinct was to support the United States but I also expressed very considerable anxiety about what was proposed. I wanted more information on the targets in Libya. I was worried that US action might begin a cycle of revenge. I was concerned that there must be the right public justification for the action which was taken, otherwise we might just strengthen Gaddafi’s standing. I was also worried about the implications for British hostages in the Lebanon — and, as events were to turn out, rightly so.

Looking back, I think that this initial response was probably too negative. Certainly the Americans thought so. But it had the practical benefit of making them think through precisely what their objectives were and how they were to justify them, which is certainly one service to be expected of a friend. Two other considerations influenced me. First, I felt that there was an inclination to precipitate action in the United States, which was doubtless mirrored there by a perception of lethargy in Europe. Second, even at this stage I knew that the political cost to me of giving permission for the use of US bases by the United States in their strikes against Libya would be high. The Government’s fortunes were just recovering from the low point of Westland and BL: but that recovery was fragile. I could not take this decision lightly.

Geoffrey, George, officials and I met the following morning at 7.45 at No. 10. A message had been received from the White House saying that the final reply to the original request was not now required by noon. I decided to use the time available by having lists of possible Libyan targets drawn up which would be as narrow as possible. More in hope than anticipation, a list of non-military actions which the US might take was also drawn up. I held a further meeting in the early afternoon, but there was little we could usefully do until I received the President’s reply to my message. I waited with some anxiety throughout the afternoon and evening.

Some time after midnight President Reagan’s response came through on the hot-line. It was a powerful, detailed and not uncritical answer to the points I had raised. President Reagan stressed that the action he planned would not set off a new cycle of revenge: for the cycle of violence began a long time ago, as the story of Gaddafi’s terrorist actions demonstrated. He drew attention to what we knew from intelligence about Libyan direction of terrorist violence. He argued that it was the lack of a firm western response which had encouraged this. He felt that the legal justification for such action was clear. The President emphasized that the US action would be aimed at Gaddafi’s primary headquarters and immediate security forces, rather than the Libyan people or even troop concentrations of the regular armed forces. The strikes would be at limited targets. I was particularly impressed by the President’s sober assessment of the likely effect of what was planned. He wrote:

I read and reread the President’s message. He was clearly determined to go ahead.

The more I considered the matter the clearer the justification for America’s approach to Libya seemed. The phenomenon of the terrorist state which projects violence against its enemies across the globe, using surrogates wherever possible, is one which earlier generations never confronted. The means required to crush this kind of threat to world order and peace are bound to be different too. There was no doubt of Gaddafi’s culpability. Nor when the most powerful country in the free world decided to act against him must there be any doubt where Britain stood. Whatever the cost to me, I knew that the cost to Britain of not backing American action was unthinkable. If the United States was abandoned by its closest ally the American people and their Government would feel bitterly betrayed — and reasonably so. From this point on, my efforts were directed not at trying to hold America back but to giving her Britain’s full support, both as regards use of bases and in justifying its action against what I knew would be a storm of opposition in Britain and Europe. This did not mean, however, that I would go along with every American suggestion. It remained vital that the air strikes be limited to clearly defined targets and that the action as a whole could be justified on grounds of self-defence.

The first task next day was to convince my colleagues of what needed to be done. Geoffrey Howe was against the American action, but once the decision had been made to support it he defended the line staunchly in public. George Younger supported it from the first.

That afternoon I sent a further message to President Reagan. I pledged ‘our unqualified support for action directed against specific Libyan targets demonstrably involved in the conduct and support of terrorist activities’. I pledged support for the use of US aircraft from their bases in the UK, as long as that criterion was met. But I questioned some of the proposed targets and warned that if there ensued more wide-ranging action the Americans should recognize that even those most keen to give them all possible support would then find themselves in a difficult position.

It is all but impossible to keep anything secret in Washington, which was now awash with rumours of US preparations for military action against Libya. This did not make it any easier to maintain a discreet silence about our own attitude. At one point on Friday it seemed that the US was not intending to use the F1 — 11S based in Britain, which would of course have substantially eased our predicament. But later in the evening it appeared that they would indeed wish to do so. Later still I received a message from President Reagan thanking me for our offer of co-operation and confirming that the targets would be closely defined under three categories: those which were directly terrorist related; those having to do with command, control and logistics which were indirectly related; and those relating to defence suppression — that is radar and other equipment which would endanger the incoming American aircraft.

On Saturday morning General Vernon Walters came to see me to explain American intentions in more detail. I began by saying how appalled I was that the gist of my exchanges with President Reagan was by now openly reported in the US press. This meant, of course, that the propaganda battle was even more important. I eagerly welcomed General Walters’s offer to show us in advance the statement from the President which would announce and explain the Libyan raid. He and I also discussed how much intelligence information could be used in public to justify the action. I was always more reluctant to reveal intelligence than were the Americans. But on this occasion it was obviously vital to do so if the general public were to be convinced of the truth of the allegations we were making against Gaddafi. In fact, although I do not believe that anyone’s life was endangered as a result of these revelations, it is certainly true that a fair amount of intelligence dried up. I also discussed with General Walters the President’s latest list of targets which I found reasonably reassuring. I suspect that the General knew precisely which targets the US would hit by the time he came to see me. If so, it was very wise of him not to say what they were. I hoped that he would be even more discreet in the rest of his trip to Paris, Rome, Bonn and Madrid where he was to explain the intelligence on which the US was acting and ask for European support.

Now that America was actually asking the Europeans for assistance which involved a political price they showed themselves in a less than glorious light. Chancellor Kohl apparently told the Americans that the US should not expect the wholehearted support of its European allies and said that everything would turn on whether the action succeeded. The French who just recently had indulged in at least private sabre rattling refused to allow the F1 — 11s to cross French airspace. The Spanish said that the American aircraft could fly over Spain, but only if it was done in a way which would not be noticed. Since this condition could not be met, they had to fly through the Straits of Gibraltar.

Speculation was now rife. We could not confirm or deny our exchanges with the Americans. The Labour and Liberal Parties insisted that we should rule out the use of American bases in the UK for the action which everyone now seemed to expect. It was important to ensure that senior members of the Cabinet backed my decision. At midday on Monday (14 April) I told the Cabinet’s Overseas and Defence Committee what had been happening in recent days. I said that it was clear that the US was justified in acting in self-defence under Article 51 of the UN Treaty. Finally, I stressed that we had to stand by the Americans as they had stood by us over the Falklands.

That afternoon it was confirmed by telephone from Washington that American aircraft would soon take off from their British bases. I received the news shortly before attending a long-standing engagement at the Economist: this was a reception to celebrate either the great Victorian constitutionalist Walter Bagehot or Norman St John Stevas, his contemporary editor, depending on your point of view. As I entered the Economist building off St James’s, Andrew Knight, the magazine’s editor, remarked with some concern how pale I looked. Since my complexion is never ruddy, I must have appeared like Banquo’s ghost. But I wondered how Andrew Knight would have looked if he knew about those American F1 — 11s heading secretly and circuitously towards Tripoli. Nevertheless I praised Bagehot, kissed Norman and returned to No. 10.

Late that night I received a message from President Reagan saying that the US aircraft would shortly strike at five named terrorist-associated targets in Libya. The President confirmed that the text of his televised statement to the American people took into account our advice to stress the element of self-defence to get the legal position right. My own statement to the House of Commons on the raid for the following day was already being drafted.

The American attack was, as we had foreseen, carried out principally by sixteen F1-11s based in the UK, though a number of other aircraft were also used. The attack lasted forty minutes. Libyan missiles and guns were fired but their air defence radars were successfully jammed. The raid was undoubtedly a success, though sadly there were civilian casualties and one aircraft was lost. Television reports, however, concentrated all but exclusively not on the strategic importance of the targets but on weeping mothers and children.

The initial impact on public opinion in Britain, as elsewhere, was even worse than I had feared. Public sympathy for Libyan civilians was mixed with fear of terrorist retaliation by Libya. Conservative Central Office received large numbers of telephoned protests, as did the No. 10 switchboard. Worries were expressed about the fate of British nationals there and the potential for hostage taking. Opposition critics, Conservative back-benchers and Tory newspapers alike were bitterly critical of the fact that I had given permission for the use of the bases. I was depicted as cringing towards the US but callous towards their victims. I reported fully on what had happened to the Cabinet, some of whose members I subsequently learnt thought that they ought to have known about the raid beforehand. Later that afternoon I made my statement to a largely sceptical or hostile House of Commons. President Reagan telephoned me afterwards to fill me in on what had been happening and to wish me well in fighting off the criticism he knew I faced. He said that when in his speech on television the previous night he had referred to the co-operation of European allies, he had had only one country in mind — the United Kingdom.

I was to speak in the emergency debate on the Libyan raid in the House on Wednesday afternoon. It was intellectually and technically the most difficult speech to prepare because it depended heavily on describing the intelligence on Libya’s terrorist activities and we had to marshal the arguments for self-defence in such circumstances. Every word of the speech had to be checked by the relevant intelligence services to see that it was accurate and that it did not place sources at risk. The debate was rank with anti-American prejudice. Neil Kinnock misquoted President Reagan’s televised broadcast; but he did so once too often. I had heard him do this earlier in the day and I had the full text of what the President had actually said given to Cranley Onslow, the Chairman of the ‘22 Committee Executive. Mr Kinnock said:

Cranley Onslow interrupted to point out that the President had said precisely the opposite:

As the Victorians used to say: ‘collapse of stout party’.

My speech steadied the Party and the debate was a success. But there was still a large measure of incomprehension even among our supporters. I went that Friday to Cranley Onslow’s constituency. I felt that people were looking at me strangely, as if I had done something terrible, which given the sensational and biased media coverage you could understand. When I explained to party workers at a reception that our action had been taken to protect the victims of future terrorism, they understood: but the accusation of heartlessness stuck — and it hurt. Yet the Libyan raid was also a turning point; and three direct benefits flowed from it.

First, it turned out to be a more decisive blow against Libyan-sponsored terrorism than I could ever have imagined. We are all too inclined to forget that tyrants rule by force and fear and are kept in check in the same way. There were revenge killings of British hostages organized by Libya, which I bitterly regretted. But the much vaunted Libyan counter-attack did not and could not take place. Gaddafi had not been destroyed but he had been humbled. There was a marked decline in Libyan-sponsored terrorism in succeeding years.

Second, there was a wave of gratitude from the United States for what we had done which is still serving this country well. The Wall Street Journal flatteringly described me as ‘magnificent’. Senators wrote to thank me. In marked contrast to feelings in Britain, our Washington embassy’s switchboard was jammed with congratulatory telephone calls. It was made quite clear by the Administration that Britain’s voice would be accorded special weight in arms control negotiations. The Extradition Treaty, which we regarded as vital in bringing IRA terrorists back from America, was to receive stronger Administration support against filibustering opposition. The fact that so few had stuck by America in her time of trial strengthened the ‘special relationship’, which will always be special because of the cultural and historical links between our two countries, but which had a particular closeness for as long as President Reagan was in the White House.

The third benefit, oddly enough, was domestic, though it was by no means immediate. However unpopular, no one could doubt that our action had been strong and decisive. I had set my course and stuck to it. Ministers and disaffected MPs might mutter; but they were muttering now about leadership they did not like, rather than a failure of leadership. I had faced down the anti-Americanism which threatened to poison our relations with our closest and most powerful ally, and not only survived but emerged with greater authority and influence on the world stage: this the critics could not ignore. And such are the paradoxes of politics that within the year this wave of anti-Americanism had come to the Government’s aid. Labour was emboldened foolishly to stress an anti-American defence policy — which provoked strong reactions from Cap Weinberger and Richard Perle. When the British people were told that ‘if you want us to go, we will go’ they woke up to reality. Labour’s anti-Americanism, in vogue the year before, steadily became more of an albatross and when the election came it helped to sink them.

As the spring of 1986 moved into summer the political climate began slowly, but unmistakeably, to improve.