The Downing Street Years, 1979-1990

TO THE PALACE

We knew we had won by the early hours of Friday 4 May, but it was not until the afternoon that we gained the clear majority of seats we needed — 44 as it eventually turned out. The Conservative Party would form the next government.

There were many friends with me as we waited for the results to come in during those long hours in Conservative Central Office. But I can remember an odd sense of loneliness as well as anticipation when I received the telephone call which summoned me to the Palace. I was anxious about getting the details of procedure and protocol right; it is extraordinary how on really important occasions one’s mind often focuses on what in the cold light of day seem to be mere trivia. But I was haunted by tales of embarrassing episodes as one prime minister left and his successor entered office: Ted Heath’s departure from No. 10 was a case in point. I now could not help feeling sorry for James Callaghan, who just a little earlier had conceded victory in a short speech, both dignified and generous. Whatever our past and indeed future disagreements, I believed him to be a patriot with the interests of Britain at heart, whose worst tribulations had been inflicted by his own party.

At about 2.45 p.m. the call came. I walked out of Central Office through a crowd of supporters and into the waiting car, which drove Denis and me to the Palace on my last journey as Leader of the Opposition.

The Audience at which one receives the Queen’s authority to form a government comes to most prime ministers only once in a lifetime. The authority is unbroken when a sitting prime minister wins an election, and so it never had to be renewed throughout the years I was in office. All audiences with the Queen take place in strict confidence — a confidentiality which is vital to the working of both government and constitution. I was to have such audiences with Her Majesty once a week, usually on a Tuesday, when she was in London and sometimes elsewhere when the royal family were at Windsor or Balmoral.

Perhaps it is permissible to make just two points about these meetings. Anyone who imagines that they are a mere formality or confined to social niceties is quite wrong; they are quietly businesslike and Her Majesty brings to bear a formidable grasp of current issues and breadth of experience. And, although the press could not resist the temptation to suggest disputes between the Palace and Downing Street, especially on Commonwealth affairs, I always found the Queen’s attitude towards the work of the government absolutely correct.

Of course, under the circumstances, stories of clashes between ‘two powerful women’ were just too good not to make up. In general, more nonsense was written about the so-called ‘feminine factor’ during my time in office than about almost anything else. I was always asked how it felt to be a woman prime minister. I would reply: ‘I don’t know: I’ve never experienced the alternative.’

After the audience, Sir Philip Moore, the Queen’s Secretary, took me to his office down what are called the ‘the Prime Minister’s stairs’. I found my new principal private secretary, Ken Stowe, waiting there, ready to accompany me to Downing Street. Ken had come to the Palace with the outgoing prime minister, James Callaghan, barely an hour before. The civil service already knew a good deal about our policies because they carefully scrutinize an Opposition’s manifesto with a view to the hasty preparation of a new administration’s legislative programme. Of course, as I quickly learnt, some senior civil servants would need more than a conscientious reading of our manifesto and a few speeches truly to grasp the changes we firmly intended to make. Also, it takes time to build up relationships with staff which reach beyond the formal level of respect to trust and confidence. But the sheer professionalism of the British civil service, which allows governments to come and go with a minimum of dislocation and a maximum of efficiency, is something other countries with different systems have every cause to envy.

Denis and I left Buckingham Palace in the prime ministerial car: my previous car had already gone to Mr Callaghan. As we drove out through the Palace gates, Denis noticed that this time the Guards saluted me. In those innocent days before security had to become so much tighter for fear of terrorism, crowds of well-wishers, sightseers, press and camera crews were waiting for us in Downing Street itself. The crowds extended all the way up Downing Street and out into Whitehall. Denis and I got out of the car and walked towards them. This gave me the opportunity to run through in my mind what I would say outside No. 10.

When we turned to the cameras and reporters, the cheers were so deafening that no one in the street could hear what I was saying. Fortunately, the microphones thrust in front of me picked it up and carried it over the radio and television.

I quoted a famous prayer attributed to St Francis of Assisi, beginning, ‘where there is discord, may we bring harmony.’ Afterwards a good deal of sarcasm was expended on this choice, but the rest of the quotation is often forgotten. St Francis prayed for more than peace; the prayer goes on: ‘Where there is error, may we bring truth. Where there is doubt, may we bring faith. And where there is despair, may we bring hope’. The forces of error, doubt and despair were so firmly entrenched in British society, as the ‘winter of discontent’ had just powerfully illustrated, that overcoming them would not be possible without some measure of discord.

10 DOWNING STREET

Inside No. 10 all the staff had turned out to welcome us. I am assured that in the days before television there was a good practical reason for this ceremony, in that everyone in the building has to be able to recognize the prime minister personally, both for security reasons and for the smooth running of the many different services which are provided there. It is also true that within No. 10 there is almost a family atmosphere. The number of staff is relatively small — a total of between 70 or 80, though because of the shift system not all will be there at one time. That figure comprises those working in the Private Office, including the duty clerks who ensure that No. 10 is able to operate round the clock; the Press Office, where someone is also always on call; the ‘garden room girls’ who do the secretarial and paperwork; ‘confidential filing’, which sorts and files the enormous accumulations of documents; the parliamentary section which deals with Parliamentary Questions, Statements and Debates; the correspondence section where some four to seven thousand letters are received every week; the sections which deal with Church matters and with honours; the Political Office and the Policy Unit; and the messengers and other staff who keep the whole extended family supplied with tea and coffee and — above all — information from the outside world. It is an extraordinary achievement, and it requires people of unusual qualities and commitment, not least when you compare these relatively slender resources and modest surroundings with, for example, the White House with its 400 staff, or the German Chancellery with 500.

The prime minister’s private secretaries, headed by the principal private secretary, are crucial to the effective conduct of government. They are the main channel of communication between the prime minister and the rest of Whitehall, and they bear a heavy burden of responsibility. I was fortunate to have a succession of superb principal private secretaries over the years. Other private secretaries, specializing in economic or foreign affairs, also quickly acquired judgement, expertise and a knowledge of my thinking which allowed me to rely on them. Bernard Ingham, my press secretary, who arrived five months after I became Prime Minister, was another indispensable member of the team. I was told that Bernard’s politics had been Labour, not Conservative: but the first time we met I warmed to this tough, blunt, humorous Yorkshireman. Bernard’s outstanding virtue was his total integrity. An honest man himself, he expected the same high standards from others. He never let me down.

The hours at No. 10 are long. I never minded this. There was an intensity about the job of being Prime Minister which made sleep seem a luxury. In any case, over the years I had trained myself to do with about four hours a night. The Private Office too would often be working till 11 o’clock at night. We were so few that there was no possibility of putting work on someone else’s desk. This sort of atmosphere helps to produce a remarkably happy team, as well as a formidably efficient one. People are under great pressure, and there is no time for trivia. All the effort has to go into getting the work done. Mutual respect and friendly relations are often the result. This feature of No. 10 shapes people’s attitudes not only towards each other but towards the prime minister whom they all directly or indirectly serve. The cheers and clapping when a new prime minister arrives may perhaps be a traditional formality. But the tears and regrets when the outgoing prime minister makes his or her final departure are usually genuine.

Of course, I had visited No. 10 when I served as Education Secretary in Ted Heath’s Government of 1970–4 and, indeed, before that as a Parliamentary Secretary to the Minister of Pensions in Harold Macmillan’s and Alec Douglas-Home’s Governments. So I knew that the house is much larger than it looks from the outside because it is, in fact, two houses, one situated behind the other, joined by passages, with an extra wing linking the two buildings. But although familiar with the reception rooms and the Cabinet Room, I knew little of the rest of the building.

LIFE ‘OVER THE SHOP’

Number Ten is more than an office: it is intended to serve as the prime minister’s home. I never had any doubt that when the Callaghans had left I would move into the prime minister’s small flat at the top of the building. Every practical consideration suggested it, as well as my own taste for long hours of work. As we used to say, harking back to my girlhood in Grantham, I liked living over the shop. I was not able to move out of the house in Flood Street where my family had been living for the last ten years until the first week of June. But from then, until November 1990, Downing Street and Chequers were the twin centres of my personal and professional life.

The flat at No. 10 quickly became a refuge from the rest of the world, though on occasion a good deal of business was done there too. It was right at the top of the building — up in the rafters, in fact. But that was an advantage, for the stairs provided me with about the only real exercise I got. There were plenty of cupboards and a box room in which to dump everything until it found a more permanent place and into which piles of books and papers could be pushed when visitors were due.

Denis and I decided that we would not have any living-in domestic help. No housekeeper could possibly have coped with the irregular hours. When I had no other engagement, I would go up to the flat for a quick lunch of salad or poached egg on Bovril toast. But usually it was 10 or 11 o’clock at night when I would go into the kitchen and prepare something — we knew every way in which eggs and cheese could be served and there was always something to cut at in the fridge — while Denis poured me a night-cap.

The deep freeze was always kept well stocked and the microwave, when it appeared, did sterling work when sudden meals were required because we were working late into the night on a speech, a statement or decisions required for the Falklands campaign or the Libyan raid — or Resolutions at the UN Security Council. On these occasions we used the small dining-room in the flat, which was next to the even smaller kitchen; secretaries from the Political Office, not paid by the taxpayer, would always lend a hand.

Prime Minister or not, I never forgot that I was also MP for Finchley; nor, indeed, would I have wanted to. My monthly surgeries in the constituency and the correspondence which was dealt with from within No. 10 by my secretary, Joy Robilliard (who had been Airey Neave’s secretary until his death), kept me directly in touch with people’s worries. I always had the benefit of a first-class constituency agent and a strongly supportive constituency chairman, which as any MP knows makes a world of difference. I also kept up my own special interests which had been developed as a result of constituency work, for example as patron of the North London Hospice.

I could never have been Prime Minister for more than eleven years without Denis at my side. Always a powerful personality, he had very definite ideas about what should and should not be done. He was a fund of shrewd advice and penetrating comment. And he very sensibly saved these for me rather than the outside world, always refusing to give interviews. He never had a secretary or public relations adviser but answered between thirty and fifty letters every week in his own hand. With the appearance of the ‘Dear Bill’ letters in Private Eye he seemed to become half the nation’s favourite correspondent.

Denis shared my own fascination with politics — that, of course, is how we first met — but he also had his own outside interests, not least sport. He was passionately interested in rugby football — having indeed been a referee. He was also heavily involved in charities, an active member of the Sports Aid Foundation and of the Lord’s Taverners. Denis delivered many speeches on his favourite (nonpolitical) subjects. The one which for me best summed up his character and convictions was on sport and ethics and contained these lines:

The desire to win is born in most of us. The will to win is a matter of training. The manner of winning is a matter of honour.

Although Denis had a deep interest in everything military, and by choice would have stayed in the army at the end of the Second World War, the unexpected death of his father left him with no option but to return to run the family business, a paint and chemicals company. I am glad he did. For his industrial experience was invaluable to me. Not only was he familiar with the scientific side (something which we had in common); he was also a crack cost and management accountant. Nothing escaped his professional eye — he could see and sense trouble long before anyone else. His knowledge of the oil industry also gave me immediate access to expert advice when in 1979 the world experienced the second sudden oil price increase. Indeed, through him and our many friends I was never out of touch with industry and commerce.

Being prime minister is a lonely job. In a sense, it ought to be: you cannot lead from the crowd. But with Denis there I was never alone. What a man. What a husband. What a friend.

INSIDE DOWNING STREET

In some ways 10 Downing Street is an unusual sort of home. Portraits, busts and sculptures of one’s prime ministerial predecessors remind one of the nearly 250 years of history into which one has stepped.

As prime minister one has the opportunity to make an impact on the style of No. 10. Outside the flat I had displayed my own collection of porcelain, which I had built up over the years. I also brought with me a powerful portrait of Churchill from my room in the House of Commons. It looked down on those who assembled in the antechamber to the Cabinet Room. When I arrived, this area looked rather like a down-at-heel Pall Mall club, with heavy and worn leather furniture; I changed the whole feel by bringing in bookcases, tables and chairs from elsewhere in the building. There might be some difficult times to come in the Cabinet Room itself, but there was no reason why people should be made to feel miserable while they were waiting to go in.

Although it was not until I had been there some ten years that I had the most important redecorations done, I tried from the start to make the rooms seem more lived in. The official rooms had very few ornaments and when we arrived No. 10 looked rather like a ‘furnished house to let’, which in a way, I suppose, it was. Downing Street had no silver. Whenever there was an official dinner the caterers had to bring in their own. Lord Brownlow, who lived just outside Grantham, lent me silver from his collection at Belton House: it sparkled and transformed the No. 10 dining-room. One particular piece had a special meaning for me — a casket containing the Freedom of the Borough of Grantham, of which both the previous Lord Brownlow and later my father had been Mayor. The gardeners who kept St James’s Park brought in flowers. And happily, the flowers kept on coming, sent by friends and supporters, right until my last days at Downing Street, when you could hardly move down the corridors for a floral display which rivalled the Chelsea Flower Show. I also had the study repapered at my own expense. Its unappealing sage-green damask flock wallpaper was stripped off and replaced by a cream stripe, which was a much better background for some fine pictures.

I felt that Downing Street should have some works by contemporary British artists and sculptors, as well as those of the past. I had met Henry Moore when I was Secretary of State for Education and much admired his work. The Moore Foundation let No. 10 borrow one of his smaller sculptures which fitted perfectly in an alcove in the main hallway. Behind the sculpture was hung a Moore drawing, which was changed every three months; among my favourites were scenes of people sleeping in the London Underground during the Blitz.

I was conscious of being the first research scientist to become prime minister — almost as conscious, in fact, as I was of being the first woman prime minister. So I had portraits and busts of some of our most famous scientists placed in the small dining-room, where I often lunched with visitors and colleagues on less formal occasions.

I felt strongly that when foreign visitors came to Downing Street they should see something of Britain’s cultural heritage. When I came to No. 10 all the paintings in the main dining-room were copies. They were replaced. For example, I was lent a picture of George II, who had actually given No. 10 to Sir Robert Walpole, the first prime minister. On my foreign visits I quickly found that many of our embassies had superb works of art which added greatly to the impression people had of Britain. I wanted foreign visitors to No. 10 to be similarly impressed. I knew that there were large numbers of excellent British paintings in our museums which were not on show. I was able to borrow some Turners, a Raeburn from Scotland and some pictures from the Dulwich Gallery and these were hung in the White Drawing Room and the main reception room. I also had some fine portraits hung of the nation’s heroes; through them you could feel the continuity of British history. I recall on one occasion watching President Giscard d’Estaing gazing at two portraits in the dining-room — one of the young Nelson and the other of Wellington. He remarked on the irony. I replied that it was no less ironic that I should have to look at portraits of Napoleon on my visits to Paris. In retrospect, I can see that this was not quite a parallel. Napoleon lost.

On this first evening, though, I could do little more than make a brief tour of the main rooms of the building. Then I entered the Cabinet Room where I was greeted by more familiar faces — among them my daughter Carol. There was Richard Ryder who had been and would continue for a time as my political secretary, responsible for keeping me in touch with the Conservative Party in the country; David Wolfson (now Lord Wolfson) who acted as my Chief of Staff, bringing to bear his charm and business experience on the problems of running No. 10; Caroline Stephens (later to become Caroline Ryder) who became my diary secretary; Alison Ward (later Alison Wakeham) my constituency secretary; and Cynthia Crawford — known to all of us as ‘Crawfie’ — who acted as my personal assistant and who has stayed with me ever since. We did not waste much time in conversation. They were anxious to sort out who was to go to which office. I had exactly the same task in mind: the choice of my Cabinet.

CABINET-MAKING

Choosing a Cabinet is undoubtedly one of the most important ways in which a prime minister can exercise power over the whole conduct of government. But it is not always understood how real are the constraints under which the choices take place. By convention, all ministers must be members of either the Commons or the Lords, and there must not generally be more than three Cabinet members in the Lords, thus limiting the range of potential candidates for office. In addition one has to achieve distribution across the country — every region is easily convinced it has been left out. You must also consider the spectrum of party opinion.

Even so, the press expect the Cabinet of some twenty-two ministers to be appointed and the list to be published within about 24 hours — otherwise it is taken as a sure sign of some sort of political crisis. My American and other foreign friends are often astonished at the speed with which British Governments are formed and announced.

So I do not think that any of us at No. 10 relaxed much that day, which turned out to be a long one. (The previous night I had had no more than a couple of hours’ sleep, if that.) I received the usual detailed security briefing which is given to incoming prime ministers. Then I went upstairs to the study in which I was to spend so many hours in the years which followed. I was accompanied by Willie Whitelaw and our new Chief Whip, Michael Jopling. We began to sift through the obvious and less obvious names and slowly this most perplexing of jigsaws began to take shape. While Willie, the Chief Whip and I discussed the appointments to the Cabinet, Ken Stowe sought to contact those involved to arrange for them to come in the next day.

At 8.30 p.m. we took a break for a meal. Knowing that there were no canteen facilities at No. 10, my personal staff brought in a Chinese meal from a take-away and some fifteen of us sat down to eat in the large dining-room. (That, I think, was the last take-away while I was Prime Minister.)

I knew that the hardest battles would be fought on the ground of economic policy. So I made sure that the key economic ministers would be true believers in our economic strategy. Geoffrey Howe had by now thoroughly established himself as the Party’s chief economic spokesman. Geoffrey was regularly bullied in debate by Denis Healey. But by thorough mastery of his brief and an ability to marshal arguments and advice from different sources, he had shown that beneath a deceptively mild exterior he had the makings of the fine Chancellor he was to become. Some of the toughest decisions were to fall to him. He never flinched. In my view these were his best political years.

After becoming leader in 1975, I had considered appointing Keith Joseph as Shadow Chancellor. Keith had done more than anyone else to spell out in his speeches and pamphlets what had gone wrong with Britain’s economic performance and how it could be transformed. He has one of the best minds in politics. He is an original thinker, the sort of man who makes you understand what Burke meant when he wrote of politics being ‘philosophy in action’. He is rare in another way too: he combines humility, open-mindedness and unshakeable principle. He is deeply and genuinely sensitive to people’s misfortunes. Although he had no doubt of the Tightness of the decisions which we were to make, he knew that they meant unviable firms would collapse and overmanning become unemployment, and he cared about those who were affected — far more than did all our professionally compassionate critics. But such a combination of personal qualities may create difficulties in the cruel hurly-burly of political life which Chancellors above all must endure. So Keith took over at Industry, where he did the vital job that no one else could have done of altering the whole philosophy which had previously dominated the department. Keith was — and remains — my closest political friend.

John Biffen I appointed Chief Secretary to the Treasury. He had been a brilliant exponent in Opposition of the economic policies in which I believed and, before that, a courageous critic of the Heath Government’s U-turn. But he proved rather less effective than I had hoped in the gruelling task of trying to control public expenditure. His later performance as Leader of the House where the qualities required were acute political sensitivity, good humour and a certain style was far happier. John Nott became Secretary of State for Trade. He, too, had a clear understanding of and commitment to our policies of monetary control, low taxes and free enterprise. But John is a mixture of gold, dross and mercury. No one was better at analysing a situation and prescribing a policy to deal with it. But he found it hard, or perhaps boring, to stick with the policy once it had been firmly decided. His vice was second thoughts.

With Geoffrey and Keith helping me to give a lead to the Cabinet, however, and with the loyalty I knew I could rely upon from Willie and some of the others, I believed we could see the economic strategy through.

Otherwise, it seemed prudent in the light of our effective performance in Opposition and the election campaign to maintain a high degree of continuity between Shadow Cabinet and Cabinet posts. Willie Whitelaw became Home Secretary, and in that capacity and later as Leader of the Lords he provided me personally and the Government as a whole with shrewd advice based on massive experience. People were often surprised that the two of us worked so well together, given our rivalry for the leadership and our different outlook on economics. But Willie is a big man in character as well as physically. He wanted the success of the Government which from the first he accepted would be guided by my general philosophy. Once he had pledged his loyalty, he never withdrew it. He supported me steadfastly when I was right and, more important, when I wasn’t. He was an irreplaceable deputy prime minister — an office which has no constitutional existence but is a clear sign of political precedence — and the ballast that helped keep the Government on course.

But I felt that some changes in portfolios were required. I brought in the formidable Christopher Soames to be Leader of the House of Lords. Christopher was his own man, indeed excessively so, and thus better suited to solo performances — whether as Ambassador in Paris or the last Governor of Rhodesia — than to working in harmony with others. Peter Carrington, who had led the Lords skilfully in Opposition, became Foreign Secretary. His unrivalled experience of foreign affairs more than qualified him for the job. Peter had great panache and the ability to identify immediately the main points in any argument; and he could express himself in pungent terms. We had disagreements, but there were never any hard feelings. We were an effective combination — not least because Peter could always tell some particularly intractable foreign minister that whatever he himself might feel about a particular proposition, there was no way in which his prime minister would accept it. This generally proved convincing. I was determined, however, that at least one Foreign Office minister should have a good grounding in — and sound views on — economic policy. I had Peter bring in Nick Ridley.

Two other appointments excited more comment. To his surprise, I asked Peter Walker to be Minister of Agriculture. Peter had never made a secret of his hostility to my economic strategy. But he was both tough and persuasive, priceless assets in dealing with the plain absurdities of the European Community’s Common Agricultural Policy. His membership of the Cabinet demonstrated that I was prepared to include every strand of Conservative opinion in the new Government, and his post that I was not prepared to put the central economic strategy at risk.

That was perhaps less clear in my decision to keep Jim Prior on at Employment. I shall describe elsewhere the divergences of opinion between Jim and the rest of us during Opposition. Running on from that time there was a lively argument about trade union reform. We all agreed that trade unions had acquired far too many powers and privileges. We also agreed that these must be dealt with one step at a time. But when it came down to specific measures, there was deep disagreement about how fast and how far to move. Yet there was no doubt in my mind that we needed Jim Prior. There was still the feeling in the country, and indeed in the Conservative Party, that Britain could not be governed without the tacit consent of the trades unions. It was to be some years before that changed. If we had signalled the wholesale reform of the unions over and against their opposition at the outset, it would have undermined confidence in the Government and perhaps even provoked a challenge we were not yet ready to face. Jim was the badge of our reasonableness. He had forged good relations with a number of trade union leaders whose practical value he perhaps overestimated. But he was an experienced politician and a strong personality — qualities he subsequently demonstrated to great effect in Northern Ireland.

The law prescribes that only twenty-two people may receive the salaries of Cabinet ministers. My decision to appoint a Foreign Secretary from the House of Lords meant that we had to have an additional Foreign minister in the Cabinet to answer in the Commons. Members of the House of Commons in any case dislike seeing too many Members of the Lords in the Cabinet. They accept, of course, that the Leader of the Lords and the Lord Chancellor (in this case the distinguished and effervescent Quintin Hailsham) and possibly a third peer of obvious suitability must be in the Cabinet. But they demand that there must be a second Cabinet minister in the Commons to answer for any departmental head who is a peer. In this post I appointed Ian Gilmour. (A similar arrangement would later be necessary when David Young joined the Cabinet, first at Employment and then at Trade and Industry.) Ian remained at the Foreign Office for two years. Subsequently, he was to show me the same loyalty from the back-benches as he had in government.

I was anxious to have Angus Maude in the Cabinet to benefit from his years of political experience, his sound views, and his acid wit. He would handle government information. At the end of the day, we were short of one place. As a result, Norman Fowler, as Minister of State at Transport, was not able to be an official member of the Cabinet, although he attended all our meetings.

By about 11 p.m. the list of Cabinet was complete and had been approved by the Queen. I went upstairs to thank the No. 10 telephonists who had had a busy time arranging all the appointments for the following day. Then I was driven home.

On Saturday I saw the future Cabinet one by one. It all went smoothly enough. Those who were not already Privy Councillors were sworn in at Buckingham Palace.[5] By Saturday afternoon the Cabinet was appointed and the names announced to the press. That gave every new minister the weekend to draft instructions to his department to put into effect the manifesto policies. In fact there was slightly more time than usual, since Monday was a Bank Holiday.

OTHER APPOINTMENTS

On Saturday night we completed the list of junior ministers, and I saw or telephoned them on the Sunday. Many of these would later enter Cabinet, including Cecil Parkinson, Norman Tebbit, Nick Ridley and John Wakeham. The best junior ministers were always in great demand by their seniors: a really good ministerial team is of enormous importance in keeping effective political control over the work of a government department. There were some sixty posts to be filled. But the whole Government had been appointed and announced within 48 hours of my entering Downing Street.

My last and best appointment was of Ian Gow as my Parliamentary Private Secretary (or PPS). Ian’s combination of loyalty, shrewdness and an irrepressible sense of fun was to see us all through many difficult moments. He was an instinctive parliamentarian who loved every aspect of the House of Commons. In private conversation he had the ability to draw everyone into the political circle and make them feel theirs was the vital contribution. In public his speeches were marked by a deadpan humour which could reduce both sides of the House to tears of laughter. We remained close friends after Ian’s principled resignation over the Anglo-Irish agreement which he opposed from a standpoint of undiluted Unionism. His murder by IRA terrorists in 1990 was an irreplaceable loss.

Monday was, as I have noted, a Bank Holiday. I came into No. 10 and took the opportunity to complete a number of nonministerial appointments. John Hoskyns arrived in the afternoon to become head of my Policy Unit.[6] John’s background was in business and computers; but over and above that experience, he had strong powers of analysis and had helped formulate our economic strategy in Opposition. He propagated the theory that a ‘culture of decline’ was the ultimate cause of many of Britain’s economic problems. In government he repeatedly compelled ministers to relate each problem to our overall strategy of reversing that decline. He kept our eye on the ball.

That same day I saw Kenneth Berrill, the head of the Central Policy Review Staff (CPRS) or ‘Think-Tank’. The CPRS had originally been set up by Ted Heath as a source of long-term policy advice for the Government, at a time when there were fewer private think-tanks, fewer special advisers in government and a widespread belief that the great questions of the day could be resolved by specialized technical analysis. But a government with a firm philosophical direction was inevitably a less comfortable environment for a body with a technocratic outlook. And the Think-Tank’s detached speculations, when leaked to the press and attributed to ministers, had the capacity to embarrass. The world had changed, and the CPRS could not change with it. For these and other reasons, I believe that my later decision to abolish the CPRS was right and probably inevitable. And I have to say that I never missed it.

I also asked Sir Derek Rayner to set up an Efficiency Unit that would tackle the waste and ineffectiveness of government. Derek was another successful businessman, from what everyone used to describe as my favourite company, Marks & Spencer. The two of us used to say that in politics you judge the value of a service by the amount you put in, but in business you judge it by the amount you get out. We were both convinced of the need to bring some of the attitudes of business into government. We neither of us conceived just how difficult this would prove.

On the same day I saw Sir Richard O’Brien on a matter which illustrates the extraordinary range of topics which crossed my desk in these first days. Sir Richard was not only chairman of the Manpower Services Commission, the QUANGO which supervised the nation’s training schemes,[7] but also chairman of the committee to advise the prime minister on the appointment of a new Archbishop of Canterbury. (Donald Coggan had announced his intention to retire; his successor had to be found by the end of the year.) He informed me about the committee’s work and gave me an idea of when it would be ready to make its recommendations. In view of my later relations with the hierarchy, I could wish that Sir Richard had combined his two jobs and established a decent training scheme for bishops.

It was the nation’s financial and economic affairs, however, which required immediate attention. Sir John Hunt, the Cabinet Secretary, gave a reassuring impression of quiet efficiency which turned out to be entirely accurate. He had prepared a short brief on the most urgent questions, such as public sector pay and the size of the Public Sector Borrowing Requirement (PSBR), and compiled a list of imminent meetings with other heads of government. Each of these required early decisions to be made. My last appointment that Monday afternoon was with Geoffrey Howe to discuss his forthcoming budget. That night — most unusually — I managed to get back to Flood Street for dinner with the family. But there was no let-up in activity. I had a stack of papers to read on every conceivable subject.

Or so it seemed. The ceaseless flow of red despatch boxes had begun — anything up to three each evening and four at weekends. But I set to with a will. There is never another opportunity like that given to a new government with a fresh electoral mandate to place its stamp firmly on public affairs, and I was determined to take advantage of it.

EARLY DECISIONS

On Tuesday at 2.30 p.m. we held our first Cabinet meeting. It was ‘informal’: no agenda had been prepared by the Cabinet Secretariat and no minutes were taken. (Its conclusions were later recorded in the first ‘formal’ Cabinet which met on the customary Thursday morning.) Ministers reported on their departments and the preparations they had made for forthcoming legislation. We gave immediate effect to the pledges in our manifesto to see that both the police and the armed forces were properly paid. As a result of the crisis of morale in the police service, the fall in recruitment and talk of a possible police strike, the Labour Government had set up a committee on police pay under Lord Justice Edmund Davies. The committee had devised a formula to keep police pay in line with other earnings. We decided that the recommendations for pay increases due for implementation on 1 November should be brought forward. This was duly announced the following day, Wednesday. We similarly decided that the full military salary recommended by the latest Report of the Armed Forces Pay Review Body should be paid in full, as from 1 April.

At that first informal Cabinet we began the painful but necessary process of shrinking down the public sector after years in which it was assumed that it should grow at the expense of the private sector. So we imposed an immediate freeze on all civil service recruitment, though this would later be modified and specific targets for reduction set. We started a review of the controls imposed by central on local government, though here, too, we would in due course be forced down the path of applying still tougher, financial controls, as the inability or refusal of local councils to run services efficiently became increasingly apparent.

Pay and prices were an immediate concern, as they continued to be throughout those economically troubled early years. Professor Hugh Clegg’s Commission on Pay Comparability had been appointed by the Labour Government as a respectable means of bribing public sector workers not to strike with postdated cheques due to be presented after the election. The Clegg Commission was a major headache, and the pain became steadily more acute as the cheques fell due.[8]

As regards pay bargaining in the nationalized industries, we decided that the responsible ministers should stand back from the process as far as possible. Our strategy would be to apply the necessary financial discipline and then let the management and unions directly involved make their own decisions. But that would require progress in complementary areas — competition, privatization and trade union reform — before it was to show results.

There would also have to be a fundamental overhaul of the way in which prices were controlled by such interventionist measures as the Price Commission, government pressure, and subsidy. We were under no illusion: price rises were a symptom of underlying inflation, not a cause of it. Inflation was a monetary phenomenon which it would require monetary discipline to curb. Artificially holding down increases merely reduced investment and undermined profits — both already far too low for the country’s economic health — while spreading a ‘cost plus’ mentality through British industry.

At both Cabinets, I concluded by emphasizing the need for collective responsibility and confidentiality between ministers. I said I had no intention of keeping a diary of Cabinet discussions and I hoped that others would follow my example. Inconvenient as that may be for the authors of memoirs, it is the only satisfactory rule for government. But I had to repeat this warning against leaks many times.

We were still in the first week of government, but we had to decide the content of the first Queen’s Speech. This was largely the task of ‘QL’,[9] the Cabinet committee chaired by Willie Whitelaw, which was responsible for making recommendations to the Cabinet on legislation for inclusion in the Queen’s Speech. We were fortunate that our manifesto commitments had been so clear; the Queen’s Speech almost wrote itself.

In all this activity of government-making and policy-setting, however, I knew I could not afford to neglect the back-benchers. After twenty years in the House of Commons, through six Parliaments, I had seen how suddenly trouble could arise and the business of the House be put in jeopardy. So on Tuesday evening, before Parliament assembled the following day, I had invited the Chairman and Officers of the 1922 Committee for a talk, to celebrate our victory and discuss the work of the coming parliamentary session.[10] The name — which is usually abbreviated to ‘the ‘22’ — commemorates the events of that year, when Conservative back-benchers forced the resignation of Lloyd George’s coalition Government, bringing about a general election and the return of a Conservative administration under Bonar Law. It should remind anyone who is inclined to doubt it of the ‘22’s importance to government. Even in less stormy times, a heavy legislative programme is only possible when there is a good working understanding between No. 10, the ‘22, the Whips’ Office and the Leader of the House.

Wednesday 9 May saw the new parliament assemble for the election of the Speaker. The Speaker of the previous parliament had been George Thomas, a former Labour Cabinet minister, and he was the unanimous choice to continue in that office. My respect for George Thomas, already great, was to grow over the years. He was a deeply committed Christian with a shining integrity that gave him as Speaker a special kind of authority — but in my speech of congratulation, something else was on my mind: I had to keep remembering not to refer to Jim Callaghan as Prime Minister.

VISIT OF HELMUT SCHMIDT

On the following day Members of Parliament assembled-to take the oath. But Thursday was a day of more than ceremonial importance (indeed there was one ceremony which somehow got lost in the rush — Denis’s birthday). It was on that day that Helmut Schmidt, the West German Federal Chancellor, arrived in London on an official visit originally arranged with the Labour Government — the first head of a foreign government to visit me as Prime Minister.

There had been some discussion about whether this visit should go ahead. But I was particularly keen that it should. I had met Herr Schmidt in Opposition and had soon developed the highest regard for him. He had a profound understanding of the international economy on which — although he considered himself a socialist — we were to find ourselves in close agreement. In fact, he understood a good deal better than some British Conservatives the importance of financial orthodoxy — the need to control the money supply and to restrain public spending and borrowing so as to allow room for the private sector to grow. But he had to be told straight away that although Britain wanted to play a vigorous and influential role in the European Community, we could not do so until the problem of our grossly unfair budgetary contribution had been resolved.[11] I saw no reason to conceal our views behind a diplomatic smokescreen; indeed I wanted to convince Helmut Schmidt of both the reasonableness of our position and the strength of our determination precisely because he and West Germany exercised great influence in the Community. So I used every occasion to get the message across.

The speech which I delivered that Thursday evening at our dinner in honour of the Federal Chancellor was my first opportunity to set out my new approach towards the European Community. I rejected right from the start the idea that there was something ‘un-European’ in demanding that inequities be sorted out. In a passage which caught the media’s attention, I said:

It has been suggested by some people in this country that I and my Government will be a ‘soft touch’ in the Community. In case such a rumour may have reached your ears, Mr Chancellor, from little birds in Smith Square, Belgrave Square, or anywhere else, it is only fair that I should advise you frankly to dismiss it (as my colleagues did long ago!).[12] I intend to be very discriminating in judging what are British interests and I shall be resolute in defending them.

At our joint press conference the following day we were asked about our personal relations, since Helmut Schmidt was a socialist who had always referred to Mr Callaghan as ‘Jim’. When I stressed the similarity of our policies, he intervened: ‘Don’t go too far, Prime Minister, and do not spoil my relations with my own Party, please!’

WORKING WEEKEND

On Saturday I flew to Scotland to address the Scottish Conservative Conference, something I always enjoyed. Life is not easy for Scottish Tories; nor was it to become easier. Unlike English Conservatives, they are used to being a minority party, with the Scottish media heavily slanted against them. But these circumstances gave Scottish Conservatives a degree of enthusiasm and a fighting spirit which I admired, and which also guaranteed a warm-hearted and receptive audience. Some leading Scottish Tories, though a small minority, still hankered after a kind of devolved government, but the rest of us were deeply suspicious of what that might mean to the future of the Union. While reaffirming our decision to repeal Labour’s Scotland Act, I indicated that we would initiate all-party talks ‘aimed at bringing government closer to the people’. In the event we did so by rolling back the state rather than by creating new institutions of government.

My main message to the conference, however, was a deliberately sombre one, intended for Britain as a whole. That same day an inflation figure of 10.1 per cent had been published. It would rise further. I noted:

As our economic and political difficulties accumulated in the months ahead, no one could claim that they had not been warned.

We arrived back at RAF Northolt and drove to Chequers where I spent my first weekend as Prime Minister. I do not think anyone has stayed long at Chequers without falling in love with it. From the time of its first prime ministerial occupant, David Lloyd George, it has been assumed that the holders of that office would not necessarily have their own country estates. For that reason, Lord Lee’s gift to the nation of his country house for the use and relaxation of prime ministers marks as much a new era as did the Reform Bills.

When I arrived as Prime Minister, the curator was Vera Thomas, who knew and loved each perfectly polished piece of furniture, each historic portrait, each glittering item of silver. Chequers itself is an Elizabethan house, but has been substantially rebuilt over the years. The centre of the house is the great hall, once a courtyard, enclosed at the end of the last century, where in winter a log fire burns, giving a slight tang of woodsmoke through every room.

Thanks to the generosity of Walter Annenberg, US Ambassador to Britain from 1969–74, Chequers has a covered swimming pool. But in the years I was there it was only used in the summer. Early on I learned that it cost £5,000 a year to heat. By saving this money we had more which could be spent on the perpetual round of necessary repairs to the house. Perhaps the most important work I had done was the cleaning of the Elizabethan panelling in the dining-room and the Great Parlour. Once the layers of varnish and dirt had gone, we discovered some beautiful marquetry beneath that had not been seen for many years.

The group which gathered for Sunday lunch just ten days after our election victory was fairly typical of a Chequers weekend. My family were there, Denis, Carol, Mark. Keith Joseph, Geoffrey and Elspeth Howe, the Pyms and Quintin Hailsham represented, as it were, the Government team. Peter Thorneycroft and Alistair McAlpine were present from Central Office — the latter having been, as Conservative Party Treasurer, one of the most effective fund raisers of all time and one of my closest and most loyal friends. David Wolfson, Bryan Cartledge (my private secretary) with their wives, and our friends Sir John and Lady Tilney completed the party.

We were still in a mood to celebrate our election victory. We were away from the formality of No. 10. We had completed the initial task of getting the Government on the road. We still had that spirit of camaraderie which the inevitable disputes and disagreements of government were bound to sap. The meal was a light-hearted and convivial one. It was perhaps an instance of what a critic was later to call ‘bourgeois triumphalism’.

But we were aware that there was a long road ahead. As my father used to say:

At 7 p.m. that evening Denis and I returned to London to begin my second full week as Prime Minister. Work was already piling up, with boxes coming to and from Chequers. I recall once hearing Harold Macmillan tell an eager group of young MPs, none more eager than Margaret Thatcher, that prime ministers (not having a department of their own) have plenty of spare time for reading. He recommended Disraeli and Trollope. I have sometimes wondered if he was joking.