The Downing Street Years, 1979-1990

Footnotes

1

A political term dating from the early 1950s, denoting a consensus politician combining the moderate Conservatism of R. A. Butler with the moderate socialism of Hugh Gaitskell.

2

The eighteenth-century statesman and prime minister, 1766–8.

3

The first fifty years of my life will be related in a second volume.

4

The term was Harold Wilson’s, derived from the name of the Selsdon Park Hotel where the Conservative Shadow Cabinet finalized its right-wing programme for the 1970 general election.

5

The Privy Council is one of the oldest of Britain’s political institutions, with the most important of the Crown’s advisers among its members, including by convention all Cabinet ministers. Its meetings — usually of a few ministers in the presence of the Queen — are now purely formal, but the oath taken by new members reinforces the obligation of secrecy in conducting government business, and the issue of ‘Orders in Council’ is still an important procedure for enacting the legislation not requiring the approval of Parliament.

6

The Policy Unit was first set up by Harold Wilson in 1974 and continued by James Callaghan. The value of the Unit, whose membership I subsequently increased, lies in its flexibility and involvement in day-to-day policy matters, on the basis of close collaboration with the Prime Minister.

7

Quasi-autonomous nongovernmental organization.

8

See Chapter 2, pp. 44–5.

9

Queen’s Speeches and Future Legislation Committee.

10

The 1922 Committee consists of all Conservative Members of Parliament (other than those in office). At its meetings, and those of its sub-committees, views and policies are discussed, and the results made known to ministers by the whips and PPSs. It is also the 1922 Committee which has the decisive say in choosing the Speaker when the Conservative Party is in office.

11

For the details and course of negotiations about Britain’s contribution to the European Community budget, see Chapter 3.

12

No. 32 Smith Square is, of course, the home of Conservative Central Office and Belgrave Square is the address of the German Ambassador’s residence.

13

In order to try to give a better indication of the real effect of government policies on living standards, we published from 17 August 1979 a new ‘Tax and Price Index’ (TPI) which combined, in one figure, a measure both of the tax changes and the movements in retail prices. For those dependent on earned income, who constituted the bulk of the population, this provided a better indicator of changes in total household costs than the RPI. However, for the purposes of wage bargaining, the circumstances of an individual enterprise should determine what could be afforded.

14

The proportion of the British workforce employed in the public sector crept inexorably upwards from 24 per cent in 1961 to reach almost 30 per cent by the time we came into office. By 1990 through privatization and other measures we had brought it down again to a level below that of 1961.

15

The Griffiths Report of 1983 was the basis for the introduction of general management in the NHS, without which the later reforms would not have been practicable. See pp. 606–17.

16

It was only towards the end of my time in government that we embarked upon the radical reforms of the civil service which were contained in the ‘Next Steps’ programme. Under this programme much of the administrative — as opposed to policy-making — work of government departments is being transferred to agencies, staffed by civil servants and headed by chief executives appointed by open competition. The agencies operate within frameworks set by the departments, but are free of detailed departmental control. The quality of management within the public service promises to be significantly improved.

17

‘Wet’ is a public schoolboy term meaning ‘feeble’ or ‘timid’, as in ‘he is so wet you could shoot snipe off him.’ The opponents of government economic policy in the early 1980s were termed ‘wets’ by their opponents because they were judged to be shrinking from stern and difficult action. As often happens with pejorative political labels (cf. Tory, which originally referred to Irish political bandits), ‘wet’ was embraced by the opponents of our economic strategy, who in turn named its supporters ‘the dries’.

18

For the steel strike, see Chapter 4, pp. 108–14.

19

These were a whole series of measures which we had inherited from the previous Labour Government and modified in various ways. They included the Youth Opportunities Programme, measures to encourage training, job release schemes, help for small firms and compensation for those in temporary, short-time work.

20

Patrick Jenkin had already announced in June 1979 that we would end the statutory obligation to uprate long-term benefits in line with prices or earnings, whichever was higher: henceforth, uprating would be in line with prices.

21

For the measures in the 1980 budget see Chapter 4, pp. 95–7.

22

For the summits I attended and the visits that I made in this period, see Chapter 3.

23

See Volume II.

24

For the outcome of these protests and our response to the hunger strikes, see Chapter 14.

25

North Sea oil would soon give Britain an exceptional position among the major industrial powers, as we became a net oil exporter; but, of course, international recession would hit the markets for our industries: we were, therefore, not immune to the international consequences of the oil price rise.

26

These were areas, typically around 500 acres in size, within which major tax incentives were made available to business — 100 per cent capital allowances for industrial and commercial buildings, complete relief from development land tax, exemption from local taxation, drastically simplified planning control and lighter regulation. The idea was Geoffrey’s own brainchild.

27

Notes and coins are included in all the monetary measures. But since the great majority of transactions in the economy are not conducted in cash, but in transferring claims on the banking system (e.g., writing cheques), most measures also include some part of total bank deposits. Wider measures often include the deposits of other financial institutions such as building societies. £M3 comprises notes and coins in circulation with the public, together with all sterling deposits (including certificates of deposit) held by UK residents in both public and private sectors. The argument about which is the best measure continues, though a misplaced obsession with the exchange rate has since rather put such argument into the shade. There were two important points which were forgotten by many of those who criticized the MTFS on the basis of the changes we made. First, ‘monetarism’ is simply the view that inflation is a monetary phenomenon and that, therefore, the reduction in the rate of growth of the money stock is essential to achieving a permanent reduction in inflation. Second, there is a difference between the measurement and the control of the money supply. Our difficulty was to measure the money supply, which led to our seeking different or better measures to supplement £M3. We knew how to control the money supply, through interest rates, and did so: indeed Alan Walters was to argue persuasively that we had controlled it too much.

28

See below, pp. 102–4, 107.

29

The report was damning. SLADE had been using its strength in the printing industry to recruit among freelance artists, photographic studios and advertising agencies by threatening to ‘black’ the printing of their work unless they joined the union. The report concluded that the campaign ‘was conducted without any regard whatever to the feelings, interests, or welfare of the prospective recruits’.

30

The Ryder Plan, dating from 1975, proposed the investment by government in phases over seven years of £1.4 billion to modernize BL plant and introduce new models.

31

See pp. 679–80.

32

Higher interest rates caused people to increase the amount they held in interest-bearing financial assets and to reduce cash and non-interest-bearing assets in their current accounts.

33

The civil service strike began in March 1981 and lasted for five months. Union members struck selectively at crucial government installations, including computer staff involved in tax collection, costing the Government over £350 million in interest charges on money borrowed to cover delayed and lost tax revenue. Industrial action was also taken at GCHQ, the installation at the heart of Britain’s signals intelligence, which led to our decision in January 1984 to ban trade unions there.

34

Our three-month rate was 13 per cent. By contrast, interest rates in the US stood at 18 per cent and in France, Italy and Canada between 18 and 20 per cent. German interest rates, at a nominal 13 per cent, were very high indeed in real terms — and still the deutschmark had depreciated by between 40 and 45 per cent against the US dollar in the previous twelve months.

35

Later, when the war was won, Enoch Powell returned to the subject in a Parliamentary Question: ‘Is the Rt. Hon. Lady aware that the report has now been received from the public analyst on a certain substance recently subjected to analysis and that I have obtained a copy of the report? It shows that the substance under test consisted of ferrous matter of the highest quality, and that it is of exceptional tensile strength, is highly resistant to wear and tear and to stress, and may be used to advantage for all national purposes.’ Ian Gow had the two quotes printed and framed for me as a Christmas present in 1982; they hang still on my office wall.

36

The MEZ was a circle with a 200-nautical-mile radius drawn around a point approximately at the centre of the Falkland Islands. From the time of its coming into effect any Argentine warships and naval auxiliaries found in the zone would be treated as hostile and would be liable to be attacked by British forces.

37

See p. 205.

38

By the end of the decade 25–30 per cent of GNP was commonly estimated.

39

Germany had forsworn nuclear, chemical and biological weapons when it joined NATO in 1955.

40

See pp. 236–7.

41

See p. 107.

42

Until 1982 the Canadian Constitution was still based on British Acts of Parliament, which only Westminster could amend, though of course in every practical sense Canada has long been an independent state. In that year at Canadian request we legislated to ‘patriate’ the constitution and the process of amendment, passing it over to full Canadian control.

43

See pp. 451–3.

44

Monetary Compensatory Amounts (MCAs) were a system of border taxes and levies on CAP products.

45

See pp. 139–43.

46

See pp. 379–83.

47

In fact, I have since seen documentary evidence suggesting that he knew full well and was among those who authorized payment.

48

See pp. 685–6.

49

The National Union of Conservative and Unionist Associations… the voluntary wing of the Party.

50

In this chapter and elsewhere nationalist is generally used as an alternative to ‘Catholic’ and Unionist to ‘Protestant’. While it is true that the political and ethnic division in Northern Ireland is largely (though not always) consistent with and sometimes worsened by religious division, it is misleading to describe it in essentially religious terms. The IRA gunmen who murder and the hunger strikers who committed suicide are not in any proper sense ‘Catholic’ nor are ‘loyalist’ sectarian killers ‘Protestant’. They are not even in any meaningful sense Christians.

51

A system of majority rule had existed in the province from the creation of Northern Ireland in the partition of 1920 until 1972, known as ‘Stormont’ (from the location of government buildings on the edge of Belfast).

52

See pp. 56–9.

53

Convicted criminals sentenced to more than nine months’ imprisonment who claimed political motivation and were acceptable to the paramilitary leaders in the gaols were accorded special category status… allowed to wear their own clothes, exempted from work, and segregated in compounds.

54

See pp. 191, 216, 223, 225.

55

Prisoners on the mainland received 33 per cent remission: we acted to remove this extraordinary anomaly by reducing remission in Northern Ireland to the same level the following year.

56

Internment… detention without trial… had been introduced at the height of the troubles in 1971, and phased out by 1975.

57

The Stalker-Sampson Report was the outcome of a police enquiry into a series of fatal incidents in 1982 in which the RUC was alleged to have operated a ‘shoot-to-kill’ policy in dealing with terrorist suspects.

58

The ‘Birmingham Six’ were six Irishmen convicted of multiple murders resulting from the IRA bombing of two pubs in Birmingham in 1974. A long campaign was undertaken to prove the convictions unsafe, eventually resulting in their release. At this time, however, their latest appeal had just been rejected by the Court of Appeal.

59

In Irish law every person born in Ireland is an Irish citizen from birth, but those born in Northern Ireland do not become Irish citizens unless they declare themselves so to be.

60

British football fans had attacked Italian fans at the Heysel Stadium in Brussels in 1985, crushing thirty-eight of them to death when a wall collapsed. Twenty-six were later extradited from Britain to face charges in Belgium.

61

Three months’ redundancy pay had been available to ministers in the Lords since 1984, and we introduced legislation to extend the scheme to the Commons in July 1990. Due to lack of time the scheme was only enacted in February 1991.

62

The principal sub-committee of ‘E’, the economic committee of the Cabinet.

63

See Chapters 4 and 23.

64

John Redwood had arrived in 1983 to be the extremely effective head of the Policy Unit. He and Peter Warry kept a shrewd and sceptical eye on BL’s finances, briefing me regularly.

65

In February 1993 former senior Soviet officials confirmed precisely this point at a conference at Princeton University on the end of the Cold War.

66

See pp. 259–162.

67

See p. 75.

68

On 22 July 1946 91 people were killed when the hotel was bombed by Jewish terrorists from a group led by Menachem Begin.

69

For discussion of the Athens European Council, see Chapter 12, pp. 335–8.

70

I am a great collector of menus. For the connoisseur I reproduce the menu for dinner on 25 June: Assortiment de foie gras d’oie; Homard breton rôti, beurre Cancalais; Carré d’agneau aux petites girolles; Asperges tièdes; Fromages de la Brie et de Fontainebleau; Soufflé chaud aux framboises; Mignardises et fours frais. All washed down with the finest wines.

71

Britain and Ireland — as island countries — were permitted to retain or take new measures on grounds of health, safety, environment and consumer protection.

72

See Chapter 22.

73

See p. 591.

74

See p. 39.

75

For the arguments about the terminology see pp. 570–1.

76

See my speech to Rand Afrikans University in May 1991.

77

See p. 571.

78

See pp. 670–1.

79

The Department of Health and Social Security (later Health alone) was responsible for strategic planning of health care in England and Wales. Below it are the Regional Health Authorities (RHAs) responsible for a number of special services, major capital projects and regional planning, and below them are District Health Authorities, whose functions are discussed below. General practitioners, dentists, pharmacists, and opticians are the responsibility of separate bodies, now known as Family Health Service Authorities. In Scotland there is a single tier of Health Boards under the Scottish Office.

80

We also looked briefly at the idea of a national lottery to help fund the NHS. But while I saw some value in local lotteries to help the voluntary sector raise small amounts for particular projects, I did not like a National Health lottery because I did not think that the Government should encourage more gambling, let alone link it to people’s health.

81

‘Medical audit’ is a process by which the quality of medical care provided by individual doctors is assessed by their peers.

82

For more discussion of ‘homelessness’ see pp. 603–4.

83

I was, though, content to make one minor adjustment. This was to provide tax relief for workplace nurseries.

84

Central government grant contributes a large proportion of local authority spending. GREAs were an attempt to allocate grants to authorities on the basis of their ‘need to spend’, as denned by central government on the basis of dozens of indicators covering everything from an authority’s population to the state of its roads. The block grant system altered the distribution of central government grant so that it provided a lower proportion of local authorities’ expenditure if they spent significantly more than their GREAs — in other words, the more a council overspent, the higher the proportion of its spending ratepayers would have to meet. ‘Targets’ for individual local authorities (based on past spending) were introduced later in an attempt to secure year-on-year reductions in local authority spending: local authorities exceeding their targets actually lost grant (‘holdback’). The Audit Commission was established in 1982 with responsibility for auditing the accounts of local authorities in England and Wales and with powers to undertake or promote work on value for money and efficiency.

85

Rates were levied at so many pence in the pound (the ‘poundage’) on the basis of the rental value of the property, which was assessed by a general valuation carried out by the Inland Revenue. Since the rental market in domestic property was small and shrinking the valuations were often very artificial. In addition, obviously, their accuracy deteriorated over time; hence the need for periodic revaluations.

86

A ‘full’ safety net was one that ensured there would be no losses or gains from the abolition of ‘resource equalization’ during the first year of the charge.

87

The capping legislation allowed us to act on a number of different criteria. The lawyers now advised that we could be much more rigorous than we had thought in capping authorities which had made excessive increases of the charge year-on-year (as opposed to capping those which had an excessive level of spending in a particular year).

88

See p. 355.

89

See also Chapter 20.

90

The earnings rule limited in the early years of retirement the amount a pensioner could earn without reducing his pension.

91

For Nigel Lawson’s resignation see pp. 15–18.

92

On both of which, see pp. 681–5.

93

See pp. 437–41.

94

See pp. 96–7.

95

Overfunding was the practice by which the Government sought to reduce private bank deposits — and hence £M3 — by selling greater amounts of public debt than were required merely to finance its own deficit. The ‘bill mountain’ arose from the use of the proceeds to buy back treasury bills from the market.

96

See p. 706.

97

In all this, it is always necessary to distinguish between nominal and real interest rates. High money interest rates are predominantly a consequence of the market’s expectations of high inflation. If inflation is expected to be high, say at 10 per cent, then, even if one ignores taxes, interest rates of 10 per cent are required just to offset the inflationary erosion of a family’s savings. In fact it is real interest rates — the excess of the percentage interest rate above the expected inflation — which affects the thrift and investment of families and businesses.

98

For this and for the Madrid European Council see pp. 740–2, 750–2.

99

The suggestion that the inflation which began at the end of 1988 and lasted until mid-1991 could be explained by decisions on interest rates and monetary policy in 1985 assumed almost a four-year lag in the effect of monetary expansion on inflation. We know that lags, in Milton Friedman’s words, are ‘long and variable’ with an average of about eighteen months. So three to four years is possible, but hardly plausible.

100

Interest rates had gone up to 13 per cent in November 1988 and to 14 per cent in May 1989.

101

Following the negative reception accorded to our original proposal for competing currencies, we began to develop this new hard ecu approach based on the suggestions made by Sir Michael Butler, Britain’s former Ambassador to the Community, now working in the City.

102

See pp. 405–6.

103

At Fontainebleau — see pp. 541–5.

104

The WEU was formed in 1948, principally for the purpose of military cooperation between Britain, France and the Benelux countries. Germany and Italy joined it in the 1950s. The WEU predated NATO, which has entirely overshadowed it.

105

See pp. 413–4.

106

For a full discussion of this issue, see pp. 786–7.

107

See pp. 709–13.

108

See pp. 168–71.

109

See pp. 799–800, 842–6.

110

The US-Soviet Strategic Arms Reduction Talks, which had begun in the first year of the Reagan Administration.

111

See p. 258.

112

For this meeting see pp. 746–8.

113

For other discussions at this meeting see p. 759.

114

The Helsinki Final Act of 1975 contained the following commitment: ‘The participating States regard as inviolable all one another’s frontiers as well as the frontiers of all States in Europe and therefore they will refrain now and in the future from assaulting these frontiers. Accordingly, they will also refrain from any demand for, or act of, seizure and usurpation of part or all of the territory of any participating State.’ However, the Final Act also provided that ‘frontiers can be changed, in accordance with international law, by peaceful means and by agreement’.

115

See p. 767.

116

See p. 800.

117

See pp. 89–90.

118

See pp. 755–6.

119

See pp. 764–7.

120

See p. 757.