© John Barnes
Political Change
Lecture 13
Although I have entitled this lecture the Conservative response, it might almost as well be called the origins of Thatcherism.
One of the more remarkable features of the 1970 election was a Conservative manifesto, which in many respects anticipated the Conservative platform in 1979 and has, with only the slightest tongue in cheek, been compared with Blair's platform in 1997.
The reversal since 1964 was in most respects so complete as to warrant us talking of an earlier U-turn than that accomplished by the Heath Government in 1972.
When Powell characterised the 1964 election as one which would turn principally on what he described as "the supreme issue", the "free society versus the Socialist State", he seemed almost totally out of kilter with his times. Even Iain Macleod, still a close friend, twitted him gently by recalling that he had presided over two major planning exercises, the Ten Year Hospital Building Programme and for Local Welfare Services. Powell had twice resigned: on the first occasion with his ministerial master, the Chancellor of the Exchequer, in January 1958, and on the second in October 1963 because he supported Butler's claim to the succession and believed that Home had reneged on a clear indication that he was not a leadership candidate. Macleod had accompanied him, but for rather different reasons. Both men were, however, invited to return to the Shadow Cabinet after the General Election defeat. Neither had done their chances of leading the party any good whatsoever, and Macleod, who had the better chance, immediately set about rebuilding his position in the hope that a change of leadership would be delayed.
Home had no intention of resigning nor was it in the party's interest that he should do so. If there were to be another defeat, best under him than under a new leader. But he was not just hanging on. He reorganised the party organisation, appointed a youthful party chairman (du Cann), launched a major policy exercise which Heath was to mastermind, and set in train an enquiry to recommend new arrangements for the election of a leader.
Nor was the next election a foregone conclusion.
Doubts about Home's leadership grew, culminating in a shocking poll, which suggested that not only did the electorate have more confidence in Mr Wilson - they also thought him more honest. Wilson ruled out a 1965 election.
A critical article by William Rees Mogg in the Sunday Times was the trigger for Home to rethink his position.
Although efforts were made to persuade him to stay, both the Chief Whip and the Party Chairman though Home had no option but to resign. In fact he had already decided to go.
By then the new machinery for electing a leader was in place.
There were three candidates. Maudling was probably the favourite, but he had surrendered the shadow Chancellorship to Heath. Powell, the outsider, had set in train a philosophical challenge to the course the Conservative party had taken as early as December 1963 (Crossbow).
Heath had taken on Callaghan in a bruising battle over the finance bill and at a crucial moment inflicted three defeats on the Government. Macleod not only decided to stand down, but threw his support to Heath. That ensured a Heath win.
Although Maudling continued in the shadow Cabinet, he concentrated on his business activities and his star waned.
Powell probably thought he was putting down a marker for the future, but his low vote may even have done him damage.
Heath's victory put him in an unenviable position, made much worse by the decision of the Smith Government in Southern Rhodesia to declare UDI.
The effect was to ensure Labour a dazzlingly big majority and the driving seat during the major sterling crisis in July 1966.
Although the Conservatives had divided over Rhodesia and more particularly the question of oil sanctions, they had potentially more serious divisions, the most important of which concerned incomes policy. Looming there was a more fundamental set of clashes over the direction the party was to take.
The economic liberalism (derived from Hayek) which had formed an important part of the Conservative platform in 1945 and which had been a feature of the early 1950s, was now in recession. But the reaction to the Macmillan Government was under way, in part at the hands of the right - the Monday Club (1961) - but more important, amongst some of the younger figures in the party.
The One Nation Group, the Bow Group and the abortive Longbow Group.
More influential still over time, the IEA, whose target had been given to it by Hayek - journalists, academics and students who went into the media and other professions. These Hayek saw as creators of the intellectual environment within which the politicians operated.
The Daily Telegraph and Maurice Green.
Samuel Brittan and the Financial Times. An early critic of planning, but not a monetarist until 1967 (Friedman's Presidential).
Peter Jay and The Times after his visits to the USA in 1967/8.
But there were also politicians who found their way to the IEA. Powell an early ally (Cf. Thorneycroft in Not Unanimous). Joseph, Howe, Mrs Thatcher, Biffen.
More important than anyone else, Iain Macleod, who was not aligned as far as I can see with the IEA, but who was intent on a radical approach to policy and particularly taxation. He was a firm believer in eliminating restrictive practices, but no more than Heath could he be described as a monetarist. Margaret Thatcher was his choice as deputy and identified her as a future leader of the party and PM.
He had focused on the salariat, as did (surely not by coincidence) the authors of New Tasks. He sought a more meritocratic society, an increase in incentives and in savings (the capital owning economy) and reform of the trade unions. But also "competition needs compassion."
Behind the scenes in the post 1966 period there was a long drawn out battle about tax, incomes policy and the management of the economy in which intellectual doubters at time made common cause with the politically cautious. The quarrel between Powell and Maudling flared in the New Year of 1966 and Macleod produced a compromise to see the party through the election. Maudling never budged from his belief in an incomes policy, but Macleod opposed that introduced in 1966. Shepherd nevertheless holds that he never ruled an incomes policy out and points to his caution on the subject in his 1966 Conference speech. In the spring of 1967 he felt that the party could not advocate an early return to freedom, but he found little support outside the shadow Cabinet. In the summer of 1967 he seemed to be favouring an informal process of suasion against the Powellites and that was the minimal position taken by Heath in the Carshalton speech 8 July 1967. But the 1967 Conference was restless and Macleod offered "the economy of choice" and "the pursuit of excellence" not equality.
By December Macleod was raising the issue of whether "we hold to our line that we are against a statutory policy" and give a lead in the public sector, including the nationalised industries, but he softened the line against the Government's renewal of statutory controls. And Make Life Better, while ruling out a statutory policy allowed some room for influence even beyond the public sector. When Conference called for a rejection of compulsion, he ruled it out, but he also asked Conference to reject the pure milk of Powellism. My own recollection differs slightly from Shepherd's. What he thought was needed was a policy for the Government as employer and customer and beyond that he would not rule out pressure so long as there was no compulsion.
Even on industrial intervention (where the IRC was an obvious target for abolition and where Joseph was allowed to set out a liberal platform in the Times in 1969), caution supervened. While it is wrong to suggest that the incoming Government had no privatisation programme, it had not been highlighted in the 1970 manifesto and after the privatisation of a handful of smaller scale enterprises, the initiative was stifled. But even though Joseph had not been appointed to Industry, the incoming government's attitude to industrial intervention was for the most part hostile.
In the meantime the overt emphasis was on Europe, trade union reform, immigration, and selectivity in the social services. First stated in Putting Britain Right Ahead most of these themes remained relevant, although in retrospect some are inclined a rethink on TU reform in the light of the Government's bill might have been wise.
The challenge of Powellism.
Ideologue, opportunist, maverick - a principled populist, with far wider support after 1970 than is generally appreciated (Schoen).
Kenyan Asians and the compromise on the Race Relations bill (45 MPs defy the whips).
The "rivers of blood" speech and Powell's dismissal. (Deal October 1967; Wolverhampton December 1967; Walsall 9 February 1968, attacked by the Sunday Times; Birmingham 20 April 1968)
Powellism may have had some coherence as a package, but it was far from universally attractive to Conservatives, containing as it did a growing opposition to the Common Market, the United States, the Commonwealth, Britain's position East of Suez, and the nuclear deterrent as well as the more popular lines on immigration, incomes policy and the economy more generally.
But there was a momentary meeting of minds between Powell and the right wing "Tory Democrats" of the Monday Club.
Heath's York speech September 1968 assimilated immigration policy to that for aliens, reiterated at Folkestone and Walsall but at the 1969 Conference the official line prevailed only by 1,349 to 954. Capitulation or fudge?