Markets and Liberty: Inside Thatcher's Treasury

Helen Goodman MP was a Treasury civil servant during the Thatcher years. Comparing her own experiences with the tributes of Conservative MPs, she wonders what lies behind the impulse to rewrite history.

 

I was a student when Mrs Thatcher was elected Prime Minister. I had voted Labour, but I do remember watching her arrive at No 10 on the telly and feeling a surge of hope – that at last we had a woman and some good must come of this.

Within two months my Dad who was working on a public sector construction was unemployed, an early victim of the cuts. He never worked again.

I was in my final year and had been offered a job at the Bank of England. Just after my finals I received a phone call – the job offer was being withdrawn! I will never forget the look on my father’s face when I told him. One family, two job losses in three months.

The reason my job was taken from me was that one of the government’s first moves was the lfting of Exchange Controls – the first of the big financial deregulations, which the Tories were praising in Parliament yesterday. The Bank had had 600 working on this. I quickly learned that with unemployment came stigma. I found myself living in a hostel for homeless women behind Victoria Station, being openly challenged – surely a job offer hadn’t been withdrawn – I had failed to get a job.

Later I learned that the Bank had withdrawn my job offer, but they’d kept on the other new graduate they’d recruited – a man. That hurt.

Well Mrs Thatcher certainly radicalised me – I joined the Labour Party and went to work for a Labour MP. This was the days before IPSA and allowances – all he could afford to pay me was £30 a week. So it was a short-term opportunity – but life changing. I retook the civil service exams and astonishingly was offered the Treasury.

When I arrived there in September 1980, officials were still reminiscing over Denis Healey and highly sceptical about Mrs Thatcher’s ideals. One afternoon, everyone working on public spending, about a quarter of the department, was called into the large marble columned meeting room overlooking Parliament Street – all wood panelling and busts of Charles James Fox. Mrs Thatcher had decided to introduce cash limits. This was the first time I was really aware of her as a force of nature. The senior official in charge had come straight from No 10. He told us he’d raised all the problems and difficulties but received this riposte “I know it’d difficult Mr L.... but don’t wallow in it.”

I was plunged in at the sharp end – my first job was on social security and I remember we had to take through emergency legislation raiding the National Insurance fund, set up by Lloyd George. My second posting was to the overseas aid desk.

Mrs Thatcher had skilfully managed to condense her philosophy into two key organising principles – markets and liberty. For officials – even the most junior like me – this was tremendously powerful, because you knew that if you pursued these two ideas you were doing the right thing. It was a clear framework and within it there was scope for initiative and flexibility. There was no need to constantly refer up for detailed instructions.

Of course, what it also did was to over-simplify every problem and ignore the costs and downsides of policy. For example in the 1970s a series of international commodity agreements covering crops and metals had been used to stabilise these markets. This had helped the producer countries to predict and stabilise their export earnings. It was difficult to know whether prices were always aligned with long-term value so Mrs Thatcher and Ronald Reagan swept them away. So now we have traders speculating in food stuffs and multi-national corporations suing the poorest countries on earth. I would submit that this is not an improvement.

I can clearly recall her on the TV arguing with the Archbishop of York, John Habgood. “You should be providing moral certainty”, she said. “But have you thought”, he politely inquired, “that moral certainty might be a sin?”.

In the 1980s the Treasury was reorganised. The nationalised industry division was closed down and we started to privatise everything.  This brought us into close proximity with the City. They were riding high on the Big Bang. I was shocked – for doing exactly the same work young men in the City were being paid five times my salary and they were allowed to speculate on the shares being sold. I recall there was some strategic leaking about this – I can’t imagine how that happened.

Listening to the tributes of Tory MPs yesterday two things struck me – first their emotions; a mixture of terror and admiration. This was authentic. I only met her once at a large meeting after midnight when we had to secure an agreement to an urgent tax change. The power had gone so we were lit by candles. She swept in – all whisky and jewels – like a latter-day Empress Catherine II all the clever young men seemed to crumple before her. Only Eddie George – Steady Eddie – whom she later made Governor of the Bank of England could tell her what was needed.

The second thing that struck me was their desire to present her now as a figure behind whom the nation could unite. When the first draft of her 1984 part conference speech was circulated the phrase “the enemy within” was meant to refer to the miners. She delivered it after the Brighton bombing – which gave it a very different interpretation. Quite apart from her political opponents the government she led was one of the most divided in history – far more divided than the famous Blair/Brown splits. In 1987 I was moved to the foreign exchange desk. Here I discovered that the Treasury was engaged in a full scale exercise in deceiving No 10 over the management of the pound, a central part of any government’s economic policy. Mrs Thatcher and her advisers wanted to let the pound float freely, but Nigel Lawson’s Treasury was pursuing a policy of shadowing the deutschmark. Ever week we were buying and selling hundreds of millions to stabilise the pound. It was my task to write a daily markets report for No 10 – this had to explain our intervention in the forex markets without revealing our policy objective. When I suggested that instead of this duplicitous approach, the Chancellor simply raise the matter at Cabinet – he would certainly have had Geoffrey Howe’s support – I was told that if I ever mentioned this again I would be sacked!

Perhaps some of the younger Tories simply don’t know what happened (by the time David Cameron turned up in the Treasury I didn’t even bother to get to know him I was so bored with this endless stream of self-assured young men) but it does seem that this attempt to re-write what happened has more to do with current desperation rather than historical accuracy.

Mrs Thatcher herself certainly had difficulty in adjusting to her loss of power. Sir Michael Richardson, her personal financial adviser told me that he had a big lunch for her when the Queen created her a Baroness. “Margaret, this must be your proudest day” he said. She replied “What is one day of pleasure in a life of gloom?”.

Margaret Thatcher and Geoffrey Howe in 1980. Photograph: Getty Images

Helen Goodman is Labour MP for Bishop Auckland and shadow media minister

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Winning Scottish independence will be even harder than before - but it may be the only choice

Independence campaigners will have to find answers on borders, currency and more. 

The Brexit mutiny has taken not just the UK economy and its relationship with Europe into uncharted waters. it has also imperilled the union between Scotland and England. From Sir John Major to the First Minister, both Unionists and Nationalists had warned of it. The outcome, though, has made this certain. The Leave vote in England and Wales contrasted with an overwhelming Remain vote north of the border.

That every region in Scotland voted to stay In was quite remarkable. Historically, fishing and industrial communities have blamed the European Union for their woes. That antagonism was probably reflected in lower turnout - an abstention rather than a rejection. 

The talk now is of a second referendum on independence. This is understandable given the current mood. Opinion polls in the Sunday Times and Sunday Post showed a Yes vote now at 52 per cent and 59 per cent respectively. Moreover, anecdotal evidence suggests even arch No vote campaigners, from JK Rowling to the Daily Record, are considering the option.

The First Minister was therefore correct to say that a second referendum is now “back on the table”. Her core supporters expects no less. However, as with the economy and Europe, the constitutional relationship between Scotland and England is now in uncharted seas. Potential support for independence may be higher, but the challenges are arguably bigger than before. The difficulties are practical, political and geographic.

Of course the Little Englanders likely to take the helm may choose a velvet divorce. However, given their desire for the return of the Glories of Britannia that’s improbable. They’re as likely to wish to see Caledonia depart, as cede Gibraltar to Spain, even though that territory voted even more overwhelmingly In.

Ticking the legal boxes

Practically, there’s the obstacle of obtaining a legal and binding referendum. The past vote was based on the Edinburgh Agreement and legislation in Westminster and Holyrood. The First Minister has indicated the democratic arguments of the rights of the Scots. However, that’s unlikely to hold much sway. A right-wing centralist Spanish government has been willing to face down demands for autonomy in Catalonia. Would the newly-emboldened Great Britain be any different?

There are no doubt ways in which democratic public support can be sought. The Scottish Government may win backing in Holyrood from the Greens. However, consent for such action would need to be obtained from the Presiding Officer and the Lord Advocate, both of whom have a key role in legislation. These office holders have changed since the first referendum, where they were both more sympathetic and the legal basis clearer. 

Getting the EU on side

The political hurdles are, also, greater this time than before. Previously the arguments were over how and when Scotland could join the EU, although all accepted ultimately she could remain or become a member. This time the demand is that Scotland should remain and the rest of the UK can depart. But will that be possible? The political earthquake that erupted south of the Border has set tectonic plates shifting, not just in the British isles but across the European continent. The fear that a Brexit would empower dark forces in the EU may come to pass. Will the EU that the UK is about to leave be there for an independent Scotland to join? We cannot know, whatever European Commission President Jean-Claude Juncker may be saying at the moment. The First Minister is right to start engaging with Europe directly. But events such as elections in France and the Netherlands are outwith her control. 

Moreover, currency was the Achilles heel in the last referendum, and hasn’t yet been addressed. George Osborne was adamant in his rejection of a currency union. The options this time round, whether a separate Scottish currency or joining the euro, have yet to be properly explored. A worsened financial situation in the 27 remaining EU members hampers the latter and the former remains politically problematic. 

The problem of borders

Geography is also an obstacle  that will be even harder to address now than before. Scotland can change its constitution, but it cannot alter its location on a shared island. In 2014, the independence argument was simply about changing the political union. Other unions, whether monarchy or social, would remain untouched. The island would remain seamless, without border posts. An independent Scotland, whether in or out of the EU, would almost certainly have to face these issues. That is a significant change from before, and the effect on public opinion unknown.

The risk that's worth it

Ultimately, the bar for a Yes vote may be higher, but the Scots may still be prepared to jump it. As with Ireland in 1920, facing any risk may be better than remaining in the British realm. Boris Johnson as Prime Minister would certainly encourage that. 

David Cameron's lack of sensitivity after the independence referendum fuelled the Scottish National Party surge. But perhaps this time, the new Government will be magnanimous towards Scotland and move to federalism. The Nordic Union offers an example to be explored. Left-wing commentators have called for a progressive alliance to remove the Tories and offer a multi-option referendum on Scotland’s constitution. But that is dependent on SNP and Labour being prepared to work together, and win the debate in England and Wales.

So, Indy Ref The Sequel is on the table. It won’t be the same as the first, and it will be more challenging. But, if there is no plausible alternative, Scots may consider it the only option.

Kenny MacAskill served as a Scottish National MSP between 2007 and 2016, and as Cabinet Secretary for Justice between 2007 and 2014.