Margaret Thatcher was not right-wing

Simon Heffer on why the Iron Lady stood not for Toryism, but for liberalism.

Gladstone and Thatcher.
Millais's portrait of William Gladstone and a photograph of Margaret Thatcher from 1971. Images: National Portrait Gallery and Corbis.

There is a danger in using labels such as “left” and “right” to describe politicians. Only the boring ones easily accept categorisation. Those who are interesting refuse to be contained within such broad ideologies. The late Margaret Thatcher was one such.

At the second New Statesman centenary debate a fortnight ago on whether the left won the 20th century, I provoked a sharp intake of breath in the audience by suggesting that Mrs Thatcher was not, in fact, of the right, as the right had been defined in the eight decades of the 20th century that preceded her administration. It was quite clear to me, and has been clear since she became prime minister 34 years ago, that Mrs Thatcher was a Gladstonian liberal. By her birth in 1925 the Liberal Party had been reduced to a near-irrelevance in what had just become a two-party state, after the rise of Labour and the divisions between Asquithian and Lloyd George Liberals. Its transformation into a social-democratic party would not, in any case, have suited Mrs Thatcher at all. It was hard enough for her to compromise herself for nearly four years and sit in Ted Heath’s cabinet. She quite ruthlessly used the Conservative Party as a flag of convenience to participate in a political organisation with some hope of forming a government. Once leader, she engaged in the usual business of taking a party and altering it to suit what she regarded as the needs of electability. Clement Attlee had done it with Labour after Ramsay MacDonald. Jeremy Thorpe attempted to do it with the Liberals after Jo Grimond. Tony Blair did it with Labour after Foot, Kinnock and Smith.

Mrs Thatcher had been supported by men – and it was almost exclusively men – in the party who wanted to see capitalism given a fairer crack of the whip and not held subject to the decline-ridden ethos of the postwar consensus. She was given intellectual underpinning by a group of classical liberals for whom the free market was the fons et origo of political wisdom. As a practising poli - tician, however, her model was William Ewart Gladstone.

To see the link with Gladstone and his modus operandi, consider his own achievements. As vice-president of the Board of Trade from 1841 to 1843 in Robert Peel’s Conservative administration, he had understood the need to repeal the Corn Laws long before even Peel had. Gladstone’s principal concern was the welfare of the ordinary people, who in a time of economic hardship were being made to pay more for their food than was necessary because of the protection of the British landed interest and the tariffs levied on imported cereals. But he saw free trade as leading to prosperity – just as Richard Cobden and John Bright did – and a prosperity that would be shared among more than just the Tory grandees who comprised most of the British landed interest.

When he was chancellor (in a coalition of Whigs and Peelites) in the 1850s and the 1860s, Gladstone’s main concern was to balance the books and abolish the income tax. He sought to reduce government expenditure and take the state out of the equation wherever possible. In his first Budget in 1853 he abolished 123 duties and reduced 133 others. These reductions were paid for by an income tax that would expire in 1860; thereafter, the expenditure individuals chose to make would be taxed and be a main source of revenue: and the income tax would be unnecessary, because the size of the state would be cut to a point where it could be funded out of duties. When the unexpected – the Crimean war – happened, Gladstone funded it out of temporarily higher taxes rather than borrowing. Even then the top rate of tax was just 6 per cent, and Gladstone saw this in terms that would have their echo in the strictness of Thatcherism: “The expenses of a war are the moral check which it has pleased the Almighty to impose upon the ambition and the lust of conquest that are inherent in so many nations.”

Becoming chancellor again in Palmerston’s administration in 1859, Gladstone inherited a budget deficit of £5m. He again refused to borrow to fund it, and put the income tax up to 9d in the pound from 5d in the pound – from just over 2 per cent to just under 4. He set about trying to conclude free-trade agreements with other countries. He abolished hundreds more duties and cut income tax back to 5d in the pound by the time he left office in 1866. He did so all the time while ensuring Britain lived within its means.

Yet it is not just his economic philosophy to which Mrs Thatcher’s ideas owed so much. Gladstone’s wider reforming programme was, anachronistically, Thatcherite to the core. Where she extended home and share ownership to the working class to enfranchise them economically, Gladstone’s 1866 Reform Bill aimed to enfranchise working men politically. After its defeat, the Conservatives had no choice but to introduce their own measure because of the strength of public agitation and the fear of the consequences of not doing so: but it was Gladstone who forced their hand. In office as prime minister in 1868, he presided over an administration that sought to break the upper and middle classes’ control over society and to extend the ladder of opportunity further down. Every child between the ages of five and 12 would have a school place made available for it, though that education would not be free – parents would be expected to pay a few pence a week for it, ensuring a price mechanism and a sense of value were inculcated into the system. The Cardwell reforms in the army ended the practice of buying and selling commissions and began the notion of promotion on merit. The religious barriers to those who wished to hold fellowships and other offices at Oxford and Cambridge Universities were removed. The Northcote- Trevelyan reforms of the civil service, to which Gladstone as chancellor of the exchequer had stood godfather in 1853, were finally completed during his premiership in 1870, ensuring that admission to most of the civil service was regulated according to merit judged in a competitive examination.

This move towards meritocracy, this desire to open up opportunity to classes of people who hitherto had only been able to dream of it, this idea of the state as something that enables rather than something that controls and apportions, were all tenets of what came to be known as Thatcherism. The basis of that creed was the elevation of the individual back to a status familiar before the Great War had begun the aggrandisement of the state at the individual’s expense. To achieve this, the individual would be economically empowered and the state reduced in size. So Mrs Thatcher ordered the cutting of direct taxation in 1979, while indirect taxation – the type that allows you to exercise a choice about whether to pay it – was used to raise more and more income. The shrinking of the state was the means of redeploying scarce resources from the unproductive to the productive sectors of the economy. Its aim was to build a dynamic, capitalist economy where inefficiency had been driven out of the system: much as was the case during the 1850s and 1860s.

Gladstone had inherited an idea common to Englishmen of his generation from the mercantile class, that the highest state to which one of the queen’s subjects could aspire was to be left alone by the state, not least in the matter of being allowed to keep his own money. Mrs Thatcher, too, believed this. She also saw an indissoluble link between liberty and free markets. Free markets were the basis not just of prosperity, but of the right to operate free will. They provided choice and allowed people to exercise it. This was something taken for granted by Gladstone, but which needed reaffirmation after decades of socialism from both of the main political parties. The control of the supply of money, in order to check inflation, was also central to the policy. This was not just to help maintain sound money but also to encourage thrift and the notion of living within one’s means. All of these were central tenets of Gladstone’s economic beliefs.

There is no need to take my estimation of her political creed as definitive. Let us recall, first of all, her speech to the Conservative party conference at Blackpool in 1983, four months after she had beaten Labour in a landslide. “I would not mind betting,” she said, “that if Mr Gladstone were alive today he would apply to join the Conservative Party.” Thirteen years later, when Thatcherism was history, she used the Keith Joseph Memorial Lecture to observe: “The kind of Conservatism which he [Joseph] and I . . . favoured would be best described as ‘liberal’, in the old-fashioned sense. And I mean the liberalism of Mr Gladstone, not of the latterday collectivists.”

She had, however, insisted to Fritz Hayek, the godfather of libertarian economics, that she was a Tory, accusing him of wanting her to be a Whig. Of course she would be repelled by the idea of being a Whig: the Whigs were effete and ineffectual, lacking the hardnosed ruthlessness in government that had distinguished Tory administrations such as Pitt’s, Liverpool’s and Peel’s. But Gladstone was never a Whig either. He was a Tory who became a liberal, according to him, because of the (to him) inspirational effect of the unification of Italy. Yet he had left the Tory party some years earlier, when it rejected the repeal of the Corn Laws and, with it, Peel, whose hard-mindedness and integrity Gladstone greatly admired. But as he reflected on the problem with the Tory party in the years after 1846, Gladstone realised his deep-seated opposition to the vested interests of the landed classes that formed the backbone of that party. He could not accept the state paternalism of the Tories, or the feudalism of the landed interest, with the concomitant lack of regard for future progress.

Gladstone and Mrs Thatcher were both radicals. Unlike the socialist radicals of the Chartist movement, or the early trade unionists and the founders of the Labour Party, neither of them believed in collectivism, but rather in a radical individualism unfettered by the suffocating hand of paternalism. It was this Gladstonian passion that Mrs Thatcher brought to bear on her own party, seeking to reinvent it as a “neoliberal” party of the sort that, as she herself said, Mr Gladstone would wish to join.

Those Conservatives in the NSdebate who argued that the right had won the 20th century used as their main weapon the success of Thatcherite economic policies – policies that are now part of the consensus in much of the global economy. Yet those were liberal policies that horrified the “right” in British politics. They came in a direct line from Adam Smith (who I know was also claimed by Gordon Brown, but everyone is entitled to be satirical occasionally), through Gladstone, through Enoch Powell during his stint as a Treasury minister in the 1950s and to the Institute of Economic Affairs (IEA) around the same time. Milton Friedman, who is often accused of inventing Thatcherism, was very much a Johnny-come-lately to this particular party. Powell, who also learned his economics from Adam Smith, was no more an orthodox Conservative than Thatcher was; and the IEA was run by two men who had nothing to do with the Conservative Party. Arthur Seldon was a supporter of the Liberal Party, before it went to seed; and Ralph Harris, when rewarded by Mrs Thatcher with a peerage for his role in shaping her thinking, sat on the cross benches so as not to become infected by the lingering germs of paternalist, protectionist conservatism.

The right, as strictly defined, for much of the 20th century had been a disaster: and it was a disaster Mrs Thatcher recognised and wished to avoid perpetuating. The Conservative Party of Baldwin and Chamberlain had appeased Hitler, with near-catastrophic results. In the postwar period, whether under Churchill, Eden, Macmillan, Home or Heath, it had been content merely to manage decline, to defer to or make accommodations with undemocratic trade unions and corrupt white-collar professional cliques, to preside over the depreciation of the currency and the loss of international prestige. In seeking to shore up British power, to put constitutional politicians at the heart of governance, to restore sound money and to break vested interests, Mrs Thatcher was taking her cue directly from Gladstone.

She, like Gladstone, sought to create an enabling state. As with him, this required a degree of centralisation. However, she had to create a strong framework in which liberty and opportunity could stand a chance, which meant controlling overmighty subjects such as the trade unions and the City of London, and seeking to remove such restraints as they placed on trade. Privatisations were, for her, a means of restoring Gladstonian economic efficiency. Although Gladstone, while at the Board of Trade during the railway boom of the early 1840s, had allowed in legislation for the state to take over the railways at a time of national emergency, he would have failed to understand the notion of state control for ideological reasons, and certainly would not have brooked the idea of state ownership of such a business.

There are other points of correspondence. Mrs Thatcher’s morality was much like Gladstone’s. She lacked the essential Tory component of pessimism. She always believed people could be better. This was the same impulse that caused Gladstone to undertake his rescue work with prostitutes, to take them back to the basement kitchen in Carlton House Terrace where he and Mrs Gladstone would attempt to make them turn to God and see the benefits of a different life. Mrs Thatcher was not an intense and brilliant theologian of Gladstone’s type, but her faith, like his by the time he entered Downing Street, was rock-solid. And, of course, the Anglo-Irish Agreement of 1985, which caused such outrage among many of her Tory supporters, was her own attempt to “pacify Ireland”.

She was not of the “right”. She saw the “right” as anti-intellectual, morally cowardly, elitist and patronising, and as having collaborated with socialism after the Second World War rather than challenging it head-on. She saw the “right” as defeatist: that is what the “management of decline” signified. That defeatism, in her estimation, consisted of a lack of faith in the energy and wit of the individual, the sort of faith that Gladstone instinctively had and that she sought to emulate. Both the posthumous biographies of Mrs Thatcher – by her chief policy adviser Robin Harris and the first volume of Charles Moore’s authorised life – show the origins of her belief in the individual as having stemmed from her strict and dutiful upbringing in the Grantham grocer’s shop. It was an upbringing any 19th-century liberal, with his picture of Mr Gladstone over the mantel, would have regarded as quite usual, and quite necessary for the improvement of the mind, and of the nation.

Simon Heffer is a columnist for the Daily Mail. His next book, “High Minds: the Victorians and the Birth of Modern Britain”, will be published by Random House in September Listen to the second NS centenary debate, “The Left Won the 20th Century”, at: newstatesman.com/podcast