Margaret Thatcher: The Autobiography. Margaret Thatcher
even fear among many of his colleagues. In a sense, even the U-turns contributed to the aura around him. For he had single-handedly reversed Conservative policies and had gone far, with his lieutenants, in reshaping the Conservative Party. Paradoxically too, both those committed to Ted’s approach and those – like Keith and me and many on the backbenches – who thought very differently agreed that the vote-buying policies which the Labour Party was now pursuing would inevitably lead to economic collapse. Just what the political consequences of that would be was uncertain. But there were many Tory wishful thinkers who thought that it might result in the Conservative Party somehow returning to power with a ‘doctor’s mandate’. And Ted had no doubt of his own medical credentials.
He did not, though, make the concessions to his critics in the Party which would have been required. He might have provided effectively against future threats to his position if he had changed his approach in a number of ways. He might have shown at least some willingness to admit and learn from the Government’s mistakes. He might have invited talented backbench critics to join him as Shadow spokesmen and contribute to the rethinking of policy. He might have changed the overall complexion of the Shadow Cabinet to make it more representative of parliamentary opinion.
But he did none of these things. He replaced Tony Barber – who announced that he intended to leave the Commons though he would stay on for the present in the Shadow Cabinet without portfolio – with Robert Carr, who was even more committed to the interventionist approach that had got us into so much trouble. He promoted to the Shadow Cabinet during the year those MPs like Michael Heseltine and Paul Channon who were seen as his acolytes, and were unrepresentative of backbench opinion of the time. Only John Davies and Joe Godber, neither of whom was ideologically distinct, were dropped. Above all, he set his face against any policy rethinking that would imply that his Government’s economic and industrial policy had been seriously flawed. When Keith Joseph was not made Shadow Chancellor, he said he wanted no portfolio but rather to concentrate on research for new policies – something which would prove as dangerous to Ted as it was fruitful for the Party. Otherwise, these were depressing signals of ‘more of the same’ when the electorate had clearly demonstrated a desire for something different. Added to this, the important Steering Committee of Shadow Ministers was formed even more in Ted’s image. I was not invited to join it, and of its members only Keith and perhaps Geoffrey Howe were likely to oppose Ted’s wishes.
Between the February and October 1974 elections most of my time was taken up with work on housing and the rates. I had an effective housing policy group of MPs working with me. Hugh Rossi, a friend and neighbouring MP, was a great housing expert, with experience of local government. Michael Latham and John Stanley were well versed in the building industry. The brilliant Nigel Lawson, newly elected, always had his own ideas. We also had the help of people from the building societies and construction industry. It was a lively group which I enjoyed chairing.
The political priority was clearly lower mortgage rates. The technical problem was how to achieve these without open-ended subsidy. In government we had introduced a mortgage subsidy, and there had been talk of taking powers to control the mortgage rate. The Labour Government quickly came up with its own scheme, devised by Harold Lever, to make large cheap short-term loans to the building societies. Our task was to devise something more attractive.
As well as having an eye for a politically attractive policy, I had always believed in a property-owning democracy and wider home ownership. It is cheaper to assist people to buy homes with a mortgage – whether by a subsidized mortgage rate, or by help with the deposit, or just by mortgage interest tax relief – than it is to build more council houses or to buy up private houses through municipalization. I used to quote the results of a Housing Research Foundation study which observed: ‘On average each new council house now costs roughly £900 a year in subsidy in taxes and rates (including the subsidy from very old council houses) … Tax relief on an ordinary mortgage, if this be regarded as a subsidy, averages about £280 a year.’ My housing policy group met regularly on Mondays. Housing experts and representatives from the building societies gave their advice. It was clear to me that Ted and others were determined to make our proposals on housing and possibly rates the centrepiece of the next election campaign, which we expected sooner rather than later. For example, at the Shadow Cabinet on Friday 3 May we had an all-day discussion of policies for the manifesto. I reported on housing and was authorized to set up a rates policy group. But this meeting was more significant for another reason. At it Keith Joseph argued at length but in vain for a broadly ‘monetarist’ approach to dealing with inflation.
The question of the rates was a far more difficult one than any aspect of housing policy, and I had a slightly different group to help me. Reform, let alone abolition, of the rates had profound implications for the relations between central and local government and for the different local authority services, particularly education. I drew on the advice of the experts – municipal treasurers proved the best source, and gave readily of their technical advice. But working as I was under tight pressure of time and close scrutiny by Ted and others who expected me to deliver something radical, popular and defensible, my task was not an easy one.
The housing policy group had already held its seventh meeting and our proposals were well developed by the time the rates group started work on 10 June. I knew Ted and his advisers wanted a firm promise that we would abolish the rates. But I was loath to make such a pledge until we were clear about what to put in their place. Anyway, if there was to be an autumn election, there was little chance of doing more than finding a sustainable line to take in the manifesto.
Meanwhile, throughout that summer of 1974 I received far more publicity than I had ever previously experienced. Some of this was inadvertent. The interim report of the housing policy group which I circulated to Shadow Cabinet appeared on the front page of The Times on Monday 24 June. On the previous Friday Shadow Cabinet had spent the morning discussing the fourth draft of the manifesto. By now the main lines of my proposed housing policy were agreed. The mortgage rate would be held down to some unspecified level by cutting the composite rate of tax paid by building societies on depositors’ accounts, in other words by subsidy disguised as tax relief. A grant would be given to firsttime buyers saving for a deposit, though again no figure was specified. There would be a high-powered inquiry into building societies; this was an idea I modelled on my earlier James Inquiry into teachers’ training. I hoped it might produce a long-term answer to the problem of high mortgage rates and yet save us from an open-ended subsidy.
The final point related to the right of tenants to buy their council houses. Of all our proposals this was to prove the most far-reaching and the most popular. The February 1974 manifesto had offered council tenants the chance to buy their houses, but retained a right of appeal for the council against sale, and had not offered a discount. We all wanted to go further than this; the question was how far. Peter Walker constantly pressed for the ‘Right to Buy’ to be extended to council tenants at the lowest possible prices. My instinct was on the side of caution. It was not that I underrated the benefits of wider property ownership. Rather, I was wary of alienating the already hard-pressed families who had scrimped to buy a house on one of the new private estates at the market price and who had seen the mortgage rate rise and the value of their house fall. These people were the bedrock Conservative voters for whom I felt a natural sympathy. They would, I feared, strongly object to council house tenants who had made none of their sacrifices suddenly receiving what was in effect a large capital sum from the Government. We might end up losing more support than we gained. In retrospect, this argument seems both narrow and unimaginative. And it was. But there was a lot to be said politically for it in 1974 at a time when the value of people’s houses had slumped so catastrophically.
In the event, the October 1974 manifesto offered council tenants who had been in their homes for three years or more the right to buy them at a price a third below market value. If the tenant sold again within five years he would surrender part of any capital gain. Also, by the time the manifesto reached its final draft, we had quantified the help to be given to first-time buyers of private houses and flats. We would contribute £1 for every £2 saved for the deposit up to a given ceiling. (We ducked the question of rent decontrol.)
It was, however, the question of how low a maximum mortgage interest rate we would promise in the manifesto that caused me most trouble. When