Back from the Brink: The Inside Story of the Tory Resurrection. Peter Snowdon
unreformed public sector, particularly the National Health Service and education. The remaining dragons of ‘state socialism’ had to be slain with the help of market forces. It was an ambitious and bold programme that inspired a whole new generation of Conservatives. One of them was an impressionable David Cameron, who in 1987 was in his final year at Oxford University studying Politics, Philosophy and Economics. ‘David was a total fan of Mrs T but feels that a mythology has grown up around her that is not connected to reality,’ a friend recalls. ‘He understands that she was fortunate in having a divided and weak opposition, but that she was also quite tactical and smart in knowing when to withdraw. To him, she was a canny politician who knew how to duck and dive when she had to.’
By the beginning of 1988, however, she had become a command-and-control Prime Minister. With many of her internal critics dispatched, including Heseltine, she began to take her Cabinet for granted. William Whitelaw had been the rock of that Cabinet since 1979. He was a dependable deputy who tirelessly worked the corridors of power to ensure that the Prime Minister was kept out of danger and in touch with the party mood. ‘Every Prime Minister needs a Willie,’ she famously proclaimed. His retirement as Deputy Prime Minister in January 1988 meant that he was no longer around to act as ‘the one-person fire brigade for collective restraint’, as the Whitehall chronicler Peter Hennessy described him.12 The powers of Mrs Thatcher’s well-honed political antennae, which encouraged caution when necessary, were beginning to diminish just as she became convinced of her own invincibility. ‘She lost her touch, and her feel for colleagues, which had been good, left her,’ recalls Ken Clarke, who sat in her Cabinet.13 This was never more apparent than in her deteriorating relations with her two principal lieutenants, Sir Geoffrey Howe and Nigel Lawson.
Howe, her Chancellor and then Foreign Secretary, and Lawson, his successor as Chancellor in 1983, believed that the government had to conquer inflation, the scourge of Britain’s post-war economy. The rising cost of living had been a dead weight on the British economy for years, particularly during the recessions of the 1970s and early 1980s, when inflation rarely fell below double figures. Although taming inflation had been central to the Thatcher revolution from its inception, it had yet to be achieved. Her lieutenants urged her to consider a Europe-wide solution. The European Exchange Rate Mechanism (ERM) could provide stable exchange rates with other European currencies, helping to bring domestic inflation under control. This was not to Mrs Thatcher’s liking: she believed that it could be mastered by controlling the domestic money supply. But her Chancellor, emboldened by his tax-cutting budget in 1988 and a booming economy, pressed her to consider joining.
European solutions were not exactly to the Prime Minister’s tastes by 1988. Ever since she signed the Single European Act in 1986, which heralded closer cooperation within the European Community on a large range of policy areas, she had had her doubts. She had fought hard to win a rebate from Britain’s contribution to the EC budget earlier in her premiership, but had not taken much interest in the Community’s affairs since. ‘Europe hadn’t been on the political agenda much before the Single European Act. Ironically she was the architect for the EC’s revival [as a federalist project],’ Iain Duncan Smith reflects. ‘It was sold to her as a market mechanism, and because she was so adamant about markets, she agreed.’14 For the Prime Minister, a properly functioning common market did not mean ‘ever closer’ political and monetary union across the EC. ‘We have not successfully rolled back the frontiers of the state in Britain only to see them re-imposed at a European level,’ she declared to an audience in the Belgian town of Bruges on 20 September 1988. She called for cooperation between ‘independent sovereign states’, rather than integration which sought to create ‘some sort of identikit Euro-personality’. It was a warning shot fired straight across the bows of other European capitals, and indeed some of her most senior ministers at home. The British Prime Minister had declared that she was firmly on the ‘Eurosceptic’ side of the argument. It was for others to decide whether to be with her or to stand against her.
Four days after Mrs Thatcher delivered her landmark speech in Bruges, a twenty-year-old David Cameron walked through the doors of Central Office to join the Conservative Research Department. The CRD was a traditional recruiting ground for ambitious graduates eager to begin their political careers, and in many cases had been the first step on the ladder to high office: Michael Portillo was but one of its alumni. As the engine room of Central Office, it pumped out high-quality research briefings for senior Tory politicians. Cameron was handed the Trade and Industry, Energy and Privatisation brief with which to cut his political teeth.
More importantly, he would befriend a group of young men and women who would become his closest aides and colleagues for years to come. Among them were Rachel Whetstone, Edward Llewellyn and Ed Vaizey, all of whom became future political allies. The ‘Smith Square set’ joined the party when Thatcherism was at its high-water mark. ‘We were all convinced that we were on the right side of the argument in politics,’ says one. ‘We were pro-enterprise and hated state bureaucracy.’ The head of the CRD, Robin Harris, was a disciple of the Iron Lady. ‘Robin was a great Thatcherite footsoldier, so he wouldn’t have let anybody through the door who wasn’t committed to the revolution,’ says Guy Black, who was head of the Political Section. ‘We came to be known as the “brat pack” in the press – there was nothing other than loyalty to Mrs T.’15 For them, Mrs Thatcher was known simply as ‘Mother’.
Some noticed that while Cameron admired the Prime Minister as much as the others, he did not see everything in black and white ultra-Thatcherite terms. ‘I remember conversations with him when I would say that we should scrap child benefit, and he said, “You can’t just take away people’s benefits, because it creates huge problems,”’ recalls one of his closest friends from the time, Rachel Whetstone. ‘He was much more thoughtful about things than I was.’ Indeed, within a year of meeting him she felt that although Cameron could be ‘unbelievably pompous’, he had what it took to go a long way in politics. ‘People used to say, “What’s your dream job?” And I said, “It is to be Political Secretary to the Prime Minister, who will be David Cameron.” It wasn’t because he had a burning ambition,’ she adds, ‘it was because he had a charisma which was quite compelling.’16
As the new CRD recruits fawned over their seemingly invincible leader, senior ministers became increasingly worried about the direction of her government. Foreign Secretary Geoffrey Howe had been at her side from the beginning. Thoughtful and patient, he was one of her most loyal allies. Yet Howe’s pro-European views, which were shared by many Tories of his generation, were at odds with the Prime Minister’s deepening scepticism. He was deeply dismayed with the way in which she had seized control of foreign policy. According to Nigel Lawson, she treated Howe as ‘a cross between a doormat and a punchbag’.17
Matters came to a head when Howe and Lawson confronted the Prime Minister on the eve of an important EC summit in Madrid in June 1989. They urged her to make a commitment to join the ERM by the end of 1992 as the best way of influencing the future direction of the EC. Their advice, once again, was met with resistance. In what she regarded as an ‘ambush’, Howe threatened to resign if she refused to accede to their demands. ‘You should know, Prime Minister, that if Geoffrey goes, I must go too,’ Lawson warned her.18 In July she retaliated by demoting Howe from the Foreign Office to the Leadership of the House of Commons and Deputy Prime Minister, a nominal title in which he would take little consolation.
But Lawson would be the first to go. In October he resigned as Chancellor in protest at the growing influence of Mrs Thatcher’s economic adviser Alan Walters, who shared her hostility to the ERM. Lawson’s departure fatally weakened her grip on power, to the extent that the Cabinet presented her with little choice but to join the ERM the following year. ‘The truth is that she was in a tiny minority in the government always in opposing joining the ERM, and she fought off attempt after attempt to do it,’ her respected foreign