Back from the Brink: The Inside Story of the Tory Resurrection. Peter Snowdon
Despite the bitterness and resentment behind the scenes, in March 1992 the Conservative Party went into the general election campaign with steady determination. Major’s allies believed that his down-to-earth style would contrast favourably with the Labour leader, Neil Kinnock. Kinnock had led the party since its landslide defeat in 1983, when the party gained a mere 27 per cent of the vote. Originally from the left of the party, he had toiled to overturn Labour’s divided image, shedding some of its most unpopular policies such as unilateral nuclear disarmament, withdrawal from the European Community and nationalisation of the high street banks. He had dealt with the militant tendency on the left of the party and helped to heal wounds after a breakaway group of MPs formed the Social Democratic Party (SDP) as a rival on the centre-left, in 1981. Kinnock’s hope was that a deepening recession in 1991 and early 1992 would ruin the Conservatives’ chances of a fourth election victory. He also hoped to capitalise on the Tories’ huge unpopularity leading up to Mrs Thatcher’s downfall. Yet he had a credibility problem: many voters regarded him as a Welsh windbag, and not a Prime Minister-in-waiting. The contrast with Major could not have been starker as the election drew closer. The Prime Minister noticed as he toured the country that the eyes of voters were not sliding away, and that people wanted to talk to him rather than walk away. The connection was still there, just.
The battle lines of the 1992 general election were shaped well before Major decided to go to the country in March. Even before he became Prime Minister the Conservative strategy had been to ruthlessly exploit Labour’s weaknesses, particularly on tax and spending. The young guns at the CRD had prepared an offensive which culminated in the ‘Labour’s Tax Bombshell’ poster campaign in January 1992. David Cameron now headed the department’s Political Section, where he had been responsible for devising the earlier ‘Summer Heat on Labour’ campaign against the opposition’s tax plans. Cameron’s briefings were now being regularly fed into Major’s preparations for Prime Minister’s Questions. ‘He was an extraordinarily able and bright young man,’ recalls Major. ‘I didn’t know him well, but I was impressed with him – his coolness and his capacity to think under pressure.’32
As Cameron made an impression on the Prime Minister, he was making friends with someone who would become an important influence on his career. Steve Hilton had taken over Cameron’s Trade and Industry brief the previous year. The son of Hungarian parents who moved to Britain in the mid-1960s to pursue their education, Hilton was not a conventional CRD recruit. Although he and Cameron shared a public school education (Hilton at Christ’s Hospital and Cameron at Eton) and both went to Oxford (where they did not meet), their upbringing could not have been more different. After Hilton’s parents’ marriage broke down, his mother and stepfather, a builder, raised him in modest circumstances in Brighton. Cameron was the son of a stockbroker and a justice of the peace, brought up in the comfortable surroundings of an old rectory in the Berkshire village of Peasemore. Hilton’s hatred of Communism deeply informed his politics, and he found a soulmate in Cameron, who had travelled to East Germany shortly after the fall of the Berlin Wall. ‘Steve had clear views about the Cold War and freedom, as did David, whose trip had left a big impression on him,’ recalls a mutual friend. Learning their trade together at the CRD, they formed an enduring friendship and a shared political outlook.
They were handed a gift when Kinnock and his Shadow Chancellor, John Smith, unveiled their ‘shadow budget’ on 17 March, just six days after the start of the election campaign. Laid out in detail, Labour’s tax and spend plans became a hostage to fortune which the CRD ruthlessly exploited. The CRD, under the direction of Andrew Lansley, primed the media with briefings about how Labour’s tax increases would hit the average voter by an extra £1,000 a year. For Lansley’s protégés, the 1992 campaign would leave an indelible mark. ‘We could not afford to make mistakes,’ recalls Lansley. ‘It was a learning experience for all of them. David, in particular, learnt that an election campaign is relentless and based on rigorous research.’33 When the party launched a highly effective poster campaign, which featured a boxer under the slogan ‘Labour’s Double Whammy’, his gloves labelled ‘1. More Taxes’ and ‘2. Higher Prices’, it was clear that this was going to be a hard-hitting campaign. Designed by the party’s advertising agency, Saatchi & Saatchi, it was one of the most successful political advertisements in modern times, and would haunt Labour for years to come. However, 1992 would be the last general election campaign for many years in which the Tory electoral machine would outshine its opponents’. On 1 April, eight days before the election date, with Labour seeming to hold a decisive lead in the polls as Major crisscrossed the country with his soapbox, Neil Kinnock took the stage at a glitzy rally in Sheffield. ‘We’re all right!’ he shouted three times, overcome by emotion. His party assumed victory; the voters had not.
The Pyrrhic Victory
In the last few days of the campaign most pundits predicted either a hung Parliament or a narrow Labour victory, but on 9 April 1992 the country returned the Conservative Party to office for an unprecedented fourth term. It was a remarkable turnaround in fortunes since November 1990. Over fourteen million people had voted Tory, the largest popular vote for any party before or since. Many Conservative MPs were surprised and relieved to have held on to their seats. Major’s overall majority of twenty-one was a modest reward for the 8 per cent lead his party achieved over Labour in the share of the vote. If the small swing to Labour had been uniform across the country, the Conservatives would have won a majority of seventy-one, and the history of the next five years would have been very different indeed.
The next day Major consoled one of his closest political friends, Chris Patten. The voters of Bath had ousted the Party Chairman who had masterminded the Conservative victory. ‘He would have had a much bigger job had he been elected,’ regrets Major. ‘We sat together in the White Room of Downing Street. We were very conscious that we had won four elections in a row, which was unprecedented in modern politics, and that winning a fifth would require the Labour Party to continue to implode, or us to have a remarkable run of success.’34 Although not impossible, they knew this would be extra ordinarily difficult, especially with such a shrunken majority. Major rewarded Patten with the last governorship of Hong Kong. As he left for the Far East, Patten knew the omens for his party were not good. ‘The electorate didn’t really want us to win,’ he recalls. ‘We won by default, but they didn’t really think we deserved it. From the moment we won, the press and people at large were looking for things to criticise us for: we gave them plenty of opportunity to do just that.’35
The 1992 general election had delivered the Conservative Party a Pyrrhic victory. Within five months, on Wednesday, 16 September, Britain’s ejection from the ERM dealt a devastating blow to the party’s reputation for economic competence. On ‘Black Wednesday’ the cornerstone of the government’s economic policy was knocked out of place as interest rates soared by 5 per cent within a matter of hours. At one point they reached 15 per cent, before falling to 12 per cent. For a Prime Minister who regarded ERM entry as one of his finest achievements as Chancellor, it was particularly damaging. In fact Major had been seeking an exit point for months beforehand, aware that the government faced the prospect of a sudden hike in interest rates during a recession, and a falling exchange rate which would have rekindled inflation.
As a reserve currency in the mechanism, the pound could not be sustained at the rate at which it had originally entered, principally because of the demands of a re-unified Germany, whose domestic economic concerns had begun to dictate the whole system. Sterling became easy prey for speculators on the currency markets, while the Bank of England spent several billion pounds of its reserves trying to prop it up. The markets went into turmoil, and as the Bank of England tried and failed to stabilise the currency that morning, Major agreed with Lamont to raise interest rates to stem the run on the pound.36 He called an emergency meeting of senior ministers at Admiralty House on Whitehall, where he had decamped because of refurbishments to Number 10.
Lamont was aghast to find that