Strange Days Indeed: The Golden Age of Paranoia. Francis Wheen
Ireland would now be governed from London.
Less than a fortnight after Bloody Sunday, Scargill’s flying pickets won the battle of Saltley. Heath’s political secretary, Douglas Hurd, wrote in his diary that the government was ‘now wandering vainly over the battlefield looking for someone to surrender to – and being massacred all the time’. Brendon Sewill, special adviser to the Chancellor of the Exchequer, witnessed the panic in Whitehall: ‘The lights all went out and everybody said that the country would disintegrate in a week. All the civil servants rushed around saying, “Perhaps we ought to activate the nuclear underground shelters and the centres of regional government, because there’ll be no electricity and there’ll be riots on the streets. The sewage will overflow and there’ll be epidemics.”’ According to Sewill, ‘many of those in positions of influence looked into the abyss and saw only a few days away the possibility of the country being plunged into a state of chaos not so very far removed from that which might prevail after a minor nuclear attack…. It was fear of that abyss which had an important effect on subsequent policy.’ The immediate effect was that Heath had to pay up for the miners, while pleading for ‘a more sensible way to settle our differences’.
Buying his way out of trouble became a habit for the man who couldn’t even spare me a fiver. Heath had come to office in 1970 promising to jettison many of the statist traditions of Butskellism such as incomes policies and industrial subsidies: lame ducks would be left to drown, pay rises would be set by collective bargaining rather than ministerial diktat. In 1972, with a million people unemployed and inflation at 14 per cent, he decided to jettison his manifesto instead. A new Industry Act gave the government wide-ranging powers to dish out money to firms that were in difficulties, while the Chancellor, Anthony Barber, announced ‘a further boost to demand’ with simultaneous tax cuts and hefty increases in public spending, to be paid for by printing more money. The amount of money in circulation grew by 28 per cent in 1972 and 29 per cent in 1973. ‘There is no doubt what this means,’ said Enoch Powell, Heath’s severest critic on the Tory backbenches. ‘Inflation.’
After the brief experiment with market forces it was back to business as usual – tripartite pow-wows in Downing Street at which ministers, unions and employers struck deals over beer and sandwiches. Heath sat down with the Trades Union Congress and the Confederation of British Industry in the autumn of 1972 to negotiate a voluntary agreement on prices and incomes. But beer and sandwiches were no longer enough. He offered to keep price increases below 5 per cent if the trade unions would restrain wage rises to £2 a week; the unions refused to accept anything less than a complete price freeze. Very well, said the Prime Minister, but only if you enforce a pay freeze as well. The talks broke down on 2 November, and four days later he introduced a statutory incomes policy, starting with a ninety-day pay freeze. At the end of Heath’s statement in the House of Commons, Enoch Powell intervened to ask: ‘Has he taken leave of his senses?’
To most Conservative pundits, it was Powell who seemed unhinged.* ‘We can see no evidence,’ The Times commented, ‘that inflation can be controlled simply through the money supply without abandoning full employment as an objective. Nor is Mr Powell willing to state the price in unemployment we would have to accept.’ The Economist reported that Heath ‘looks much more like any other Conservative prime minister’, which was intended as a compliment. ‘To the mainstream Tories his new pragmatism on wages and prices is reassuring. The Conservatives are a party of government and they are used to pragmatism.’ Who could have imagined that by the end of the decade Powell’s monetarist theories would be the official policy of The Times, The Economist and the Conservative Party?
Heath’s emergency freeze was succeeded in the New Year by a formula known as Stage Two, which limited pay rises to £1 a week plus 4 per cent. Speaking to the Institute of Directors in the summer of 1973, the Prime Minister explained that he was applying a lesson he’d learned in ocean racing: when sailing in rough water over submerged rocks, either ‘you tack and go off, losing direction and the race; or you go through and come out on the other side’. He was fearlessly setting his course straight over the rocks, and he might even have lurched through somehow but for the sudden military attack on Israel by both Egypt and Syria on 6 October 1973, the Jewish festival of Yom Kippur. Enraged by American support for Israel, the Arab oil-producing states cut production and hiked prices – from $3 a barrel to $5 in October, and then to $11.63 two months later.
By the time Heath launched Stage Three of his ‘counter-inflationary strategy’, two days after the start of the Yom Kippur war, it was already holed below the waterline. He had known since the summer that the National Union of Mineworkers was limbering up for another confrontation over pay, but had hoped to navigate through the storm by burning oil instead of coal. No chance of that now, as the NUM was quick to appreciate: it refused to budge from its demand for a 40 per cent pay rise. Some of Heath’s colleagues suggested he could allow the miners a large increase without breaching the pay policy by treating them as a special case and designating some of the money for ‘threshold payments’ or ‘unsocial hours’ or even ‘bathing and waiting time’. There was no chance of that either. The electricians’ leader Frank Chapple, who had already signed up to Stage Three, rang the coal minister Tom Boardman: ‘If those buggers get one farthing more than me, then all bets are off. And I could stop the country in forty-eight hours. It’ll take them forty-eight weeks, you know.’
Heath was marooned. At the end of November, two weeks into their overtime ban, he called the NUM leaders to 10 Downing Street and begged them to abandon it in the national interest. ‘What is it you want, Mr McGahey?’ he pleaded with the union vice president Mick McGahey, a gruff Scottish Communist. ‘I want to see the end of your government,’ McGahey growled. There was nothing more to be said. After the union leaders had departed, Heath announced that from 2 January 1974 all workplaces would be restricted to a three-day week to conserve coal supplies. The energy minister Patrick Jenkin urged patriotic citizens to brush their teeth in the dark; camping stores reported a stampede of shoppers wanting butane lamps and stoves; a snuff-making firm in Sheffield switched its production from electricity to a water-wheel first used in 1737; a candlemaker in Battersea announced that he had quadrupled production to one million candles a day to cope with demand. His most popular items were wax effigies of Ted Heath.*
‘Had lunch with Roy Wright, the deputy chairman of Rio Tinto Zinc, who was very gloomy,’ Tony Benn, the shadow energy minister, wrote in his diary on 29 November. ‘He said, “Of course, we are heading for a major slump. We shall have to have direction of labour and wartime rationing.” In the evening, had a drink with [Labour MP] John Silkin who thought it was just possible that there could be a coalition … Most interesting.’ Four days later Benn dined with Wilfred Brown, chairman of the Glacier Metal Company, ‘who also believes we are heading for a slump and food riots and there must be a national government … At the Commons I saw [Tory MP] John Biffen, who told me: “Enoch Powell is waiting for the call.”’
The excitable Benn may have found all this giddy volatility ‘most interesting’, but for Ronald McIntosh it was agony. He had recently been appointed director-general of the National Economic Development Council (known as ‘Neddy’), a tripartite body under whose auspices the leaders of trade unions, big business and the government met every month to ‘develop a consensus’ on how to improve the country’s economic performance. Ronnie McIntosh seemed the ideal man for the job, a cheerful civil servant who got on with everybody, from captains of industry to union militants, and felt sure that all problems were soluble if only they kept talking to one another. Alas for him, he took charge of Neddy – and started keeping a diary – just as the post-war consensus was falling apart. The second entry in his diary, for 29 November 1973, sets the tone: ‘Lunch at the Pearson Group, hosted by the chairman, Lord Cowdray. We soon got into a discussion about our present industrial troubles. Roger Brooke [a Pearson director] foresaw a right-wing regime “with tanks in the streets”. I argued that this was a poor way to run things.’ A fortnight later his lunch companion was Fredy Fisher, editor of the Financial Times: ‘He thinks there is a real risk of a right-wing authoritarian government next year.’