Will Mrs Thatcher’s luck hold until 1983?

Press, 13 October 1982, Page 20

Will Mrs Thatcher’s luck hold until 1983?

From “The Economist,” London

Three months ago, Mrs Margaret Thatcher told her colleagues to put out of their minds any thought that she might capitalise on her Falklands victory by calling a snap general election. Before the Falklands campaign in AprilJune this year the Conservatives had been trailing Labour in the polls from late 1979 to the end of 1981, but had then closed the gap .with Labour during the period when the Democrat Social Party-Liberal Alliance commanded more support than either of them.

By the time the warlet was won, the Conservatives had surged to a lead unprecedented for any modern government three years into its period of office. None the less, Mrs Thatcher ruled against any opportunistic election campaign, which might provoke public reaction against the party. Tories should hold to the task set in 1979, she said, and trust their policies. Recipients of the Prime Minister’s message were much impressed by her moral certainty. The certainty was fraying as the Tory party gathered for its annual conference at Brighton. Mrs Thatcher is now emerging as one of. British politics’ most remarkable gamblers. A year ago she confronted a party conference at which a large section of her Cabinet was openly demanding the abandonment of her economic programme and a return to reflation in good time for the next election. Many were predicting her demise should she fail to take this advice, and certainly the demise of her chancellor of the exchequer. Sir Geoffrey Howe. This challenge was followed last winter by a battle over Government spending which did more to mature Mrs Thatcher as a Prime Minister than any event of her period of office. Though she attempted to give a more flexible public look to her policy, and though compromise ruled the day round the Cabinet committee table, she left her colleagues in little doubt that a few concessions by the Treasury did not mean she would always give in

to the "wets." Recognition towards the end of 1981 that there had been considerable improvements in inflation and productivity during that hard year yielded a marked improvement in the Government s popularity. The Falklands victory turned that improvement into an opinion-poll landslide and elevated Mrs Thatcher from faction leader to national heroine. The risk she took was large, and the military luck she enjoyed quite enormous: fortune often favours the brave. Mrs Thatcher’s determination that

nothing short of a military victory would wipe the stain from the Government’s record sustained both the diplomatic and military phases of the operation. It was based on a total self-confidence in reading the mind of the Tory rank and file in particular, and the British people in general. That this gamble paid off so handsomely reinforced the Prime Minister’s intolerance of faint hearts among her advisers. It armed her with renewed animosity towards Foreign Office, persistent opponents of the view that there was no honourable alternative to war. The magic of a victorious war leader gave her a new command over her Cabinet and over Whitehall. These characteristics may prove decisive as she now faces the next gamble of her administration: the campaign to win a general election at a moment when unemployment will be very high. Many of Mrs Thatcher's supporters still believe that the election which will take place some time during the next 18 months will be a foregone conclusion. Any such prediction is foolish. The chances of any full-term incumbent Government surviving an election must usually be put at 60-40 against. Since June the Tories have seen their poll rating eroded, while Labour’s has increased.. As the war passes into history, the state of the economy becomes the dominant political issue once more. This fact alone will act as balm to the self-inflicted wounds of the Government’s main opponents, the Labour

Party. Already the surface wounds are starting to heal (the deeper divides remain). The Labour Party conference in Blackpool last month put aside the lunacies of its leftist fringe, at least for the time being (which includes the next election). Although Mr Michael Foot many seem an implausible future Prime Minister, the Labour Party does not seem to the undiscerning televiewer so implausible a future Government.

At the Liberal assembly last month. Mr David Steel left nobody in doubt which party he would favour as coalition partner in the possible event of the Liberals holding the balance in the next Parliament.

That party was clearly not (under Mrs Thatcher) the Tories. Support for the LiberalS.D.P. alliance is likely to survive longest in existing Tory marginal seats, where it will risk handing them to Labour. A vote for the alliance is likely to be a vote for a Labour Government of some sort, and both Mrs Thatcher and Mr Foot know it.

Will Mrs Thatcher respond to this challenge as most of her colleagues would wish, by shelving the Tory radicalism which she so regrets not having imposed earlier in this Parliament? Will she attempt by the distribution of public expenditure to hold the loyalty of the more prosperous working classes who supported her in 1979 and rallied impressively to her Falklands flag? Will she adhere to the axiom of Tory strategists down the years, on whose pre-election game plan is written one word: reflate?

On present form, the Prime Minister will give short shrift to such blandishments, but the manner in which she does so is likely to dictate not only her fate in 1983-84, but that of the Government she will form should she prove to be a second-term winner. She has long maintained that hers is a programme for two Parliaments — or at least Sir Keith Joseph has long maintained it for her.

Much even to her surprise, the signs are that the Treasury

has so far delivered her at last some ideological goods: a declining public borrowing requirement. falling interest rates and a rate of inflation that is now tumbling fast. That the economic price for these gains should have been so high is, to many Conservatives, the fault of British industry not the Government.

The task now is not to create an artificial pre-election boom. Private enterprise must be left to gain strength on its own in a financial climate which must continue wintry. For this reason. Mrs Thatcher will continue to fight the deluge of election-oriented claims from spending departments this winter. The medium-term financial strategy’ must stand. There must be no talk of election budget next year. The Government went out of its way last week to stamp on suggestions that a substantial cut in income tax might be on the way. Any generosity to be shown by the’ chancellor must be to companies. not to consumers who would spend many of their tax cuts buying imports in the shops.

As if to emphasise that no quarter would be given to the moderates, this month’s news that the Treasury was enthusiastic about a fundamental reappraisal of those twin pillars of the welfare state, the national health and state education services, left Labour politicians incredulous with delight and many Tories aghast. It was as. if Labour before an election had proposed to nationalise beer.

So far, Mrs Thatcher's gambler's luck may hold. But she is in danger of believing that military victory, a declining inflation rate and a ruthless manner are sufficient to appeal to a modern electorate. The item currently at the top of the political agenda is none of these. It is once again unemployment. This may annoy a politician who passionately believes that unemployment is a symptom of poor economic management by a Government. But in a democracy at elec-tion-time, it is not for the

Prime Minister to lay down what is or is not a significant issue for public concern.

This time last year Mrs Thatcher appeared to acknowledge the message that the public required her to be more sensitive to the human cost of recession. Her colleagues pleaded with her to take the credit — and permit her party to take the credit — for measures to alleviate distress, however much she might have fought against them in Cabinet.

As it is. the Conservatives have had no thanks for their huge annual subsidies to nationalised industry, for training and unemployment programmes and for record spending on the health service, all of which make Labour’s record seem stingy. Instead they have allowed themselves to be cast as enemies of the nursing profession. the health service and the state school and university systems.

The Tories have certainly given munificently to certain interests such as farmers, and the armed forces and the police. But there are few floating votes among these groups.

Rumours that Mrs Thatcher wants to run yet another law-and-order platform at the next election sound odd, as Mr William Whitelaw points out, for a Government which has spent its period of office throwing more money than ever before at crime prevention. Nor is the workforce likely to respond to constant appeals to the spirit of the Falklands any more than it did to Sir Harold Wilson's “spirit of Dunkirk."

Industrial militancy is likely to increase in 1983. It will be impervious to the charge that it is increasing unemployment. Much of it, especially within the public sector, will have a scarcely disguised political motive. Yet this will not hurt Labour. It will hurt the Government of the day unless it becomes so outlandish that Mrs Thatcher can seize an advantage from it. Her policy here will, as in the past, be one of damage limitation rather than ideological coherence. Trying not to lose an elec-

tion does not necessarily win one. as Sir Alec Douglas-Home found in 1964. Mrs Thatcher now needs to re-establish her credentials as a constructive radical politician. Her stated intention in 1979 was to use her period in office to restructure the British economy and thereby eliminate much of the inertia in British societv.

Such a questioning, iconoclastic Toryism was popular and secured for her a wider measure of support than that of traditional Conservatives.

It promised a "bonfire of controls'" similar to that seen in the early 19505. The housing market (and with it labour mobility) would be invigorated, monopolies dismantled, cartels deregulated, public coporations denationalised or at least decentralised. the size and pervasiveness of the civil service reduced.

Such a programme has so far been seen only fitfully, in areas such as transport and telecommunications. So strong a chord did it strike, however, that it has been repeated in the recent programmes of the Social Democrats and Liberals. It is a radicalism not of the archaic “right” but of the new anti-socialism, which played a major part in the centre-party upsurge of 1981. It is true both to Mrs Thatcher’s own political antecedents and to the present imperative of appealing to the middle ground. If there are to be more gambles in 1983. these are the ones Mrs Thatcher should make.