Bang!: A History of Britain in the 1980s (75 page)

At the same time, the practice highlighted by the Wapping revolution and the abolition of the National Dock Labour Scheme of companies derecognizing unions in the workplace, while salutary to
those it affected, failed to become commonplace across the economy as a whole. Between 1980 and 1988 there were only fifty-six such instances.
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In the longer term, the threat to unions’ influence came less from losing their grip in private companies where previously they had enjoyed a presence than from failing to gain a toehold in
modern, emerging enterprises. Only one third of companies set up after 1980 recognized unions.
⁶²
Particularly contentious within the trade union
movement was the belief among reform-minded general secretaries like Eric Hammond of the EETPU that signing single-union, no-strike agreements with companies represented a viable way of ensuring a
union presence in the future (despite his failure to make a deal stick at Wapping). Single-union deals were not the closed shop by any other name since employees were not bound to join the union.
The idea of denying the right to strike was anathema to traditional union leaders, who thought it worth fighting a civil war over within the union movement. This had unfortunate consequences when,
in March 1988, the TGWU’s efforts to scupper a single-union deal negotiated between the Amalgamated Engineering Union and Ford caused the car manufacturer to cancel its plans to create a
thousand jobs in Dundee. Spanish workers benefited instead. Regardless, the TUC’s general council pressed ahead with its campaign against the single-union protagonists, suspending EETPU as a
precursor to an overwhelming vote by conference delegates in September 1988 to expel the union and its 330,000 members from the TUC.

Excommunicating Hammond did nothing to solve the problem of the continuing slide in union membership and the associated decline of collective
bargaining in the workplace.
The privatization of monopolistic state-owned industries and utilities into separate companies further disrupted the ability of unions to achieve nationwide collective pay bargaining. It was partly
in an effort to redress this process that an accelerated pace of mergers created a handful of super-unions which aimed to speak as the unchallenged representatives of the workers across entire
sectors of the economy. These mergers were driven not just by a belief that security came in numbers, but by a recognition that the pace of economic and technological change was undermining many
skills, while increased job flexibility offered choice as well as potential insecurity. Consequently, the old-fashioned demarcation between proudly independent skilled labourers keen to protect
their apprenticeships and craft-guild traditions from one another no longer corresponded to the realities of the workplace. The largest mergers did not take place until the nineties, but the
creation of the GMB from the Amalgamated Society of Boilermakers, Shipwrights, Blacksmiths and Structural Workers – more sensibly known as ‘the boilermakers’ – and the
General and Municipal Workers’ Union in 1982 set an example which was followed in 1988 by the formation of the Manufacturing, Science and Finance Union,
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which merged unions representing foremen, skilled workers, technicians and white-collar employees, predominantly in the engineering, research, health and insurance
sectors.

The unions also sought salvation from another driver of cooperation and integration – Brussels. At the same 1988 TUC conference that expelled Eric Hammond, delegates gave a rapturous
welcome to the president of the European Commission, Jacques Delors. The French socialist outlined his proposal for a European Social Charter to standardize employment law throughout the European
Community, guaranteeing the right of all workers to collective bargaining and worker representation in management decision-making. ‘Social Europe’, it seemed, could rescue British
syndicalism from the straitjacket imposed upon it by Westminster. In return for the promise of salvation, Delors received more than a standing ovation – he won converts from a movement that
had until that point widely regarded the European project as capitalist dogma.

Twelve days after Delors charmed the conference-goers in Bournemouth, Thatcher crossed the English Channel in the opposite direction to deliver a speech in the Belgian city of Bruges that put
beyond doubt her disenchantment with the regulatory, centralizing mission of European integration. A new enemy had been indentified, but this time, as she advanced to confront it, the prime
minister would not have all her army marching behind her. Finally, her enemies saw their chance.

Rolling Back the State

The biggest privatization the world had ever seen was scheduled for November 1984. There was good reason to anticipate its failure. The problems extended far beyond estimating
the scale of British Telecom’s notional future profits. It was not even easy to work out how it generated its existing income. Since 1912, the Post Office had enjoyed a monopoly of telephone
provision and operation throughout the country. Wholly state-owned, British Telecom’s independence from the Post Office only dated from 1981, and when the Department of Trade and Industry
first looked into whether a successful privatization was possible it discovered that BT’s accounts were so vague that it was unclear which parts of the business were profitable and which were
not.
¹
Without shareholders to answer to or competition to fear, such basic accountancy was seemingly a low priority. Certainly, the patience of the
customer was severely tried. Private homes wishing to have a telephone were put on a waiting list. Routinely, installation could take three months or more. Businesses were also hindered by the
inability to meet demand with supply. In the early eighties, the ambition of stockbroking firms to do more of their share-trading by telephone was handicapped because BT proved unable to install
sufficient lines even within an area as confined as the Square Mile. The comedian John Cleese popularized the joke that the reason public telephone boxes were routinely out of order was not because
they were vandalized but rather that they were vandalized because they were out of order.

That the prevailing culture might change alarmed those who saw no reason to challenge the existing system. BT’s unions led the campaign to prevent the privatization and Labour articulated
the parliamentary opposition, the party’s trade and industry spokesman, Peter Shore, condemning ‘the folly of attempting to privatize this large, profitable and extremely innovative and
successful public enterprise’.
²
Moreover, even experienced
capitalists doubted whether offering shares in 50.2 per cent
of such a vast entity was a sensible idea. Ahead of the proposed flotation, the Chancellor of the Exchequer, Nigel Lawson, attended a private dinner party with leading industrialists and financiers
from the City of London. The venue was a penthouse suite at the top of the Dorchester Hotel with panoramic views across the rooftops in one direction and of the vast, verdant expanse of Hyde Park
in the other. Around the dinner table, the vision remained conventionally myopic. With a solitary exception, every one of the experts present assured Lawson that ‘the privatization was
impossible: the capital market simply was not large enough to absorb it’.
³
The contrary voice was Martin Jacomb, who, as the vice chairman of
Kleinwort Benson, the merchant bank handling the flotation, had a vested interest in talking up its prospects.

It was easy to see why BT might be considered too big to sell. In the United States the recent break-up and sale of AT&T for $500 million had set the record for the industry. By comparison,
selling half of BT would net nearly £4 billion – if enough buyers could be found at the asking price of 130 pence per share. No stock market anywhere in the world had handled an equity
issue of this size. Undaunted by much of the City’s apparent self-doubt, the government pressed ahead. Offering local authority tenants the right to buy their council houses had proved one of
the most significant policies of Thatcher’s first term in office, the take-up having greatly exceeded expectations. Anthony Eden’s phrase about creating a ‘property-owning
democracy’ was revived, and if those of modest means could be persuaded to invest in property then the possibility presented itself that millions of them might also start buying shares in
companies. A massive advertising campaign was launched, targeting not the main institutional investors but private individuals and, in particular, potential first-timers with no previous experience
of dabbling in the stock market. The share offer opened on 20 November with 39 per cent of the shares specifically restricted to individual purchasers (permitted one application each) and only 50
pence of the 130 pence needed as a down payment. The offer was five times oversubscribed and the 2.3 million Britons whose applications were successful watched gleefully as the share price almost
doubled within hours of dealing beginning on the Stock Exchange floor.
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In the space of weeks, the conventional wisdom that the flotation would flop morphed into the accusation that its success was so preordained that the government’s opening price represented
either an incompetent or a cynical undervaluation. Those who feared the whole promotion was little more than an incitement to greed had their suspicions confirmed when among those caught illegally
trying to make multiple personal applications (by using variations on their names) was the Conservative MP Keith Best. Forced to resign his seat, the future chief executive of the Immigration
Advisory
Service managed to have his four-month jail sentence overturned in return for an increased fine of £4,500. More significantly, the fact that 5 per cent of the
country’s adult population had legitimately bought BT shares almost doubled the number of people in Britain who owned shares. ‘We are seeing,’ declared the jubilant Chancellor,
‘the birth of people’s capitalism.’ Thatcher admired the sentiment if not the phraseology, which she thought smacked of Marxism–Leninism. She duly amended it to
‘popular capitalism’.
⁵
This was to be the new focus for her political mission, now that inflation seemed to have been conquered and the
trade unions confronted. Explicitly linking the sale of council houses with that of nationalized entities, she ebulliently assured her 1986 party conference: ‘The great political reform of
the last century was to enable more and more people to have a vote. Now the great Tory reform of this century is to enable more and more people to own property. Popular capitalism is nothing less
than a crusade to enfranchise the many in the economic life of the nation.’
⁶

The campaign for the vote certainly took longer to bring about. For, if hardly occurring by accident, the rolling back of the state during the eighties was nonetheless the result neither of
lengthy planning on the part of government nor of a mass movement clamouring for it. As Nigel Lawson subsequently put it, although Keith Joseph, Geoffrey Howe and he saw privatization as an
intrinsic part of a future Tory government, ‘little detailed work had been done on the subject in opposition’ because of ‘Margaret’s understandable fear of frightening the
floating voter’.
⁷
With the controversial exception of the steel industry, during the 1950s and 1960s the nationalization of the major public
utilities, as well as the railways, British airlines and other major industries, had ceased to be politically contentious, regardless of varying levels of dissatisfaction with the service they
provided. The timidity with which the Conservatives approached the issue was evident when Edward Heath’s Conservative administration contented itself with privatizing a chain of state-owned
pubs in Carlisle. Indeed, in taking the troubled Rolls-Royce from receivership into state ownership, Heath actually extended the reach of nationalization, a process that continued after 1974 when
the incoming Labour government took control of the aerospace and shipbuilding industries, along with the country’s major car manufacturer, British Leyland. When the Conservatives returned to
power in 1979, their manifesto promised only to privatize aerospace, shipbuilding and the National Freight Corporation. The rest would remain in the hands of the state.

Although the Conservatives moved beyond their manifesto pledges during their first term in office, the privatizations attempted offered no certain template for more radical and comprehensive
action thereafter. An effort to sell British Airways had to be abandoned. When the state sold half
of Cable & Wireless in October 1981 (since the 1940s it had been part
of the Post Office), £224 million of shares were bought – more than had ever previously been paid for a company that was effectively new to the London Stock Exchange. Providing an
accurate valuation proved especially difficult. The state offered its shares in the pharmaceutical company Amersham International at far too cheap a price in February 1982, thereby making only
£71 million on a company whose real value the market soon found to be far higher. Then, nine months later, the government got the offer price wrong again – but in the opposite direction
– when floating 51 per cent of its shares in the state oil corporation, Britoil. At £549 million this had set the (soon to be repeatedly broken) record for ‘the largest
privatization the world had ever known’,
⁸
but it coincided with two disincentives for investors – a gloomy forecast for future oil
prices, and the medium-term threat that if Labour won the next election it would honour its pledge to renationalize the company at its sale price (indeed, Tony Benn was insisting that the state
should seize back assets that had been sold without paying the current owners any compensation whatsoever).
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In consequence, the Britoil flotation
was badly undersubscribed. This was potentially a serious setback. If investors were nervous about buying into assets as lucrative as North Sea oil, what hope was there that they would want to buy
less obviously profitable sectors of the state-run economy? So much of a shot in the dark was privatization considered in 1982 that even some of those who would later regard it as accepted
orthodoxy were initially sceptical. On the eve of the Britoil flotation, the leading article in
The Times
questioned the wisdom of ‘transferring ownership from twenty million taxpayers
to a few hundred thousand shareholders, simply to raise a relatively small amount of money’.
¹⁰