The Atlantic and Its Enemies (91 page)

Was there not some way of sorting out the mess? There were wrangles between government and local government, especially London and Liverpool, where high spenders proposed to ignore government guidelines for the control of inflation. The only way to deal with this was to set a rates ‘cap’ and here there were battles, one problem being that if the government ‘capped’ rates, it would necessarily be responsible for the ‘cuts’ that followed - old folks’ homes closed,
etc.
How could this problem be solved? There had been inquiries, six since the war, but there seemed to be no alternative to rates, from property. In the USA there was a local sales tax, and the country was easily large enough to have endless variety. Neither there nor in Germany did central government take detailed control of local finance, and in both cases there were large units, ‘states’, which produced somewhat different and healthily competing ways of doing things. The Heath government had attempted a reform along these lines, ending up with things that were too large to be changed or too small to be effective. Local government was an unrewarding karst of a subject, and the matter was now dealt with in an almost casual way. Had local government’s powers been confined, what followed might have made sense. As matters came to a head, there emerged the most absurd piece of reactionary triumphalism since Charles X of France, in 1830, had appointed as prime minister a man who had visions of the Virgin and decreed a closure of the press. The revolution of 1830 quickly ensued.

It was called a service charge. In theory, high-spending and inefficient councils would be penalized by their own voters, because the service charge would be so high, higher than in comparable areas. Nigel Lawson and one or two others demurred, but in January 1986 the plan was introduced, with preparation time of ten years. Parliament’s system of select committees strangely allowed it through, and a one-time Heathite, scorned by Sherman, and greatly promoted thereafter, introduced the Bill more or less without criticism, so long as he was given money (over £5bn) to smooth its passage. There were to be safety nets and rebates, complications that made the Bill very difficult to understand. Nigel Lawson argued that the best thing would be to remove education from local government responsibility, as it accounted for half of its spending. At any rate, serving bills for several thousand pounds on a family not used to paying anything at all was not a sensible method of gaining popularity, especially as so much of local government was inefficient and pointless (Oxford had forty times as many AIDS ‘counsellors’ as there were AIDS victims). By 1989 a large number of Conservative MPs were feeling their heads. The details, as monks, the disabled,
etc.
had to be exempted, were surreal.

All of this amounted to a
piano
and chromatic version of a funeral march, but there was another version in the major going on very loudly at the same time. The government had failed in its aims, a failure concealed by some magnificent victories, and above all by the legendary status of its leader. Neither in England nor in the USA had ‘the State’ really been cut back. The concomitant, inflation, now returned. By the end of 1988 house prices were rising by almost one third per annum. In 1987 the consumer price index rose by only 2.7 per cent, but in 1988 it was rising and in 1989 was at 15 per cent - more or less the figure with which this administration had started. The pound slid, and the balance of payments registered alarm. To all of this, the European lobby in London responded with cries for closer co-operation with the Europeans. The Confederation of British Industry was important in this respect. It consisted mainly of well-established businessmen of the older type, not expert in finance, and brought up in the corporatist world of the seventies, when businesses really flourished only through their links with a then all-governing government. The
Economist
, the
Financial Times
and a small host of respected commentators all blamed the troubles upon failure to join the ERM, the early stage on the way towards a European currency, in the context of the Single European Act. The monetarists had been waved aside, and the one-time Chancellor, Geoffrey Howe, was now in favour of some British co-operation with the would-be European currency (he had recently and very uncomfortably given up smoking). So was his successor, Nigel Lawson (soon to give up eating). Charles X had been overthrown by his cousin Louis-Philippe, a man for the wallet, and the Orleanists now gathered, to conspire in London.

The point as to the ERM was that it was the product of a world of two decades before, the failure of the Bretton Woods system. It could only really be made to work if there were real partnership,
i.e.
if the German Bundesbank agreed to support currencies such as the pound that were based on very different economies from the high-saving German one. Any restriction of credit, in pursuit of exchange rate stability through higher interest rates, would mean unemployment, but the ERM had become a sort of totem, and the Americans, who had invented its original version, were in support. ‘Europe’ was a sort of
deus ex machina
for dealing with intractable internal problems, as the Italians, welcomingly, had found, and as Mitterrand in France, needing a bomb to blow up his allies on the Left, astutely discovered when his wooden Brave New World collapsed in 1982-3. It became, as a nineteenth-century English radical had observed of foreign affairs, a sort of outdoor relief for a sort of aristocracy, and for that matter the Foreign Office, not, generally, having much of a role, and having weakened its
esprit de corps
with half-baked positive discrimination, now found a role: it could interpret the awful complexities of Europe for politicians who had many other things on their minds.

A Sir David Hannay was apparently deputed to ‘Europeanize’ Margaret Thatcher, to inform her of the advantages of the institutions of what was supposed to be a united Europe. She took up the invitation to address the training school for European bureaucrats, the Collège d’Europe, at Bruges, in Belgium. Even then, she went not out of enthusiasm but because she had to be in Luxemburg anyway. Just then, the ‘president’ of the European Commission, Jacques Delors, was promoting his own candidacy for renewal quite vehemently: Germans, latterly, had been collecting such functions (as Manfred Wörner had done with NATO) and Delors wished to keep his. He went the rounds, making European speeches, announcing that within six years there would be a real government and a real parliament, responsible for ‘80 per cent’ of all laws passed in Europe. A few weeks later, the British Trades Union Congress gave him a standing ovation, as he sketched a picture of a left-wing Europe, with social benefits and low unemployment. In September 1988 Margaret Thatcher made her Bruges Speech, having lost from the draft a good part of the Foreign Office emollients, and made a characteristic assessment of Europe as she saw it - she played up the British contribution, but then told truths, to the effect that Brussels had been painfully slow and reluctant as regards the freeing of markets and capital movements, and that ‘we have not successfully rolled back the frontiers of the state in Britain only to see them reimposed at a European level, with a European super-state exercising a new dominance from Brussels’. It was a good swan-song; but the fact was that she had already lost the campaign. ‘Europe’ was marching on regardless, and even Geoffrey Howe, the Foreign Secretary, regarded the speech with ‘a weary horror’.

There were Europeans of some enthusiasm in influential positions all around; they, too, were somewhat shocked. It was put about that there was no such ambition for a European federal state, that ‘federal’ meant something different to the Germans in particular, that it was all xenophobic fantasy. In 1988-9, interest rates were rising, with inflation, and the ERM appeared to be the solution. It was quite widely advocated by very influential people, and the Americans, by now, were in favour of it, because it would support their own efforts to control the dollar’s value abroad. In the spring of 1989 a report, given the name the ‘Delors Report’, outlined what should be done to unify the Continent and its various currencies. Robin Leigh-Pemberton, Governor of the Bank of England, had signed it. It outlined ‘stages’ towards unity, in a manner supposed to be non-committal but in practice very influential. The fact was that a very powerful establishment wanted the Europeans’ ‘stages’, and certainly the ERM. Margaret Thatcher had, as ever, a large voting army. But many of her senior officers were near mutiny. The Delors Plan was supposed to be discussed by European heads of government in Madrid, in June 1989. The Spanish expected to make their first important mark at this, their first presidential European ‘summit’. The Prime Minister rejected this, but then found that even in private the people to whom she listened disagreed. Both Howe and Lawson asked for a joint interview on 25 June 1989 and threatened to resign. She gave way. At Madrid, she did agree to ‘Stage One’, though privately adding to Charles Powell, ‘We can’t stay in this bloody common market any longer.’ The full-scale European Monetary Union had been postponed, but ERM, as a stage towards it, had been in effect endorsed.

That summer, the post-war Conservative Party started to disintegrate. The Poll Tax was supposed to take effect in the spring (1990) and the party stood low in the opinion-soundings. At that point, one of her few remaining allies, Nicholas Ridley, spoke indiscreetly, as he was wont to do, and denounced the ERM as ‘a German racket designed to take over the whole of Europe’. The sentiment was wildly expressed, and it was an exaggeration: but, as with much that Ridley said, there was truth in it, in so far as German credit conditions would have to be valid for all of Europe, and that, in Britain, would mean high unemployment. Misfortune again came when some Irish terrorists assassinated Ian Gow, a wise adviser, and his successor as Parliamentary Private Secretary was not, by far, of the same class (he even wanted to extract a public oath of loyalty from the MPs). The middle party took Gow’s seat at a by-election, with a very large majority. There was of course the perennial stalking of the foreign stage, but Margaret Thatcher’s great moment had passed, with the waning of the Soviet Union. Her last act was to stiffen the resolve of the American President, George Bush, when Saddam Hussein invaded Kuwait in August 1990.

The next round of exhausting European wrangling was set for Rome, with the Italians chairing proceedings. Early in October, the concession, to join the ERM, was at last made. But the Europeans wanted more, an advance towards the Delors stages for proper unification. In their view it mattered much more, now, because, without formal unity, an enlarged Germany might be a great and malevolent force once more. One of the ‘stages’ involved an irrevocable commitment to monetary union (as it happens, with fixed exchange rates planned for 1994). Mrs Thatcher hated the ‘grand and vague words’ of these European occasions, and disliked what they portended. She said, about the tired metaphor of not taking the European train as it was leaving the station, that ‘people who get on a train like that deserve to be taken for a ride’. She denounced the Italians’ ‘mess’ of a presidency, and said, in Parliament, in grand-actress style, ‘No, no and no’ to all three Delors proposals. Howe resigned, and wrote a powerful letter; when the party chairman attempted to explain this away, he spoke on 13 November very powerfully indeed in the House of Commons, apparently much of the statement at the dictation of his wife. And then Margaret Thatcher had to face re-election as leader of the party. She won, but by a very narrow margin and under a strange rule that required a second-round election. It was of course an extraordinary humiliation for an outstanding figure, though in British affairs it had happened before, not least to Churchill. Her ministers, on the whole, told her that they would not support her, and in the end Denis Thatcher told her that that was that. The next day, 22 November, there was a brief, tearful Cabinet. She broke down, and had to start the business again. Then she had to appear for a final Commons debate, on a motion of no confidence. She spoke with a command performance, perhaps her greatest speech ever; one of the greatest occasions in the history of the House of Commons. The eighties had been a magnificent counter-attack: just when the enemy thought it had won, its ammunition dump had exploded. The look on the faces of the seventies was a poem. But what did the eighties do, in England and America, with the victory of the ‘Seven Fat Years’? It had been in so many ways the best of times: Russia back in the Concert of Europe, China returning as a great world civilization, a recovered Germany with an entirely healthy relationship with her neighbours, an Atlantic that had recovered its vitality. There had been downsides to the eighties, perhaps those associated with democracy by the classical writers. But it had been the most interesting, by far, of the post-war decades.

Further Reading

Richard Pipes, in his two-volume
Russian Revolution
, had the good idea of naming the hundred essential books. My own list, with inevitable injustice, is even more of a thimble in an ocean. For general accounts, there are Eric Hobsbawm,
The Age of Extremes
(1994), which is excellent on the troubles of capitalism, and Paul Johnson,
Modern Times
(1983), excellent on the troubles of Communism. In both books there is much with which creative disagreement happens. Obviously the uses of technology are enormously important in the making of this period, and it would be easy to list two-dimensional works of praise. They should be put in the context of David Edgerton,
The Shock of the Old
(2006), which shows that ‘modernism’ is not what it purports to be.

As a general account of the Cold War, I have mainly used a splendid French account, Georges-Henri Soutou’s
La Guerre de Cinquante Ans
(2001), but another French book, André Fontaine’s
Après eux le Déluge
,
de Kaboul à Sarajevo
(1995), covers the last decade or so of Communism, very readably. John Lewis Gaddis,
The Cold War
(2005), is a very efficient survey, and his
The Long Peace
(1987) bears re-reading, but see also David Reynolds,
One World Divisible
(2000). The world of arms negotiations was covered in admirable and dogged fashion by Don Oberdorfer,
From the Cold War to a New Era
(1998).