The Benn Diaries: 1940-1990 (70 page)

He asked Roger Stott to leave the room and said, ‘I think you have made a great mistake. He is very uncouth with Mrs Thatcher. You ought to have somebody else more in the Centre of the Party.’

I told him, ‘I think I ought to pick from one of the thirty-seven who voted for me. There weren’t many of them.’

‘Will he support us on the IMF?’ he asked. I didn’t know so he followed, ‘You had better ask him. I can’t have you appoint him now and then find he resigns in six weeks.’

‘I’ll put that to him if you like.’

He said, ‘If you insist on him, I’ll accept it.’

Thursday 11 November

Before Cabinet, I talked to Merlyn Rees, who said, ‘I have never seen the Party in such despair. People think the Government might fall by tonight, the Opposition may defeat the Aircraft and Shipbuilding Bill.’

In the meeting, Jim said, ‘It is going to be extremely tough from now until Christmas and I don’t want to carry on leading a government that is divided. I don’t want to give up, or anything of that kind, but we have got to be united. We have got to make that clear.’

We went on to the Queen’s Speech, which is to be delivered on 24 November. There was a reference to the ‘unacceptable level of unemployment’ and the point was made that we couldn’t go on talking about it as unacceptable, so that was deleted. The reference to replacing the Official
Secrets Act by some new legislation was omitted and the general point was made that the less Parliament did this coming year the better.

Jim said, ‘We have just got to axe some Bills,’ and he went through the list trying to get some of them chopped. Stan Orme suggested that the European direct elections might be deferred. Stan said, ‘It looks as if the only Bills we can bring forward are those the Tories and the Liberals will accept.’ I was nodding in agreement and Jim said, ‘It’s no good Stan saying that. It’s no good Tony Benn nodding sagely. We have got to face the fact we are a minority government.’ In the end, nothing in terms of legislation was actually cut.

Friday 12 November

Stayed at home all day. Julie Clements, my new secretary, came in, a very nice woman. I like her very much.

Monday 22 November

Before lunch I sat in on the Aircraft and Shipbuilding Nationalisation Bill in the House of Lords, on which they were solemnly deciding, by 190 to 90 votes, that they would delete ship-repairing. They knew they were engaged in a major constitutional crisis by rejecting such an important Bill and I heard Fred Peart saying that it was inadvisable to do this. My presence at the bar was noticed by some Tory peers; they must hate my guts.

I went over with Caroline to Number 10 for a dinner for the President of Venezuela. Talked a bit to David Steel. Jim made a good speech. I told him that he looked very boyish and he said he’d washed his hair for the occasion! I also had a long talk to John Biffen, whom I really like. He said he spent a lot of time defending me and the idea that I was an authoritarian was a load of old codswallop.

Caroline and I enjoyed it very much. When we arrived home, the paper that is being discussed at Cabinet tomorrow was in my red box. It is absolutely terrifying. £1.5 billion cuts, including the sale of BP shares and delaying the upgrading of pensions. I just feel that it is unacceptable.

Wednesday 24 November

Decided to dictate a Cabinet paper, with Francis by my side, to be classified as Top Secret, in which I spelled out the choices facing the Cabinet, the dangers of the IMF route and the alternative strategy, ending with a long passage on the problems of implementation.

To the Energy Committee chaired by Merlyn Rees, where the first item was Windscale. A year ago we agreed to the siting of a thermal oxide reprocessing plant for Japanese nuclear waste. I had held it up for some months to allow public discussion, as a result of which it was alleged that the French had been offered the contract. I held inquiry hearings in Windscale
itself and in London, and finally recommended to the Cabinet that we go ahead with it.

It is of course a major planning issue and the Cumbrian Council, who are interested in the jobs, approved it, but Peter Shore as Minister of the Environment had the right to call it in for a decision by himself. He wrote a paper for today’s meeting calling it in, although the whole of Whitehall had briefed their Ministers against doing this because it would involve delay.

I described how, on a visit to Tokyo a year ago, I was told that Windscale had had a fire in 1957 and that part of it was not operating yet, something I had never been told by my officials. I said it was not a problem of middle-class cranks versus solid workers. It was the scientific community trying to get its way with political Ministers.

We were discussing the statutory rights of people to have such matters properly looked at, and we should be very careful before we tell a Minister to blank out these statutory rights.

Peter got very hot under the collar and said he was calling it in anyway. Anyway it was agreed that it would go to Cabinet and meanwhile Peter would extend the decision time.

When the history of nuclear power comes to be written, I think this discussion will turn out to be a significant one.

Thursday 25 November

Lazy start. First Cabinet at 10.30.
Tribune
came out with the 1931 Cabinet minutes which I had dug out in preparation of my case against the IMF loan. The
Guardian
had a full story indicating that Jim had withdrawn his support from Denis. Things are very difficult at the moment and I’ll keep my head down at Cabinet. I’ll put in my paper and leave it at that. The
Guardian
story by Peter Jenkins about Callaghan taking over the helm from Denis probably came from Harold Lever, who is a close friend of Jenkins. Peter Jay had an article in
The Times
based on the 1931 minutes.

When we came to the IMF, Jim said that after the Cabinet on Tuesday, he and Denis had carried out the necessary action. He had sent messages to President Ford and Schmidt, Denis had personally seen Alan Whittome, the head of the IMF’s European Department, then Whittome had been to see the Prime Minister and the Chancellor together. Jim said that the IMF knew about our fear of deflation and we faced a serious dilemma between retaining on the one hand the confidence of the TUC and, on the other, the confidence of the markets. He said that Ford and Schmidt did not want a decision today.

He went on to say that he had met Len Murray on another matter but since Len was a Privy Councillor, Jim felt able to tell him about the situation and the dilemma. Whittome had asked us to look at three scenarios for 1977/78: one was the PSBR at £8.5 billion, another at £9 billion and a third at £9.5 billion.

Jim stated that none of these measures were going to be attractive. All the packages before us would be unpopular but he took the point about extra time for discussion and agreed that we should have two Cabinets next week, using Wednesday for discussion and Thursday for the final decision.

I hoped the real options would be before us on Thursday and not just a Yes or No to the IMF proposals. We had to have broad discussions about the political implications of various courses of action. There were things that the IMF could do to us which we might accept but would involve taking away our seals of office, we would be a government without power. Thatcher would then get in and the people we look after would suffer terribly.

Monday 29 November

Tea with Brian Sedgemore and I told him about the refusal by Jim Callaghan to let him be my PPS and he agreed to let it rest till after Christmas. I’ll get back to Jim then.

Tuesday 30 November

To Michael’s Foot’s room. Jill was there, with Albert, Stan Orme, Peter Shore and John Silkin. We talked about tomorrow’s Cabinet now all the papers have come round, fourteen of them including mine. We talked things through in depth, agreed on tactics and decided to meet again tomorrow night.

Wednesday 1 December

Francis and Frances came for breakfast and I spent from 8 till 9.30 going over the papers for the Cabinet.

We agreed that I must be careful to distinguish myself from Crosland and Healey, hoping that I wouldn’t be called till later in the morning, by which time Crosland and Healey would have knocked each other out, then I’d come in with the alternative strategy, saying what we needed was reflation instead of high unemployment. So we sketched out a line of approach.

Frances came in the car with me to the Cabinet, which was delayed from 10 till 10.30. This made us a bit suspicious. You don’t normally delay a Cabinet of that importance unless there’s some hiccup, and we wondered whether Jim and Denis were having a set-to; in fact when we went into the Cabinet Denis was just coming out, so I think they must have had a talk. Whether it indicated a row or a make-up I don’t know.

When the Cabinet met finally at about 10.40, there were no officials present, a thing that hasn’t happened since Jim has been PM. He said, ‘I want to draw special attention again to the need for secrecy. Some of the press reports have been very damaging and very accurate, for example, the blow by blow account in the
FT
last Friday called “An Honest Man in a Labour Cabinet”.’ (That must have been a reference to Healey.) ‘I know who gave it to the
FT
and I shall take the necessary action to deal with the
matter when I next have a reshuffle.’ He went on to say, ‘We are in a position where we shall have to rally to the majority view, whatever it is, or it will not be possible for me to go on. We have to remember that we have some critical by-elections coming up.’

Denis said, ‘I’m glad you’ve said what you’ve said because I’ve been the victim of many of these leaks and colleagues who have tried to make themselves out to be heroes at my expense have done themselves, as well as me, a lot of damage.’

At that point, officials were brought in, and Jim called me, shrewdly concluding that it would be better to get me disposed of first. He said he wanted to conclude the general discussion today.

‘Prime Minister, I think we’re all aware that this is a political decision as grave as any in our history, that we cannot really rely on others to help us, particularly Ford, who is a lame duck, or Schmidt, whose view is pretty monetarist in character. I base myself on the telegram that came in after the Socialist Congress in Geneva in which our officials there said that Schmidt had warned about inflation and said that public expenditure not properly financed had been the cause of unemployment. I assume that represented his view. Carter wouldn’t want to get too involved until he becomes President, therefore we have to rely on ourselves and trust our judgement. I entirely share the view that the survival of the Government is in the national interest, but in this context we must consult our partners – the TUC and the Labour Party.’

Jim interrupted me, ‘I perhaps should tell the Cabinet that I have seen Len Murray about something else last Tuesday and I also keep in pretty close touch with Jack Jones.’

‘Well, that’s better than nothing,’ I said, ‘but I want to emphasise this very much indeed, because they’ve put their reputations at risk in supporting us and if we take decisions unacceptable to them, it would not be fair. There are two alternative strategies, the Chancellor’s and mine, and there is a very big choice to make. My paper warns against deflation of any kind, imposed or self-imposed. I have been driven to the conclusion, very reluctantly, and I hope the Cabinet will believe me, that expansion requires protection.

‘In 1974 when we were elected, I was very keen on our industrial policy, which I played some part in formulating, but I did come to the conclusion that this would not work while our industry bled to death. I simply do not believe that it cannot be made to work. In 1931 the Chancellor warned the Cabinet that import duties or revenue tariffs were not acceptable, and that if we came off the Gold Standard, the standing of living of workmen would fall sharply. Yet two months later, both were done. Someone from that Labour Cabinet subsequently said that we were never told we could do it. Peter’s paper draws attention to the fact that all import controls are legal under the General Agreement on Tariffs and Trade and under the EEC and I think we should seek international support on that basis for that alternative
strategy. It would be inexplicable to our movement that we had never even tried on our alternative strategy with the IMF and yet more inexplicable that in order to get the loan we have promised not to undertake that alternative strategy.’

I was subjected for about half an hour to the closest cross-examination. First, Jim asked, ‘Do you think we need the loan?’

I said I would prefer to have the loan rather than not. I reminded the Cabinet of the famous cartoon in 1940 of a soldier after Dunkirk waving his fists and saying, ‘Very well, alone!’ I said that I thought the IMF would help us because it would be in their interests to do so.

Bill Rodgers asked what my policy would do to unemployment, and I replied that although I hadn’t got a Treasury computer to mislead me the one thing that was absolutely clear was that unemployment would rise under existing policy and would get worse under extra cuts. Import controls would substantially improve the unemployment situation. The big difference now was that with unused resources we would not need cuts on the scale forecast by the Cambridge School, of which I am not a member, in order to go for the alternative strategy because these resources could be brought into play.

Harold Lever wanted to know why I thought we could survive politically. If we could get it through the Cabinet, could we get it through the House of Commons? What would our stance be electorally?

My opinion was that nothing would be more fatal to our electoral chances (and I had no crystal ball) than the Party going to the country having laid off employees in the manufacturing industries and in the public-service sector on the grounds that the bankers wanted unemployment to restore confidence. I said it would be much better to present this in a vigorous way. I thought we would get support nationally, even in the House of Commons, and have a far better chance of winning.