Table Of ContentTHE FAILURE OF THE HEATH GOVERNMENT
Also by Martin Holmes
THE FIRST THATCHER GOVERNMENT: Contemporary Conservatism and
Economic Change
BEYOND EUROPE: Selected Essays, 1989-93
*
THATCHERISM: Scope and Limits, 1983-7
* THE EUROSCEPTICAL READER (editor)
*
THE LABOUR GOVERNMENT, 1974-9: Political Aims and Economic Reality
*
Also published by Macmillan
The Failure of the Heath
Government
Martin Holmes
Leclurer in Po/ilics
SI Hugh's College
Oxford
Second Edition
palgrave
macmillan
© Martin Holmes 1982, 1997
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as the author of this work in accordance with the
Copyright, Designs and Patents Act 1988.
Published by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS
and London
Companies and representatives
throughout the world
First edition (Political Pressure and Economic Policy: British
Government 1970-1974, Butterworths) 1982
Second edition (Macmillan) 1997
ISBN 978-0-333-71607-6 ISBN 978-0-230-37611-3 (eBook)
DOI 10.1057/9780230376113
A catalogue record for this book is available
from the British Library.
This book is printed on paper suitable for recycling and made from fully managed and
sustained forest sources. Logging, pulping and manufacturing processes are expected
to conform to the environmental regulations of the country of origin.
IO 9 8 7 6 5 4 3 2 I
06 05 04 03 02 01 00 99 98 97
Contents
Acknowledgements vii
The Failure of the Heath Government:
Introduction to the Second Edition IX
Part I The Political Setting
Chapter 1 Electoral Victory and the 'Quiet Revolution'
1.1 Opposition 1964-1970 3
1.2 The 1970 General Election 6
1.3 The 'Quiet Revolution' 9
Part II Political Pressure and Economic Policy
Chapter 2 The Industrial Relations Act: its Origins,
Operation and Consequences
2.1 The 1960s' background 17
2.2 The implementation of the Act 18
2.3 The docks and railways disputes 23
2.4 Putting the Act 'on ice' 30
Chapter 3 The V-turn over Industry Policy
3.1 Disengagement 37
3.2 Rolls-Royce 40
3.3 The Upper Clyde Shipbuilders' crisis 42
3.4 The political pressure of rising unemployment 44
3.5 The Industry Act and the return to interventionism 48
Chapter 4 The 'N minus l' Experiment and the Reaction to
Rising Unemployment
4.1 The background to 'N minus l' 55
4.2 The politics and economics of unemployment 61
4.3 The 1972 miners' strike 68
Chapter 5 The 'Heath Dilemma' and the Drift to Incomes Policy
5.1 The 'Heath dilemma' strategy 77
5.2 The tripartite talks 79
5.3 The resort to statutory controls 84
Chapter 6 The Operation of Stages I and II
6.1 The freeze 91
6.2 By-election anxieties 91
6.3 Stage II and the dash for growth 95
Chapter 7 Stage III, the Miners' Strike and the February 1974
Election
7.1 The secret Downing Street meeting 102
7.2 The miners' dispute escalates 106
7.3 The TUC initiative 109
7.4 The February 1974 election 113
Part III Conclusions
Chapter 8 Policy Reversals and Prime Ministerial Power
8.1 Mr Heath's style of Government 127
8.2 The politics of confrontation? 133
8.3 The criticisms of the Conservative Right 136
Chapter 9 Policy Reversals and Contemporary Conservatism
9.1 The context of Conservatism 140
9.2 Economic priorities and political pressure 143
9.3 Final assessment 147
Part IV Appendixes
I Chronology 153
II Select bibliography 156
Index 157
Acknowledgements
I wish to thank those politicians, civil servants, trade unionists, industrialists,
journalists and academics who kindly consented to be interviewed for this book.
I am especially indebted to Dr David Butler whose wise and patient advice is no
less appreciated 15 years after the original publication in 1982.
My thanks are also due to my superb secretarial assistant, Penelope Whitworth,
for the speed, precision and good nature with which she worked.
I would also like to thank the Principal and Fellows of St Hugh's College for
providing an atmosphere conducive to scholarship and research. Tim Farmiloe
and Sunder Katwala at the publishers handled the manuscript with customary
courtesy and efficiency, and I am grateful to them.
Needless to say any errors in the following pages are my responsibility alone.
Martin Holmes
St Hugh's College, Oxford
January 1997
The Failure of the Heath Government
Introduction to the Second Edition
When this book was first published in 19821 the Heath government was widely
accepted to have been a failure. Free-market and Thatcherite critics had long
since criticised the V-turns which produced both the economic meltdown of
1973-4 and the two electoral humiliations of February and October 1974. Critics
on the left had voraciously assaulted a government which had introduced the
social poison of the Industrial Relations Act 1971, waged class war against the
miners and exhibited, in Mr Heath's own words, the 'unacceptable face of
capitalism'. The Heath government, while the memories were still politically
fresh, was associated with the three-day week, five States of Emergency in three
and a half years, and the dismal series of power cuts resulting from protracted
industrial disputes.
By the late 1990s, however, several studies had emerged which portrayed the
Heath government in a much more favourable light. These revisionist works
sought to place the 1970-4 Conservative government in an historic context
which exonerated Heath from the culpability which both his own party, and his
nominal political antagonists on the left, had ascribed to him.2 Revisionist
analyses have been characterised by - even though not necessarily motivated by
- anti-Thatcherism. To the opponents of the philosophy, style and policies of
1979-90, the Heath government has acquired the status of a tragic, yet heroic,
administration which, albeit unwittingly, paved the way for Thatcherism. On the
principle that the enemy of your enemy is your friend, the Heath government has
been enlisted in the rollcall of honour of those who opposed the Thatcherite
project.
The revisionist defence of Heath falls into three main categories: there was no
alternative, practical or ideological, to Heath's V-turns; international economic
circumstances were severely adverse; and the Labour governments 1964-70 and
1974-9 were even less successful. As a subtle variation on the revisionist theme
it has also been argued that the economic and industrial failures of the Heath
government should be offset against the successful entry of Britain into the
European Economic Community on 1 January 1973. But how convincing is the
revisionist defence? How far is it simply a continuation of the ideological battle
against Thatcherism by other means? To evaluate the revisionist case it is
necessary to examine it from first principles.
The most frequently cited exculpation is that the Heath government had no
ix
x Introduction to the Second Edition
option but to abandon its original Selsdon Park policies, because the tide of
fashionable intellectual opinion was still favourable to the postwar Keynesian
consensus based on a high level of government intervention in the economy.
Moreover, it is argued, the requirement of practical politics - based on the
concept of what is politically possible - necessitated the V-turns in the absence
of any feasible alternative policies. Thus Dennis Kavanagh writes that:
Ministers and advisers clung to a Keynesian paradigm which was out of date
but no credible alternative was available in the early 1970s.3
Similarly the same apologist ventures that 'In 1970 incomes policies were not
widely regarded as a failure and there was no comprehensive monetarist analysis
available at the time.'4
Even Edward Heath's fainninded and perceptive biographer, John Campbell,
referring to the V-turn on incomes policy, has argued that 'the fact remains that
there was near universal support for Heath's approach in 1972, if only he could
have pulled it off, and little confidence that the country could be saved from the
abyss by any other means'.5 To Anthony Seldon, 'there was no alternative and
acceptable philosophy available which would have provided the intellectual
underpinning for an assault on the prevailing orthodoxy of Keynesianism',6
while Robert Taylor goes as far as to suggest that 'the Conservatives came to
power in 1970 without any detailed promise to roll back the frontiers of the
state' .7 The difficulty in assessing such views is that it depends what is meant by
'credible', 'acceptable', and 'comprehensive' alternatives to Heath's V-turns.
But although any assessment is inevitably subjective, sufficient evidence existed
at the time to indicate the availability of alternatives which had already entered
the bloodstream of Conservative politics both before and after the 1970 election.
John Charmley has traced this process back to the 1965 Conservative policy
document Putting Britain Right Ahead so that by 1970, there was 'not much ...
that Thatcherites would cavil at'. But Charmley is correct to argue that 'whilst
Heath was good at expousing proto-Thatcherism, he was a good deal less adept
at implementing it'.8 The majority of Conservatives, however, did take seriously
the fundamental policy re-appraisal of Opposition and did not expect the next
Conservative government simply to continue the policies of its Wilsonian
predecessor.
Revisionist critics undervalue the extent of the commitments with which the
Heath government took office; they explain away the Selsdon Park
disengagement from Keynesian interventionism, rather than explain it. The truth
is that the Heath government lost its nerve in 1971-2 because of rising
unemployment. Its failure was one of political will rather than a lack of
intellectual justifications for its original policy stance. 'When in 1971
unemployment spurted towards the - at that time unthinkable - million mark,
[Heath] lost his nerve .... Being a man of no fixed ideology he turned in his
tracks',9 is the considered verdict of the late Peter Jenkins, himself no
Thatcherite. While it may be correct to argue that Heath never really understood
the philosophical derivation of the Selsdon Park policies, that is not the same as
saying that no one else understood the intellectual complexities. For one thing
the thorough policy review of 1966-70 had produced an intellectual debate
which preceded the 1970 Conservative manifesto commitments to promote free
market solutions. For another the supporters of such solutions - the Powellite
neo-liberals on economics - vociferously proclaimed their opposition to the V-
