Prime Minister Margaret Thatcher’s bitter war with Tory “wets” over the way her spending cuts were impacting upon Britain’s recession-hit economy are laid bare in records released today.
Files from the National Archives show how opponents of her hardline monetarist policies rounded on Lady Thatcher and Chancellor Sir Geoffrey Howe in a cabinet showdown in 1981, at one of the most difficult points of her tenure.
As unemployment broke the 2.5m-mark, Sir Geoffrey used his budget to tighten the Government’s economic squeeze.
The policy was condemned in an open letter from leading economists as having “no basis in economic theory”, providing fresh ammunition for the cabinet “wets” – the nickname given to traditional one-nation Conservatives unhappy at the direction Lady Thatcher was taking.
The struggle came to a head when the cabinet met on July 23, with Sir Geoffrey arguing they must keep cutting borrowing if they were to convince financial markets of their determination to get the finances under control.
Other ministers immediately rounded on him, denouncing his paper as “inadequate” and his strategy “unrealistic”. Summing up the discussion, the minutes noted that Sir Geoffrey’s approach “did not offer a sufficiently imaginative and practicable response to the acute social and political problems now confronting the Government”.
They went on: “With unemployment totals rising to three million... and following the recent rioting, the tolerance of society was now stretched near to its limit.
“To give people renewed hope and confidence for the future, it was essential to take new and constructive action urgently.”
Mrs Thatcher chose to play for time, agreeing Sir Geoffrey should come back after the summer with “a fuller evaluation of options”.
But as ministers left for their holidays, she was already plotting her revenge – the sacking or moving of key opponents, and the appointment of allies such as Nigel Lawson in their places.