the Labour government after the 1997 election.
When the 1988 public expenditure survey began, bids were once again far too high, although a number of ministers had strong claims to extra funding. Douglas Hurd had a compelling case for increased police expenditure and capital for an enhanced prison-building programme. Kenneth Clarke, now at Health, had an irresistible case for preparing for the NHS reforms – which, since I had helped to negotiate them, diminished my arguments against his bids. Paul Channon, now at Transport, submitted a strong case for more investment in roads and nationalised industries. Others, too, argued their case forcefully – notably Nick Ridley, George Younger and, of course, Peter Walker.
By this time Jill Rutter, my Private Secretary, had been promoted. Her replacement, Carys Evans, had a different style but was just as effective. When Peter Walker played the ‘Welsh’ card yet again, I dictated him a note, and Carys translated it into Welsh before we dispatched it. We hoped there was a Welsh-speaker in Peter’s office.
As usual, the public spending negotiations were protracted. In many cases they continued throughout the Party Conference at Brighton in October. I sat in my hotel bedroom as ministers trooped in and out, but decamped to a different hotel for especially long discussions with George Younger, who as ever fought politely but determinedly for every penny. Slowly I persuaded him that I could not meet his bids, but he ceded ground only after heavy bombardment.
Negotiations with Nick Ridley, the Environment Secretary, were strained. I thought Nick a clever but erratic man of much ability and an admirable contempt for presentational niceties. In some quarters he was widely liked and admired. His junior ministers and officials – even those who loathed his often uncompromising views – nearly always spoke warmly of him. Like many in the Commons I had been astonished when Nick was appointed to the Cabinet, but he had an original mind and was wonderfully politically incorrect. Face to face, I respected him, but I did not like what he said behind my back. I found this apparent animosity from someone who did not know me well puzzling.
Whenever we met for negotiations Nick took off his jacket, and even his red braces looked pugnacious. We tried to get on, but even where we agreed our reasons differed, and neither of us felt at ease with the other. Only rarely in my life have I utterly failed to form a relationship with someone, but Nick and I were doomed. I don’t apportion blame for this, I simply note it. Later, when I was appointed chancellor, I understood Nick’s frustration: he clearly wanted the job himself, and must have thought himself better qualified. He was certainly closer to the Prime Minister than I was. He suffered, and his private frustrations were reported to me.
Nick and I only rarely clashed in Cabinet or in committees. But one exchange in Cabinet committee did not endear us to each other. It also gave an interesting insight into the Prime Minister’s occasionally rather engaging innocence. David Mellor, then the Minister of Health, had rather conversationally raised the issue of single mothers. Nick suggested gruffly that they should be housed together in hostels so that they could be ‘cared for’ (and, the subliminal agenda went, watched). I thought this patrician approach to be so careless of people’s individual circumstances that I said ironically, ‘Why don’t we put red lights outside the hostels too?’ Nick grasped what I was on about and flushed with anger, but the Prime Minister, not understanding at all, warmly supported my ‘proposal’. ‘They’ll know where to go, Nick,’ she enthused. Irony was not Margaret’s strong suit.
Not that Nick’s hostility was directed solely at me. It extended to Cecil Parkinson (at that time the Energy Secretary) as well. In 1988 Nick and I reached a stand-off in pre-budget discussions, and I told him that I intended to refer his settlement to the Star Chamber. Since this was chaired by Cecil the prospect was not at all to Nick’s taste, and he quickly settled his budget at Environment in a brief meeting with Nigel Lawson – as I had suspected he would. His dislike of Cecil probably cost his department quite a lot of money.
Cecil was not called into action, as for the second year running all the spending agreements were reached without resort to the Star Chamber. The plans I agreed included an extra £2.25 billion for capital spending in the first year and large increases for health, law and order, defence, roads and local authority spending. These increases were possible because of the falling burden of interest payments on government debt and savings on social security payments as unemployment fell. The books balanced without any increase in overall spending for the first year of the survey, and only modest increases for the following two years.
As 1988 ended I could look back on two successful public expenditure rounds. My satisfaction was soured only by the increasing signs of economic problems to come. During those two years I had been so preoccupied with Treasury responsibilities that I had turned down a number of opportunities to deliver the sort of philosophical lectures that identify politicians with a particular credo. At the time I had no hesitation in refusing them. I was busy, and believed there would be many future invitations and ample time ahead to set out my ideas. Had I realised how my career was about to accelerate I might have acted differently. As it was, I delivered only one speech, to the Audit Commission in mid-1989, in which I tried to indicate that at least one Conservative felt that the public services performed a valuable role. This was a slightly dissenting voice to come from the Treasury, and was a trailer for the public service reforms that I was later to introduce.
As chief secretary to the Treasury, I came to know Margaret Thatcher much better. Since my role was to restrain public spending we were generally on the same side in most arguments. But we did have one fierce row. Short’s Brothers, a large aerospace company in Northern Ireland, was an important local employer in an area of massive unemployment. It had huge debts, and Tom King, the Northern Ireland Secretary, and I were keen to sell it to Bombardier, a Canadian aerospace company, in order to save jobs. They would not buy it without a substantial dowry, but to my astonishment Margaret objected to the terms of the deal I proposed. She summoned me to Downing Street, where in front of her Principal Private Secretary Andrew Turnbull we had a two-hour confrontation that began coolly, turned frosty, and ended in fierce rowing. I felt her attacks on me were unjust. I had concluded the two most successful public spending rounds for years, and was now accused of not being concerned about taxpayers’ money. Neither of us gave any ground, and I returned to the Treasury determined to resign if I was overruled. The next day, Margaret asked for further figures to justify my case, and then accepted it. But it had been a close call.
Yet again, a reshuffle was about to show that Margaret did not bear grudges over fierce arguments.
CHAPTER SIX ‘What’s the Capital of Colombia?’
I HAD BEEN WIDELY TIPPED for a move from the Treasury to my own department, but the promotion I was given surprised everyone – except me; the whips’ mafia had worked with its customary effectiveness. Three days before the reshuffle I had been warned by Tristan Garel-Jones that the Prime Minister intended to appoint me foreign secretary. I scoffed, and told him to lie down with an aspirin until he felt better. But I was not confident he was wrong. It was the sort of thing the whips would know, and he seemed very certain. I spent an uncomfortable weekend brooding on the prospect.
Norma was horrified. Of all the jobs in government the Foreign Office was the one she least wanted me to have, and the one for which I was least prepared. Moreover, I enjoyed being chief secretary. I had been in the job for two years, and felt thoroughly on top of it. It was flattering to be tipped for promotion, but I would have preferred to consolidate my position at the Treasury. I knew also that such a dramatic promotion would explode for good the contemporary wisdom that I had no enemies in politics. I knew that success could breed resentment, and that I would also be a sitting duck for the fire any commentator, colleague or opponent might henceforth care to direct at me.
The reshuffle began on Monday, 24 July 1989. Whitehall is a veritable grapevine on such days, and I kept in touch with colleagues by phone. Peter Brooke was followed into Number 10 by Ken Baker – self-evidently a change of party chairman. John Gummer, Cecil Parkinson and Nick Ridley were followed by Chris Patten. Others were said to have gone in privately, through the Cabinet Office. It was a substantial reshuffle but appeared to