Thatcher’s children? By the time she left office, only a minority were true believers. Most would have voted her out had her cabinet ministers not beaten them to it. History is harshest to a leader just as they fall. She had been such a strident presence for so long that many who had first welcomed her as a gust of fresh air now felt harried. Those who wanted a quieter leader were about to get one. Yet most people had in the end done well under her, not just the Yuppies and Essex boys, but also her snidest middle-class critics. Britons were on average much wealthier than they had been at the end of seventies. The country was enjoying bigger cars, a far wider range of holidays, better food, a wider choice of television channels, home videos, and the first slew of gadgets from the computer age. Yet this was not quite the Britain of today.

More people smoked. The idea of smoke-free public areas, or smoking bans in offices and restaurants, was lampooned as a weird Californian innovation that would never come here. People seen talking to themselves with a wire dangling from one ear would have been considered worryingly disturbed. There were no Starbucks: coffee shops were still mainly locally owned places selling instant coffee, tea, fried food or cakes. Lunch had been under threat for some years in the City and the days of midday drinking were beginning to die in other professions too. The chic sandwich bar had begun to spread since the early eighties, when BLTs, avocado and blue cheese began to be regularly offered, alongside the traditional fillings of cheese, ham and egg. At a by-election outside Liverpool in 1986 a Labour activist had allegedly pointed to the mushy peas in a local chip-shop and asked for some of the ‘avocado dip’ too: it was a story, perhaps an urban myth, much re-told as symbolizing the gap between real Britain and the new metropolitan Britain of the south. The habit of urbanites carrying bottled water wherever they went had not yet taken off, though meaningless corporate language was already sullying business life. The ubiquitous PowerPoint presentation was in its infancy. Passengers, rather than ‘customers’, travelled on British Rail trains, with the double-arrow symbol which had been familiar since 1965. On the roads were plenty of flashy Ford Sierras, Austin Montegos and nippy Metros.

For a wealthy country, the mood was uneasy. An old jibe, ‘public affluence, public squalor’, was much heard. The most immediate worry was economic as the hangover effects of the Lawson boom began to throb. Inflation was rising towards double figures, interest rates were at 14 per cent and unemployment was heading towards two million. Over the next four years a serious white-collar recession was to hit Britain, particularly in the south, where house prices would fall by a quarter. An estimated 1.8 million people found that their homes were worth less than the money they had borrowed to buy them in the heady easy-credit eighties. During 1991 alone, more than 75,000 families would have their homes repossessed. With hindsight it is generally accepted that the Thatcher revolution reshaped the country’s economy and prepared Britain well for the new age of globalization waiting in the wings, but in 1990 it did not feel quite like that.

There were other changes too. The British were fewer than they are today. The population was smaller by at least three million souls. Also, the ethnic mix of the country was simpler. Of the roughly three million non-white British, the largest groups were Indian (840,000), black Caribbean (500,000) and Pakistani (476,000), pretty much what an extrapolation from the seventies would have predicted. No serious concern was expressed politically about whether Muslims could fully integrate. In the interests of keeping an eye on troublemakers, and maintaining Britain’s traditions of tolerance, a number of the most radical Islamic militants, on the run from their own countries, had been given safe haven in London. The largest white migrant group was from Ireland, which was still relatively poor. Any Poles or Russians in Britain were diplomats or refugees from communism. The term ‘bogus asylum seeker’ would have met with a puzzled frown. Looking to east or west, Britain was far less penetrated by overseas culture and people than she would soon become.

Britain was also about to go to war again as the junior partner to the Americans in the first Gulf conflict, which freed Kuwait from Saddam Hussein’s invasion and immolated the Iraqi army’s Republican Guard. Despite British forces losing lives and the use by Saddam of human shields, the war generated nothing like the controversy of the later Iraq war. It was widely seen as a necessary act of international retribution against a particularly horrible dictator. After the controversies and alarms of the Thatcher years, foreign affairs generated less heat, except for the great issue of European federalism. There was a real sense of optimism caused by the end of the Cold War, which had resulted in the deaths of up to 40 million people around the world, and involved no fewer than 150 smaller conflicts. At last, perhaps, the West could relax. Politicians and journalists talked excitedly of the coming ‘peace dividend’ and the end of the surveillance and espionage secret state that had been needed for so long. The only present threat to British security was the Provisional IRA, which would continue its attacks with ferocity and cunning for some years to come. They would hit Downing Street with a triple mortar attack on a snowy day in February 1991, coming close to killing the Prime Minister and the top team of ministers and officials directing the Gulf War.

Environmental worries were present too, though a bat-squeak compared to today’s panic. British scientists played a big role in alerting the world. Among the handful of Britons in the second half of the twentieth century who may be remembered centuries hence is James Lovelock. He is the scientist who in 1965 after studying the long-term chemical composition of the planet’s systems, and their interaction with living organisms, developed the ‘Gaia’ theory. The name, from a Greek goddess, came from the British Nobel Prize-winning novelist William Golding, a neighbour of Lovelock’s in Devon, during a country walk. ‘Gaia’ demonstrated how fragile the life-supporting atmosphere and chemistry of the planet is, an immensely complex self-regulating system keeping temperatures fit for life. Some hippies and ‘New Age’ mystics mistakenly thought Lovelock was saying the Earth was herself alive. He was using a metaphor but one with powerful implications for man-made climate change. At the same time as Lovelock was writing his most influential book, in the late seventies, far south the British Antarctic Survey was just beginning to notice a thinning of the ozone layer. It is said that when the first measurements were taken later in 1985 the readings were so low the scientists assumed their instruments were faulty and sent home for replacements. This led to an important treaty cutting ozone-depleting CFCs. British influence was important at the first world climate conference in Geneva in 1979, which had appealed to nations to do more research.

By 1990, a follow-up conference attended by 130 countries focused on the growing evidence that global warming was a real threat, but no agreement was reached about what should be done. Were any senior politicians worried? One was. Two years earlier Margaret Thatcher, science-trained, had made a speech about global warming. She had been persuaded that it was a profound issue by Britain’s outgoing ambassador to the United Nations, Sir Crispin Tickell, who had ironically enough got at her with worrying data during a long international plane flight. So in September 1988 she had told the Royal Society that she believed it possible that ‘we have unwittingly begun a massive experiment with the system of the earth itself.’ Such was the interest that no television cameras were sent to record her speech and the prime minister had to read it by the light of wax candles held over her head in an ancient hall. For most people in 1990 ‘the environment’ or green issues meant containable local problems such as the use of chemical pesticides or the problems of disposing of nuclear waste. Books about the fate of the earth concerned themselves with nuclear weapons.

Culturally, the country was as fixated by imported American television as it would continue to be: Baywatch and The Simpsons were popular new imports. And the national self-mocking strand of comedy which would be such a mark of the next fifteen years was well established, with Harry Enfield’s Wayne and Waynetta Slob joining his ‘Loadsamoney’ attacks on the big-bucks Thatcher years, Spitting Image puppetry at its most gleefully venomous, and the arrival of a new quiz show, Have I Got News For You. This heralded a time when interest in ideology and serious policy issues was being replaced by politics as entertainment, a stage on which humorists and hacks could prove themselves wittier than elected parliamentarians. Unsurprisingly, this would not result in a better-run country.

After a spate of transport disasters there was a widespread feeling that large investment was needed in the country’s infrastructure. French and British engineers celebrated in 1990 when they met under the Channel. Mobile phone use was tiny by modern standards, mainly confined to commercial business travellers’ cars and a few much-mocked City slickers carrying objects the size of a brick. The computer age was further advanced. The Thatcher years had seen a glittering waterfall of new products and applications, most of them generated in California’s new ‘silicon valley’, a hotbed of computer inventiveness recognized by name as early as 1971. The revolutionary Apple II computer had been launched in 1977, followed by Tandys, Commodores and Ataris with their floppy disks and basic games. The first IBM personal computer had arrived in 1981, using the unfamiliar MS-DOS operating system by a little known company called Microsoft. The Commodore 64 of the following year would become the best-selling computer of all time, though there were British computers: here, Sir Clive Sinclair’s ZX Spectrum computer caught most of the headlines. Then in 1983 an IBM clone arrived, the Compaq, first of countless many, and the unveiling of Microsoft Word and Windows. A year later came the first Amstrad personal computer from the British entrepreneur Alan Sugar’s electronics company and, from the US, the Apple Macintosh. A cult novelist called William Gibson introduced a new word, cyberspace.

By the end of the eighties the hot new topics were virtual reality, computer gaming – Sim City was launched in 1989 – and the exponentially increasing power of microprocessors. Computer graphics were becoming common in films, even though they were clunky and basic by modern standards. But the biggest about-to-happen event was the internet itself. The single most significant achievement by a British person in the early nineties had nothing to do with politics. Sir Tim Berners-Lee, inventor of the World Wide Web, stands alongside James Lovelock for influence above that of any politician. Today’s internet is a combination of technologies, from the satellites developing from the Soviet Sputnik success of 1957, to the US military programs to link computers, leading to the early ‘net’ systems developed by American universities, and the personal computer revolution itself. But Berners-Lee’s idea was for a worldwide hypertext – the computer-aided reading of electronic documents – to allow people to work together remotely, sharing their knowledge in a ‘web’ of documents. His creation of it would give the internet’s hardware its global voice.

Berners-Lee was an Oxford graduate who had made his first computer with a soldering iron and cut his teeth with British firms in Dorset, before moving to the European particle physics laboratory (CERN) in Switzerland in 1980. This is the world’s largest research laboratory where scientists were constantly evolving ways of communicating with one other by computer, so it is no coincidence that it was in Switzerland that Berners-Lee wrote his first program. In 1989 he proposed his hypertext revolution which arrived as ‘WorldWideWeb’ inside CERN in December 1990, and on the internet at large the following summer.

An admirably unflashy, decent man, Berners-Lee chose not to patent his creation, so that it would be free to everyone. He could have been fabulously wealthy but preferred to live the life of a moderately salaried academic, latterly in Boston, driving a second-hand car and living quietly. He was knighted in 2004 and, two years later, warned that misinformation and undemocratic forces were spreading through the web, calling for more research on its social consequences. In the immediate aftermath of the fall of Margaret Thatcher, all this was still to come. There were articles proclaiming some kind of new computer world community taking shape, but they were confusing to most people. Would this internet be basically for scientists? Was it a new kind of telephone-cum-typewriter, or an automated library system? Nobody knew for sure. In 1990 there were no ‘www’ prefixes, no dotcoms.

John Ball, More Interesting than He Looks

To guide this confusing new Britain, teetering on the edge of a new spate of globalism arrived an unlikely and very English figure, a Prime Minister whose seven years in office make him one of the longer-serving of modern times but who already gets half-overlooked. John Major was not what he seemed. He appeared to be a bland, friendly loyal Thatcherite. She thought so. So did Tory MPs, who elected him their leader because of who he was not. He was not the urbane, posh, old-school Tory Douglas Hurd and he was not the floppy-haired enchanter and lady-killer, Michael Heseltine. So who was he? Major had none of Thatcher’s certainty or harshness. It is a reasonable principle that when you probe the history of a normal, middle-of-the-road English person, you find it surprisingly exotic. That is the case with Major. He was a sensitive boy from the wrong part of town, from a mixed-up, rather rum family. His father was one of the music-hall artistes described much earlier in this book, a remarkable man who had been partly brought up in the United States, returning to Britain in Edwardian times to pursue a long stage career, then rampaging cheerfully round South America, marrying twice and producing two illegitimate children. His name was Tom Ball. The ‘Major’ was a stage name. As John Major said later he might more properly have been named John Ball, like the leader of the peasants’ revolt against the original poll tax.

Major was born late. His father was already an old man, now pursuing yet another career making garden ornaments. When an informal business deal went wrong he lost almost everything and the family moved from their comfortable suburban house to a crowded flat in Brixton, which they shared with a cat-burglar, a Jamaican later arrested for stabbing a policeman, and a trio of cheery Irish tax-dodgers. The flat turned out to be owned by Major’s (much older) secret half brother, though he never knew this at the time. Methodist Grantham this was not. Major, infuriated at being saddled with the name Major-Ball when he was sent to grammar school, was a poor pupil and left at sixteen. His early life was ragged and formless in shape. He worked as a clerk, made garden gnomes with his brother, looked after his mother and endured a ‘degrading’ time of unemployment, before eventually pursuing a career as a banker and becoming a Conservative councillor. Unlike Margaret Thatcher, his politics were formed by the inner city and he was on the anti-Powellite, moderate wing of the party. After a long search, he was finally selected as Tory candidate for the rural seat of Huntingdon and entered Parliament in 1979 as the Thatcher age began.

There he rose almost without trace, through a minor job with the Home Office, to the whips’ office which, as the internal security machine of a parliamentary party, can be a useful training ground for the ambitious, to two years at Social Security. After the 1987 election Thatcher promoted him to the cabinet as Chief Secretary to the Treasury, when he haggled with ministers about their spending plans. She liked him because he had stood up to her in argument, not because he was a stooge. There followed the abrupt further promotions to the Foreign Office where he served as Foreign Secretary for all of ninety-four days, and Treasury. As Chancellor he had promoted a short-lived alternative to monetary union, the ‘hard ecu’, which would have been a kind of voluntary euro, running alongside the old currencies. He had then won Thatcher round to membership of the ERM, though entering as it turned out at too high a rate. By the time he suddenly emerged as a possible candidate to replace her as Prime Minister, Major was known by those who knew him for being affable, reliable, hardworking, self-deprecating and, it was assumed, as her protégé, a model Thatcherite. But to everyone outside Tory politics, he was a blank canvas. He was the least known new Prime Minister in post-war Britain as well as the youngest of the century so far. At forty-seven, he was barely a public figure.

Most Conservatives had grown sick and tired of dramatics. Here was a bloke from next door with an easy smile leading them to easier times. Chris Patten, then the brightest man in the cabinet, acted as its spokesmen when he recalled the prisoners’ chorus to freedom in Beethoven’s opera Fidelio. If only they knew what was coming. Thatcher, belatedly slightly wary, promised to be a good ‘back-seat driver’. Major wanted none of her advice. He considered offering her a job, either in the cabinet or as ambassador to Washington. He decided not to. He talked of building a ‘society of opportunity’ and compassion, and for privileges once available to ‘the few’ to be spread ‘to the many’. This sounds like an early try-out for the language of New Labour: Major came to believe Blair had simply swiped many of his ideas and presented them as his own, with more verve. As we shall see there is some truth in this. But Major had little time to plan his own agenda. There were immediate crises. He was quick to kill off the poll tax and replace it with a new council tax bearing an uncommon resemblance to the old rating system. He was equally quick to meet the elder President Bush and support him through the Gulf War. Above all, he had to turn straight away to confront the great hydra-headed monster that was devouring his party, the federal agenda of Jacques Delors.

If ever a place was well chosen for debating the end of a Europe of independent nation states, it was Maastricht in Holland, an attractive cobbled town nestled so close to the German and Belgian borders it is almost nationless. Here the great showdown of winter 1991 took place. A new treaty was to be agreed and it was one which made the federal project ever more explicit. There was to be fast progress to a single currency. Much of foreign policy, defence policy and home affairs were to come under the ultimate authority of the EU. A ‘social chapter’ would oblige Britain to accept the more expensive work guarantees of the continent and surrender some of the trade union reforms brought in under Thatcher. For a country with a weak industrial base whose economy partly depended on undercutting her continental rivals, all this would be grave. For a Conservative Party which had applauded Lady Thatcher’s defiant Bruges speech, it was almost a declaration of war, in which Europe’s ‘federal’ destiny had become made explicit and imminent. Fretting and moody in exile Thatcher saw Maastricht as a recipe for national suicide. She now believed she had been removed from Downing Street because of her stand over Europe. Hearing Major declare he wanted Britain to be ‘at the heart of Europe’, a mere bromide of a phrase, she added him to the long list of traitors. Her admirers hissed. He refused to rule out a single currency for all time. They became angrier still. So did she.

Major was trying to be practical, not exciting. He decided that he had no absolutist views on the single currency. One day it would happen. It had obvious business and trading advantages. But now was too soon, partly because it would make life harder for the central European countries being freed from communism to join the EU. So he was neither a ‘never’ nor a ‘now’. Most people assumed he was glibly steering between two whirlpools, trying to keep his party united. In his memoirs, a great deal better written than most such books, he protested that he was accused of dithering, procrastination, lacking leadership and conviction. As to his true and subtle position, ‘I have given up hope that this will ever be understood.’ Yet at Maastricht he managed against all the odds during genuinely tense negotiations to slip Britain out of paying fealty to the EU on most of what was demanded. He and his Chancellor, Norman Lamont, negotiated a special British opt-out from monetary union and managed to have the social chapter excluded from the treaty altogether. Major kept haggling late and on every detail, wearing out his fellow leaders with more politeness but as much determination as Thatcher ever had. For a man with a weak hand, under fire from his own side at home, it was quite a feat. Major returned to hosannas in the newspapers and the widely reported remark of an aide that it was ‘game, set and match’ to Britain. He was briefly a hero. He described his reception by the Tory Party in the Commons as the modern equivalent of a Roman triumph, quite something for the boy from Brixton.

Soon after this, flushed with confidence, Major called the election most observers thought he must lose. The economy was so badly awry, the pain of the poll tax so fresh, the Labour Party of Neil Kinnock now so efficiently and ruthlessly organized, that the Tory years were surely ending. Things turned out differently. Lamont’s pre-election budget had helped a lot. It proposed cutting the bottom rate of income tax by five pence in the pound, which would help people on lower incomes, and badly wrong-footed Labour. Under a pugnacious Patten, now the party chairman, the Tories targeted Labour’s enthusiasm for higher taxes. It was tough stuff. Patten called himself ‘the liberal thug’. During the campaign itself, Major found himself returning to his roots in Brixton and mounting a soap-box – in fact, a plastic container – from which he addressed raucous crowds through a megaphone. This stark contrast to the careful control of the Labour campaign struck a chord with the media and he kept it up, playing the underdog to the Kinnock’s ‘government in waiting’. Right at the end, at an eve of the poll rally in Sheffield, Kinnock’s self-control finally gave way and he began punching the air with delight, crying ‘y’aw’right!’ This is often said to have finally turned middle England against him. That seems a bit neat.

On 9 April 1992 Major’s Conservatives won 14 million votes, more than any party in British political history. It was a great personal achievement, also based on people’s fear of higher Labour taxes. It was also one of the biggest percentage leads since 1945, though the vagaries of the electoral system gave Major a majority of just twenty-one seats. Kinnock was devastated and quickly left front-line politics. But never has such a famous victory produced such a rotten result for the winners. Patten lost his seat in Bath and went off to become the final governor of Hong Kong, tussling with the Chinese ahead of the long-agreed handover of Britain’s last proper colony. Despite the popular vote, the smallness of the majority meant Major’s authority was now steadily eaten away. He has not gone down in history as a great leader of this country, but under a parliamentary system greatness is generally related to parliamentary arithmetic. What kind of revolutionary would Margaret Thatcher have been had she had a majority of twenty-one in 1979 or 1983? Nor were the economics propitious. Had Labour won in 1992 it would have been quickly tarnished too. The choice of governing in that year was what rugby players call a hospital pass. For now John Major, the delighted and much-relieved victor, had the slippery ball in his hands and was acknowledging the cheers of the crowds. Meanwhile a platoon of nasty looking, bone-crushing, twenty-stone forwards were just about to jump him.

Old Labour’s Lost King

The story of modern British political life has, so far, thrown up a high proportion of nuts, or at least of unsettled people with something to prove. John Smith was not a nut. After Neil Kinnock gave up in despair following Major’s victory in 1992, he was replaced by a placid, secure, self-certain Scottish lawyer with a very boring name. Today almost everyone has an interest in writing John Smith out of the history books. For the Blairites, he was the timid, grey background for the heroic drama of modernization about to unfold. For those who loved Kinnock, he was the election-losing Shadow Chancellor. For the Tories, he was an embarrassingly good parliamentary inquisitor. In politics, predictions about what will happen a month ahead are dangerous but though Smith died of a heart attack in 1994, three years ahead of an election, it is fairly safe to suggest that, after the tarnishing years of the mid-nineties, he would have become Prime Minister. Had he done so, Britain would have had a traditionalist social democratic government, much closer to those of continental Europe, and our history would have been different.

Smith came from a family of herring fishermen on the West Coast of Scotland and, though bald as a coot himself, was the son of a bristly small town headmaster known as Hairy Smith. Labour-supporting from his earliest days, bright and self-assured, he got his real political education at Glasgow University, part of a generation of brilliant student debaters from all parties who would go on to dominate Scottish politics. Back in the early sixties, Glasgow University Labour Club was a hotbed not of radicals, but of Gaitskell-supporting moderates. It was a position Smith never wavered from, as he rose through politics as one of the brightest stars of the Scottish party, and then through government under Wilson and Callaghan as a junior minister dealing with the oil industry and devolution before entering the cabinet just in time as President of the Board of Trade, its youngest member at forty.

In Opposition, he managed to keep at arm’s length from the worst of the in-fighting (he and Tony Benn liked one another, despite their very different views, after working together at the Energy Department) and eventually became Kinnock’s shadow chancellor. He was a good lawyer and a brilliantly forensic parliamentary operator. This won him acclaim in the Westminster village even if, in Thatcher’s England, he was spotted as a tax-raising corporatist socialist of the old school. One letter he got briskly informed him: ‘You’ll not get my BT shares yet, you bald, owl-looking Scottish bastard. Go back to Scotland and let that other twit Kinnock go back to Wales.’1 Smith came from a somewhat old-fashioned Christian egalitarian background which put him naturally out of sympathy with the materialist, pleasure-orientated and aspirational culture that had grown so vigorously in Thatcherite England. Just before he became leader he told a newspaper he believed above all in education because ‘it opens the doors of the imagination, breaks down class barriers and frees people. In our family . . . money was looked down on and education was revered. I am still slightly contemptuous of money.’2 This could not in all honesty be said of the man who replaced him.

Smith was never personally close to Kinnock, but scrupulously loyal. A convivial (not drunken) workaholic who ate too much, he nevertheless succeeded him by an overwhelming vote in 1992. By then he had with great good luck survived a major heart attack and taken up hill walking. The Sun, not always a good guide to the future, greeted his triumph with the eerily accurate and predictive headline: ‘He’s fat, he’s fifty-three, he’s had a heart attack and he’s taking on a stress-loaded job.’

Though Smith swiftly advanced the careers of the brightest younger stars, Tony Blair and Gordon Brown, they swiftly became depressed by his style of leadership. He did not believe Labour needed to be transformed, merely improved. He was reluctant at first to take on the party over issues such as one-person, one-vote internal democracy. He had an instantaneous dislike of the Mephistopheles of the modernizers, Peter Mandelson, which may have been tinged with Scottish Presbyterian homophobia. Blair, Brown and Mandelson thought Smith was smug and idle. He on the other hand was equally sure they were making too much fuss and that Labour could regain power with something of its traditional spirit. A little-known newspaper journalist called Alastair Campbell divided the party into two camps, the ‘frantics’, led by Brown, Blair and Jack Straw, and the ‘long-gamers’, led by Smith. At one point Blair was contemplating leaving politics, so despairing was he of Smith’s leadership. He should, he reflected, have stuck to the law, where his elder brother was doing so well. What was there in politics for him?

Smith died of a second heart attack on 12 May 1994. After the initial shock and grieving had finished, Labour moved rapidly away from his legacy. There is, however, one part of the Smith agenda which survived intact and is a big influence on the shape of Britain today. As the minister who had struggled to achieve devolution for Scotland in the dark years of 1978–9 he remained a passionate supporter of the ‘unfinished business’ of establishing a Scottish Parliament and Welsh Assembly. With his friend Donald Dewar he had committed Labour so utterly to the idea in Opposition that Blair, no particular fan of devolution, found this one part of old Labour’s agenda that stuck and had to be implemented later.

Black Wednesday and Party Suicide

The crisis that now engulfed the Conservative government was a complicated, devilish interaction of themes but in other ways very simple. The first thing that happened was that they lost their economic policy in a single day when the pound fell out of the European exchange rate mechanism. Major’s opening words in the chapter of his book that deals with this are a fair summary: ‘Black Wednesday – 16 September 1992, the day the pound toppled out of the ERM – was a political and economic calamity. It unleashed havoc in the Conservative Party and it changed the political landscape of Britain.’3 It is worth recalling just what the ERM was and why it mattered so much in the early nineties.

Europe’s old currencies, the marks, francs, lira, crowns and the rest, were supposed to move in close alignment, like a flight of mismatched aircraft in tight formation. They would stick together against outsider currencies, notably the US dollar, behaving almost as if they were one currency. Speculators would not be able to drive them apart. Eventually, they would fuse and become one, which is where the aircraft analogy falls down, because so would the aircraft. The strongest currency by far was the German Deutschmark, so the rest followed it up and down.

Like the others the pound had a narrow band of values against the mark – its own airspace, as it were – which it had to keep to, as it swept through the turbulence and storms caused by the international money markets. Once it had chosen its entry rate, the value in marks that sterling would try to maintain, the government’s only steering mechanism was interest rates – plus, at the margin, protestation. What was the point of this? Dangerously, that depended on your vantage point. For Major and his government, the point was that because the German central bank had a deserved and ferocious reputation for anti-inflationary rigour, having to follow or ‘shadow’ the mark meant Britain had purchased a respected off-the-shelf policy. Sticking to the mighty mark was a useful signal to the rest of the world that this government, after all the inflationary booms of the past, was serious about inflation. On the continent the point of the ERM, however, was entirely different. It would lead to a strong new single currency. So a policy which Mrs Thatcher had earlier agreed to, in order to bring down British inflation, became a policy Lady Thatcher abhorred, because it drew Britain towards a European superstate. Confused? So was most of the Conservative Party.

Thus the bomb was prepared. What happened to set it off was that the US dollar began to fall because interest rates there were being cut, and pulled the pound down with it. Worse, the money flowed into Deutschmarks which duly rose; so the lead aircraft was gaining altitude, just as the pound was plunging. The government raised interest rates, up to an eye-watering 10 per cent, to try to lift the pound. But this did not work. The obvious next move was for the Germans to cut their interest rates, lowering the altitude of the mark, and keeping the ERM formation intact. This would have helped not just the pound but other weak currencies such as the Italian lira. But Germany had just reunited after the downfall of communism. The huge costs of bringing the poorer East Germans into West Germany’s embrace meant a real fear of renewed inflation and all those Weimar memories. So the Germans, heedless of the pain of Britain, Italy and the rest, wanted their interest rates high. Major begged, cajoled, warned and wrote stiff letters of protest to Chancellor Kohl who would not move. He warned of the danger of the new Maastricht Treaty failing completely, for the Danes had just rejected it in a referendum and the French were now having a plebiscite of their own. None of that cut any ice either.

In public, the British government insisted the pound would stay in the ERM at all costs. The mechanism was no mere technicality. It was Major’s anti-inflation strategy. Ever since as Chancellor he had told the unemployment-hit and house-repossessed British that ‘if it isn’t hurting, it isn’t working’, his credibility had been tied to the ERM. But it was his foreign policy too. British membership of the ERM showed the country was serious about being ‘at the heart of Europe’. It was Major’s big idea for Britain’s economic and diplomatic survival. Norman Lamont, who as Chancellor was as apparently committed as Major himself, told the markets Britain would neither leave the ERM nor devalue. It was ‘at the centre of our policy’ and there should not be a ‘scintilla of doubt’. Major then went further, telling an audience in Scotland that with inflation down to 3.7 per cent and falling, it would be madness to leave the ERM. ‘The soft option, the devaluer’s option, the inflationary option, would be a betrayal of our future.’

But he could hold out for not much longer. The lira crashed out of the ERM formation. The international money traders turned their attention to the weak pound and carried on selling. They were betting Major and Lamont would not keep interest rates so high the pound could remain up there with the mark – an easy, one-way bet. For in the real world, British interest rates at 10 per cent were already painfully high. On the morning of Black Wednesday, at 11 a.m., the Bank of England raised them by another two points. This would be agonizing for home-owners and business alike. But Lamont said he would take ‘whatever measures are necessary’ to keep the pound in the system. The sense of panic mounted. The selling went on. A shaken Lamont rushed round to tell Major the interest rate rise had not worked. But sitting in Admiralty House – Number Ten was being refurbished after the IRA mortar attack – Major and his key ministers decided to stay in the poker game. The Bank announced that interest rates would go up again, by three points, to 15 per cent, which if sustained would have caused multiple bankruptcies across the country. This made no difference either. Eventually, at 4 p.m., Major phoned the Queen to tell her he was recalling Parliament. The government cracked. At 7.30 p.m., Lamont left the Treasury with his closest advisers, including David Cameron, to announce to a throng of cameramen and bystanders in Whitehall that he was ‘suspending’ the pound’s membership of the ERM and was reversing the first of the day’s interest rate rises. Major wrote out his resignation statement for broadcast. It was the most humiliating moment for British politics since the IMF crisis of September 1976, sixteen years earlier.

If Major had actually resigned Lamont would have had to go as well. The country would have lost the two senior ministers in the middle of a terrible crisis. So Major decided to stay on, though he was forever diminished by what had happened. Lamont, always a bubblier and more resilient figure, better suited perhaps to the Regency than the fag-end of the twentieth century, announced that he had been singing in the bath after the ERM debacle, and later added to the insouciant impression by quoting Edith Piaf’s song ‘Je ne regrette rien’. He decided that he was delighted as the economy began to react to lower interest rates, and the slow recovery began. While others could see only endless sleet and frozen mud of unemployment, repossession and bankruptcy, he was forever spotting the ‘green shoots’ of economic rebirth. Perhaps it was the twitcher in him; keen bird-watchers are alert to nature.

In the following months Lamont created a new unified budget system and took tough decisions to repair the public finances but as the country wearied of recession, he became an increasingly easy butt of media derision. A few trivial incidents combined to make him something of a laughing-stock. To Lamont’s complete surprise and utter shock, Major sacked him as Chancellor a little over six months after Black Wednesday. Lamont retaliated later in a Commons statement. The government listened too much to pollsters and party managers, he said: ‘We give the impression of being in office, but not in power.’ It was a well-aimed and painful blow. Major appointed Kenneth Clarke, one of the great characters of modern Toryism, a pugnacious, pro-European, beer-drinking, jazz-loving One Nation brawler, to replace Lamont. Though Lamont then moved increasingly towards full-on Euro-scepticism and never forgave Major, these three unlikely musketeers were jointly responsible for the strong economy inherited by New Labour four years later.

As to Major himself, his stony road just got flintier and steeper. In the Commons the struggle to ratify the Maastricht Treaty, hailed as such a success before the election, became a long and bloody one, conducted in late-night cabals, parliamentary bars and close votes night after night. Major’s small majority was more than wiped out by the number of anti-Maastricht rebels, egged on by Lady Thatcher and her former party chairman, Norman Tebbit, now also in the Lords. Black Wednesday emboldened those who saw the ERM and every aspect of European federalism as disastrous for Britain. As John Major later wrote, it turned ‘a quarter century of unease into a flat rejection of any wider involvement in Europe . . . emotional rivers burst their banks.’ Had not the Germans let us down again? And had lower interest rates and ‘green shoots’ of recovery not followed Britain’s self-expulsion? If the ERM had been bad, so surely was the whole federal project? Most of the newspapers which had welcomed Maastricht were now as vehemently against it. The most powerful Conservative voices in the media were hostile both to the treaty and to Major. Lady Thatcher’s new oppositionism echoed loudly through Westminster. Principle, pique and snobbery swirled together. Major’s often leaden use of English, his resolute lack of panache or cool, led many of England’s High Tories to brand him shockingly ill-educated and third-rate for a national leader. His own sensitivity to criticism and occasional exhibitions of self-pity simply made things worse. He lacked that layer of nerveless flesh leaders today require.

The story of the long progress through Parliament of the Maastricht bill during the autumn, winter and spring of 1992–3 is too convoluted to be recorded here. Suffice it to say that a constantly shifting group of around forty to sixty Tory MPs regularly worked with the Labour opposition to defeat key parts of their government’s main piece of legislation, and that Major’s day-to-day survival was always in doubt. Whenever he called a vote of confidence and threatened his rebellious MPs with an election, he won. Wherever John Smith’s Labour Party and the anti-Maastricht rebels could find some common cause, however thin, he was in danger of losing. The rebels ranged from the most fastidious and high-minded MPs who were profoundly worried about the constitutional damage European Union would do an ancient parliamentary democracy, to the mischievous and the embittered. Some backbench rebels found that they were interviewed constantly on television. Their views were sought by the papers and they became very minor national characters. This can be, as the current author witnesses, dangerously intoxicating. In the end Major got his legislation and Britain signed the Maastricht Treaty but it came at appalling personal and political cost. Talking in the general direction of an eavesdropping microphone, he spoke of three anti-European ‘bastards’ in his cabinet – a reference to Michael Portillo, Peter Lilley and John Redwood. The country watched a divided party tearing at itself and the country was unimpressed.

By the autumn of 1993 Norman Lamont was speculating aloud that Britain might have to leave the European Union altogether, and the financier Sir James Goldsmith was preparing to launch his Referendum Party to force a national plebiscite. The next row to break was over the voting system to be used when the EU expanded, a murky matter of realpolitik which directly affected each country’s leverage. Forced to choose between a deal which weakened Britain’s hand and stopping the enlargement from happening at all by vetoing it, the new Foreign Secretary, Douglas Hurd, went for a compromise. In Parliament, once again, all hell broke loose. Tory rebels began talking of a challenge to Major as leader. This subsided briefly but battle began again over the European budget, and fisheries policy. Formal membership of the Tory Party was withdrawn from eight rebels. By now Smith, who had given Major some of the worst parliamentary moments of his life, had suddenly died, and had been replaced by Tony Blair. When Major readmitted the rebels, the young Opposition leader told him: ‘I lead my party, you follow yours.’ As with Lamont’s ‘in office but not in power’ this caricatured the dreadful dilemma Major was in. But like Lamont’s remark, Blair’s struck a chord with the country.

The Age of Major

While the central story of British politics in the seven years between the fall of Thatcher and the arrival of Blair was taken up by Europe, at home the government tried to continue the British revolution. After many years of dithering, British Rail was broken up and privatized, as was the remaining coal industry. After the 1992 election it was decided that over half of the remaining coalmining jobs must go, in a closure programme of thirty-one pits to prepare the industry for privatization. This depressed or angered many Tory MPs who felt the strike-breaking effect of the Nottinghamshire-dominated Union of Democratic Mine-workers deserved a better reward, and it roused much public protest. Nevertheless, with power companies moving towards gas and oil, and the union muscle of the miners broken long since, the sale went ahead two years later. Faced with a plan by Michael Heseltine to sell off the Post Office too, Major baulked. It was a service with the stamp of Royalty on it and a long tradition. His refusal was probably good for the country. Why? Because the privatization of the railways was a catastrophe.

There has long been a problem with some politicians and railways. Perhaps it was all those Hornby models in boys’ bedrooms or attics. Perhaps it was the simple romance of an industry which has beauty and complexity, which appeals to the mathematically minded in the structuring of its timetables, and to romantics in its engineering. At any rate, fiddling with the railway system became a dangerous obsession of governments of different colours. Thatcher, not being a boy, knew that railways were also too much part of the working life of millions to be lightly broken up or sold. She is said to have told Nicholas Ridley when he was Transport Secretary, ‘Railway privatization will be the Waterloo of this government. Please never mention the railways to me again.’4 Yet just before she resigned, under pressure from a Treasury privatization unit with too little left to do, she began to soften, and rail privatization was taken up by John Major with gusto. Trains! What could be more fun? Was not old-fashioned, curled-sandwich-serving, rail accident prone British Rail a national joke? Could not any reforming government worth its salt, brimming with nostalgia for the old days of brightly painted trains run by private companies, do better than that?

The problems with selling off an elderly, loss-making railway system on which millions of people depend, are obvious. If your first aim is to raise money, then you have to accept that fares will rise briskly, and services may be cut, as the new owners try to make a profit. This will make you less popular. If, however, your aim is to increase competition, just how do you do that? Each route has only one railway line. Different train companies can hardly compete directly, racing each other up and down the same track. Do you give up on competition and sell off all of British Rail as a single unit? The Conservatives decided against that which left them essentially with two options. They could cut up BR geographically, selling off both trains and track for each region, together, so that the railway system would end up looking much as it had in the thirties. Competition would not be direct, but it would become clear that, say, the Great North Eastern operator was offering a pleasanter and more efficient service than the company running trains to Cornwall and Devon, and in due course one might lose, and the other gain, market power. Licences could be revoked, or there might be takeovers. Alternatively, the railway could be split vertically, so that the State owned the track, some companies owned the stations, and others the trains. This could be called the Complete Horlicks option.

Under Treasury pressure to produce the maximum competition and revenue, the new Transport Secretary, John MacGregor, chose it. A vastly complicated new system of subsidies, contracts, bids, pricing (of almost everything), cross-ticketing and regulation was created, topped off when late in the day, it was decided to sell off the nation’s railway tracks separately to a single private monopoly to be called Railtrack. Suddenly to get across the country could become a complicated transaction, involving two or three separate train companies. They would not, however, be left to get on with it in a new market. Trains were too important for that. A Franchise Director would be given powers over the profits and pricing, including ticket prices, of the new companies and a Rail Regulator would deal with the track. Both would end up reporting directly to the Secretary of State so that any public dissatisfaction, commercial problem, safety issue – indeed, almost everything – would be back in the lap of the politicians. If this was privatization, it was a strange and possibly pointless one, which would end up costing the taxpayer far more than old-fashioned, much-mocked British Rail. The historian of this curious tale, Christian Wolmar, dubbed it ‘the poll tax on wheels’. The writer Simon Jenkins, who had sat on the British Rail board, concluded: ‘The Treasury’s treatment of the railway in the 1990s was probably the worst instance of Whitehall industrial mismanagement since the Second World War.’5

Citizens and Hoop-jumpers

As a Brixton man who had known unemployment, and as a sensitive man quick to feel slights, Major was well prepared by upbringing and temperament to take on the arrogant and inefficient quality of much so-called public service. In his early years he himself had been the plaintive figure who found ‘telephones answered grudgingly or not at all. Booths closed while customers were kept waiting . . . Remote council offices where, after a long bus journey, there was no one available to see you who really knew about the issue . . . Anonymous voices and faces who refused to give you a contact name.’6 He was making a good point. Why in a country that spent so much on public services were so many of them so bad? The answer of the Thatcher revolution was that in the end only the market is properly responsive. Yet nobody in power during the eighties or nineties, including Margaret Thatcher, was prepared to take this logic to its limit and privatize the health service or schools or road system, compensating the worse off with vouchers or cash help. Nor, under the iron grip of the Treasury, was there any enthusiasm for a revival of local democracy to take charge instead.

This left a fiddly and highly bureaucratic centralism as the only option left, one which we have seen gather momentum in the Thatcher years and which would flourish most extravagantly under Blair. Under Major, the centralized Funding Agency for Schools was formed and schools in England and Wales were ranked by crude league tables, depending on how well their pupils did in exams. The university system was vastly expanded by simply allowing colleges and polytechnics to rename themselves as universities, and a futile search began for ways in which civil servants might measure academic merit and introduce league tables there. The hospital system was further centralized and given a host of new targets. The police, faced with a review of their pay and demands by the Home Secretary, Kenneth Clarke, for forces to be amalgamated, were given their own performance league tables. The Tories had spent 74 per cent more, in real terms, on law and order since 1979 yet crime was at an all-time high, as a doleful list of high-profile murders reminded the public. Clarke’s contempt for many of the police as ‘vested interests’ was not calculated to win them round to reform. Across England and Wales elected councillors were turfed off police boards and replaced by businessmen. Clarke’s hostility to local control had been confirmed by his time as Health Secretary when, according to one department insider, he showed himself as ‘a leading exponent of the Stalinist side of the Tory party. He castrated the regional health authority chairmen.’7

In 1993 Clarke defended his new police league tables in language that was eerily echoed by New Labour later: ‘The new accountability that we seek from our public services will not be achieved simply because men of good will and reasonableness wish that it to be so. The new accountability is the new radicalism.’ Accountability: once the word had implied a contest of ideas and achievements, played out in front of the voters. Now it meant something very different. Across the country, from the auditing of local government to the running of courts or the working hours of nurses, an army of civil servants, accountants, auditors and number-crunchers marched in. Once, long ago in the 1940s, Labour had been mocked for saying that the man in Whitehall knew best. Now the auditors and accountants hired by Whitehall ruled instead. Weakly, from time to time, ministers would claim that the cult of central control and measurement had been imposed by Brussels. Some had been, but this was mostly a homegrown ‘superstate’.

Major called his headline policy the Citizen’s Charter, though he himself did not like the name very much because of its ‘unconscious echoes of Revolutionary France’. Every part of government dealing with public service was ordered to come up with proposals for improvement at grass-roots level, to be pursued from the centre by inspections, questionnaires, league tables and ultimately the system of awards, Charter Marks, for organizations that did well. Throughout, Major spoke of ‘empowering’ teachers and doctors, ‘helping the customer’ and ‘devolving’. He thought his great system of regulation from the centre would not last long: it was ‘a regulatory goad to raise standards . . . over time, I anticipated formal regulation steadily withering away, as the effects of growing competition are felt.’ But how would this happen? In practice, the regulators grew more powerful, not less so. If people are paid to respond to regulators’ targets and jump through hoops, they become excellent at target-practice and hoop-jumping. This does not make them wise administrators. Despite the rhetoric, public servants were not being given real freedom to manage. Elected office-holders were being sacked. Major’s hopes for central regulation withering away echo Lenin, who hoped for a ‘withering away’ of the Soviet State, with similar success.