The cause of the Tories’ shock win in 1997 has been debated almost as much as the roots of the first world war. The consensus is the same: it was lots of little factors that did it. In this case, the Tories refined and refined their core message until fear of Labour and hope in the economic dawn grew. John Major and Michael Portillo’s visit to a News International conference in 1993 seemed to result in a shoring up of support from the Sun and the Times.
Labour reverted to their long-learned behaviour and started acting like losers. Their lack of confidence was reflected by gaffes across the leadership, ruthlessly pursued by the press. By the election itself, reports of division drowned out Labour’s message. Perhaps the Tories were helped more than anything else by the untimely death of Margaret Thatcher in 1992 when, on the anniversary of the Falklands war, she slipped off the wet rocks of Port Stanley harbour into the icy South Atlantic depths. Without her interventions Tory division ebbed.
Finally, on that bright morning of 1 May 1997, a Tory government was returned with a slightly increased majority. British politics, for as far forward as any could see, would be conducted through the instrument of the Conservative party. Its internal councils carried more weight than anything said in parliament. Smart people cut their cloth accordingly.
The boom times of the late 1990s gave chancellor Michael Howard the time to enact a ‘starve the beast’ policy. As usual for Tories, they used rising government incomes not to invest in public services or pay back debt, but to give money back to the very wealthy. But they were cunning. They did not go for cutting tax rates but for abolishing certain taxes altogether.
The reasoning was simple. While it’s hard for future governments to raise tax rates, it’s a thousand times harder to levy new taxes. Inheritance tax was abolished. So too was stamp duty, and various forms of capital gains. Oddly, despite these changes benefiting only a tiny proportion of the population, they were widely popular. Perhaps people imagined they were richer than they were. In any case the times were good, so why worry?
Howard had almost achieved his plan. The remaining piece was a law that seemed completely uncontroversial. When it was first mentioned, commentators said he might as well have been legislating for more apple pie. The shortest parliamentary bill ever, the government debt (limitation) bill (1997), simply said: ‘No government shall present
a deficit budget bill two years running.’ The argument was simply made. Governments can’t go on borrowing money forever. That is just stealing from the children.
Howard had used a snooker player’s guile. When the next downturn came, any government would find that their hands were tied on financial policy. It would be political suicide to raise the income tax rate sufficiently to cover the hole in the budget. It would be suicide to introduce new taxes. It would be suicide to repeal the ‘debt bill’. As soon as the boom time stopped, a government of any stripe would have little choice but to cut public services. That was the meaning of ‘starve the beast’: the beast is government. You can never argue down its expenditure to the 30 per cent of national wealth the Tories long for. You need to create a crisis. But we are getting ahead of ourselves.
Once the Tories regained power, their unity faded. The offer of the deputy leadership and the control of a vast new department covering welfare, pensions, housing and health had kept Kenneth Clark within the cabinet fold. His brief was to extend Thatcherite radicalism right into the heart of the public services. Indeed, his white paper calling for a wholesale shift to ‘individual social insurance with a safety net’ was the most influential document since the Beveridge Report. He was not to see the Promised Land himself. He quit the cabinet when John Major announced that the Tories would no longer whip European votes because ‘they were a matter of conscience, made solemnly and for all time’.
Meanwhile, Portillo was like no home secretary since Churchill. He was photographed inches behind the police charge that finally bust up the picket round parliament in 1998. The health and emergency service workers were protesting at the removal of their right to strike. It was to be the most powerful image of his political career since his evocation of the SAS at the 1995 Tory conference. It would remain so until Prime Minister Portillo was photographed with President Bush in 2004 burning the Kyoto agreement and pushing their own carbon-trading scheme. Tory backbenchers gradually advanced their case for the death penalty in cases of child murder and the slaying of police officers. Who could disagree?
The Cabinet Office minister Ann Widdecombe was given free reign to push her own agenda. Major quickly learnt from ‘back to basics’, borrowing another form for the New Morality from across the Atlantic. Compassionate conservatism meant pulling apart the ‘monolithic’ state provision of welfare and replacing it with help from charities and churches. It also meant not being afraid of looking after people’s souls as well as their physical needs. After all, what was the point of giving people bread for one day when teaching them good behaviour would lead to a lifetime of prudent and responsible work? She also managed to get far more representation in the House of Lords for other clergy and to use her bully pulpit to hold forth, full force, on family issues.
Prime Minister Major concentrated on Britain’s global position. He had his hands full. During the Kosovo crisis it was his voice above all others calling for caution. There was no good to be had meddling in these ancient tribal hatreds… a point, ironically, that would have resonance nearer to home. Scotland and Wales, both alienated from the politics of England, collected petitions of millions demanding independence. These were hawked round the UN, the EU and every other international body.
Constitutionally it was a red herring but squaring away the bad publicity took a great deal of Major’s time. Finally he had to deal with Iain Duncan Smith, the head of the group within the party that voted to leave Europe, constantly introducing parliamentary bills to achieve that aim. Smith also started negotiating detailed terms for joining Nafta with a special committee of Republican Senators. Major was heard once, when the cameras were accidentally running, comparing his job to running around with a butterfly net trying to catch lunatics.
By the late nineties, the boom times came to an end, as they usually do in a Tory economy – with a bang. Massive consumer spending following tax cuts, interest rates set too low by the chancellor (the Bank of England not having independent control), market uncertainty about Britain’s membership of the EU: all these factors combined to form a kind of perfect economic storm.
Howard was grim but unrepentant. There was a global economic slowdown in the late 1990s – how could Britain hope to avoid it? With dread purpose he began to implement the cuts he had made inevitable. Welfare payments for those under 30 with no dependants was replaced with food or food vouchers and state accommodation. Universities were completely privatised, leaving only a skeletal state scholarship scheme. Welfare payments were given a ‘sunset’ of five years. To take the ‘burden’ off public services, people were allowed to rebate half their national insurance payments towards private health treatment. It was Howard’s ‘new economic settlement’, forged out of adversity. Most saw no other option. Just a few wondered why, in these grim times, he was smiling.