William Armstrong and British Policy Making KEVIN THEAKSTON and PHILIP CONNELLY

William Armstrong and British Policy Making KEVIN THEAKSTON AND PHILIP CONNELLY

UNDERSTANDING GOVERNANCE Understanding Governance

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More information about this series at http://www.palgrave.com/series/14394 Kevin Theakston • Philip Connelly William Armstrong and British Policy Making Kevin Theakston Philip Connelly Sch of Politics & International Studies Tunbridge Wells, Kent University of Leeds Sch of Politics & United Kingdom International Studies Leeds, United Kingdom

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This Palgrave Macmillan imprint is published by Springer Nature The registered company is Macmillan Publishers Ltd. The registered company address is: The Campus, 4 Crinan Street, London, N1 9XW, United Kingdom Preface

This book has in many ways been a long time in the making. It represents also the coming together of a number of streams of work. Supported by an Economic and Social Research Council grant as part of the ESRC’s ‘Whitehall Programme’, Kevin Theakston first started researching the life and career of William Armstrong in the 1990s for his book Leadership in Whitehall (1999), working on the Armstrong family papers and material in the National Archives, and conducting a series of interviews with senior civil servants (serving and retired). Theakston also undertook further archival research in 2004 into Armstrong’s role in civil service and machinery of government reforms, featuring in his chapter on Whitehall reform in the 1960s in Peter Dorey’s edited book on The Labour Governments 1964–70 (2006). Meanwhile, whilst working on a full-scale biography, Philip Connelly interviewed former civil service colleagues of Armstrong, friends and family members between 2003 and 2007, while Jeanne Connelly undertook research into William Armstrong’s family antecedents. Although his manuscript was completed in 2007, it remained unpublished after his untimely death, but a significant portion of the original forms part of the current book. Accordingly, the final phase of the project came in 2015–17 when Theakston undertook a further round of intensive work on the Armstrong family papers, media and other sources, and in particular on government files in the National Archives, including from William Armstrong’s private office, the Treasury, the Cabinet Office, the Prime Minister’s Office, the Civil Service Department, and the wartime Security Executive. In the process, a great deal of completely new material on Armstrong’s role in

v vi PREFACE

policy-making in the Heath government, in wartime and in the 1950s and 1960s was uncovered, and is quoted, discussed and analysed in this book— significantly extending and deepening our previous knowledge and understanding of William Armstrong’s role, career and influence. This book therefore draws on original information and insights from many thousands of pages of government memoranda, files and minutes from the 1940s through to the 1970s; on William Armstrong’s private papers and the texts of many speeches and interviews he gave; and on a great many interviews with Whitehall insiders who worked closely with William Armstrong and others who knew him well. Theakston has pulled all this material together, analysed the new and re-analysed the previous original archival and interview research, integrated it with the relevant academic work, and written up the manuscript of this book, incorporating the extensive new research findings and analysis, while retaining significant material from Connelly’s original manuscript. It is a sad fact that Philip Connelly did not live to see this book appear, but his role and input into its making has been absolutely vital and important, and it is fitting that it appears as a joint endeavour under both our names. The authors are grateful to the Armstrong family and friends for their help over the years and for their information. We thank Peter Armstrong in particular for his hospitality and for access to, and permission to quote from, the Armstrong papers. We would like to thank Peter Armstrong, Lady Armstrong and Mrs Janet Turnbull (daughter) for the interviews they gave Philip Connelly. Adrian Pegg, of the Ernest Bevin College, was especially helpful in providing documents on Bec School, and for tracking down two school contemporaries of William Armstrong. Kevin Theakston thanks the senior civil servants whom he interviewed on a ‘not for personal attribution’ basis during his research on Whitehall and William Armstrong, and thanks Peter Jay for the interviews he gave. Philip Connelly thanks, for their ‘on the record’ interviews: Lord Allen of Abbeydale, Lord Armstrong of Ilminster, Sir Alan Bailey, Lord Butler of Brockwell, Tom Caulcott, Sir John Chilcot, Lord Croham, Susan Crosland, Graham Crosskey, Colin Gilbraith, Sir Samuel Goldman, Herbert Harris-Taylor, Sir James Hamilton, Sir John Herbecq, Anthony Howard, Sir Conrad Heron, Lord Hunt of Tamworth, Peter Jay, Jack Jones, Dr Stanley Mason, Bill McCall, Sir Ronald McIntosh, Sir Kit McMahon, Sir David McNee, Sir Peter Middleton, Lord Moser, Mrs Jim Rodger, Lord Roll, Sir William Ryrie, Sir David Walker, Richard Wilding, PREFACE vii

Lord Wilson of Dinton. Where quoted in the text, those of the above gave their permission to be quoted. In the references, interviews are marked (KT) or (PC), depending on which of the two researchers conducted them. We thank Lord Armstrong of Ilminster for the help and information he gave at different times in correspondence with Philip Connelly and also with Kevin Theakston, and for his comments and advice on part of our text. We also thank Lord Hurd for the information he provided in correspondence with Philip Connelly. Peter Armstrong recorded a conversation with his father in 1974, which covered family background and this is referred to in the book as the ‘Armstrong Tape’. We are grateful to Peter Armstrong for also making available a recording of the Mile End Group discussion event, ‘Memories of William Armstrong’, held at Queen Mary, University of London in 2008. We thank Dr Rosaleen Hughes for permission to quote from her unpublished PhD thesis: ‘Governing in Hard Times’: The Heath Government and Civil Emergencies—the 1972 and the 1974 Miners’ Strikes, Queen Mary University of London (2012). We acknowledge the great help received from the staff at the National Archives, the British Library, the University of Leeds Library and Special Collections, and the Special Collections and Archives section at the Sydney Jones Library at the University of Liverpool. We are grateful to Rodney Lowe, Peter Hennessy, Geoffrey Fry and Rod Rhodes for help, advice and comments over the years on our work. The authors alone are, of course, responsible for the contents and the judgements and interpretations made in this book. Philip Connelly would have wanted to acknowledge his huge debt to Jeanne Connelly and the support of Ruth and Andrew. I would like to thank Jeanne for her great help and encouragement in making this project possible and seeing it through to completion. My own greatest debt is, as always, to Breda Theakston.

Leeds, UK Kevin Theakston Contents

1 Introduction 1

2 William Armstrong: Family Background and Education 13 The Salvation Army 13 A Showman Father? 15 The Sun and the Moon: Mother’s Influence 18 A Happy but Disrupted Childhood 20 A Christian Upbringing 21 Bec School: The Crucial Turning Point 24 Getting into Oxford 27 Oxford: The Life of the Mind 28 No Politics Here 31 Religion and the Idea of Service 36

3 Climbing the Whitehall Ladder 45 Joining the Civil Service 45 The Board of Education 49 Security Executive 54 Working with Edward Bridges 60 Chancellor of the Exchequer’s Private Secretary 67 Rising Through the Treasury 77

ix x Contents

4 Head of the Treasury 1962–68 97 Taking the Helm 97 Reorganizing the Treasury 102 Chancellor’s Right-Hand Man 105 Economic Policy 114 ‘Creative Tension’ 127

5 Head of the Home Civil Service 1968–74 143 Fulton and Civil Service Reform 149 Machinery of Government 163 Senior Appointments 172 Women in the Civil Service 176 Royal Finances 178 Open Government 180

6 ‘Deputy Prime Minister’ Under Heath 197 Armstrong and Heath 198 Economic and Industrial Policy 201 A Prime Minister’s Department? 211 Counter-Inflation: Prices and Incomes Policy 218 The Breakdown 238

7 The Midland Bank Years 253

8 William Armstrong: An Assessment 265

Index 283 CHAPTER 1

Introduction

William Armstrong was the most influential civil servant in Britain in the 1960s and early-1970s, and one of the most powerful and significant Whitehall officials in the post-1945 period as a whole. He was at the centre of the Whitehall policy-making machine for over 30 years—the very incarnation of the ‘permanent government’ of the country. He worked closely with ministers in successive Labour and Conservative governments from the 1940s to the 1970s—ministers who came to rely hugely on his administrative skills and to trust his advice and counsel. He made the machinery of government work and deliver for them. He helped them put their policies and programmes together, deal with the problems thrown at them, and manage crises great and small. ‘One felt that if Armstrong was behind you it couldn’t be so bad’, recalled one of the Chancellors of the Exchequer he worked with.1 ‘For nearly two decades’, wrote Samuel Brittan when Armstrong died, ‘he had been at the centre of public affairs where his personal impact was a great deal stronger than that of many politicians who fill the headlines.’2 He was regarded with immense respect and even awe inside the Whitehall civil service community, but was genuinely personally unstuffy and informal. He seemed to embody many of the defining features of the classic civil service ‘mandarin’ but was at the same time a very modern figure—rational, analytical, at home with the-then contemporary issues and theories of economic management and policy. His background was,

© The Author(s) 2018 1 K. Theakston, P. Connelly, William Armstrong and British Policy Making, Understanding Governance, https://doi.org/10.1057/978-1-137-57159-5_1 2 K. THEAKSTON AND P. CONNELLY however, far removed from that of the classic ‘mandarin’. As the son of two full-time Salvation Army officers, his early life was spent following his parents in their Army postings around the country and receiving his education in a series of state schools often located in insalubrious parts of town. He was also the first top civil servant who became known to the public, breaking the mould and consciously cultivating a public profile when appointed to head the Treasury in 1962 and more conspicuously as Head of the Civil Service handling the post-Fulton reform of the civil service after 1968. But controversy surrounded his role in the Heath government and his final years in Whitehall, when he became so closely involved in the formulation and direction of the Conservative government’s prices and incomes policy, and so much the prime minister’s key right-hand man, that he was publicly dubbed the ‘deputy prime minister’. Obituary headlines in 1980 summed up the story: ‘Lord Armstrong, controversial but “a great public servant”’; ‘A passion for rationality’; ‘Lord Armstrong’s life of crisis.’3 Despite the significance of their roles in government policy-making at the hinge of politics and administration, and the leadership they give to the bureaucratic machine, the lives and careers of top civil servants like William Armstrong are less well documented, reported and written about than those of politicians. In part, this reflects the constitutional conven- tions of civil service anonymity and ministerial responsibility, the blanket of official secrecy, and the reticence of the traditional administrative culture of Whitehall that together have obscured or veiled their activities. Administrative biography has been a relatively neglected and under- explored dimension of historical, political science and public policy studies of government. But a biographical approach has great potential for the study of leadership in public administration and policy-making in government. ‘It seeks to understand how the personality, training and previous experiences that an individual brings to an organization influence his or her performance. It analyses the forces shaping the individual and the individual as a force on administration. It addresses how the individual applies skills and strategies to the role of the executive.’4 Biographical studies can illustrate: the different ways in which civil servants contribute to and support policy-making and decision-taking in government; the ways in which leadership can be exercised in Whitehall and the opportunities for and constraints on that leadership; and provides material and a viewpoint from which to analyse and assess change over time in the character, culture and working of the Whitehall system.5 INTRODUCTION 3

There are few in-depth studies of top Whitehall bureaucrats. The books on the major civil service figures of the twentieth century that stand out are the accounts of Maurice Hankey (Secretary to the Cabinet 1916–1938) by Stephen Roskill and John F. Naylor, Eunan O’Halpin’s study of Warren Fisher (Head of the Civil Service 1919–1939), and Richard Chapman’s analysis of the influence of Edward Bridges (Head of the Civil Service 1945–1956) on the ethos and traditions of the civil service.6 A recent addition to the genre is Michael Jago’s biography of Robin Butler (Cabinet Secretary and Head of the Civil Service 1988–1997), albeit a study hampered by the limited availability of official papers at the time of writing.7 The influence of and the controversies around Horace Wilson (a leading figure in Whitehall in the 1920s and 1930s, and permanent secretary of the Treasury and Head of the Civil Service 1939–42) have been approached in short essays by Rodney Lowe and Richard Roberts and (on his role in relation to appeasement) by George Peden, with Adrian Phillips discussing his machinations and manoeuvres during the 1936 abdication crisis.8 More collective studies or group biographies have cast light on the history and working of the Cabinet Office and the Secretary to the Cabinet since 1916 (Seldon with Meakin, and Beesley), the changing exercise of leadership in Whitehall in the nineteenth and twentieth centuries (Theakston), and the variability of the role of the permanent secretary of the Foreign Office from the mid-nineteenth to the mid-twentieth centuries (Neilson and Otte).9 Also in this vein, Peter Ribbins and Brian Sherratt have been developing a group portrait and analysis of the policy-making roles, styles and influence of successive permanent secretaries at the Department for Education 1976–2012.10 As Neilson and Otte put it, ‘it is people who make institutions work’—a biographical focus thus providing an essential supplement, alternative or indeed antidote to anonymous ‘institutional history’ and desiccated administrative theories. In this context, and looking at the topmost levels of the twentieth- century British civil service, the absence of a detailed study of William Armstrong’s career and influence has long been apparent, and this book therefore fills a major gap in the literature. While inevitably foregrounding the role and personality of William Armstrong, and piecing together an account of his thinking and his contributions to policy-making, the book also casts light on wider institutional, political and historical issues around the working and reform of the civil service and the government machine, and the experience in office of Labour and Conservative governments, from the 1940s to the 1970s. 4 K. THEAKSTON AND P. CONNELLY

Memoirs written by civil servants can provide something of a counter- balance to the accounts provided by politicians and by their politically- appointed special advisers and media aides. There is a long tradition of memoir-writing by retired diplomats, ambassadors and Foreign Office officials, and of the publication of diaries—some of these volumes being pretty anodyne and bland, while others are more revealing ‘insider’ accounts, adding colour, anecdote and detail, and evidence of the impact of personality, to our understanding of foreign policy-making, diplomacy and international crises.11 There are usually fewer exotic locations and glamorous cocktail parties recorded in the memoirs and autobiographies of officials in the home civil service but nevertheless they afford many keen insights into life in the Whitehall ‘village community’, the issues facing different departments, and changes over time in the organisation and work of the civil service.12 Particularly valuable and important—indeed, indispensable—for understanding economic policy-making and the relations between officials and ministers in the Treasury at the time when William Armstrong was working there are the diaries of government economic advisers Robert Hall and Alec Cairncross.13 William Armstrong himself gave some serious thought after he had left the civil service to writing a book based on his experience in Whitehall. The publishers George Weidenfeld (of Weidenfeld and Nicolson) and Graham C. Greene (of Jonathan Cape) were interested in a possible Armstrong book.14 Harold Evans, editor of the Sunday Times, would have liked to serialise it in his newspaper and offered research and secretarial help with the project—someone to put together chapter by chapter dossiers of notes and clippings from which Armstrong could write, or a journalist to tape-record interviews and from the transcripts write up drafts which could be reworked and hammered into shape.15 Armstrong’s initial idea, in discussion with George Weidenfeld in late 1974, was for a book conveying ‘an insider’s view of how British Government really works—not as it is described in the text-books, nor yet as it appears from newspaper stories.’ The ‘requirements of confidentiality’, he was clear, would ‘rule out inside stories of particular events’ but he sketched for Weidenfeld a plan for a book based on ‘a series of letters’ addressed to four imaginary people: a youngster starting on his or her first job in the civil service, a minister entering government for the first time as a parliamentary secretary and later becoming a member of the Cabinet, a middle-ranking civil servant, and a permanent secretary. The title Behind the Chair had occurred to him. He would purportedly be ‘an insider INTRODUCTION 5 writing for insiders’, weaving in anecdotes from his own experience and references to events which actually happened to discuss issues like recruitment to the civil service, civil service ethics, the work of the Cabinet Office and the Treasury, coping with special advisers, working with ministers and the prime minister, the transfer of power at elections.16 The book would have had ‘autobiographical under-tones’ but would not be in itself a conventional autobiography.17 The plan was put on ice because of work pressures but a few years later, in June 1977, Armstrong returned to the subject, saying he was not interested in doing a ‘straightforward book of memoirs’, partly because he had kept no diary but also because of ‘the rules of the civil servants’ game’ (that senior officials were in a position of trust and needed to maintain the confidentiality of relations with ministers was a central aspect of Whitehall’s guidance on memoirs18). He still wanted to do a book ‘mixing experience with reflection on particular themes.’ Harold Evans arranged for Eric Jacobs, Labour Editor of The Sunday Times, and someone who had written a perceptive profile of William Armstrong in 1968,19 to work with Armstrong, and on the basis of a long taped interview Jacobs produced in August 1977 a rough first draft of a chapter covering his family background and parents, school and university education, and recruitment to and early years in the civil service (up to the outbreak of war). Jacobs ten- tatively outlined a number of other chapters they could start to develop in the same way.20 And Armstrong himself spent some time putting together notes (which are in his private papers) with key dates, lists of posts held, incidents from his career, reminders of anecdotes and themes he wanted to introduce into the text, and so on. ‘Does C.S. rule country [?] What is role of Minister? How can C.S. be non-political? Is machine efficient?’ he jot- ted down in one such note. Another referred to ‘The sort of people who become C.S. Not the enthusiastic reformers or the seekers for power’, adding to the latter, ‘Horace Wilson as exception’ (emphasis in original). It would have been a fascinating and unique book but it never got written. Armstrong was too busy at the Midland Bank and died suddenly in 1980, aged just 65; perhaps if he had had a longer retirement, he would have finally pushed the project through to completion. The great challenge—as found by the biographers of William Armstrong’s distinguished predecessors as the country’s top civil servant, Warren Fisher and Edward Bridges—is pinning down what part he played in events or particular policy areas, what his personal impact or contribution actually was.21 ‘It is the lot of the public servant, even one of William’s 6 K. THEAKSTON AND P. CONNELLY stature, to make his contribution not in one single indelible endeavour but in manifold and innumerable inputs to the policies and practice of government’, as Gordon Richardson, the Governor of the Bank of England, said at the memorial service for William Armstrong in 1980.22 Then there is the general issue that government policy-making and administration are usually collective and interactive processes, making the individual’s personal input to a collegiate activity such as committee deliberations difficult or impossible to capture. So much is done in informal discussions and exchanges, in face-to-face conversations or by telephone. As H.E. Dale described the work of senior civil servants:

High officials spend most of their days in talking and listening; files memoranda and letters are an important part of their work but not the most important. These tend more and more to be only records of decisions taken in conversation and of instructions given by word of mouth. Questions of importance are rarely settled by an interchange of minutes or letters, without personal discussion. The higher a man rises in the service, the less he writes and the more he talks and listens.23

Even when officials are ‘tracked’ through the files, as it were, and Whitehall notes or memoranda they wrote and minutes of committees they attended are identified, the written evidence needs to be handled with care. As Lowe and Roberts warned, ‘official memoranda are not … the secret con- fessions of higher administrative officials. They are either advice tendered to particular ministers, often on their particular instruction, to meet a particular political situation; or else they are attempts, within the constraints of parliamentary votes and perceived public opinion, to determine practical ways in which to implement policy.’24 Similarly Peden cautioned that, ‘in practice it is difficult to be sure whether ideas originate with a minister or a civil servant, since even a memorandum by the civil servant may reflect an earlier conversation with the minister.’25 These difficulties are all the greater in William Armstrong’s case, with even close colleagues and fellow insiders admitting to uncertainty or igno- rance about what his personal views actually were, what he was really saying to ministers or to the prime minister, and what advice he was giving on the great problems and policy issues of the day, in his innumerable private and confidential meetings with them. Armstrong really was ‘behind the chair’—the minister’s or the prime minister’s chair—for many years, but what he was saying and doing there was—and even now remains—often mysterious and enigmatic. INTRODUCTION 7

The life of William Armstrong combines a number of stories. First, that of a brilliant young man making his way, from an unlikely, fundamentalist and unusually formative background, through the civil service and the Treasury, to the highest levels of public life, advising ministers and prime ministers on big and complex issues of national policy. Second, that of the Head of the Civil Service, guardian of its standards while responsible for its reform, advising ministers on top appointments and shaping Whitehall’s wider leadership. Third, that of a public servant placed, in a highly-charged crisis in the 1970s, at the heart of the government’s prices and incomes policy and relationship with the trade unions, which had an irredeemably political nature. What makes these stories different in the case of William Armstrong— for there have always been other clever and competent officials—is the elusive and compelling character of the man himself. Even close colleagues could not quite make him out, though all were hugely impressed by his ability, speed and eloquence. Hard-bitten journalists and businessmen also found in him an unsurpassed and captivating ability to explain and communicate. Brian Connell brought it out well, reflecting after an interview with him: ‘It takes a minute or two to adjust to the speed and precision of thought, the effortless grasp of complex issues, the spring-steel core that have brought this scholarship boy of modest origins to the position of one of the few eminences grises of our time.’26 One of the co-authors of this book, Philip Connelly, felt the combination of charm, intellect and persuasive lucidity of the man the first time he met William Armstrong. At a course at Sunningdale designed to improve understanding between businessmen and civil servants, Armstrong took a question and answer session. In the course of asking a question, Connelly employed a metaphor, in order to make his point. No sooner were the words out of his mouth, than Armstrong had replied, using a different and better metaphor. He enquired after his then employer (BP) and showed an interest in his point of view. Connelly was dazzled by this display of intellectual and verbal dexterity. That was indeed the overt persona that greeted people when they met William Armstrong. But there was, mainly covertly, an unusual mind-set, derived—one has to conclude—from his upbringing in a fundamentalist religious atmosphere. This background is basic to an understanding of him. He never did, nor could, separate himself, intellectually and emotionally, from the Salvation Army. Connected with that background and his journey from it, perhaps, there was a vulnerability that showed up 8 K. THEAKSTON AND P. CONNELLY during some periods of high stress or exhaustion. The top of public life can exact a toll and batten upon vulnerability. Physically, William Armstrong was not a hugely impressive man. Rooms that he entered did not light up. He had a modest and unthreatening demeanour, and was immensely courteous. Of middling height, and usually wearing the standard-issue dark suit of the senior man of that time, he had, however, piercing blue eyes and expressive eyebrows. Colleagues frequently commented on his pallor and appearance of exhaustion. He was a compul- sive cigarette smoker. It was his voice, its timbre and his vocabulary, plus his speed, imaginativeness and accuracy of response that set him apart. This gave him presence. Intellectually, he was simply more able than most of his colleagues and political masters. Emotionally, he was sympathetic and exceptionally persuasive. He would run meetings in a low-key way, summing-up concisely and effectively. Contemporaries recall ‘a vivid conversationalist’ and ‘a man of immense charm’.27 He could and did speak out with an engaging candour concerning government policy unmatched amongst his colleagues. Junior colleagues who went to see him were conscious that they had to have done their homework, since he could be withering, though polite, in his criticism of sloppy work. Clive Priestley, formerly of the Civil Service Department, and Chief of Staff to the PM’s Adviser on Efficiency, once put the matter feelingly: ‘William Armstrong was a powerful and forbid- ding Permanent Secretary, with a leonine way of swatting down opposition. He had high intelligence allied to personal modesty, with an almost mystical aloofness.’28 Senior colleagues respected and trusted him. To ministers, usually busy and preoccupied, and sometimes in a hole, he exuded confidence and helpfulness, aware of their political imperatives, needs and limitations. This book describes and analyses the contribution of the leading civil servant of his time to our public life, the influences and pressures on him, and the influence he had on policy-making and on the structures and processes of government. During the 30 years or so that William Armstrong was involved in policy-making and advising top politicians, he was mostly a supremely rational, clever, detached civil servant. Increasingly towards the end of that period, however, he seemed to become politically committed. He seemed to be, on one reading, more overtly the son of his parents, a product of the Salvation Army, a moralist. He saw perdition staring his country in the face and resolved to avert it, as he saw was his opportunity and, indeed, his duty. He should have advised his prime minister more objectively than he did, or perhaps could. At any rate, he crossed the INTRODUCTION 9 boundary of politics and officialdom and paid the price. It took a terrible toll on his health and strength—a sacrifice he made, however, with the best of motives, and which does not and should not overshadow his earlier achievements as one of the most brilliant Treasury officials of his generation and the huge contribution of leadership which he made to the civil service in an exacting period of change and reform.

Notes 1. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 2. Samuel Brittan, ‘A passion for rationality’, Financial Times, 14 July 1980. 3. The Guardian, 14 July 1980; Financial Times, 14 July 1980; The Observer, 13 July 1980. 4. W. Henry Lambright and Madison M. Quinn, ‘Understanding Leadership in Public Administration: The Biographical Approach’, Public Administration Review, 71 (5), 2011, p. 782. 5. Kevin Theakston, ‘The Biographical Approach to Public Administration: Potential, Purpose and Problems’, in Kevin Theakston (ed) Bureaucrats and Leadership (London: Macmillan, 2000), pp. 1–16. 6. Stephen Roskill, Hankey: Man of Secrets, 3 vols. (London: Collins, 1970–1974); John F. Naylor, A man and an institution: Sir Maurice Hankey, the Cabinet Secretariat and the custody of Cabinet secrecy (Cambridge: Cambridge University Press, 1984); Eunan O’Halpin, Head of the Civil Service: A study of Sir Warren Fisher (London: Routledge, 1989); Richard A. Chapman, Ethics in the British Civil Service (London: Routledge, 1988). 7. Michael Jago, Robin Butler: At the heart of power from Heath to Blair (London: Biteback Publishing, 2017). 8. Rodney Lowe and Richard Roberts, ‘Sir Horace Wilson, 1900–1935: the making of a mandarin’, The Historical Journal 30 (3), 1987, pp. 641–662; G.C. Peden, ‘Sir Horace Wilson and appeasement’, The Historical Journal, 53 (4), 2010, pp. 983–1014; Adrian Phillips, The King Who Had To Go: Edward VIII, Mrs Simpson and the Hidden Politics of the Abdication Crisis (London: Biteback Publishing, 2016). 9. Anthony Seldon with Jonathan Meakin, The Cabinet Office 1916–2016: The birth of modern government (London: Biteback Publishing, 2016); Ian Beesley, The Official History of the Cabinet Secretaries (London: Routledge, 2017); Kevin Theakston, Leadership in Whitehall (London: Macmillan, 1999); Keith Neilson and T.G. Otte (eds), The Permanent Under-Secretary for Foreign Affairs, 1854–1946 (London: Routledge, 2009). 10 K. THEAKSTON AND P. CONNELLY

10. See: Peter Ribbins and Brian Sherratt. ‘Permanent secretaries, consensus and centrism in policy making in education: David Hancock and the 1988 Reform Act’, Educational Management Administration and Leadership, 40(5), pp. 544–559; Peter Ribbins and Brian Sherratt, ‘The permanent secretary as policy maker, shaper, taker, sharer and resister in education— Sir James Hamilton as a centralising outsider’, Journal of Educational Administration and History, 45(1), 2013, pp. 28–49; Peter Ribbins and Brian Sherratt, ‘Reforming the Civil Service and revising the role of the mandarin in Britain: A view from the perspective of a study of eight permanent secretaries at the Ministry of Education between 1976 and 2011’, Public Policy and Administration, 29 (1), 2014, pp. 21–44; Peter Ribbins and Brian Sherratt, ‘Centrism and the mandarin class: Understanding the meta-politics of Whitehall bureaucratic neutrality’, Public Policy and Administration, 30 (1), 2015, pp. 5–30; Peter Ribbins and Brian Sherratt, ‘Biography in the study of public administration: towards a portrait of a Whitehall mandarin’, Journal of Educational Administration and History, 48 (3), 2016, pp. 243–260. 11. For a sense of the variety in a large field, see: David Dilks (ed),The Diaries of Sir Alexander Cadogan 1938–1945 (London: Cassell, 1971); John Harvey (ed), The Diplomatic Diaries of Oliver Harvey 1937–40 (London: Collins, 1970); John Harvey (ed), The War Diaries of Oliver Harvey 1941–1945 (London: Collins, 1978); Lord Strang, Home and Abroad (London: Andre Deutsch, 1956); Ivone Kirkpatrick, The Inner Circle (London: Macmillan, 1959); Paul Gore-Booth, With Great Truth and Respect (London: Constable, 1974); Nicholas Henderson, Mandarin: The Diaries of an Ambassador 1969–1982 (London: Weidenfeld and Nicolson, 1994); Percy Craddock, In Pursuit of British Interests (London: John Murray, 1997); Christopher Meyer, DC Confidential (London: Weidenfeld and Nicolson, 2005); Sherard Cowper-Coles, Ever the Diplomat (London: Harper Press, 2012). 12. See: Alix Meynell, Public Servant, Private Woman: An Autobiography (London: Gollancz, 1988); Antony Part, The Making of a Mandarin (London: Andre Deutsch, 1990); Peter Le Cheminant, Beautiful Ambiguities: An Inside View of the Heart of Government (London: The Radcliffe Press, 2001); Roy Denman, The Mandarin’s Tale (London: Politico’s, 2002); Ronald McIntosh, Challenge to Democracy: Politics, Trade Union Power and Economic Failure in the 1970s (London: Politico’s, 2006); Richard Wilding, Civil Servant: A Memoir (Durham: The Memoir Club, 2006); Ronald McIntosh, Turbulent Times (London: Biteback Publishing, 2014); Brian Unwin, With Respect, Minister: A view from inside Whitehall (London: I.B. Tauris, 2017). INTRODUCTION 11

13. Alec Cairncross (ed), The Robert Hall Diaries 1947–1953 (London: Unwin Hyman, 1989); Alec Cairncross (ed), The Robert Hall Diaries 1954–61 (London: Unwil Hyman, 1991); Alec Cairncross, The Wilson Years: A Treasury Diary, 1964–1969 (London: The Historians’ Press, 1997). 14. Correspondence with George Weidenfeld and Graham C. Greene in Armstrong papers. 15. Harold Evans to Lord Armstrong, 29 January 1976, Armstrong papers. 16. Armstrong to Weidenfeld, 17 December 1974, Armstrong papers. 17. Weidenfeld to Armstrong, 8 November 1974, Armstrong papers. 18. E.J. Ellis, T.J. A Life of Dr Thomas Jones CH (Cardiff: University of Wales Press, 1992), pp. 521–524; Richard A. Chapman, The Civil Service Commission 1855–1991: A Bureau Biography (London: Routledge, 2004), pp. 208–211. 19. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 20. Jacobs to Armstrong, 23 June 1977; Jacobs to Armstrong, 24 August 1977, Armstrong papers. The transcript of the interview and the draft chapter are in the Armstrong papers. 21. O’Halpin, Head of the Civil Service, pp. x–xi; Chapman, Ethics in the British Civil Service, p. xv. 22. Address by Gordon Richardson, Memorial Service for William Armstrong, St. Margaret’s Church, Westminster, 16 September 1980 (Armstrong papers). 23. H.E. Dale, The Higher Civil Service of Great Britain (Oxford: Oxford University Press, 1941), p. 40. 24. Lowe and Roberts, ‘Sir Horace Wilson, 1900–1935: the making of a mandarin’, p. 643. 25. Peden, ‘Sir Horace Wilson and appeasement’, p. 984. 26. Brian Connell, ‘Lord Armstrong: A hardly-noticed transition from Whitehall to the City’, The Times, 15 November 1976. 27. Interview with Susan Crosland (PC). 28. Geoffrey K. Fry, Reforming the Civil Service: The Fulton Committee on the British Home Civil Service 1966–1968 (Edinburgh: Edinburgh University Press, 1993), p. 266. CHAPTER 2

William Armstrong: Family Background and Education

For a future Head of the Civil Service and leading member of the British ‘Establishment’, William Armstrong had a remarkably unconventional background and upbringing. The effects of this stayed with him throughout his life. In that, he was of course not unusual. The child is father of the man. But no other Head of the Civil Service, before or since, has had such a background. It is of central importance in understanding him. His parents’ calling was unique and compelling. A tape of a conversation between William Armstrong and his son, Peter, in 1974, contains Armstrong’s recollections of his parents’ early reminiscences and sheds a great deal of light both on his family and early life, and upon his knowledge of these events and personalities.1 Despite many gaps and uncertainties (particularly in the case of his father’s complicated extended family, which he characterised as ‘a great muddle’) his account was sufficiently detailed to provide the basis for a fuller picture to be built up from census returns and other records and sources.

The Salvation Army William Armstrong was born on 3 March 1915, at the Salvation Mothers Hospital, Mare Street, Clapton, in London. Long since demolished, this was in its time a substantial maternity hospital. His parents were William Armstrong (1877–1942), here called William Armstrong senior, and

Priscilla, nee Lax Hopkins (1877–1960), both then aged 38 and both full- time Salvation Army Officers, stationed at that time in Bedford. Three years later, in 1918, his brother, Stewart was born. William Armstrong’s parents had married relatively late. The only record of their courtship and meeting, he once recalled, was a little text that his father kept above his bed for a very long time: ‘He that believeth shall not make haste.’2 At the time of their marriage, in 1913, Priscilla was, as an Adjutant in charge of financial matters at Northampton Divisional Headquarters, senior in rank to her husband, who was a Captain, and she was therefore paid a little more. Priscilla apparently had to ‘mark time’ while William senior ‘caught up with her’, as their son later put it, and they then kept pace with one another until both finished up as Colonels.3 But the Salvation Army did not discriminate between the sexes. This was to emerge as a theme in William Armstrong’s future view of the staffing of the civil service. He spoke quite strongly about the provenance of his belief: ‘If we are talking about what I got out of my early childhood and upbringing, the thing undoubtedly was the equality of women, because the Salvation Army treated women equally with men. A woman could be a Salvation Army officer equally with a man; equal pay, equal rights, take the services, take a marriage service, anything of this kind.’4 William Armstrong senior and Priscilla were, if not of the very first generation of Salvationists, certainly of the next one, and lived at the same time as William Booth (1829–1912) and, technically, Catherine Booth (1829–90) who jointly established the Salvation Army in 1865.5 William senior was said, in his Obituary in The Scotsman of 9 October 1942, to have been at one time Assistant to a member of the family, Colonel Mary Booth. Both William Armstrong senior and Priscilla had previous occupations which they gave up for service in the Salvation Army. William senior had been a blacksmith in Bannockburn, near Stirling in Scotland; his brother had preceded him as a Salvationist but did not become a full-time Salvation Army officer. Priscilla had been a schoolteacher in Grimsby. Both William senior and Priscilla had joined the Army separately, in Stirling and Grimsby respectively, around 1898 and had moved around the country on the Army’s business, not knowing each other, until they met around 1912 when Priscilla was working at Divisional Headquarters in Northampton and William senior was in charge of a Salvation Army Citadel as the officer commanding Rugby, which was part of Northampton Division. By any standards, they were an unusual and brave couple. They were pioneers in what was at that time still a relatively new fundamentalist WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 15 evangelist movement that, in the early days, encountered violent opposition on the streets, often allegedly fomented by the brewers, due to the fact that the Army frequently inveighed against the demon drink.

A Showman Father? William Armstrong regarded his father, William senior, as a bit of a showman: ‘As an officer of the Salvation Army he had a message to proclaim and he proclaimed it. He would do that either at the Cenotaph, shortly after it was put up, or in the forecourt of Buckingham Palace or on a white horse going down Plymouth Hoe. I suppose I’ve inherited a certain amount of that from him.’6 The references to the Cenotaph and Buckingham Palace concern the First World War Armistice celebrations in 1918. The Salvation Army Souvenir Booklet marking the Jubilee of the Salvation Army’s Regent Hall in 1932 gives an account of the events of 1918:

Brigadier [sic] Armstrong … took advantage of every opportunity given for Salvation Army work during the Armistice celebrations. Trafalgar Square, Whitehall and the precincts of Buckingham Palace, always prohibited areas before the war, became the scenes of many great Salvation Army demonstrations. Brigadier Armstrong shares with the Corps and Band the honour of conducting the only ‘civil’ religious service round the Cenotaph, as after the first year all processions were ordered to keep moving.

Other accounts point to William senior’s ‘flamboyance’ and describe him as being a ‘gifted publicist’.7 William Armstrong junior was typically a rather shy and reserved, though self-confident, man. His wife at one time prevailed upon him to don the uniform of a Roman soldier in a Church play in Sanderstead, Surrey—but ‘prevailed upon’ is the word. Beneath the surface, however, some felt that ‘he possessed his father’s acumen as a Barnum and Bailey type showman. This perhaps accounted for his occasional tendency [later in his career] to extract from the formal set pieces a certain amount of dramatic savour.’8 William Armstrong senior, therefore, became a big wheel in the Salvation Army, but he started at the bottom with hard missionary work. Before his marriage he had, upon promotion to Captain, toured the Midlands with his Lieutenant, James Dunbar. They travelled in a caravan, initially horse drawn, then an early-model motorized version, holding open-air meetings and attempting to start up Salvation Army Corps in the 16 K. THEAKSTON AND P. CONNELLY villages where they stopped.9 His obituary in the Salvation Army publication War Cry, of 31 October 1942, notes his appointments at Divisional level in the South West of England, North Scotland, Glasgow, South West London, Ireland and North London. His final appointment, at the rank of Lt. Colonel, was as National Candidates Secretary, supervising the recruitment of new officers into the Army. Family friends, bombed out in the London Blitz, stayed with the Armstrong family for six weeks during the Second World War, often passing the time at night until the ‘all clear’ sounded by playing the ‘Monopoly’ board game with the family—including William junior, living with his parents while engaged in security work (see later), and his father, who with moral objections to playing with cards, consented at least to be the banker. ‘Naturally, smoking, drinking, swear- ing or blaspheming were outlawed under the strict regime extant in the household, the permitted expletives being confined in the main to “blow”, “bust” or “my giddy aunt”.’10 William Armstrong senior died suddenly in 1942, aged just 65: ‘promoted to Glory while in the street near the (Westminster Central) Hall’ after leaving a temperance meeting, as the War Cry put it, using the terminology of the Salvation Army.11 When William Armstrong recorded his recollections of his family history in conversation with his son, Peter, he confessed that, on his father’s side, the intricacies of the complex extended family relationships eluded him and he characterised it as a ‘great muddle’. In terms of personal recollections of individuals, he recalled meeting an uncle, Robert, his father’s brother, and numerous relatives (possibly cousins, uncles or aunts), many with the surname Malcolm, leading him to suppose that his grandmother had been married twice, possibly to someone called Malcolm. A number of these relatives, he recalled, worked in the Coalsnaughton pit, where his own father had been an apprentice blacksmith, shoeing the pit ponies. Others were employed as shopkeepers, or in the local bus company. His confusion about his father’s family is understandable. His supposi- tion that his grandmother had married twice was correct (although in neither case to a Malcolm). In both cases she married men who had been previously widowed (in one case twice), resulting in three separate sets of stepsiblings for William Armstrong senior. In addition, two of her four children, including William senior, were born outside her two marriages. From his description of his parental background on the tape, Armstrong may not have known of his father’s illegitimacy. William Armstrong senior was born in Perth in 1877, the fourth child of a young widow, Jane Armstrong (nee Fergus). Jane Fergus was the WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 17 daughter of a Perth confectioner and had worked as a domestic servant until her marriage, at the age of 24, to a widower in his late fifties, Peter Armstrong, a coal agent. They had two children, Robert (the uncle the young William recalled meeting) and Margaret, before Peter Armstrong died in 1875, after only five years of marriage. William senior was born two years later, and although he was illegitimate, his birth was jointly registered by both parents, with his father’s name and occupation being recorded as ‘William Hunter, Carter’. These provide the only known details of William senior’s father. (This acknowledgement of paternity would have entitled William senior to use his father’s surname of Hunter, but apart from one instance, where he witnessed his brother’s marriage with the signature ‘William Hunter Armstrong’, suggesting perhaps that he was aware that he and Robert did not share the same father, he always used the name William Armstrong.) Jane Fergus Armstrong’s determination to ensure that her child’s paternity should be acknowledged and recorded had been equally evident some years earlier. Six years before her marriage to Peter Armstrong, her first child, Elizabeth, was born and, after a hearing in the Sheriff Court, she had obtained a Decree of Paternity, which formally recorded the father’s name, and paternity. For a servant girl of 18 to pursue such a case successfully suggests that she was a young woman of some spirit, probably sustained by a supportive family. She was certainly a hard worker, and, as the sole breadwinner during William senior’s early years, she worked in a fac- tory to support her four children. Even at her death, at the age of 74, she was working as a housekeeper. (William junior never met her, although he recalled his parents attending her funeral). William senior’s later childhood was spent in rather more economically secure circumstances, after his mother married for the second time when he was nine, to James Voy, an engine driver. He, like her first husband, was a widower in his late fifties, with adult children. The 1891 Census provides a snapshot of the family household with all the adults in employment, as well as William senior who, at the age of 13, was described as a message boy, implying he had left school at the age of 12. His mother and half- and stepsiblings were employed as the ‘shopkeepers and bus company employ- ees’ that William recalled his father describing. During this period, Elizabeth, William senior’s elder half-sister, had married a coalminer, James Malcolm, and moved to Coalsnaughton, a mining village in Clackmannanshire, near Stirling. They were soon to be followed by the rest of the family, who left Perth following the death of 18 K. THEAKSTON AND P. CONNELLY

James Voy, when William senior was 15. The Malcolms went on to have a large family, and these would have been the relatives called Malcolm that the young William recalled, although with some of them being more than 20 years his senior it is not surprising that he was unsure whether they were cousins, uncles or aunts. It was at Coalsnaughton that William senior served his apprenticeship as a blacksmith, shoeing the pit ponies, which made such a vivid impression on his son. At some point later, William senior moved to Bannockburn in Stirlingshire where he worked as a blacksmith. His obituary in the War Cry notes that he was converted to Salvationism in Stirling, in what was the first Army meeting he attended, a Harvest Festival celebration. After holding various part-time positions with the movement, he eventually took the decision to become a full-time Salvation Army Officer. His acceptance by the Salvation Army Training College in June 1901 marked the beginning of a distinguished career with the organisation. William Armstrong senior’s early life would have located him as amongst the industrial working classes, with a keen perception of the narrow margins between relative poverty and just-about-managing, depending upon the numbers working in the household and their wages. He would also have seen the advantage conferred upon those who managed to stay on at school at a crucial period in their young lives.

The Sun and the Moon: Mother’s Influence As for his mother, Priscilla, William Armstrong junior was to say much later that she ‘broke with her own family to join the Salvation Army’.12 It is not clear what he was referring to (and her War Cry obituary noted she was reconciled to her family later13), but she was undoubtedly a strong- willed woman. Priscilla Lax Hopkins was born in Hull, in 1877, the daughter of Henry Hopkins, a fisherman, and Elizabeth Hopkins (nee Lax). The relatively unusual surname of Lax was clearly intriguing. William junior gained the impression that it could have been of Jewish or Polish origin, a belief reinforced for him by the fact that she took a great interest in the Jewish faith and, as he said in the (1974) tape interview with his son, ‘looked Jewish’. However, the name Lax, though documented as an Ashkenazi Jewish name, also has origins as an occupationally based name for a salmon fisher or seller, derived from the Norse word for salmon. It appears (as Lax or Laxe) in North-Eastern and Yorkshire records since at least the seven- WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 19 teenth century. Certainly in the nineteenth century there are many recorded Church of England marriages of people called Lax, including that of Priscilla’s parents. Henry Hopkins and Elizabeth Lax were married in the Holy Trinity Parish Church in Hull in 1866. Elizabeth Lax was unable to sign her name, marking her marriage certificate with a cross. The marriage certificate shows Henry Hopkins’ occupation as fisherman, but has no details of his father’s Christian name or occupation, recording him simply as ‘late—Hopkins’. It is possible that at some point his father lived or worked in France, as official records show Henry Hopkins’ birthplace as Boulogne. Elizabeth Lax’s father, John Lax, was a shoemaker and the son of a shoemaker, or cordwainer, also called John Lax, and had himself been married in the same church 24 years earlier, in 1842, to Priscilla Rufford, whose name their granddaughter would later be given. It seems therefore that any possible Jewish or Polish connection would have been a distant one. The reference to Priscilla’s breaking with her family may, of course, simply be that her family resented her abandoning the safe and improved career of schoolteacher, albeit in a village school, for a more uncertain future in the Salvation Army. Priscilla was the youngest of five children. Two years after she was born, her mother died in childbirth and her father remarried shortly afterwards. At some point the family moved to Grimsby, where they were living at the time of the 1891 Census. Priscilla was then 14 and attending school, and one sister was a schoolteacher and one brother a pupil-teacher. This was to be the occupation that Priscilla was also to follow initially, until she joined the Salvation Army. Whatever her origins, Priscilla did not lack spirit. Having attended the Salvation Army Training College around 1901, she was sent off to northern Scotland, initially as a Lieutenant, then, having been promoted to Captain, with her own Lieutenant, Kate Stewart. She preached in the small northern Scottish fishing communities of the Moray Firth and the North Sea, in and around Aberdeen, Elgin, Peterhead, Arbroath and Findochty. According to her son, she was so popular that ‘her chief difficulty was fending off proposals of marriage.’14 She would, of course, have had a common experience of the fishing trade, via her father, but it would still take a degree of nerve, as a young woman, and moreover as an English woman, though bolstered of course by her burning faith, to address such communities. It should be remembered, however, that in North East Scotland fishing communities, women played an important stabilizing part in the economic life of the (often absent) fishermen and indeed in 20 K. THEAKSTON AND P. CONNELLY some communities, women carried their menfolk on their backs to their fishing vessels, lest their clothes got wet.15 Strong women were therefore not unknown, and were indeed valued, hence perhaps the proposals of marriage. Moreover, the Salvation Army was not the first, nor would it be the last, evangelical group to recruit in that part of Scotland. William Armstrong would therefore have been brought up to perfectly truthful accounts of his mother preaching to fishermen in remote Scottish villages, and of being well received. William Armstrong was, and continued to be, impressed with her, possibly more than with his father. He described her as adventurous, intellectual, better read than his father, and good at figure work,16 deriving no doubt from her extended period of schooling compared with William senior. While his father was an extrovert, his mother was quiet, thoughtful and studious; a family friend once said William junior took after her.17 In the Armstrong papers are letters received by her on 17th and 18th November 1913, on the occasion of her leaving her then post, from both her Divisional Commander and her successor congratulating her on the excellence of her books and accounts. As a role model for a future Treasury official, she could scarcely be bettered.

A Happy but Disrupted Childhood When Priscilla and William senior decided they wished to marry, they had, of course to become engaged. In the Salvation Army, that meant getting permission. This was granted, but with conditions. Unnecessary meetings of the two were discouraged, as were over-long letters. Finally, it was made clear to the couple that permission to get married would depend on a satisfactory period of engagement, and that the purpose of marriage was the better to serve the Salvation Army, not to make them happier.18 The birth of their two children did not alter the couple’s style of life. They continued their mission, working as a team, and embraced, apparently without complaint, the frequent geographical changes in posting this involved, which meant a disrupted education for their children. In the Salvation Army, it has been said, ‘the blade of proselytising zeal is kept sedulously honed by moving the officers to a new place every two years.’19 During each posting, they were accommodated in Army quarters, and had few possessions of their own. William declared that his first memory (remarkable, but perhaps not totally impossible, his being two at the time) was when his parents came from a posting in Norwich to London, to the WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 21

Regent Hall Citadel in 1917. He remembered seeing the first Armistice Day from a block of flats in Marylebone, where they lived.20 From 1920, that is when William was five, until he was 13, they moved from London to Brighton to Plymouth to Aberdeen to Glasgow, and then back to London. William and Stewart were taken out of, and put into, the local state schools, good, bad or indifferent. Between the ages of five and 14 William went to seven different schools.21 As he said much later: ‘Up till the time I was 13 we travelled all over the country … I changed elemen- tary schools, always in the poorest parts of the towns, because of course that’s where the Army works … I think I have a very clear idea of what it is like for people living in poor conditions.’22 His experience with the Scottish state school system lived vividly in his memory. While at the Kitty Brewster School in Aberdeen, his left- handedness was frowned on severely, and he was forced to write out many passages from the Psalms with his right hand. In the Armstrong papers, a 1925 Examination Report from Langside School, Glasgow, survives. The head teacher, James Hall Maxwell, reports very properly that ‘Willie’s marks are as follows, and he will be pleased to know them’. There then follow the results for ten subjects, each with a possible ten marks out of ten. William had scored ten out of ten in eight subjects, and eight out of ten in two of them. He performed brilliantly from an early age. William Armstrong’s background and subsequent career, and that of his father, were long remembered in Northern Scotland: a profile in the Scottish Daily Express in 1968 proudly described ‘our Bill’, as he was called by ‘his Scottish friends and relatives’, as ‘one of the greatest living Scots’23 and an obituary appeared in the Aberdeen Press & Journal on the occasion of his death in 1980.

A Christian Upbringing Frequently during their young schooldays, the brothers did not see very much of their parents, who were out in the evenings saving souls. In addition, William subsequently recalled, his father ‘was totally involved day in and day out on the administrative business, and some evenings a week and some evangelistic services and of course on Saturdays and Sundays. And I and my brother expected to go to the Salvation Army Sunday School, and Salvation Army meetings virtually all day on Sunday.’24 It soon emerged that William had no talent for music, something that was (and is) central to the life of the Salvation Army, with its hymn singing, songsters and 22 K. THEAKSTON AND P. CONNELLY brass bands helping convey the gospel message. ‘I was tried out with lam- entable results on various instruments’, he recalled. ‘Not just those that you blow but the triangle, which you’d have thought anybody could strike, though there is the difficult question of when you strike it, and the drum—but you still have to keep time. I ended up with the flag.’25 William spoke later of remembering a series of minders who looked after him and Stewart, but Lady (Gwen) Armstrong believes that in fact, during a great deal of this time, the boys were looked after by one Salvationist lady who moved around with the family during their various postings, more like a nanny than a child-minder, and who would have regarded it as an honour to be looking after the sons of the Officers. One possible legacy of those days is the tendency William Armstrong subsequently showed to moving house. He moved nine times during his married life (including three in Sanderstead alone), all at his instigation. According to his son, Peter, such moves would normally be presaged by William declaring that the current house was ‘too large’, or, alternatively, ‘too small’.26 In any event, there was not much rhyme or reason to it if not an attempt to re-create his childhood experience. It could hardly be coincidence, particularly the moves within Sanderstead, a relatively small dor- mitory town in Surrey. Showing an early pragmatism in the face of his parents’ constant absences, plus an early facility with written communication, William, as a young child, along with Stewart, wrote letters to his parents telling them of his exploits. These reveal a loving and secure relationship between the boys and their parents, with references to hidden Christmas presents ‘for ma and pa’ and reports on ‘VG’ marks for schoolwork.27 Family life was hard but happy. There was, of course, no radio, theatres, alcohol or tobacco. The first time William Armstrong went to a cinema was as a twenty or so year old student at Oxford. They were hard up but they managed. ‘Looking back on it now’, Armstrong recalled in 1977, ‘[it was] obviously extremely poor but it didn’t feel like that, because I’d never really known anything else.’28 ‘It was a very, very plain upbringing’, as he once described it. ‘Poverty-stricken isn’t quite the right word. It was simply very austere.’29 Priscilla, known as ‘Mama’ in the family, was a very dominant personality in the household. The wartime bombed-out family friend recalled her as a ‘canny Yorkshire ex-schoolmistress with a perpetual twinkle in her eye … [and] debunking William in a gentle manner if ever she felt he strayed over the border into pomposity.’30 Lady (Gwen) Armstrong feels that, although the boys had deep respect for their mother, WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 23 there was also perhaps a bit of fear as well. ‘What she thought was right was right, and that was it. She could be very fierce.’31 Later, Mama came to live with William and his family for some five years in the 1950s, eventually dying in 1960, and while she had retired as an active Salvation Army officer in 1942 after her husband died, never gave up her rigid principles. So William Armstrong, in those years, would return from his senior Treasury jobs to find his mother, who sometimes wore her Salvation Army uniform, clearly disapproving of his children’s life style, with their boy-friends, girl-friends, make-up, pop music, and so on. This may not have contributed to a completely relaxing environment, but it would certainly have kept Armstrong up to scratch on his moral principles up to his mid-forties, while he was a busy and important official climbing to the top rungs of the ladder in the Treasury. Stewart, three years younger than William, lived to some degree in his shadow, did not go to as good a school in the final years, and went to Manchester University rather than Oxbridge (receiving his BSc in 1939). He had a good relationship with William, but was quite different in personality, looks and attitudes. Like his mother in appearance, his temperament seemed closer to his father’s extrovert, showman streak, and he acted in amateur drama productions in Leeds. He worked as a civil engineer for the Admiralty during the Second World War, took a doctorate in science and pursued an academic career. He was more overtly left wing than William, to the extent the latter can be placed at all on the political spectrum, and in later years disapproved of his brother’s move to the Midland Bank. The boys were brought up in a religious atmosphere of a fundamentalist and puritanical sect; it was ‘totally and completely’ a religious upbringing, as Armstrong once put it. ‘The whole life of the Salvation Army was our life, and it was only very much later that I discovered there was any other kind of life.’32 He spelled out some of what this meant: ‘I grew up in a world in which Christianity was seen at its simplest and clearest, that the literal truth of every Bible story was taken for granted and that life was displayed to us as a war against sin and the devil that would last as long as time itself and in which it was a proud honour to be engaged for life.’33 In the very different circumstances of modern life, with a collapse in the observances of Christianity, and with the much greater availability of home entertainment, it is difficult to conceive of the accepted place in society then of itinerant evangelical preachers. But, before the age of radio and television, they (Church of England and Non-Conformists alike) were 24 K. THEAKSTON AND P. CONNELLY active in the Christian cause. So the followers of William and Catherine Booth, despite all the difficulties, pursued a successful initiative. It was an initiative, however, which was based on the poverty of the industrial working classes. The Salvation Army certainly believed in saving souls, but it also had a social mission and believed in addressing poverty where it found it, with no strings attached. From his earliest years, therefore, William would have been exposed to the poor and destitute, and to the duty of the Salvation Army to respond to and alleviate their misery, though his parents were not directly part of the Army’s social work in its hostels and soup kitchens, working more on its administrative and evangelistic side.34 Aged 11 in Glasgow on 19 January 1927, on his own, he wrote a letter to his parents, the writing of which was interrupted by ‘the Captain, who has just come up for the mince for the poor children’s dinner.’35 At that age, therefore, he was explicitly aware of the poverty of the industrial working classes, and of the role of the Army in assuaging this.

Bec School: The Crucial Turning Point When the Armstrongs were transferred from Scotland back to London, when William was between 11 and 12, the local education authority clearly did not rate highly any form of Scottish education, and although he had won entry to a secondary school in Glasgow, he was placed in a non- scholarship school (on the assumption that he would not have passed the equivalent of the 11+ exam). He had not been long at a central school in Clapham (which he attended 1927–28) before they discovered their mistake: a test in English grammar placed him ‘way above’ the other children there and within a year or so he had been awarded a supplementary scholarship and transferred to a better school, Bec School in Tooting, South London, which he entered in September 1928 in the third form.36 In 1930, William’s parents were about to move to their next Salvation Army posting, in Belfast. It was assumed that the family would, as usual, move together. Remarkably, his parents were persuaded to leave William behind when they moved to Belfast, so that he could become part of the newly established Sixth Form at the Bec School, and work undisturbed for a scholarship to Oxford. His headmaster was acutely conscious of the talents of the young William and was alarmed at the damage a continuation of erratic schooling might do. In most versions of the story that William gave in interviews in later years, the headmaster approached his parents and pleaded with them to let him stay. But in one (1972) interview William WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 25 said that he himself had felt that he had ‘had about enough, [and] I wanted to stay put’. What William then described as ‘a great battle … went on all through the summer holidays as to whether or not I should be allowed to stay at school in London, and finally he [the headmaster] and I won and my parents accepted it.’37 It was a big financial decision and it says much for his parents that they consented to this, and William, at the age of 15, in effect left home and moved into local digs, where he was to remain until the age of nearly 19, when he went away to university. As he later admitted, it was at about this time that he started to realise that he was not going to pursue a life in the Salvation Army—‘that I was going somewhere else’.38 His first year in lodgings away from home was spent at first with other Salvationists and in a very crowded house with three other youngsters, and he found some difficulty doing his homework amidst the noise and bustle around the kitchen table. But then accommodation with an elderly couple with grown up children was found, and William had a separate bedroom and study. The atmosphere was religious, though not Salvationist. The couple ‘had originally been Congregationalists, but now ran a little Gospel chapel of their own’.39 William visited his parents during the school holidays, three times a year, usually travelling by coach. It is possible to see the quality of his schoolwork in those days. Surviving in the Armstrong papers is his New Testament Exercise Book. It is meticu- lous. Extracts from the New Testament in Greek (with the proper accents and breathings) accompany carefully drawn maps of the Holy Places. It is clear, then as subsequently, that a brilliant mind was buttressed by sheer hard work; he clearly put in the hours. He was also fortunate in his teach- ers at Bec school, in particular Tom Melluish, a brilliant classics master (and ‘devout Catholic’),40 with whom he was still in correspondence over 30 years later. A contemporary at the school thinks that Melluish was the greatest single influence during William’s school career.41 Bec School (now demolished, amalgamated and restructured and known as the Ernest Bevin College) was in its day a very good school. It had been founded in 1926 and was the first Grammar School to be founded by the London County Council. Fees were charged—for parents living in London, £15 15s per annum for a pupil aged 12 or over, according to the 1936 Prospectus. There were, however, scholarships, awarded on the results of the Entrance Examination and William was awarded a Supplementary County Scholarship. The masters wore gowns, and there were prefects, of whom William was one in the junior section of his House 26 K. THEAKSTON AND P. CONNELLY

(Gamma). Whatever may have been the quality of the schools he had attended up to this point, he could scarcely have done better, at this crucial time in his education, than Bec School. Although he was the first Open Scholar to Oxford from the school, in the same year there were five Scholarships or Exhibitions to Cambridge. The headmaster during William’s time was S. R. Gibson, who gathered around him an excellent young staff, including several Oxbridge graduates. A cursory glance at the School Magazines of the time shows a dynamic School, with a plethora of well-supported clubs and societies. William was a member of the Editorial Board of the Magazine in 1932 and 1933. In it he features as an occasional contributor, a prize-winner in Classics, but also in English and French, and he was a regular performer of Greek dec- lamations at Speech Day. He did not figure in games prizes. A contemporary, Graham Crosskey, remembers him as ‘slim, above average height, languid, not in any way boisterous, but the intelligence shone through.’42 Another contemporary recalls an intellectual leader, for example suggesting to his classmates how to deal with the sometimes abstruse subjects set by the headmaster for weekend essays.43 Tom Melluish remembered an occasion when another boy led off a discussion by reading a paper to the class about the cinema. William Armstrong jumped up and, displaying confidence and logical grasp, completely demolished the boy’s arguments. Then he said apologetically: ‘Perhaps I shouldn’t be saying this. You see, I’ve never been to the cinema.’44 He was in fact rather poor during this time, but put up with this, since he was accustomed to a very frugal lifestyle. However, he was sensitive, like any teenager, about his relative poverty in terms of dress since, on at least one occasion, he remarked on another boy’s expensive new suit.45 In digs, his parents paid one pound per week for board and lodgings, and gave him five shillings (25p) to pay for school lunches. At the end of the week, he might have tuppence left over. He was not given fare money since he walked to school. It was at this time that he started to have doubts about his religious background: ‘I began to meet other sorts of people, I found myself in a home that was not teetotal, I began, I suppose, to reject the very puritanical side of the [Salvation] Army’. His church-going began to slacken off a bit and he would sometime spend Sundays with school- friends and their sisters rather than attend Army meetings. ‘I thought I was too clever for the young people’s Bible classes that the Army offered’ he recalled. He was getting interested in philosophy and, at school, studying the New Testament in a critical and historical way—‘that made me WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 27 sceptical of the Army’s rather naïve fundamentalist approach to it all.’ He was getting, he recalled, ‘more and more disenchanted’. The Salvation Army, he began to realise, was ‘a very narrow place’. His Christian faith wavering, it was, he summed up, ‘not difficult to just quietly give up’—‘by the time I had got my place at Oxford I was what the Army calls a “back- slider”—what I preferred to call a conscientious agnostic’.46

Getting into Oxford William Armstrong’s progress to Oxford was not entirely straightforward. He was, as so many others of his generation, the first in his family to go to University. In that period (covering those born between 1910 and 1929), only one per cent of males whose fathers had a manual working class background went on to university, and while only 1.2 per cent of pupils at secondary modern schools went to university, 12.2 per cent of those at secondary grammar schools (like the Bec School) went to university, compared to 44 per cent of those at independent boarding schools.47 The odds were stacked against someone from his social and educational background. However, his father, a typical Scot, had inculcated both respect and aspira- tion for higher education. William recalled his father, having been posted to Aberdeen, taking him to see the carving above the entrance to Marischal College (part of the University of Aberdeen) ‘rather like a crown with spar- kling granite’, and his saying ‘that is the sort of place you want to go to when you finish school.’48 Later, his form master at Bec School indicated that, if he wanted to try for Oxford, he would have to drop Chemistry and Physics and do Latin and Greek, because there were more scholarships in those subjects at Oxford than in any other subjects and this was the only way financially for William to go to Oxford. This was somewhat disappointing to William, since he enjoyed science, though he enjoyed all subjects. Perhaps more disappointing was his initial failure to get a Scholarship at Brasenose College. Instead he got an Exhibition, but this paid only £50, half of the value of a Scholarship. Financially, this was insufficient, so he turned down the Exhibition and stayed at school for another year. Sure enough, he then won an Open Scholarship (worth £100) to Exeter College, passing out top of the list. Simultaneously, his results in what was called the Higher School Certificate were good enough to earn him a State Scholarship, and the sum of the two was adequate for him to live on, albeit carefully. He had in all £230 a year at Oxford, and ended up with debts to local tradesmen of about £25. 28 K. THEAKSTON AND P. CONNELLY

William Armstrong, therefore, went up to Oxford in 1934, as a classics scholar. There is some suggestion that he might previously have thought university beyond him financially, since he is believed to have started teaching himself shorthand, perhaps as a preparation to joining the civil service from school as an Executive Officer, as did many from the LCC grammar schools.49 If so, he soon received encouragement from his classics master, Tom Melluish, that a classics scholarship could be his and financing could be arranged. Though not a smooth or automatic process, he thus went to Oxford and underwent the broadening experience, which he sorely needed. His progress there was far from pre-ordained. He had to work for it, and it might not have happened if it could not have been financed. His lifeline in that regard, of which he would have been conscious, was attention to his books. He was aware at a young age that his future was his alone to make, and depended upon his intellectual gifts and capacity for hard work.

Oxford: The Life of the Mind ‘Oxford was absolutely astonishing—I had no idea that such things existed’, was how William Armstrong later recalled his university experience and its impact upon him. ‘The horizons got wider’, as he once put it.50 Up to a point, he rebelled against his strict religious background, when he left home and went to university. He became an agnostic, though in at least some of his letters home he refers to attending Church services, and in the vacations he would stay in his parents’ quarters and attend some Salvation Army meetings.51 He went to the lectures of the person- able philosopher, man about town and subsequently television personality, A. J. Ayer, then working out a highly articulate and popular version of linguistic philosophy, published as Language, Truth and Logic in 1936. This theory would have made absurd the propositions of religious belief. ‘I did reject then quite a lot of what I had been brought up with’, he later said. ‘But I never remember feeling hostile to my home itself.’ Although his parents were enormously proud of his educational achievements, it was clear that they did not really like the outside influences he had come under. ‘They were very upset when they found out that I was no longer teetotal’, he admitted. His mother ‘thought that Oxford to some extent spoiled me.’ His parents, he said, ‘were very quiet about [it] but I think it was a disappointment to them that I didn’t become an officer in the Salvation Army.’52 WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 29

Oxford was enormously important in Armstrong’s transformation from an immensely clever but socially inept schoolboy to a young man who subsequently could (and did) rub shoulders with the highest in the land. Surrounded by confident middle-class public school boys, he initially experienced acute social and personal discomfort, later describing himself as ‘very scared’ and frightened. Then it dawned on him, as one profile put it, that they were ‘even more afraid of his powers of argument’. As he said in a later interview: ‘I remember feeling terribly shy and isolated in my first term or two until I discovered—I can’t remember exactly when but I know I did discover it towards the end of my first year—that these charac- ters [the public school boys] were mortally afraid of something in me. I think now that it was my ready wit, what you might call my debating skill in argument. Anyhow, as soon as I had a weapon I felt much better.’53 He does not say explicitly, but it must have been awkward, at least at first, before he discovered his skill in argument and debate, to have to admit to his peers the occupation of his parents, though Exeter College did have a non-conformist history. Interestingly, Edward Heath, up at Balliol College at about the same time, possibly went through a similar class-based experience. In Heath’s memoirs, he recalls an article he wrote for the Spectator magazine in 1940, attacking a proposal to admit poor boys to public schools on state scholarships:

To have to answer that one’s father is a bus driver or a carpenter [Heath’s father’s original occupation] … to know that one’s parents cannot afford to travel to school functions, or to see them there, unhappy and ill at ease and feel oneself shudder at a rough accent or a ‘we was’; to be asked to stay with a school friend and to have to refuse for fear of asking him back to a humble villa; to have no answer to others’ stories of travel in the holidays; worst of all to see one’s parents, who have made such sacrifices, grieve because they know one cannot have all the things one’s associates have; that is what it will mean for a state scholar.54

Although this is not explicitly an account of Heath’s own university experience, it does have the whiff of real-life personal testimony about it, and it is at least possible that William Armstrong shared it or some of it. There are many subtle gradations in the English class system, but he is probably to be understood as having come from a lower socio-economic class than Heath, whose parents had bettered themselves through hard work and, for example, acquired a car in his final year (that epitome of lower-middle class respectability, a Hillman Minx).55 30 K. THEAKSTON AND P. CONNELLY

Armstrong did not graduate in 1938, but waited until 28 years later, when his son, Peter, graduated, and the two attended the same ceremony. His parents, by this time, were long dead. The story in the family, and in some profiles, is that he could not have afforded the fees for graduation in 1938, but is it not at least possible that he could have scraped together the fees but perhaps did not wish his parents to attend the ceremony? Much later, one civil service colleague thought that William was ‘cautious about his background until he became a permanent secretary’.56 It is suggestive that Robert Hall, who as the government’s chief economic adviser in the 1950s, worked closely with him—and rated him very highly indeed—did not appear to know much about his personal background when, in his diary, he gave his impressions of the top Treasury officials in 1958, noting William Armstrong down simply as ‘Scotland; Exeter, Oxford’.57 By his own account, therefore, William Armstrong acquired two key insights at Oxford: first, the consciousness that he had a fearsome weapon to deploy—his forensic intellect and skill in argumentation—and second, he realised just what a wide world existed beyond his childhood experience—there was an ‘enormous opening up of the world’, as he later put it.58 As to the first, since he never joined the Oxford Union, his weapon must have been deployed mostly with his fellow college and university students, and for a while he was President of his college’s Essay Club, which discussed papers and brought in speakers, and of the college’s Dialectical Society.59 Nor would he have friends from his old school, since most of the university scholarship boys from Bec School went to Cambridge or London universities, thus adding to his isolation. William must have spent a pretty lonely life at Oxford. He made no circle of friends, beyond one or two, which he, then or later, spoke of—no really close lifelong connections. In adulthood, his few regular friends were not drawn from school, university or the civil service, but from amongst his neighbours. Three of them, plus William, would go sailing, until ‘the one with the boat died.’60 However, he seems to have been happy enough at Oxford. He did not pine. In view of their future relationship, it is useful to compare the young William Armstrong with the young Harold Wilson. Both came from non- fashionable backgrounds, both attended non-fashionable colleges, in the case of Armstrong, Exeter College, in the case of Wilson, Jesus College. Both paid close attention to their studies, and one can imagine them, though there is no evidence they ever met, working extremely hard a short distance across Turl Street, where the two colleges were situated. Both WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 31 eschewed the political clubs of the time, William Armstrong for the dura- tion and Harold Wilson until, according to his biographer, he took a conscious decision, in 1938–39, to seek a political career.61 Both felt, and were, outsiders compared with the fashionable activist students in, for example, Balliol College where the likes of Ted Heath, Denis Healey and Roy Jenkins were already becoming well-known and laying the foundations for their future political careers. Harold Wilson despised the airs and graces with which such students adorned themselves. He and William Armstrong were grammar schoolboys taking on the public school boys, and winning the academic battles at least. It has to be said that the staff of Bec School were nothing if not well- organised. In a letter home to his parents of 28 February 1938, William records a Bec School reunion weekend at Cambridge University, attended, inter alia, by the Headmaster, S.R. Gibson (who met William’s train from Oxford) and his old classics master, Tom Melluish.62 Tom Melluish, retired and not in the best of health, subsequently wrote to William in 1970 and recorded that Mr Gibson was not only alive, but, at 80, had written a book. Bec Headmasters were clearly tough as well as diligent. The second realisation, of the wide world out there, is, of course, very common amongst students; indeed, some would say that its attainment is one of the key objectives of a university education. But it must have been a hugely eye-opening revelation for William Armstrong. ‘It was only when I went to Oxford that I realised all the other dimensions of life that had been completely missing as far as I was concerned up to then’, he recalled.63 And, in Lady Armstrong’s words, ‘he developed into a social being’.64 He also discovered girls, in the same way that girls of about the same age discover boys. According to Lady Armstrong, before they met in 1939 he had two girlfriends, Eve and Sylvia, in sequence, though not through Oxford University.

No Politics Here Information on Armstrong’s activities at Oxford is sparse. It is obvious, not least from his letters home, that he worked ferociously hard at his studies. But an early interest in water is shown by the fact that he also found time to join the Boat Club. Indeed, it appears from his papers that he attended the Exeter College Boat Club Dinner on 27 May 1936. He rowed for the College, in the third eight, by dint of concealing his weight (he was actually a little lighter than the cox).65 He also played some tennis 32 K. THEAKSTON AND P. CONNELLY and was mildly interested in amateur dramatics. He found time to write— some poetry, some plays and articles—but, significantly in view of his subsequent career, he was never involved in politics or political debating. At the time, there were innumerable political clubs at Oxford. He joined none of them. In his first term, there was a local cause celebre. The local council had built a big housing estate in North Oxford, next to a smart private estate, and the residents of the latter had built a large wall to separate the two, with the effect that the council estate tenants had a much longer walk to get to the road and buses. There were several demonstrations by students over this injustice, and parts of the wall were pulled down. In an interview years later, Armstrong made the point that he did not join in on this, though he was well aware of it and might have got halfway there, to see what was going on, but did not take part. He then made a general point: ‘I’ve often thought it was just as well really, that I didn’t have and never have had a sort of instinctive gut feeling towards one party or another, which has made it peculiarly easy to serve both.’66 This aspect of personality and outlook, linking the student and the top mandarin, became a staple theme of later profiles and interviews. One profile, marking his appointment as head of the Treasury in 1962, noted Armstrong’s ‘remarkable detachment [at Oxford]. It never occurred to him to attend a political meeting. The two great issues of the day—unemployment and the Spanish Civil War left him completely cold.’ ‘Even today’, it continued, ‘he has absolutely no opinions on the issues of the day. All Civil Servants have to put up a show of detachment between their private feelings and the policies they are instructed to pursue. But for Armstrong this detachment is almost total.’67 ‘He has no known position on most of the obvious political issues’, ran another 1968 profile. ‘He is one of nature’s abstainers at election time.’68 In a 1971 radio interview Armstrong himself observed that ‘as you get up the [Whitehall] ladder you begin to meet politicians, and … I think you can see that there is a real political viewpoint, which is different from yours … and that the two parties, although for their various purposes they like to emphasise their differences, in fact have got a great deal in common, perhaps more than they like to let on; and the differences are often differences of emphasis rather than absolute outright differences … and so you get on with it.’69 ‘We were perhaps the most political generation in Oxford’s history, and our politics was overwhelmingly of the left’, Denis Healey (who was at Oxford 1936–40) later recalled. ‘We lived in a world of pamphlets, WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 33 meetings, marches, demonstrations—and very exhilarating it was’, was how Tony Crosland remembered Oxford (1937–40).70 It was a dramatic and intense political era. In 1935, Mussolini had invaded Abyssinia; in 1936 the Spanish Civil War started and in the same year Hitler marched into the Rhineland; in 1938, there was the Austrian Anschluss and Nazi threats to Czechoslovakia; at home there was the continuing background of mass unemployment and the depression. Armstrong once admitted that ‘looking back on it I think [I] probably was rather absorbed in the fascinating business of day by day and didn’t take as much interest as a lot of other people in the wider affairs of the world.’ But he was not totally divorced from the outside world. As he later recalled his student days for Eric Jacobs: ‘economics was in the air, we had [been] living through a period of very very high unemployment, with all kinds of discussion and ideas about how to deal with it, with Mosley, and then the effect of the rearmament programme on economics, and so the whole business of economic policy was obviously very immediate and pressing, … a thing you couldn’t escape from, quite apart from what you were actually studying.’71 And it must be remembered politics was not necessarily the dominant preoccupation of all students, even then. Ben Pimlott, Harold Wilson’s biographer, has pointed to ‘the other Oxford’ in the 1930s, the one ‘dedicated to essays, marks, exams, chapel-going, sport and college societies … the Oxford of the overwhelming majority of undergraduates.’72 There are, perhaps, two reasons why William Armstrong did not engage more with the stirring events of the 1930s, one a matter of timing but another more profound. On the timing, it must be remembered that, in 1938, he was rather preoccupied with Final Schools and getting a job, and in fact he was in his first job, ensconced in the Board of Education in London by October 1938, having sat the Civil Service Examination and gone through the interview process. His student days in Oxford were over. More fundamentally, although he may have been temperamentally disinclined to join the world of political pamphlets and meetings, it does not follow that he was insensitive to the events of the day. It is possible, indeed probable, that even in that era he had already adopted the stance of observer and analyst, not of activist. Crosland, Healey, Jenkins, Heath and many others up at about the same time were politically charged with the adrenalin of events in a way which Armstrong was not, nor ever was, except perhaps during his final days in Whitehall and perhaps during the Suez crisis (see later). 34 K. THEAKSTON AND P. CONNELLY

Some of his letters from Oxford to his parents survive in the Armstrong papers. He was a dutiful correspondent and also a loving son. His letters are clear, comprehensive and unstrained. However unusual may have been his upbringing prior to Oxford, they show a sense of security and practical- ity, asking for modest items of clothing and not forgetting presents for maternal birthdays and so on. He was matter of fact and purely descriptive about the formidable amount of time he spent on his studies. He was a hard worker, but did not revel in the fact. He performed brilliantly in his final examinations, gaining a First in both parts, Classical Moderations and Greats. His first in Mods was thought by one of his examiners to be the best in his year. In the Second Public Examination he got an alpha mark of some sort on every paper and was congratulated by the examiners on the all-round excellence of his work. One of his contemporaries was Reginald Maudling, whom he was to encounter subsequently as Chancellor. ‘I do remember William Armstrong … who took his degree and his oral examination at the same time as I did, being congratulated by the examiners on the consistent excellence of his papers throughout the examination’, Maudling wrote in his memoirs. ‘Was there ever a man more clearly destined to become Head of the Treasury?’73 Intellectually, he was most stimulated by the ancient history and, most of all, by the philosophy part of his studies, which was not limited to ancient philosophy but came up to the modern period. He went to the lectures of A. J. Ayer and Oliver Franks, and also to Bertrand Russell’s when the latter spent two terms in Oxford. He seems to have been most taken by Russell’s work on mathematical and symbolic logic and recalled visiting and arguing with him in his North Oxford house. Philosophy later proved relevant to his work in Whitehall, he thought, ‘in the sense that it taught scientific methods of inductive and deductive reasoning, logic and statistics.’ The study of history, he thought, ‘provided an understanding of … how the essence of political action was to be found in the composition of conflicting interests, a way of looking at things that seemed totally acceptable to me then, and still does.’ He read Keynes, but on probability theory rather than employment and economics.74 There was, it is clear, a great flourishing of his mind. He was clear in an interview in 1968, when appointed Head of the Civil Service, about what Oxford had given him, while also underlining the importance of his family background and environment: ‘You have to remember that however I began, I went to Oxford, and there’s something called Oxbridge that puts its stamp on WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 35 people. Maybe for that reason it never seemed to me particularly difficult to get on with my colleagues in the Civil Service, nor did I seem to be particularly different from them. But I think it’s probably true to say that I have a knowledge of what it was like to live at the bottom end of society in the Thirties, which will undoubtedly influence my approach to my new job.’75 He had little idea of what to do when he graduated. When he had gone up to Oxford in 1934 he had vaguely thought he would like to become a journalist: he had edited his school magazine and thought it would be an interesting kind of life. One of his girlfriends was actually a working journalist. But by 1937 and 1938, he was realising that journalism might be a precarious existence and he was in fact pretty uncertain about his future employment. As he later told Eric Jacobs: ‘I’d no idea how to open doors into industry or into the professions or anything of the sort, not the slightest clue.’ He had no idea of private business, and major companies had yet to develop their graduate entry schemes for high-flyers and future top managers. ‘The world didn’t look all that open, you know, in 1938’, he said in a 1968 interview. ‘This was a period when graduates selling ency- clopedias or even silk stockings or vacuum cleaners were a fairly well- known thing.’ One option was to stay at Oxford and go down the academic route to get a fellowship and become a philosophy don; he had done well enough to make that possible. But he had become ‘disenchanted with Oxford as a place to stay for the rest of my life’, as he explained to Eric Jacobs. Oxford, he once said, ‘had come to seem an ivory tower, a place where strange academic objectives were pursued which had very little relation to the life I had known up to then. And I felt I wanted to do something a bit more practical.’ ‘The people I knew were occupied on very eccentric and exclusive kind of pursuits.’ He had, for example, been in correspondence with the logician H. H. Price, who became mentally ill. Later, Armstrong could understand neither his own questions nor Price’s replies. Then there was his Exeter tutor, Dacre Balsdon, a historian and a ‘character’ who wrote novels and books about Oxford, whom at the time Armstrong regarded as ‘a rather curious figure of fun’ but later valued more, recognising that he took great pains with his students and had worried more about him than he had realised.76 With growing reservations about Oxford, he saw by chance on a College notice board an advertisement from the Civil Service Commission, inviting applicants for the civil service, the method of entrance being by way of an examination—one area in which he had both experience and a 36 K. THEAKSTON AND P. CONNELLY record of success. He knew very little about the civil service and what sort of work would be involved but upon informing his tutor of his intention to apply, he received the unworldly answer: ‘Yes, I think that will suit you extremely well. I understand they start at 10 and finish at 4 so you will have plenty of time for your researches and literary pursuits.’77 And so, a month after finishing his Final Schools at Oxford, in the summer of 1938, William Armstrong took the entrance examination at the headquarters of the Civil Service Commission, then at Burlington House in Piccadilly.

Religion and the Idea of Service How, then, can the effects of the childhood, school and Oxford years on William Armstrong’s character be summed up? At the most basic, and very important, he acquired a self-confidence, based on great intellectual success at school and university, and a self-possession, based on an early soli- tary but secure, if peripatetic, life. But there were two other effects, profoundly important for his subsequent development. Firstly, there can be no doubt that a solid basis of religious awareness was laid from his earliest years. His parents lived and breathed religion. It was their vocation and their daily work: their whole life. It would be impossible for this not to leave its mark on him, irrespective of subsequent doubts. Although he never wore his heart on his sleeve, he was always quite clear in his replies when, much later and in some degree of eminence, he was asked directly about his religious beliefs. In a television interview (March 1974), when he was Head of the Civil Service, the question was put: ‘How important is Christian morality, or a belief in God, in your working life as a civil servant?’ to which he replied: ‘I think it’s very important for me. I doubt if I could tolerate the burden that I have to carry if I weren’t able to humble myself in front of a sort of all-powerful creator.’78 ‘I am not a Salvationist today’, he said in one 1970s interview, ‘but I am a Christian and I am enormously proud of my background and what my parents did for us. I’m enormously proud of what they were, of the good, happy lives they led. And there were many things about my Salvationist upbringing that stayed with me.’79 ‘A lot of that [the Salvation Army influence] has undoubtedly stuck’, he told another interviewer. ‘A sense of dedication, a sense that life is on trust, you don’t own the freehold of it, but somehow you’re responsible to something somewhere. Although I no longer believe that in any literal sense, no doubt it affects my attitude.’80 WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 37

He retained an affection and a gratitude for the Salvation Army.81 He was throughout his adult life quietly loyal to the Salvation Army, though not as an adherent to their regular services. After his agnostic period (at Oxford and afterwards), he became a solid member (indeed, a Deacon) of the Sanderstead (Surrey) Congregational Church (now the United Reformed Church) for many years in the 1950s and spoke in a talk of his motivation to take part in their services. He ‘found it helpful that the Congregational Church had no creed, that I was not required to attest to a belief in any of the things I found so difficult, but simply to affirm that I wished to be a follower of the Lord Jesus.’82 In fact he made it clear that the strength of the Childrens’ Church at Sanderstead Congregational Church was the deciding factor in his joining it. This Church had a Sunday School of 300 children. He found time to join the teaching staff and re-wrote the teaching material. In a well- organised way, this introduced his children to Christianity, an introduction he felt he had to make. This ‘made me think again about my own beliefs and doubts’, he once explained, ‘and it helped me find my faith.’83 He ‘became a Christian believer again’, he told Eric Jacobs.84 He and his wife had tried the local Anglican Church, but had found it wanting.85 But from some point in the 1960s, when at the top of the Treasury, after leaving Sanderstead and moving to central London, he stopped going to ordinary Sunday services in any church.86 In a 1970 interview he described himself as ‘what you might call a Bishop-of-Woolwich Christian’ (a reference presumably to Bishop John Robinson, a noted liberal theologian, and his controversial Honest To God book, published in 1963).87 He spoke at the Salvation Army Memorial Service for his father in the Regent Hall on 23 September 1942. He met his wife, Gwen, at a Salvation Army-organised event in 1939. She was a Salvationist and the daughter of a Salvationist. Shortly after his promotion to be Joint Permanent Secretary to the Treasury, in 1962, he invited his high-flying Treasury colleague Robert Armstrong (subsequently Cabinet Secretary and Head of the Civil Service but no relative) and his then wife, to a Salvation Army musical event in the Regent Hall, London. There was much good brass band music, a lot of it unique to the Salvation Army.

In the middle, at a break, William got up and spoke; and he spoke with intense passion about his faith. I had never seen this kind of passion in him before. I saw another side to William … I got the impression that this did not arise from an unquestioning acceptance of his parents’ faith but that he 38 K. THEAKSTON AND P. CONNELLY

had reached his position through a process of reasoning. It was then I realised that underneath that very cool and rigorously controlled exterior, there was a passionate temperament. I don’t think I ever saw it again.88

In 1964, Peter Jay became his private secretary in the Treasury. His view of William at that point was ‘there was a simplicity and decency of personal integrity, highly compatible with growing up in an environment which put emphasis on virtue, consideration for others, plain dealing and a sense of humility.’ But also ‘he was the supremely rational Oxbridge product, a conscientious person using his high intelligence to work out where the public interest lay in the issues he dealt with.’89 ‘Religious belief has not, I think, affected my work as a civil servant directly’, Armstrong said in a draft chapter of autobiography. ‘That is, the advice on policy I have given to Ministers would not have been perceptibly different without it.’90 Most of his colleagues, most of the time, were probably unaware of his religious beliefs or background. Such considerations simply did not enter the equation of Whitehall life. It was only very occasionally, as at the musical event described above, that the mask slipped (or, one wonders, was allowed to slip). Nevertheless, he did not fail to give public support to the practical attempts of the Salvation Army to address social problems. For example, Tony Benn recalls William Armstrong’s attendance at a Salvation Army lunch (ironically, at the Dorchester) in April 1967, called to promote the Army’s appeal ‘For God’s Sake, Care’, to fight poverty in Britain.91 His private secretary in the Civil Service Department, Colin Gilbraith, recalls that in the period 1969–1971, Armstrong attended Salvation Army events perhaps three times a year.92 For many years he had the idea of writing a book about the Salvation Army but pressure of work never allowed it, though he did write a short piece about General Booth’s famous (1890) book about the Army’s social mission, In Darkest England and the Way Out.93 In April, 1972, during wages policy talks between the Government and the TUC, there was an interesting demarche by Jack Jones, then General Secretary of the Transport and General Workers Union. Jones recalled that he sought to widen the area of discussion between the two sides to include the pensioners. Knowing of William Armstrong’s background, Jones sought him out during a break in the proceedings and said ‘Look, William, your father and mother would be ashamed if they thought you weren’t using your influence to get the old people a little extra at Christmastime.’94 Shortly afterwards Prime Minister Edward Heath WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 39 announced the introduction of a £10 Christmas bonus for the nation’s pensioners. Towards the end of his civil service career, in 1972, while Head of the Civil Service, William Armstrong presided over the Salvation Army’s Annual Territorial Congress in Glasgow and chaired and spoke at their Citizens Rally. His appointments as permanent secretary of the Treasury and then Head of the Civil Service had been reported in Salvation Army publications such as War Cry and Vanguard. His family insurance arrangements were, for a time, with the Salvation Army Insurance Society. He was, in retirement from the civil service, a member of the London Advisory Board of the Salvation Army. A Salvation Army Commissioner took part in his funeral service and an Army International Staff Band provided the music. William Armstrong never totally left that community, nor relin- quished its moral sense. He may have rejected the fundamentalism of the Salvation Army but always had an ethical compass of an evangelical kind. In his own way, he was a highly religious man, irredeemably shaped by his childhood experiences. When combined with his outstanding intellectual ability and communication skills, this was a powerful and potentially heady mixture. Secondly, he acquired from his parents the notion of service, meaning not only that his talents were to be used for the benefit of others, but that they could really get things done. He put this very clearly when interviewed:

I was brought up to believe … that we somehow belong to God and we are in the world to serve people. The idea of service, in the civil service or any other service was a very easy thing for me. I think I had it drilled into me all my life … I also think with a fundamental kind of optimism. I believe that the only thing that will produce total destruction is despair and that you don’t have to despair … This perhaps is not specifically religious, perhaps more the Salvation Army itself, but I was brought up to believe that all things are possible, to him that believes. Faith can move mountains … and I still sort of retain that feeling that nothing that is physically possible is inherently impossible.95

The Salvation Army has a spiritual and a social mission and sees itself as serving people and meeting needs on both levels. It is one of the largest providers of social care in the country. The lives of members, and especially officers, are devoted day-in and day-out to providing a service to the 40 K. THEAKSTON AND P. CONNELLY less privileged in society. William Armstrong could not but see this as the calling and occupation of his parents. He was only occasionally, and in the future, to reveal very much of his religious principles. Such was his self-control and easy mastery of the arguments pursued by his ministers, he was able to sublimate spiritual within temporal values. Indeed, one of the enduring themes of William Armstrong’s career was the reconciliation of his implanted religious and moral stance with his superb, rational mind, in addressing the issues of the day. But this was always a strain, and was later to become so to an intoler- able degree when he faced a national crisis, in which he found himself principal adviser to his prime minister. This is closely connected with, what others (for example, former Treasury civil servant Leo Pliatsky), have called ‘a curious messianic streak’ in his character, ‘which could lead him to become committed to otherwise uncharacteristic emotional attitudes in particular situations’,96 including perhaps the belief that he had a calling to sort out the ills to which his country had succumbed. William Armstrong had been deeply imbued with religious notions, in particular those of salvation and of service, and had the example of his parents’ lives and work etched upon his memory. This was combined with a superbly organised and efficient mind, a gift for communication, a habit of hard work and a mission to serve his fellow men. His religious feelings were sublimated, but they never left him.

Notes 1. Armstrong tape (Armstrong papers). 2. ‘Sir William Armstrong, the new head of the Civil Service, in conversation with George Scott’, The Listener, 9 May 1968, p. 596. 3. British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, transcript in National Archives BA 6/82. 4. Transcript of William Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 5. Roy Hattersley, Blood & Fire: William and Catherine Booth and their Salvation Army (London: Little, Brown and Company, 1999). 6. ‘Sir William Armstrong talking with Desmond Wilcox’, The Listener, 28 March 1974, p. 391. 7. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 8. Derek Wellman, recollections of Lord Armstrong, CSD News, September 1980 (Armstrong papers). WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 41

9. Armstrong tape (Armstrong papers). 10. Wellman, recollections of Lord Armstrong, CSD News. 11. See: War Cry, 3 October 1942 and 31 October 1942. 12. The Listener, 9 May 1968, p. 596. 13. War Cry, 20 August 1960. 14. The Listener, 9 May 1968, p. 596. 15. North Eastern Folklore Archive, Aberdeenshire Council, 2007. 16. Armstrong tape (Armstrong papers). 17. BBC television, ‘A Chance to Meet—Sir William Armstrong’, 17 October 1971, transcript in National Archives (NA) BA 6/80. 18. Armstrong tape (Armstrong papers). 19. Gwyn Thomas, ‘A glimpse of the inner lining of a supreme mandarin’, Western Mail, 6 July 1974. 20. The Listener, 9 May 1968, p. 596. 21. William Armstrong, ‘A layman looks at the church’, lecture to British Council of Churches, 12 September 1972, Armstrong papers. 22. Jeremy Hornsby, ‘Secrets all my life’, Daily Express, 30 July 1962. 23. Jack Webster, ‘Now “Our Bill” carries the nation’s banner’, Scottish Daily Express, 11 January 1968. 24. William Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 25. The Listener, 9 May 1968, p. 596. 26. Interview with Peter Armstrong (PC). 27. Armstrong papers. 28. William Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 29. Mary Kenny, ‘Fight the good fight: Once a Christian, No. 4: Lord Armstrong’, Evening Standard, 8 March 1978. 30. Wellman, recollections of Lord Armstrong, CSD News. 31. Interview with Lady Armstrong (PC). 32. William Armstrong interview with Eric Jacobs, 1977, Armstrong papers; transcript of ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. 33. William Armstrong, ‘A layman looks at the church’, lecture to British Council of Churches. 34. William Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 35. Armstrong papers. 36. Armstrong interview with Eric Jacobs, 1977, Armstrong papers; Wellman, recollections of Lord Armstrong, CSD News; The Listener, 9 May 1968, p. 596. 37. British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, NA BA 6/82. 38. Ibid. 39. William Armstrong, ‘A layman looks at the church’, lecture to British Council of Churches. 42 K. THEAKSTON AND P. CONNELLY

40. Ibid. 41. Interview with Graham Crosskey, former schoolmate (PC). 42. Ibid. 43. Interview with Herbert Harris-Taylor, former schoolmate (PC). 44. Jacobs profile of Sir William Armstrong, The Sunday Times, 15 September 1968. 45. Interview with Herbert Harris-Taylor (PC). 46. William Armstrong interview with Eric Jacobs, 1977, Armstrong papers; William Armstrong, ‘A layman looks at the church’, lecture to British Council of Churches; ‘A Chance to Meet—Sir William Armstrong’, NA BA 6/80; On Reflection—Sir William Armstrong’, NA BA 6/82. 47. Jean Floud, ‘The educational experience of the adult population of England and Wales as at July 1949’, in D.V. Glass (ed) Social Mobility in Britain (London: Routledge and Kegan Paul, 1954), p. 138. 48. William Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 49. Interview with Herbert Harris-Taylor (PC). 50. ‘Fight the good fight: Once a Christian, No. 4: Lord Armstrong’,Evening Standard, 8 March 1978; ‘On Reflection—Sir William Armstrong’, NA BA 6/82. 51. Vanguard, January 1963, p. 28. 52. ‘Fight the good fight: Once a Christian, No. 4: Lord Armstrong’,Evening Standard, 8 March 1978; ‘On Reflection—Sir William Armstrong’, NA BA 6/82. 53. ‘Fight the good fight: Once a Christian, No. 4: Lord Armstrong’,Evening Standard, 8 March 1978; ‘The Chancellor’s right-hand man’, The Observer, 30 September 1962; The Listener, 9 May 1968, p. 596. 54. Edward Heath, The Course of My Life (London: Hodder and Stoughton, 1998), p. 82. 55. George Hutchinson, Edward Heath: A Personal and Political Biography (London: Longman, 1970), p. 39. 56. Private information (PC). 57. Alec Cairncross (ed), The Robert Hall Diaries 1954–61 (London: Unwin Hyman, 1991), p. 168. 58. Transcript of ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. 59. ‘The Essay Club, Trinity Term 1937’, Armstrong papers; information from Armstrong’s civil service application form in NA CSC 11/10. 60. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 61. Ben Pimlott, Harold Wilson (London: HarperCollins, 1993), p. 67. 62. Armstrong papers. 63. ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. WILLIAM ARMSTRONG: FAMILY BACKGROUND AND EDUCATION 43

64. Interview with Lady Armstrong (PC). 65. ‘On Reflection—Sir William Armstrong’, NA BA 6/82. 66. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 67. ‘The Chancellor’s right-hand man’, The Observer, 30 September 1962. 68. ‘Cleaning up the corridors of power’, The Sunday Times, 15 September 1968. 69. ‘A Chance to Meet—Sir William Armstrong’, NA BA 6/80. 70. Denis Healey, The Time of My Life (London: Michael Joseph, 1989), p. 34; Kevin Jefferys, Anthony Crosland (London: Richard Cohen, 1999), p. 7. 71. ‘The Change Makers’, Robert McKenzie interview with Sir William Armstrong, BBC TV, 9 January 1969, transcript in Armstrong papers; Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 72. Pimlott, Harold Wilson, p. 38. 73. Reginald Maudling, Memoirs (London: Sidgwick and Jackson, 1978), p. 27. 74. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 75. The Listener, 9 May 1968, p. 596. 76. Armstrong interview with Eric Jacobs, 1977, Armstrong papers; The Listener, 9 May 1968, p. 596; ‘On Reflection—Sir William Armstrong’, NA BA 6/82. 77. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 78. The Listener, 28 March 1974, p. 391. 79. ‘Fight the good fight: Once a Christian, No. 4: Lord Armstrong’, Evening Standard, 8 March 1978. 80. William Armstrong interview with W.B. Nicolson (25 February 1970), transcript in Armstrong papers. 81. ‘The Chancellor’s right-hand man’, The Observer, 30 September 1962; Vanguard, January 1963, p. 27. 82. William Armstrong, ‘A layman looks at the church’, lecture to British Council of Churches. 83. Ibid. 84. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 85. Interview with Dr Stanley Mason (PC). 86. William Armstrong, ‘A layman looks at the church’, lecture to British Council of Churches. 87. William Armstrong interview with W.B. Nicolson (25 February 1970), Armstrong papers. 88. Interview with Lord Armstrong of Ilminster (PC). 89. Interview with Peter Jay (PC). 90. Autobiographical chapter, based on an interview with Eric Jacobs, Armstrong papers. 44 K. THEAKSTON AND P. CONNELLY

91. Tony Benn, Out of the Wilderness: Diaries 1963–67 (London: Hutchinson, 1987), p. 496. 92. Interview with Colin Gilbraith (PC). 93. William Armstrong, ‘The General’s way out dream’, The Spectator, 19 September 1970, p. 298. 94. Jack Jones, Union Man (London: Collins, 1986), p. 257. 95. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 96. Leo Pliatzky, Getting and Spending (Oxford: Basil Blackwell, 1982), p. 78. CHAPTER 3

Climbing the Whitehall Ladder

In many respects, William Armstrong can be seen to have enjoyed a mete- oric rise to the top of the civil service—‘talent-spotted’ fairly early on, benefiting from powerful patrons and winning golden opinions for his performance, moving up through key posts on the ‘inside track’ at the centre of government. Though not fitting the usual stereotype in terms of his family and class background and state schooling, in other ways—from Oxford onwards—the so-called ‘velvet drainpipe’ model of higher civil service recruitment and careers would seem to apply.1 But in fact, William Armstrong’s civil service career had a somewhat stuttering start, including a near-disastrous interview experience at the recruitment stage, and but for the opportunities opened up by the outbreak of the Second World War it is possible that he may not have not risen so rapidly or so far. Looking back on it later, he thought ‘the process by which I was selected for the civil service seems rather hit and miss, and the early days of my career in it little better.’ His own experience, he went on, ‘did much to shape the reforms which I helped to introduce as Head of the Civil Service 30 years later.’2

Joining the Civil Service Armstrong took the civil service entrance exams in the summer of 1938, a month after finishing his final degree exams at Oxford. He came fifth amongst all those who competed to join the Home Civil Service and attributed this (for him, relatively disappointing) result to the fact that, although

© The Author(s) 2018 45 K. Theakston, P. Connelly, William Armstrong and British Policy Making, Understanding Governance, https://doi.org/10.1057/978-1-137-57159-5_3 46 K. THEAKSTON AND P. CONNELLY his marks in the written papers were substantially better than those of almost everybody else, he was pulled down by the interview. The open competition examination for entry to the Administrative Class of the Home Civil Service had, at that time, three elements: (a) three compulsory written papers in English, Essay, and ‘Present Day’ (questions on matters of current interest), accounting for 300 possible marks; (b) optional papers from a range of academic subjects, from which candidates could choose (usually according to their degree subjects), adding up to 700 possible marks; and (c) an interview counting for 300 marks. The supreme exam-passing machine, William Armstrong got the highest marks out of all the competi- tors that year for the compulsory essay papers (252/300) and came second (with 564/700) on the academic ‘Section B’ papers he took, but he slipped badly on the interview (200/300). If written exam papers only had counted, he would have come second overall in the competition—just behind Arthur Galsworthy, who went on to have a distinguished career in the Colonial Office and ended up as ambassador to Ireland. The 1938 Administrative Class recruits were a strong cadre, including three others who also reached permanent secretary rank—Conrad Heron, Arthur Peterson and Ronald Radford—and a future Chief Economic Adviser to the Treasury—Bryan Hopkin (who actually came first overall in the competition that year).3 It has to be said that Armstrong was advantaged in the civil service exams by the way in which there was a strong built-in preference for Oxbridge classicists—‘entrance was biased towards the Greats man’, he admitted many years later in a draft chapter of autobiography. He recalled having a choice of 14 papers for ‘Section B’, enabling him to pick seven at which he thought he could do best, and that part of the process ended up being ‘very similar to the degree which I had taken about six weeks before.’ A PPE (philosophy, politics and economics) student, in contrast, would only have found six papers in his or her subject, and would have had to do all of them and then search for another to tackle (perhaps a language or historical paper).4 Oxbridge accounted for 76 per cent of those who took the civil service exams in 1938, but fully 90.8 per cent of the successful candidates. (The Oxbridge share of all open competition recruitment for the civil service between 1925 and 1939 was 87.1 per cent).5 To some extent, therefore, William Armstrong was thus the beneficiary of the Whitehall elite’s practice of recruiting in its own image, including the assumption that Oxbridge was best, and that the subjects taught there (particularly classics) provided the best and most coherent education and training for future civil servants.6 CLIMBING THE WHITEHALL LADDER 47

However, all the evidence shows that someone from William Armstrong’s social class and school background was, in contrast, definitely disadvantaged by the interview element of the process. An interview had been introduced after the First World War because of the feeling that written exams assessed primarily academic qualities rather than personal effectiveness in a wider sense—some applicants, it was said, ‘were too exclusively scholars and not sufficiently men of the world.’7 The year before Armstrong sat the civil service exams, the scheme was rejigged to increase the relative importance of the interview (changing from 300 out of 1800 total marks to 300 out of 1300). But critics at the time and subsequently have pointed to issues of social class bias in its operation and outcomes. Percival Waterfield, appointed as First Civil Service Commissioner in 1939 (the year after Armstrong joined the service), admitted that the interview process was ‘sadly slap-dash and amateurish’.8 The viva voce was supposed to assess ‘the candidate’s intelligence and alertness, his vigour and strength of character, and his potential qualities of leadership.’9 But a short, 15-minute interview with a panel of senior figures who were inevitably predominantly from Oxbridge and public school/boarding school backgrounds themselves could in practice only do that in a limited, haphazard and fairly superficial way and, moreover, candidates from backgrounds similar to those of the interviewers were more likely to display the outward polish and manner that was being looked for and make a favourable impression. Sir Roderick Meiklejohn (First Civil Service Commissioner 1927–39) once explained that questions could cover foreign travel (‘have you been abroad much?’), foreign-language literature, games and sport—‘almost anything which occurs to you’.10 It was not just a question of the interviews being rather amateurish, unreliable and arbitrary. A better process for discomforting and disadvan- taging applicants from working-class and even lower-middle class backgrounds could hardly be designed. And statistical evidence shows that that was indeed the effect in the inter-war period. The sociologist R.K. Kelsall’s analysis of recruitment data for the 1925–39 period demonstrated conclusively that Administrative Class entrants from local authority (LEA) state schools got higher marks on their written exams (which were, of course, anonymous) than those from public schools, but for the interview stage the position was reversed. Kelsall’s in-depth analysis of the 1938 recruitment data in particular (William Armstrong’s year) showed that 24 per cent of those appointed only passed because their interview marks placed them in the final rank-ordering above those with higher marks on 48 K. THEAKSTON AND P. CONNELLY the written papers, those thus displaced being disproportionately non- Oxbridge, from state schools and from lower socio-economic backgrounds.11 By his own account, William Armstrong was lamentably ill at ease and unprepared for his interview with the Civil Service Commission selectors. He was ‘very very shy and thoroughly confused … terrified’, he later recalled. ‘I put my foot in it in various places.’ He was asked what department he wanted to get into:

I really hadn’t a clue about any of the departments, had no idea what they did or even what the civil service did, and I hadn’t thought about which department I wanted to go into so I simply said the first thing that came into my head, which was the Treasury. I suppose I must have had some vague idea that the Treasury was the number one department … but they had a policy, which they ran for some time, of not taking people straight from university, but waiting until they had been in for two or three years and then picking from those. And … so this was pointed out to me. I said well I still wanted to get into the Treasury eventually. I distinctly remember one extraordinary old boy [who] took his spectacles off, looked at me down his nose and said ‘are you good at saying no?’ to which I think the truthful answer is no because I don’t think you are when you’re that age. You tend to say yes. But I said I would be and felt totally covered in confusion and I don’t think that stood me in very good stead at all.

The next unexpected question thrown at him was which the best of the daily newspapers was. He again said the first thing that popped into his head—naming The Daily Express—which he immediately saw was ‘the wrong answer’. ‘Clearly … they didn’t think much of me’, he later said, ‘because they only gave me 200 out of 300—went as near as they could to push me out.’12 He was not pushed out, but it was a close-run thing. Half of that year’s entrants got the full 300 marks in the interview,13 but A.N. Galsworthy (who came second overall) also got only 200, like William Armstrong, despite having the Forsytean advantages of having been at a public school and being the son of a businessman who was a cousin of the novelist John Galsworthy (an individual example which does not detract from the wider point made by Kelsall’s systematic statistical analysis). It must have helped that Armstrong’s Oxford tutor, Dacre Balsdon, wrote him a strong reference, talking about his ‘distinguished first in Greats’ and saying that he had ‘a very rich as well as a very acute mind.’ ‘If CLIMBING THE WHITEHALL LADDER 49 he does not pass high into the Home Civil Service’, Balsdon told the Civil Service Commission, ‘I shall feel there is something very badly wrong with that examination or else that this year has produced candidates of unex- ampled merit.’ Balsdon was a shrewd judge of character, describing Armstrong as ‘modest’ and ‘sensitive’, perhaps having suffered ‘from a certain strain’ but now ‘enormously respected’ in the College, and saying that ‘he knows the wisdom of silence, and he does not open his mouth, as most of us do from time to time, to say silly things.’ Armstrong, he predicted, ‘will make a very distinguished civil servant ultimately.’14 Having qualified to enter the civil service, Armstrong was sent a list of vacancies and the names of the departmental Establishment Officers in charge of personnel management in the various ministries, and invited to have discussions with three departments. He decided to talk to the Board of Trade, the Colonial Office and the Board of Education. The man he went to see from the Board of Trade explained it was ‘a very miscellaneous sort of place’ and that he might find himself doing anything, and asked him what he would think of investigating infectious diseases amongst har- bour masters. Not surprisingly, he found this very off-putting, as he did the interview with the Colonial Office, where he felt the official in fact definitely set out to put him off. His reception at the Board of Education was totally different. His interviewer had seen a short essay he had written for a Spectator ‘Under 30’ page, on the subject of ‘What should we fight for?’ published in July 1938.15 The interviewer produced it at the interview, praised it and said William was ‘just the kind of chap’ the department wanted. There was no contest. He opted for Education and started work with the Board of Education in the New Public Offices in King Charles Street, London on 6 October 1938, at a salary of £275 a year, not much more than his income at Oxford, but enough to live on while he was living at home with his parents again (his father at that point was being paid £6 and 10 shillings a week by the Salvation Army).16

The Board of Education Though William Armstrong cannot have known it when he joined the department, the Board of Education was, between the wars, actually the most socially and educationally elitist of the Whitehall social service departments. Compared to the Ministry of Health, Ministry of Labour and Ministry of Agriculture, for instance, a much higher proportion of its administrative officials were drawn from Oxbridge and public schools (and 50 K. THEAKSTON AND P. CONNELLY particularly the elite ‘Clarendon’ schools). Later described as ‘probably the only man in the administrative grade who had been through the system of education that they were administering’, Armstrong was in fact one of only seven (out of 179) Board of Education officials serving in the 1919–39 period who had been educated at LEA schools (3.9 per cent). Moreover, analysis of career statistics in that period shows that once inside the civil service, those from Oxbridge/public school backgrounds enjoyed better chances of promotion (from assistant principal to principal, and then to assistant secretary and above).17 Promotion could be achingly slow in interwar Whitehall: future Cabinet Secretary Norman Brook spent eight years on the lowest ‘cadet’ rank of assistant principal in the Home Office in the late 1920s/early 1930s, for instance, and the redoubtable Evelyn Sharp stayed at the bottom rank in the Ministry of Health for nearly a decade after she joined the civil service. Whitehall’s talent spotters kept an eye on the juniors in the Board of Education, however. Some regarded it as one of the best training grounds in the civil service.18 Burke Trend (future Cabinet Secretary and close colleague of Armstrong’s at the very top in the 1960s and early 1970s) had joined it in 1936 and within a year was plucked out to work in the Treasury; Antony Part joined Education in 1937 and two years later was picked out to become private secretary to the minister at the newly-created Ministry of Supply, later becoming a permanent secretary. Years later, when he was the country’s top civil servant, Armstrong insisted that he had never felt at a disadvan- tage in the civil service through his ‘lack of the old school tie.’19 But it is hard to escape the conclusion that 1930s Whitehall looked very like a system in which William Armstrong would depend on his Oxford ‘badge’ and would need to display conspicuous above-average administrative ability and potential to off-set his state school origins and get on. Armstrong’s early experiences at the Board of Education conformed very largely to the picture of the work of a new assistant principal given in H.E. Dale’s portrait from the inside of The Higher Civil Service of Great Britain, written in the late 1930s (and published in 1941). Dale had been a senior official at the Ministry of Agriculture and was a shrewd analyst of the character and culture of the interwar mandarin class. The first year or two, Dale explained, the young recruit must spend in ‘learning his way about. He [sic] ought to master the routine common to all Government offices … He has to acquire a knowledge of the official hierarchy and of official etiquette, a reasonable command of official language and a feeling for its shades of meaning, above all a knowledge of the organisation, CLIMBING THE WHITEHALL LADDER 51

functions, and staff both of his own Department and of those with which his Department and his particular section of it have most to do.’ The work could well seem ‘monotonous for two or three years’, he warned, ‘and it includes a good deal of what must seem rather mechanical drudgery to a man who may have just taken a first in Greats.’ Overall, the new assistant principal had to recognise that he was ‘an insignificant and powerless menial’ in the early stages of this administrative apprenticeship, one designed to instil and develop crucial professional skills and qualities, including familiarity with ‘the general principles of the machinery of government’, ‘thoroughness, accuracy, and clarity of reasoning and statement’, ‘a passion for precise facts and close inferences’, ‘a proper respect for precedent … [and] continuity in public affairs’, and ‘loyalty and discretion’.20 Armstrong was assigned to one of the territorial divisions within the Board of Education, dealing with Lancashire and Cheshire. After a fortnight or so, the assistant secretary in charge sent for him to explain what the job was about. This was to ‘administer the 1936 Education Act’, he was told: not to get involved with education policy (a task for ‘education- alists’) or buildings (the architects’ branch), and generally to keep out of matters which did not concern him. He was subsequently given a dressing down when he had the temerity, as the most junior administrator in the department, to send a memo directly to the Board’s legal adviser asking him to clear up some questions that had occurred to him after reading the 1936 Act. That august official could only be addressed through the proper hierarchical channels, he was told, and all communication had to pass through the Board’s most senior civil servant, the permanent secretary, at that time Sir Maurice Holmes.21 Another early indicator, perhaps, of his interest in and capacity for analysis and policy-making can be seen from his first few weeks in the department, in a story he later recounted at a conference of the Royal Statistical Society:

I had noticed that when proposals for a new school were finalized, and the authorities had said ‘all right, go ahead’ the papers had to be marked to an XYZ Section; I could not make out why, so I went along to the XYZ Section. There was a man sitting there with a very large book, and it was his duty, he said, to record in the first half of this book the name of every school in which there was a theatre or other place for drama larger than 2,000 sq. ft. In the second half of the book he recorded the name of every school where 52 K. THEAKSTON AND P. CONNELLY

gym shoes were provided free. I said this was very interesting, and how did my area of the country, which was Lancashire, compare with other areas of the country in this respect?—I assumed there was some kind of analysis of this. Oh, he didn’t know, he just wrote the names in the book. And I said ‘Well, I hadn’t heard of this. I suppose we’ve got a policy, have we, for improving drama in schools, and are we in favour of free gym shoes or are we against them?’ He said he didn’t know, he just wrote the names in a book. And I said was this information ever published, and he said, well, it hadn’t since he’d been there. Had anybody ever asked to see it? Well, not since he’d been there.

He soon realised how it had started: ‘Somebody asked the President of the Board of Education for this information in a Parliamentary Question and he felt ashamed that he had not got it, and he said “Let it be obtained”, and there it was.’ (In future years, and particularly in the Treasury and later as Head of the Civil Service, Armstrong was deeply interested in the collection of statistical and quantitative information, and in its interpretation, analysis and use in policy-making, as well as increasing the numbers and career opportunities for statisticians in the civil service.)22 There was no real training. ‘The only training I got’, as he later said, ‘was of the kind which one picks up on the job—training which can be very good indeed, if you have a good superior officer—but not the way to get any vision wider than the horizon of the particular section in which you are placed.’23 ‘Sitting with Nellie’ was the Whitehall slang term for this approach, not one that usually encouraged challenging traditional departmental thinking or methods, or developed specialist skills.24 He was desk bound. Much of the work was done by correspondence, a good deal handled via standard letters and by adapting stock replies to fit particular cases, where Armstrong was helped dealing with the routine and with the queries that came in by the clerical assistants ‘who were extremely good and suggested what we should do’, he recalled. When there was the need for advice from the field, representatives of the local authorities or the school managers would come to London for a discussion; Armstrong and his colleagues would not go to the front line but would get their local reporting from the HMIs, the school inspectors. Dealing with local authorities’ schemes for reorganising the school system in their areas also kept him very busy. Local education authorities had to apply to the Board for various approvals and it was forcefully emphasised to new administrators that ‘public money was very scare and that every proposal must be scrutinised with the upmost rigour.’25 But Armstrong was obviously not CLIMBING THE WHITEHALL LADDER 53 stretched intellectually, since he contemplated doing some economics part-time in the evenings at the London School of Economics, but could not fit it in to his timetable—the volume of work was heavy and the hours were not at all what his Oxford tutor had predicted; he usually ended up staying at the office until 8.00pm to clear the paperwork. Soon after he started work, there was a move from the New Public Offices to a building a mile or so away in Kingsway, to make way for the Air Ministry as part of the preparations for war. He spent a couple of weekends helping to shift the Board’s files from the basement (which was going to be strengthened against air raids), the younger staff working in teams of six, dressed in their oldest clothes, with four manhandling the files off shelves thick with dust and into large baskets while the other two beat off rats with sticks. (Something today’s Whitehall health and safety managers would probably veto.) With war looming, he was switched in the spring of 1939 to a job in the team of officials developing plans for evacuating school children from the cities, which were obviously going to be targets for German bombers. As part of this role, he was appointed secretary to a committee that met daily and was chaired by the permanent secretary, Sir Maurice Holmes, dealing with questions arising from the evacuation plans. Holmes was an experienced, shrewd and practical administrator, not at all idealistic. An assignment like this was standard practice for young assistant principals, serving, as H.E. Dale explained, as an ‘introduction to one of the most important instruments of modern British administration’ and ‘afford[ing] the youth ful secretary much instruction in the conduct of affairs, some addition to his knowledge of human nature, and some secret entertainment.’26 This was Armstrong’s first exposure to senior people, and the first time they were able to see his qualities in action. ‘It was very useful to me to see top people coping with problems’, he later recalled. An incident that stayed in his memory involved Manchester Grammar School, which had been evac- uated to somewhere in North Lancashire, but half the parents refused to let their children go there, mainly on the grounds that they lived in areas on the edge of the city or in Cheshire where there was little danger from bombs. The school announced it intended to return to its city site, while Manchester Council declared that if it did, they would send it back again. There was a fierce argument at the Whitehall committee that Sir Maurice Holmes finally resolved by pulling a coin from his pocket and tossing it in the air, saying ‘heads they come back, tails they stay where they are’. It came down heads and MGS went back to Manchester. 54 K. THEAKSTON AND P. CONNELLY

By early 1940, he had been moved again and became assistant private secretary to the President of the Board of Education, Earl de la Warr, who was replaced in April 1940 by Herwald Ramsbotham. As H.E. Dale pointed out, assistant private secretaries might mainly be dealing with routine work, appointments and correspondence and papers, and be subordinate to the main private secretary (a more experienced and higher rank official), but this was still a post involving personal access to ministers and other politicians, and to senior staff and business from across the department and other parts of Whitehall. Armstrong now started to see Cabinet papers and minutes and to learn how parliamentary questions were handled. He was lucky to have got a coveted job like this after less than two years in the civil service, and it was a sign that he had been marked out as (to use Dale’s words) ‘among the ablest of the younger men in the Department.’27 He had clearly impressed the permanent secretary, who would have had a decisive say in this posting, with his work servicing the evacuation committee; this was his first step on the ladder of promotion.

Security Executive ‘I might have stayed there except for the war’, William Armstrong once remarked about his early years in the Board of Education.28 However, this seems an unlikely trajectory for his career to have taken in those hypothetical circumstances, at least over the medium and longer-term. Most junior and middle-grade officials in the interwar period made their careers within one department, it is true, albeit moving at various times from one branch or post to another. But the Treasury’s policy of picking out and transferring across the most talented young high-flyers from around Whitehall has been noted above, and that is one way Armstrong might have moved on.29 The philosophy of the ‘generalist’ and a ‘musical chairs’ approach to filling the top-most posts in Whitehall was strongly pushed by Sir Warren Fisher, the powerful Head of the Civil Service at that time (1919–39), as a way of unifying the civil service and fostering a corporate spirit. In practice, though, that meant moves between departments were more common for the most senior men—deputy secretaries and permanent secretaries—than for the bulk of officials in the lower and middle grades of the hierarchy (at that time styled: principal assistant secretaries, assistant secretaries, principals, and assistant principals), where such transfers were less likely to occur and progression was largely within the same department.30 In this scenario, Armstrong might have moved from Education to a senior post in CLIMBING THE WHITEHALL LADDER 55 another department 20 years later, in middle-age, as he got closer to the top of the Whitehall tree. The Second World War, though, shook up Whitehall and transformed William Armstrong’s career and outlook. The civil service expanded dramatically in size as government took on new functions, and the volume of administrative work and the tempo of business increased enormously. Although there was an influx of ‘outside irregulars’ brought in as temporary officials, in narrow instrumental terms this opened up to able staff already in the civil service opportunities for new assignments and for promotions. Many years later Armstrong was asked in an interview whether, by being in the civil service rather than the armed forces, he felt he was ‘missing something or not doing something [he] ought to have been doing’, to which he replied, ‘Well yes, I did.’ Although he had been working on school evacuation plans, ‘it didn’t seem to me to be really directly connected with it [the war effort]’, he said. ‘And a number of us were endlessly debating how we could get out of this and some of us did.’ In Armstrong’s case, the chance to escape from what may have seemed a bit of a backwater came shortly after Churchill had assumed the premiership in May 1940. ‘The issue was settled for me’, he explained, ‘when in the early summer of 1940 I was posted at no more than an hour or two’s notice to a job which was certainly very directly connected with the war, although it didn’t [involve] carrying a weapon. I was sent to something that was called the Security Executive.’31 ‘I went off’, as he put it in a later speech ‘to a more exciting job.’32 The wartime (1941 and 1943) editions of the Imperial Calendar and Civil Service List have William Armstrong officially listed as an assistant principal in the Board of Education but ‘seconded to another Government Department’. The department concerned was not listed in that public handbook of Whitehall organisation and personnel. Armstrong had become part of the ‘secret state’. In later years he did not try to cover up or hide the fact that he had worked on security matters, but nor was he particularly forthcoming about it; he did not list the job in his Who’s Who entry, though the sketchy notes he made for a possible autobiography included points about his wartime work and experiences which he planned to write about.33 In a 1968 radio interview, marking his recent appointment as Head of the Civil Service, he briefly mentioned his wartime work dealing with the so-called ‘Fifth Column’ threat.34 Some newspaper profiles referred to him ‘helping to reorganise MI5’35 and being ‘intimately connected with the intelligence services’—then and, by implication, later 56 K. THEAKSTON AND P. CONNELLY in his career.36 (Later indeed, as Head of the Civil Service, he chaired Whitehall’s Official Committee on Security, a body concerned particularly with security issues and procedures in the public service.)37 In an interview in the United States in 1970, however, he maintained that he had had only ‘a pretty lowly job’ in the wartime security machinery.38 What in fact Armstrong was, for three years from May 1940, was secretary to what was at first called the Home Defence (Security) Executive, and then from October 1941 the Security Executive. The immediate impetus for the creation of this body was provided by the threat of expected invasion following the success of the German blitz- krieg against Scandinavia, the Low Countries and France—the rapid collapse of which fuelled fears of treachery, sabotage and subversion by the ‘enemy within’. The wave of panic and suspicion about a possible ‘Fifth Column’ focussed on German and Austrian nationals (and, after Mussolini joined the war, also Italians) resident in Britain, many of these ‘enemy aliens’ being actually refugees, opponents of fascism and/or Jewish. At a ‘backs against the wall’ moment of national isolation and danger, the order went out to ‘collar the lot’, and soon thousands were being swept up into internment camps.39 At the same time there was a crackdown on the British Union of Fascists and its leader, Oswald Mosley, and many of his followers were imprisoned. With a range of government departments and agencies involved, and a danger of ‘over- laps and underlaps’ stymying quick and decisive action,40 Churchill had put Lord Swinton, an experienced former Cabinet minister and a Tory grandee, in charge of pulling things together as Chairman of the newly- formed Security Executive. Parliamentary critics (who talked wildly about this ‘odd, secret Gestapo’)41 and some historians42 have depicted the ‘Swinton Committee’, as it was sometimes known, as a shadowy and powerful body. Swinton was indeed a determined and forceful figure, who had considerable clout and could claim the prime minister’s backing to get his way, but he was not formally a minister and he headed what in Whitehall terms was a coordinating rather than an executive body. Representatives from the Home Office, the Foreign Office, MI5, MI6 and other intelligence agencies, the prime minister’s office, the military, the police Special Branch, the Post Office, and at different times a number of other government departments, were involved in its business and attended meetings (and, where relevant, carried the responsibility for administration, taking action and getting things done on the ground).43 CLIMBING THE WHITEHALL LADDER 57

William Armstrong acted as private secretary to Swinton throughout the two years he was Chairman—later telling Swinton’s biographer that this was ‘his first—and most educative—experience of a minister at close hand.’44 Swinton was a man who ‘prized … concentrated effort, rapid assimilation of detail, and economy of presentation’45—mandarin abilities that Armstrong would come to exemplify. He was to find Duff Cooper, Swinton’s successor as Chairman in 1942, of ‘markedly inferior administrative ability and powers of application.’46 For a while in 1940, he was the Executive’s only staff member, based in its headquarters in Kinnaird House in Pall Mall, acting as secretary to the Executive and its various ad hoc committees. As he explained in a later speech: ‘I had … to build up a little department—a very little one—from scratch … [My] horizons widened considerably, because the job was to coordinate the activities of a large number of Departments in a particular field; and obviously if you are going to help a lot of organisations to work together, you must first learn what they are doing, what difficulties they are facing and how they can be helped.’47 Before long, Armstrong was joined by a small number of other staff, including Ronald Wells (a more senior official—an assistant secretary—from the Home Office), Reginald Duthy (a business associate of Swinton), Kenneth Diplock (a lawyer and later an eminent judge), and Sir Herbert Creedy (a former permanent secretary at the War Office and a hugely experienced and skilful Whitehall operator who later chaired the Executive for the last two years of the war).48 ‘We had to attack all the problems [around the risk of a Fifth Column] in the best way we could’, Armstrong later recalled. ‘We, I think, in the end succeeded in both improving the quality of the defences against this kind of activity and in establishing that in the popular sense there wasn’t a Fifth Column in this country at that time.’49 He had a front row seat as arguments between the Home Office, backed up by Isaac Foot MP, a Liberal and a liberal with a small-l, who was appointed as an independent member of the Executive, on the one side, and the intelligence services and the military, on the other, raged over the scale of the threat and the response needed, and later over the release of internees (whose number reached at one time 27,000). ‘A German, however badly he had been treated by his Government, remained a German at heart’, ran Armstrong’s minutes of the discussion at one meeting of the Executive; ‘experience had shown that German and Austrian domestic servants were not always as harmless as they appeared’, he recorded senior Security Service (MI5) 58 K. THEAKSTON AND P. CONNELLY staff insisting at another meeting (a line that could have come straight from a P.G. Wodehouse novel).50 As early as August 1940, however, it had become apparent to Churchill (and others) that the Fifth Column danger had been ‘exaggerated’51 and in due course internees started slowly being released. It is easy to say in hindsight that it had been a chaotic and ugly business (and tragic—one ship taking detainees to Canada being sunk by a U-boat with great loss of life) but the balance of risks and the wartime security necessities of the summer of 1940 were frighten- ingly pressing and urgent. It is clear from the available material in the National Archives that the work of the Security Executive covered a much broader range of business than just the Fifth Column issue and internment. Its role was ‘coordinating all security activities’, with ‘security’ defined as defence against ‘hostile elements’ and against ‘espionage, sabotage and attempts to pro- cure defeat by subversive political activity’, according to a 1942 statement of the Executive’s functions.52 Accordingly a wide range of issues appeared on its agenda from the start, including: dealing with the British Union of Fascists; action against the Communist Party of Great Britain and satellite organisations; pacifist, religious and conscientious objectors’ organisations; issues around radio and telephone interception and signal- ling; censorship (press, postal, telegraph and telephone); shipping and port security; wartime refugees; protection against sabotage and control of explosives and chemicals; employment of prisoners of war and aliens; security and border issues in Northern Ireland; travel and communications between the UK and Eire; security protection of key factories and government facilities; and security measures in and for British colonies and dominions and in key overseas ports. The Executive’s small staff— including Armstrong—had a classic Whitehall ‘secretarial’ role: it was their duty to ‘keep the Executive informed of all questions arising for consideration, and to issue the necessary memoranda, agenda, minutes and reports.’ Their job was also to ‘follow up the Executive’s conclusions, and to assist Departments in carrying them out.’53 During Armstrong’s service with the Executive, he took the minutes at all but five of the 88 meetings it held between 28 May 1940 and 26 May 1943 (the final meeting he attended as secretary); he also circulated many notes or short papers in advance of meetings, setting out or summarising issues and questions that the executive would need to consider. In addition, for a while Swinton was given executive control over MI5 and over- saw an urgently-needed reorganisation of the Security Service, bringing CLIMBING THE WHITEHALL LADDER 59 in an outside business-methods expert to reorganise its vast and anti- quated filing system, and playing a key role in the appointment of a new director-general of the service. It is unclear how much of this work in relation to MI5 William Armstrong was involved in, or how deeply, as Swinton’s private secretary, but he certainly saw the critical report on MI5’s problems and proposals for its reorganisation that Sir David Petrie prepared before taking over as its new chief in 1941.54 This was all heady stuff for a young civil servant and doubtless was responsible for the way in which he was, as a contemporary friend noted, ‘rather uncommunica- tive with strangers’.55 Armstrong’s work on domestic security coordination brought him into contact with top-level and heavyweight figures in Whitehall who attended the Security Executive’s meetings, including at various times: Sir Horace Wilson (Head of the Civil Service 1939–42), Sir Alexander Maxwell and Frank Newsom (from the Home Office), Norman Brook (head of the Lord President’s Office and then Deputy Secretary to the Cabinet), Desmond Morton (Churchill’s personal assistant and security adviser), and the heads and other senior officials from the security and intelligence agencies. Crucially for his future career too, he and his work came under the view of Sir Edward Bridges (Secretary to the Cabinet since 1938). In early 1942 a Panel of the War Cabinet, chaired by the Secretary to the Cabinet, was set up to deal with security arrangements in government departments. Meeting under Bridges, its membership included the head of the Security Service, Norman Brook (Bridges’ deputy) and a number of departmental representatives from around Whitehall. To maintain close liaison with the Security Executive, it was decided that the Bridges Panel would have two secretaries—William Armstrong therefore working alongside Lt.-Colonel Denis Capel-Dunn from the military side of the War Cabinet Office (Capel-Dunn was secretary to the Joint Intelligence Committee, a peacetime barrister with high-level drafting abilities, and one of the inspirations for the character of Widmerpool in Anthony Powell’s Dance to the Music of Time novels). So, through 1942 and into 1943 Armstrong worked directly under Bridges on the business of this Panel, covering issues like the vetting of staff engaged on secret work, the physical security of government buildings, security procedures and classification of official documents, radio and telephone security, and cypher security.56 William Armstrong was proving himself to be a young official of potential and promise, and was catching the eye of Whitehall’s powers-that-be. 60 K. THEAKSTON AND P. CONNELLY

Working with Edward Bridges A feeling—going back to his Salvation Army upbringing—that nothing was impossible was strengthened by Armstrong’s various wartime experiences, not only in terms of his own career experiences and ambitions but also perhaps in the wider sense that, like many other officials, his entire conception of what the civil service was about and what government could do was transformed by the war. ‘We worked on the basis that nothing was impossible’, he later recalled, ‘that we would take on and deal with any task, however difficult. The tasks were always changing, always new, and we were continually adapting to them.’57 Wartime changed William Armstrong’s personal life too. He met and fell in love with Gwendoline Bennett, daughter of company director John Bennett, at a Church Youth Conference organised by the Salvation Army at their long-established premises in Sunbury Court near London, on August Bank Holiday 1939. In early 1942, they married. Gwen’s family was religious, indeed in her and her mother’s case Salvationist, but a much warmer family than William’s. A son, Peter, was born in 1943 and a daughter, Janet, followed in 1947. The breakthrough to the inside track came when, ‘with virtually no notice at all’, as he later commented, he was appointed private secretary to Sir Edward Bridges in July 1943.58 Recognising its value as a Whitehall training post, Bridges had started the practice of appointing a young high- flying civil servant as private secretary to the Cabinet Secretary, being served in that capacity from 1939 by Ronald Harris, who had initially joined the India Office in 1936.59 It was time for Harris to move on and with the Security Executive’s main work largely done (it was by then usually meeting only every three to four weeks), it was also an opportune moment for Bridges, who had clearly been impressed by what he had seen of his work, to pull out Armstrong and move him across to the Offices of the War Cabinet. Armstrong was now to work at the very centre of the Whitehall machine, and his obvious outstanding ability meant that his career would henceforth be spent close to or among the most senior and powerful officials and ministers. The pace of work and the intensity of purpose in this central coordinating hub of the wartime machinery of government were striking. ‘In a moment I found myself translated right into the centre of things, and all my former ideas of hard work were shattered’, Armstrong recalled. ‘My master [Bridges] lived and slept at the office, so I had to do so too.’ The CLIMBING THE WHITEHALL LADDER 61 working day could go on into the small hours, particularly given Churchill’s idiosyncratic working methods and fondness for late-night meetings. All communications inwards to and outwards from the Cabinet Secretary normally went through the hands of the private secretary. There was a constant flow throughout the day of Cabinet and official papers, overseas telegrams and despatches, intelligence reports, and other correspondence and memoranda from all around Whitehall. The minutes of the Cabinet’s proceedings since they were first formally recorded from 1916 onwards, were kept in the private secretary’s office. There was an array of coloured telephones on his desk and the private secretary had under his control a series of red, green and black boxes in which papers were sent round to ministers and senior officials. There was a constant whirl of meetings—of the War Cabinet, ministerial and official committees, staff conferences. Immediate action might be needed on any emergency that might arise, and at all hours of the day or night. It was a ‘24 hours a day job’, Armstrong noted later.60 The wartime Cabinet Office was based in the Government Offices on Great George Street, bordering Parliament Square, with the Cabinet War Rooms in the reinforced bunker underneath, with offices, conference rooms and accommodation for staff: there was a small bedroom for Bridges and another cramped room, next door, with a desk and an iron bed for his private secretary.61 ‘I remember the first time I slept at the office’, Armstrong once recounted. ‘It was rather after one a.m. when I got to bed, but at half-past one the telephone rang, and I was told that a meeting of the War Cabinet was to be summoned immediately. It was part of my job to know where the different members of the War Cabinet were to be found—and you can imagine my feelings as I rang each of them up, waking most of them from sleep—and informed them that they were wanted at 10 Downing Street at once!’62 Working for Bridges made him privy to the big secrets of wartime government. ‘I went along one afternoon for a briefing from my predecessor’, he recalled, ‘and after showing me round the office and explaining where the lavatory was and that kind of thing, he then lowered his voice and produced from a safe two files. One of them contained all that was known at that time about the V1s and V2s [German rocket missiles]. … The other was the file about … the atomic bomb. So I was flung into central secrets right from the word go.’63 There was a continued link with the security and intelligence services, as the Cabinet Secretary was involved in issues about their organisation and funding, with files going through 62 K. THEAKSTON AND P. CONNELLY the private office. And Armstrong seems to have been personally involved in discussions with Denis Capel-Dunn following on from an important report produced by the JIC in January 1945 on post-war intelligence organisation.64 There was a link with the Palace, too, with the private secretary having to make sure Cabinet minutes (‘Copy No. 1’) were promptly sent to the King, and some communications with the King’s private secretary. Both Ronald Harris (in 1942) and William Armstrong (in 1945) were awarded the MVO (Member of the Royal Victorian Order) in recognition of service to the monarchy in the Cabinet Office private secretary’s post. The connection forged with Edward Bridges was the making of William Armstrong. For the next decade, Armstrong was working directly with or close to Bridges in successive posts, receiving a series of promotions. One of the great civil servants of the century, Bridges’ background and upbringing were very different to Armstrong’s: the son of the Poet Laureate, educated at Eton and Oxford, winning the M.C. as an officer in the First World War. He was an ‘Establishment’ man through and through, very much the product of his class and generation. As Cabinet Secretary (1938–46) and then Permanent Secretary to the Treasury and Head of the Civil Service (1945–56), he had an immense influence on the character, ethos and development of the mid-twentieth century civil service and the Whitehall machine. He was not an innovator or reformer but demanded from others, and displayed himself, the highest professional and moral standards and integrity, having a clear view of the role and duty of the civil service in terms of impartiality, service, continuity, confidentiality and discretion. ‘To serve Bridges as his Private Secretary’, recalled Ronald Harris, ‘was to be treated as a companion in a joint enterprise.’ He was a tireless and exacting man to work for, and was regarded with great respect and affection, and a certain awe, inside Whitehall. Bridges could be tough and a stern master, extremely demanding of other people in terms of the quality and quantity of work he wanted from them, and was an intensely serious person. But he also had enormous zest for life and work, and there was a playful streak in him: he was not above giving his colleagues playful digs in the ribs, or of chortling ‘Isn’t this fun’ after some particularly difficult exercise (something that was not William Armstrong’s way).65 Towards the end of June 1945 Armstrong was chosen to be part of the British Secretariat for the Potsdam Conference, in which the leaders of the major powers—Truman, Stalin and Churchill—met to take the decisions that would shape the post-war world. His own account of this assignment CLIMBING THE WHITEHALL LADDER 63 conveys a sense of excitement at being part of history, together with pride that, when required, Whitehall can act quickly and practically.

The first step was to go to Potsdam, to see what accommodation was available for the Prime Minister and the British Delegation, and what equipment etc would have to be sent out. A small party of us set off one morning towards the end of June 1945, to fly to Berlin—the first civilians to get so far into Germany. An Army Division had been detailed to provide the transport, engineering and other services on the spot … We drove to the area in Potsdam which the Russians had selected for us—a strip about half a mile or so along the side of one of the lakes, containing about fifty houses which had formerly belonged chiefly to the heads of the German film industry … these houses were to be our offices and living quarters for the conference. Our immediate job was to conduct a rapid survey, decide which houses were to be offices, which dormitories and so on—to say where we wanted telephones, desks, filing cabinets, typewriters, communication equipment and all the rest of it. We were there three days, and left with a complete picture of the layout for the information of those at home and working instructions for the Division in Potsdam. When I returned with the main party three weeks later, everything had been transformed and a little Whitehall had been created on the banks of that German lake.66

In a letter to his mother, he told of the flight over Germany. On the way out, flying over Hanover there ‘did not seem to be any buildings left at all in the centre of the town’ and he saw only ‘grey heaps of ruins’. On the flight back, the pilot took them over Dortmund and the northern part of the Ruhr valley: ‘for mile after mile there was nothing but desolation’, he wrote. Joan Bright Astley, on the staff of the War Cabinet Offices and also part of the delegation, later wrote of how, a couple of miles from the pleas- ant site chosen for the conference, the bomb-blasted centre of Potsdam itself ‘smelled of death’s decay’. Back in London, he showed the King’s private secretary, Sir Alan Lascelles, the plans for the conference accommodation for the British and American delegations, and when asked where Stalin and his people would be, replied that the Russians had refused to say anything to them about that.67 Three weeks later, he went back for the second phase of the work—the actual conference itself. Armstrong gave a vivid description of this:

My task was to help keep the record of its proceedings, for the use of the Prime Minister and the Foreign Secretary and for the information of the other members of the Cabinet at home. We took a great pride in making 64 K. THEAKSTON AND P. CONNELLY

these records as accurately and as rapidly as possible, and with the help of some Spitfires of the RAF managed to put on the desks of Ministers in London each morning the full record of the proceedings of the day before. In all this we worked in friendly rivalry with the Americans—a rivalry which worked up to a crescendo as the Conference came to a close, and we had to prepare, check in English and Russian, and have typed and duplicated the long communique that was issued at the end. For this we mustered all our forces, typists, electrical duplicating machines and dispatch riders, and as the great men settled the communique section by section, we got it down on paper; we got the first section at about one thirty a.m.—and at about half past five that morning a Spitfire took off with the copies of the full commu nique for the London papers. Since Berlin time was then two hours ahead of London time, those copies were in London by seven o’clock that same morning!68

An important domestic political development was to take place during the conference. The general election of July 1945 returned a Labour Government. (Polling day was 5 July, but there was then an interval of three weeks before the votes were counted, to enable the service votes to come in, and the result was declared on 26 July.) Churchill was out and Attlee was in. But Churchill had been accompanied by Attlee at Potsdam, in case of such a result, and together with the professionalism of the civil service, this enabled the new prime minister and new Foreign Secretary (Ernest Bevin) to resume the conference smoothly. There is a photograph: Attlee, Bevin, Truman, Stalin, Molotov, and sitting at a table in the background—William Armstrong. He later used this aspect of his Potsdam experiences to illustrate the importance of the impartiality of the civil service in switching to loyally serve their new political masters in exactly the same way as it had served the old ones.69 Promotion to the rank of principal came while working in Bridges’ office. Remaining on the Cabinet Office’s books until November 1946, Armstrong’s private office duties took him into the secret inner workings of the Cabinet system. He was responsible for keeping the ‘Cabinet Committee Book’ up to date and, as his experience grew, he would send in memos to Norman Brook suggesting changes in the composition or structure of committees. He invented the ‘Precedent Book’, a collection of material covering constitutional and procedural contingencies, kept in loose-leaf binders in the Cabinet Secretary’s office (and regularly up-dated up to the 1990s). An argument about the use of official papers by former ministers in writing their memoirs had caused him to check the precedents CLIMBING THE WHITEHALL LADDER 65 since Lloyd George. It was also on his initiative (cleared with the tidy- minded Brook) that the various directives and papers issued by the prime minister on the conduct of Cabinet business were pulled together and promulgated in a consolidated form as ‘Questions of Procedure for Ministers’ by Attlee in May 1946—a key document, amended and expanded over the subsequent years, setting out the dos and don’ts of the Cabinet system. A year later, in 1947, he penned the first official definition of the functions of the prime minister and his staff, later incorporated into the ‘Precedent Book’. There were one-off assignments, too, such as a couple of months in Brussels in early 1946 working on reparations business at the Inter-Allied Reparations Agency.70 Bridges, having taken over as Head of the Civil Service and permanent secretary to the Treasury, was now busy on the machinery of government front, trying to adapt government organisation from its wartime role to meet peacetime requirements, and he wanted Armstrong near him on this work. From January 1946, while still in Bridges’ private office, he was deployed part-time on machinery of government (MG) work and that November he transferred full-time to the Treasury to head its newly- set up MG branch, initially as a principal but within a year being promoted to assistant secretary. He had finally made it to the ‘number one’ department he had been quizzed about at his interview to join the civil service eight years earlier, and Bridges later (in 1968) confirmed that he was himself responsible for that move, telling Armstrong: ‘Whatever else people may say about me, it was owing to me that you came into the Treasury.’71 Initially the branch consisted only of Armstrong himself but was built up to half a dozen, including three principals working under him. To his small staff at this time he appeared a ‘star-marked’ and ‘wholly brilliant and available branch head’, as one of them later recalled, always able and ready to teach them the mandarin arts, such as speedy drafting of committee minutes, and invariably open-minded. In some ways, though, it was a frustrating job: he was not hard-pressed and found time to do a lot of reading and even to write (and stage) a play.72 Detailed work on parlia mentary procedure and statutory instruments took up some of his time. He later described it as ‘the one period of my career that I had a very very poor job.’73 To some extent the problem was that a young, keen and ambitious Armstrong wanted the MG branch to play a ‘positive’ role as a central research, ‘intelligence’ and advisory staff with a wide scope, formulating 66 K. THEAKSTON AND P. CONNELLY

‘a truly central point of view on these questions’ from the Treasury, advising on problems and assisting departments, and also putting forward proposals for changes, whereas Bridges was cautious, reactive, tactically-minded and very conscious of the constraints faced by the centre. Bridges did not conceive of Treasury MG work in terms of putting together a radical long-term programme of action, but as dealing ad hoc with tricky organi- zational disputes and problems. Whitehall departments and their permanent secretaries were in any case reluctant to accept far-reaching changes and unwilling to think about rejigging their organization, structures and functions in the light of general principles, as Armstrong saw from his position as secretary to the official Machinery of Government committee and its later incarnation the Government Organisation Committee.74 However, with what a colleague from the MG branch called his ‘always deeply sensitive political sense of how things were going’, Armstrong did appreciate Bridges’ argument that the machinery of government could not be treated just as an ‘engineering problem’ and that the political dimension—including how ministers approached and handled these questions—was crucial.75 The longer-term consequence of this period in his career was that in the years that followed, however involved he became in economic policy at the highest levels, he continued to be fascinated by the machinery of government and the possibilities of reform—20 years later, as Head of the Civil Service, these issues were to be high on his agenda. ‘Armstrong had very long-run interests in some of those fashions, devices and arrangements which must recur in the modern machinery of government’, Bernard Schaffer, who worked with him in the MG branch, recalled. Issues around the organization and working of the centre of the government machine (Number 10, Cabinet Office and Treasury), the role of supervising and coordinating ministers, and the relationship between the size of a department and its efficiency interested Armstrong from the start of his MG work. ‘The interest in hiving-off executive work from the ministerial and departmental sectors of the machinery of government went back to when I first knew him,’ Schaffer noted. Prefiguring later reforms in the 1980s to create executive agencies, in the hand-over note Armstrong wrote for his successor in 1949, he argued that ‘advantages might accrue from a greater separation of policy work from executive work’ but admitted that the MG branch’s raising of the issue as a ‘general organization problem’ was, in view of departmental reactions, at that time ‘misguided—or at least premature’.76 CLIMBING THE WHITEHALL LADDER 67

Chancellor of the Exchequer’s Private Secretary The MG job was ‘far from politics’, William Armstrong noted in jottings he once made for a possible autobiography,77 but that changed in the summer of 1949 when he was picked to become the Chancellor of the Exchequer’s principal private secretary, in succession to Burke Trend, who had done that job since 1945. The following four years, 1949–53, working in close support of Labour’s Sir Stafford Cripps and Hugh Gaitskell, and then the Conservative R.A. (Rab) Butler, was, it has been said, ‘the formative period for his subsequent emergence as a civil servant’ (Times obituary). It was a testing but exhilarating time to be in this key post. He gained invaluable experience of central economic policy-making and crisis- management. Working as closely as he did with three such different personalities, with their different approaches to decision-making, and observing their dealings with the prime minister and Cabinet colleagues, undoubtedly taught an alert and reflective young official a great deal about practical politics and ‘the nature of the political animal’.78 There was the additional challenge of adjusting (again) to a change of government in 1951. And also important for his development as a civil servant and for his economic education was his linkman role in the Budget process: on five occasions he was responsible for the co-ordination of the Budget speech and to a great extent the writing of it. Private office service—particularly as a principal private secretary to a very senior minister such as the Chancellor, and even more so to the prime minister—is one of the hallmarks of the future permanent secretary, those serving the occupants of No.10 or No.11 Downing Street often going on to reach the top in Whitehall ahead of their civil service peers (in terms of age and length of service). Doing well in these positions, and getting noticed, helps accelerate careers. But ‘talent already demonstrated and recognised’, as Barberis puts it, is necessary to be picked in the first place for these important and demanding private office assignments,79 and the way in which William Armstrong had been proving himself and delivering for Edward Bridges from the middle of the war onwards made him the obvious choice when the opportunity came up. ‘The Private Office is a most exciting place; it buzzes like the centre of the hive’, according to Evelyn Shuckburgh, whose stint as the Foreign Secretary’s private secretary (1951–54) overlapped with Armstrong’s time heading the Chancellor’s office. The private secretary, says Shuckburgh, becomes ‘better able than his colleagues to understand why the Minister 68 K. THEAKSTON AND P. CONNELLY often cannot follow up policies which, intellectually and in the seclusion of the [department] he might have agreed were right’, getting to see up close how ‘the political background, the party pressures, [and] the personal ambitions of Ministers’ influence decision-making. This education in political administration, as it were, was also emphasised in H.E. Dale’s description of the private secretary necessarily getting to know about ‘personal likes and dislikes in high quarters, the seamy side of politics, and the inner history of crises great and small’, including the personal relations of ministers among themselves, of ministers and senior officials, and of the top officials among themselves. Dale also stressed how the private secretary ‘sees the working of the Department in all its parts, and has a chance to appreciate the connexion of one wheel with another.’ Moreover, private office service, he noted, ‘creates or fosters … the feeling for what is practicable in British government and for the means of translating the practicable into practice.’80 The private secretary is ‘the hinge between the Minister and the Ministry’, according to Nicholas Henderson, the private office being the place where ‘Minister and machine interlock.’81 The private secretary has a double loyalty—to both minister and department—representing to the minister the views of the department, and to the latter the will of the minister. The private secretary is, for the minister, the gatekeeper—the point of contact with the staff of the department he or she leads. This is a two- way traffic. The advice of the department is conveyed to the minister by the private office, and ministerial thinking, views, priorities and decisions are conveyed to the department by the same mechanism. The private secretary filters the flow of information and ‘sees practically all the Minister’s correspondence and Cabinet papers, as well as all papers that come to the Minister from the Department.’82 There is also the job of briefing the minister before important meetings and recording such meetings where the minister is in the chair. In the pell-mell of the life of a minister, the private secretary provides an essential life line by organising the private office and thereby the diary, movements, speeches, and so on. He sticks close to the minister, usually travelling with him on overseas trips. He sees the Minister close-to and learns to live with him (and his personal foibles and eccentricities). The private secretary also represents the minister more broadly in Whitehall, liaising and networking with opposite numbers in other private offices (including No.10) and with the central mechanism of the Cabinet Office. The more important the minister, the more important the private secretary. Apart from the prime minister, the Chancellor usu- CLIMBING THE WHITEHALL LADDER 69 ally, though not always, carries the most weight, and so therefore does his principal private secretary, amongst his peer group. A successful incumbent of the principal private secretary’s job in the Treasury comprehends not only the economic and financial issues at stake but also the politics of the situation. William Armstrong fulfilled this role to perfection. He won golden opinions, not only for his irreplaceable tal ents in organizing things in and from private office, but also for his appreciation of the life of a politician. His was a fluent tongue and pen, for example regularly turning the stolid official prose of a Budget speech or statement into a comprehensible account of economic policy. Long after he left the private office and indeed the Treasury, he was turned to, in order that the Budget speech meant something to ordinary people. Armstrong enjoyed the personal confidence of Treasury ministers to a special degree—Douglas Jay, one of Labour’s junior Treasury ministers in the late 1940s, said that he had ‘besides other talents, the best qualities of a father confessor with whom one could discuss one’s toughest problems’83—and he undoubtedly learned a lot from the Chancellors he served about the arcane ways of British politics which was to stand him in good stead later. Stafford Cripps was a towering political figure, a dominating personality and a uniquely powerful Chancellor in the post-war Labour government, but he was exhausted and physically ailing (he was to die in 1952), with his political reputation and authority increasingly challenged, and his economic record and strategy coming under fire, during the 15 months or so Armstrong served him as principal private secretary. He was thrown straight into the build up to the devaluation of the pound. ‘There is a very serious situation boiling up’, he remembered Burke Trend telling him during their hand-over. ‘It’s not at all certain that we can hold the rate.’ Within a short time, he went off on the Mauritania, accompanying Cripps and Ernest Bevin, the Foreign Secretary, for talks with the US government in September 1949. The first thing Cripps did when he boarded the ship, Armstrong recalled, was to pace out the deck to work out how many times he would need to go round it to complete his daily three-mile run. Cripps also insisted on Armstrong accompanying him in the swimming pool after his run. It was a rough passage and the pitch of the boat was sometimes so extreme that one end of the pool would almost empty as waves sloshed around the swimming area. On the voyage, Cripps and Bevin had quite different and irreconcilable timetables. Cripps would rise about 5.00 am and then go to bed at about 5.00 pm. Unfortunately, that was the time 70 K. THEAKSTON AND P. CONNELLY when Bevin (resting in his cabin with heart problems) tended to stir himself and get up. Consequently the two ministers did not meet to discuss matters for three or four days, until Cripps was prevailed upon to stay up a little later. Then ‘once we’d arrived in Washington, it seemed that the whole world was bent on trying to tease out of us our intentions’, Armstrong later said. ‘I tended to have to answer the telephone, and call after call would say: “We understand you’re going to devalue, the rate should be so-and-so.” And I always had to say: “I’m terribly sorry, I just don’t know what you’re talking about. Devaluation, never heard of it.”’ He went on to explain: ‘When it comes to something like the exchange rate, it is clearly quite impossible to advertise one’s intentions in advance: to do so would simply be to telegraph your punches.’84 At the crucial meeting at the British embassy where ministers and officials finally settled on the new exchange rate ($2.80), Armstrong glimpsed what sort of things mattered for politicians and how they thought:

Ernie [Bevin’s] main concern about the whole devaluation was what it would do to the price of food. It obviously was going to put it up … and in particular bread. … He believed almost that the Government would stand or fall by whether the British working man got his ‘jam butties’ and what he had to pay for them … He suddenly said he felt the British working man would accept an increase in the price of bread if he could have a whiter loaf. We had this national flour and … it was a sort of dirty brown colour and he reckoned that if we raised the extraction rate and produced a whiter loaf, people would accept that they had to pay more for that. He got into a terrible argument with Stafford [Cripps] about all this, because Stafford was prepared to agree that the price of bread was an important matter but he thought Ernie’s gimmick for getting over it was absolutely dreadful, because he didn’t believe in white bread, he believed in brown bread, being a bit of a food fad. And the idea of selling the British public an inferior product that would do them harm, and, at the same time, charging them more for it, he regarded as little short of immoral.85

Armstrong remembered having to keep inquisitive journalists at bay on the train journey from Washington to New York where they caught a plane to fly back to London for Cripps to broadcast and make the announcement. The Chancellor had covered the first draft of the script about the still-secret decision with masses of red ink amendments and wanted a clean copy typed so he could continue working on it. There was no time at the airport to get the draft retyped and they were not travelling CLIMBING THE WHITEHALL LADDER 71 on a private plane, but the secretary accompanying Cripps and Armstrong was very resourceful. As Armstrong later told the story:

She said she could adjust the ribbon in her portable typewriter so that when she typed the fair copy with two carbons we should have a couple of copies to work on, but the top copy as it rolled out of her machine would be blank and give nothing away. I thought this was a brilliant idea and when we got into the plane we started straight away. She did a page or so quite happily when I saw that across the aisle was a gentleman who was very interested in what we were doing—and very unhappy about it. He had been fortifying himself for the Atlantic crossing with generous doses of the airline’s hospitality and was clearly doubtful whether he was seeing straight. At last he could stand it no longer and leaning over, said to me: ‘Do you know there’s nothing coming out?’ I did my best to stall him off, mumbling something about preferring it that way, but I couldn’t pacify him and decided we had better abandon the attempt. Luckily we stopped in Gander [to refuel] longer than we expected and the job was finished in a private room at the airport.86

Armstrong recalled Cripps giving Churchill a secret personal briefing before the devaluation was announced, at which the Great Man had wept and complimented the Labour Chancellor on his wisdom and bravery, Cripps later feeling betrayed when the Leader of the Opposition then mounted a ferocious attack on him in the House of Commons. Cripps was a workaholic and also a man of deep moral purpose and religious conviction. Armstrong liked to tell the story of coming into the Treasury early one morning to find the Chancellor already in his office, where he had been working since 6.00 am, writing out a talk on Christian Socialism he was due to deliver at Wandsworth jail that afternoon. Armstrong protested that the Chancellor had lots to do and that he, as his private secretary, could have drafted something for him. ‘William’, said Cripps, ‘the talk is on Christian Socialism and the prisoners of Wandsworth deserve as much of my attention as any Commonwealth Finance Minister.’87 Conscious that the burden of running the Treasury was getting too much for Cripps, in January 1950 Bridges suggested to Attlee, the prime minister, the appointment of another minister of Cabinet rank to the Treasury. In reply, Attlee wondered whether taking control of the civil service away from the Treasury, leaving it as a finance and economics ministry only, was the answer. Armstrong, Burke Trend and Thomas Padmore 72 K. THEAKSTON AND P. CONNELLY

(then a Third Secretary in the Treasury) discussed Attlee’s minute and argued strongly that (a) the civil service-related work occupied relatively little of the Chancellor’s time, so putting that under a separate minister would give him little real relief, and (b) it was imperative that things should not be unscrambled back to the position of 1946, with the Lord President responsible for general economic policy, or 1947 with a Minister for Economic Affairs separate from the Chancellor. The Treasury, in other words, should not be split up or functions taken away from the Chancellor. To lighten the load, they suggested, real responsibilities and authority should be delegated to the Chancellor’s ministerial subordinates in the Treasury.88 The issue of where the lines should be drawn between functions, departments and ministers in this area later returned to the agenda with some force in the 1960s, with Armstrong centrally involved. The solution adopted in 1950, however, was the appointment of Hugh Gaitskell to be Minister of Economic Affairs, outside the Cabinet and working as the Chancellor’s deputy in the Treasury. In October 1950, he succeeded Cripps as Chancellor. Armstrong was actually one of the team of officials accompanying Gaitskell on a trip to Canada and the USA when, in New York, the news came through that Cripps had resigned and Gaitskell was to become Chancellor. ‘It was very like a couple of brothers hearing that father has gone and the business is left to them’, Armstrong later said. ‘He [Gaitskell] took it on with considerable trepidation, not on the economic side but more particularly on the political side. He had an enormous knowledge of the underlying economics of the job, but of course nothing like the same experience of working in the House of Commons.’ Gaitskell dragged a rather reluctant gaggle of officials along Broadway into a nightclub and cabaret bar to celebrate his promotion, the new Chancellor being pru- dently steered away from establishments marked ‘Dancing’ and ‘Girls’. More seriously, Gaitskell confided in Armstrong about his hopes for the rejuvenation of the Labour government as a younger generation came into positions of power, saying that a socialist Chancellor’s main task over the next few years was the redistribution of wealth, and predicting that, once that was accomplished, party divisions would narrow and British politics would gradually become a battle over competence, as he imagined American politics to be, with the Labour Party evolving into something like the US Democrats.89 Gaitskell wrote in his diary about developing ‘close and intimate relations’ with his officials, and specifically his private office. He said he was CLIMBING THE WHITEHALL LADDER 73

‘sustained by the determined loyalty of the leading officials … and particularly my Private Office who, of course, knew exactly what was happening’ and were ‘very sympathetic’ through the bitter struggle over the 1951 budget, where he came to the brink of resignation and Aneurin Bevan and two other ministers resigned over the imposition of NHS charges and greatly increased defence spending. Gaitskell broke down at his birthday party at home in Hampstead before giving his budget speech, Armstrong (who was with him) recalling ‘and I almost broke down too’. Gaitskell described Armstrong as one of the group of his top Treasury advisers whose advice ‘never wavered. They did not ask the impossible of me but they always made clear where they thought I should stand and why they thought I should stand.’ And Gaitskell acknowledged the great help he got from Armstrong (and Clem Leslie, the Treasury’s press secretary) with his speeches and broadcasts.90 But for all that Armstrong and Gaitskell may have seemed on the same wave length, with real trust between the two, there were problems and tensions in Gaitskell’s relations with the Treasury. Armstrong complained to Robert Hall, director of the Economic Section, about the frustrations caused by Gaitskell’s working methods. There was the endless drafting and redrafting of speeches, often far into the night: ‘He cannot leave it to others, he won’t start till it is too late, and he cannot make it plain what he wants done in a draft.’ Managing his diary was difficult: he was bad at keeping appointments, he saw too many people, trivial things squeezed out important things, meetings would overrun, senior people would be kept waiting or hanging around. It was a struggle to ‘make H.G. efficient’, Armstrong admitted. Treasury civil servants also felt Gaitskell got too involved in—in fact, bogged down by—detail. ‘His officials had a great respect for him’, noted Samuel Brittan, ‘but they complained that he insisted on doing other people’s work for them—a complaint that may simply mean that he wanted to run his own policy.’ For his part, Gaitskell described himself as ‘not entirely happy about the officials … they have such a keen sense of their own independent, departmental position as apart from serving me. For example, in the Treasury they are continually using the phrases, “It is the Treasury view”, or at least “It is the departmental Treasury view”, or, “we think”, etc. This is buttressed up by such institutions as the Budget Committee, which is purely official.’ Personal character and relative inexperience in high office were part of the problem here, but it was also the case, as Scott Kelly argues, that Gaitskell, a trained economist, had his own strongly-held and worked-out views on the 74 K. THEAKSTON AND P. CONNELLY objectives and techniques of economic policy that were quite different from those of the Treasury and his official advisers (for instance in relation to maintaining direct economic controls and subsidies).91 Rab Butler became Chancellor in 1951 in the middle of a balance of payments crisis, starting his Treasury life by accepting an invitation to lunch with Edward Bridges and William Armstrong at the Athenaeum Club. ‘Both my singularly able advisers stressed the critical state of the economy’, recalled Butler. ‘Their story was of blood draining from the system and a collapse greater than had been foretold in 1931.’ Cuts in import quotas and overseas expenditure, and an increase in interest rates, were rushed through. Armstrong became more influential as principal private secretary under Butler than he had been under Gaitskell, says Scott Kelly, because Butler delegated more to him and confided more in him: ‘He delegated the responsibility for the drafting of speeches, including the Budget speech, to Armstrong and he became an important source of policy advice.’ Gaitskell wrote the bulk of his own Budget speech, save for some technical passages, but under Butler it was largely Armstrong’s work to pull it together. Butler felt in fact that Armstrong ‘offered excellent advice’ judges Anthony Seldon; he came to rely on him more and more, and did not want to lose him when he was promoted and moved on in 1953, his replacement never striking up the same sort of relationship or being so influential with the Chancellor. Armstrong shrewdly understood that, behind the political mask (or masks) he put on, Butler was ‘not nearly as ignorant as he seems’ (in economic adviser, Robert Hall’s words). Hall noted that Armstrong was ‘always chatting to the Chancellor’, and Hall’s diaries show how Armstrong was the key channel for passing on to officials the Chancellor’s thinking on policies, personalities and issues, undoubtedly feeding back to Butler similar intelligence and information about what his officials were thinking and proposing.92 The journalist Eric Jacobs can only have been referring to Butler when, in a 1968 profile of William Armstrong, he wrote that ‘one man for whom he worked as private secretary was perceptive enough to see that Armstrong was capable of manipulating him, and now admits to having rather enjoyed the process.’93 Their relationship was close and friendly; William Armstrong’s son, Peter, recalls Rab Butler performing conjuring tricks to entertain the Armstrong children.94 On the private secretaries’ network, Armstrong and Evelyn Shuckburgh swopped high-level gossip and shared confidences (perhaps intended for ‘back channel’ onward communication) about the rivalry of their respec- CLIMBING THE WHITEHALL LADDER 75 tive political masters, Butler and Eden. Armstrong ‘evidently likes Rab very much indeed’, Shuckburgh observed. In January 1953 Armstrong was assuring Shuckburgh that ‘Rab, though anxious to be Prime Minister, had no wish to do so yet. He had long-term plans for reforming the Tory Party. … He wanted to serve first under A.E. … I said it would be nice if he could say some of this a little more publicly.’ In July of that year, Armstrong—clearly very much on the inside loop—passed on the secret news about Churchill’s serious stroke and about the plans for the succession if he had died. Again he stressed ‘Rab’s absolute loyalty vis-à-vis A.E.’ and talked of ‘some intrigue on the part of Harold Macmillan.’95 Armstrong certainly felt that Butler’s ‘knowledge of politics and mastery of the House [of Commons] was … almost unique.’ He told the story of Butler’s handling of the 1952 Finance Bill, which introduced the excess profits levy:

Now I, of course, have no idea how it got into the [Conservative] manifesto, but when it got on the floor of the House in the form of a series of clauses in the Finance Bill there appeared to be no supporters for it whatever on their side of the House. And for amendment after amendment the only supporter was the Government’s spokesman, that is to say, Rab or one of the junior Ministers in the Treasury. And this all looked terribly serious and at midnight one night Rab came over to the [officials’] box [in the corner of the Commons chamber] where I was sitting and I said to him rather anx- iously: ‘This isn’t going very well. ‘Oh’, he said, ‘it’s perfectly alright. There’ll be another couple of speeches and then I will reply and we’ll move on to the next business.’ And so it was. And when he got up to reply, he mentioned everyone who had spoken … he didn’t forget the maiden speeches, he didn’t forget the honourable member who’d just become the President of the Society of Such and Such … and then he said: ‘We’ve had an extremely useful and interesting debate, and I’m sure that the Committee will be with me in wanting to move on to the next business.’ And so they were. That kind of understanding of the way the House of Commons works is rare and of course to hard-pressed officials in the Treasury … it’s what they’re looking for in a Minister.96

Seldon counts William Armstrong as among the opponents inside the Treasury of the controversial ‘ROBOT’ plan in February 1952 to float the pound, make it convertible into dollars and block the sterling balances, but it is difficult to pin down his exact role. ‘ROBOT’ was a bold, auda- cious and politically risky plan that triggered heated and bitter infighting 76 K. THEAKSTON AND P. CONNELLY in the Treasury and deep Cabinet divisions before its advocates were defeated. Leslie Rowan and ‘Otto’ Clarke, from the Overseas Finance (OF) side of the Treasury were the leading Treasury figures trying to bull- doze the scheme through, with the economic arguments against coming mainly from Robert Hall in the Economic Section, Edwin Plowden, the chief economic planner, and—from outside the Treasury—Lord Cherwell, the Paymaster General, and his economic adviser Donald MacDougall. Robert Hall’s diaries certainly show Armstrong—in classic private secr etary mode—passing on to officials the Chancellor’s changing views on the issue over the next few months. When the proposal resurfaced in June 1952, Armstrong told Plowden that silence would be taken as consent by the Chancellor, thereby provoking Plowden and Hall to hurriedly draft memos against it that, Armstrong reported, had shaken Butler. This at least was the private secretary doing his job of ensuring that the Chancellor—and particularly one inexperienced in economic management, who had been in office only a few months, like Butler—gets all the advice needed on a policy proposal, including the problems and downsides and counter-arguments (something the zealots in the OF division were not providing).97 Armstrong was also involved, as Butler’s private secretary, in discussions and consideration of Treasury organisation and personnel. Robert Hall recorded a lunch with Armstrong in May 1952 at which Armstrong reported that the Chancellor was feeling that he did not get ‘any really good advice’, and that on Treasury organisation ‘William and/or the Chancellor want to make some big changes, to try to bring it into line with its new responsibilities and to make it a unity.’ Part of the problem was that Edward Bridges, the permanent secretary, was no economics expert himself and was tremendously overloaded, trying in effect to do two jobs (as Head of the Civil Service and running the Treasury); he had been planning to retire in 1951 and, it could be argued, stayed on in Whitehall too long, into his mid-sixties, getting rather tired towards the end. Bridges did not pull things together in the Treasury effectively enough, and his relationship with Butler ‘left much to be desired’, as Seldon puts it. The relationship was not as close as it had been under previous Chancellors, and Butler felt on occasion Bridges was not there when he wanted or needed him. Butler made plain to Bridges his concern that there were too many ‘more or less independent units concerned with economic and financial policy’. ‘There seems to me’, he said, ‘to be too many hounds, some of whom start their own hares.’ Coordinating economic CLIMBING THE WHITEHALL LADDER 77 policy advice was going to be even harder when the struggle over the ‘ROBOT’ plan, as Robert Hall explained to Bridges, had made relations between the OF division and the Economic Section like those in a ‘religious war’.98 The initial plan was to appoint a strong deputy to the permanent secretary to be, as Butler told Bridges, ‘the active organiser of the Treasury on Finance and Economics’. Butler toyed with the idea of getting Oliver Franks (British ambassador to the USA 1948–52, who had been a great success as a wartime ‘irregular’, rapidly rising to permanent secretary rank) to do the job—Robert Hall discovering that this was William Armstrong’s own idea. But Franks thought that the scheme would not work and said no. In the event, Sir Bernard Gilbert, a Treasury Second Secretary, was given the responsibility for coordinating economic and financial advice in a limited 1953 reorganisation which saw some of the top Treasury jobs reshuffled, but he was not a success in that role.99 William Armstrong himself moved on and up in that reshuffle but obviously continued thinking about the issues around the structure of the Treasury and the best organisation for economic advice and policy-making in the managed economy, later playing a decisive role when this came back onto the agenda early in the 1960s.

Rising Through the Treasury As Armstrong climbed the hierarchy in the 1950s, he was regarded by Treasury insiders as someone marked out for the top jobs. Commenting on him in 1953 when he was still the Chancellor’s private secretary, Robert Hall described him as ‘a very sound and sensible young man. He is 37 and will clearly be very high in the Civil Service before long.’ A year later, in 1954, Rab Butler and Hall agreed that William Armstrong, Burke Trend and William Strath (on the economic planning staff) ‘were the best of the younger ones’ in the department. (Later, Strath was briefly a permanent secretary at the Ministry of Supply and then at the Ministry of Aviation, 1959–60, before leaving Whitehall for private business; Trend became Deputy Secretary to the Cabinet 1956–59 and Cabinet Secretary in 1962.) Meanwhile, Edward Bridges told the Chancellor in 1955 that in his view Trend and Armstrong were ‘obviously very able indeed’ and merited ‘early promotion’. Hall too was describing at that time Trend and Armstrong as ‘the two best men in the Treasury’, while a few years later, in 1958, he recorded Norman Brook’s verdict (by that time Head of the Civil Service 78 K. THEAKSTON AND P. CONNELLY as well as Cabinet Secretary) that Armstrong was ‘very good’.100 William Armstrong in this period held key policy jobs in which he displayed an analytical and undogmatic approach, first as an under secretary in the overseas finance (OF) division (1953–57), dealing with sterling, the balance of payments and external financial problems, and then (from 1958), as a Treasury third secretary (equivalent to a deputy secretary), running the home finance division, concerned with government borrowing and lending, monetary policy, interest rates, credit control, relations with the Bank of England, the structure of taxation and the Budget (the HF division being regarded as ‘a department [sic] of great complexity’ and ‘one of the more intellectually testing policy areas’).101 Leo Pliatzky, who served as a principal in the OF division in the 1950s, recalled his first encounters with William Armstrong at that time: ‘I was astonished to find myself talking to someone among my elders and betters on the Overseas Finance side who had an open mind on things and wanted to know the facts of the case and the arguments.’ The top official in OF (1951–58) was Sir Leslie Rowan, a Treasury second secretary (equivalent to a permanent secretary in another department), who had been private secretary to Churchill and Attlee in No. 10, had immense experience of international economic, trade and financial issues, and was an able and forceful civil servant who could also be (as seen in the ‘ROBOT’ episode) ‘brilliant, difficult and impatient’; he left the civil service in 1958, disappointed at his failure to become the Treasury’s permanent secretary.102 Denis Rickett, whose experience on the overseas finance side went back to the late 1940s, was third secretary in OF from 1955, immediately above Armstrong in the pecking order. In the first period of Armstrong’s work in OF, in 1953–54, he was occupied with the aftermath of the Iranian oil nationalisation crisis of 1951–53 and involved in lengthy and complex negotiations with representatives of US, British and French oil companies, and with US and French officials and diplomats, over the organisation and the currency arrangements for the consortium of companies that brought Iranian oil back onto the international market (as part of this development, the Anglo-Iranian Oil Company changing its name to British Petroleum). Crucial from the Treasury’s point of view was not just protecting Britain’s oil supplies but also the interests of the sterling area, the dollar burden on the UK, the strength of the pound and balance of payments issues.103 In early 1954, he flew out to Australia and New Zealand, working as part of the British delegation, led by Rab Butler, to the Commonwealth Economic CLIMBING THE WHITEHALL LADDER 79

Conference in Sydney. As Robert Hall noted about the conference in his diary, ‘on development the influence of William Armstrong … is already showing in that he has attempted both to quantify what is happening and to relate it to the [Economic] Survey Target: and the whole approach is more liberal.’104 The following year, dealing with economic development issues in South and South-East Asia, he played a major role in the meeting of the Consultative Committee of the Colombo Plan in Singapore in October 1955, being praised by Lord Reading, the Foreign Office minister of state, for leading the UK official delegation ‘with great skill and discretion.’105 Armstrong was centrally involved, and an influential voice, in the Treasury’s work in relation to the Middle East from 1955 through to 1957, dealing with issues involving the oil-producing states like Iran, Iraq and the Gulf states, and questions about trade and financial relations with Egypt, Syria, Jordan, Israel, Libya, Saudi Arabia and other states in the region. There was a complex of interrelated problems with economic, financial and political implications, he and other Treasury officials recognised, with Britain’s economic interests, including oil supplies, trade and particularly the priority given to maintaining the international strength of sterling and the balance of payments having to be handled in the context of regional political and social instability, competing Cold War strategic interests, and significant capital development needs and challenges.106 This mix got superheated in 1956 when Nasser nationalised the Suez Canal, triggering a huge international crisis. In the early stages of the Suez crisis, Armstrong was involved in the Treasury’s work on calculating the serious impact that closing the canal would have on oil supplies and the balance of payments.107 Then, in September and October 1956, he was deeply involved in the discussions, exchanges and meetings around the establishment of what was first called CASU (the Co-operative Association of Suez Canal Users) and then SCUA (Suez Canal Users’ Association). The problem with this scheme for an international body to run the canal was that John Foster Dulles, the US Secretary of State, whose initiative it was, saw it as a way of heading off military intervention by Britain and France, or at least buying time, while the French were sceptical and key British ministers, such as the Chancellor, Harold Macmillan—at that stage, very hawkish—saw it as a ‘foolish plan … very naive’ and a way to ‘entangle the Americans more and more’, in the hope of ‘an incident which would involve Americans’. While the British government regarded SCUA as an instrument for ratcheting up 80 K. THEAKSTON AND P. CONNELLY pressure on Nasser and as a step towards the ultimate use of force, the Americans thought of it as an instrument for ensuring cooperation with Egypt and possibly as the nucleus of a permanent arrangement.108 Meanwhile, the Chancellor just sat upon Edward Bridges’ warnings about the financial and economic risks of military action and Britain ‘going it alone’ without maximum US support—Bridges, shortly due to retire as the Treasury’s permanent secretary, and his incoming replacement, Sir Roger Makins (who thought it would all be a disaster), being effectively sidelined and kept in the dark during the build-up to the Suez invasion. Treasury officials and Whitehall more broadly were, with some exceptions, deeply dismayed by the Suez adventure. Leslie Rowan, for instance, Armstrong’s immediate boss, as head of Overseas Finance, thought it ‘an almighty mess … Madness, just madness.’109 William Armstrong was put into a particularly difficult personal position by Suez. While preparations for the invasion of Egypt were being secretly hatched between Britain, France and Israel, he had been working on the SCUA plan and sent to Washington to discuss it with US State Department officials, looking to arrive at a workable scheme and a peace- ful solution. When military action started, at the end of October, he felt he ‘personally had been duped’, as he put it later in a 1974 interview. His assignment, he believed, had been designed to divert and distract the Americans. ‘I was very angry indeed at, as I thought, being used as part of a cover plan while the [military] preparations were being made.’ ‘I personally had been tricked’, he said on another occasion (a 1971 interview). ‘I mean things had been going on behind my back that I didn’t know about.’ He thought the Suez invasion was ‘wrong’ and ‘unlikely to be effective’, as he said in a 1972 interview, and ‘totally contrary to what I thought we were going to do.’ ‘It wasn’t so much … that I was asked to carry out a policy I disagreed with’, he went on, ‘but other people in the Government were doing things I disagreed with and that what I had been instructed to do [in relation to SCUA] appeared to be futile and useless and of no avail.’ Deeply upset, he contemplated resignation but realised it would make absolutely no difference to events. Instead, to let off steam and as a personal protest, he wore a black tie to work until the operation ended—a ‘rather futile and juvenile gesture’, as he later described it.110 Some more junior Treasury staff in Overseas Finance noticed this gesture, one of them—Alan Bailey—later commenting that it was ‘rather cheering to us all.’111 A couple of junior diplomats did resign in protest from the Foreign Office and, according to Richard Wilson, a later Cabinet Secretary CLIMBING THE WHITEHALL LADDER 81

(1998–2002), ‘a number of permanent secretaries seriously discussed whether they should resign in protest against a government behaving ille- gally.’112 But in the end, most officials—like William Armstrong—stayed true to their professional code, swallowed their doubts, did their jobs and their constitutional duty to the government of the day, carried out ministers’ instructions, and kept publicly tight-lipped. Part of Armstrong’s job in the aftermath of Suez was his role in the development of what was labelled ‘Future Middle East Policy’, involving high-level discussions inside the Treasury and an official-level working group chaired by Paul Gore-Booth of the Foreign Office. He fed in ideas and urged fresh thinking about development problems in the region, including the idea of an agency under the auspices of the United Nations to promote development funded by a special levy collected by an international pipeline authority as a way of tapping oil revenues.113 He was clear, however, as he wrote in a memo to Leslie Rowan in January 1957 that the key British objectives remained ‘secure access to Middle East oil’ and ‘the reduction of our financial commitments in the Middle East to the mini- mum necessary for [that].’ ‘It is surely obvious that since the war we have, to judge by results, wasted an enormous amount of money in the Middle East,’ he went on. ‘The more one looks at the situation in the Middle East the more remarkable it is that since the war it has been held for so long’, he argued.

I suggest that this has been because of three main factors – (i) the underlying common interest between the Arabs as sellers and the West as users of oil; (ii) Western (predominantly British) military strength in the area; (iii) Western financial help where it was required. In the new situation (i) remains but (ii) and (iii) must become predominantly American. We ought therefore to discuss all these problems with the Americans and work out with them an approach on the basis of partnership.114

In another memo, he pointed out the large preponderance of military over ‘civil’ expenditure in the region, arguing that ‘much of our expenditure’ was, when directly related to the fundamental economic objective of maintaining secure oil supplies, and the importance of maintaining the position of sterling as a major trading and reserve currency, ‘unproduc- tive’. A hard look at military expenditure and the need to ‘coordinate our 82 K. THEAKSTON AND P. CONNELLY strategic policies with those of the United States’ were, on this basis, the necessary next steps—views very much in line with the established OF point of view, as led by Leslie Rowan, and with thinking at the top of the Treasury.115 Perhaps an indication of the bond forged between Armstrong and Rab Butler when he was the Chancellor’s private secretary, was the way in which Butler sought his private advice before his April 1955 Budget. The Chancellor was receiving conflicting advice: there was political pressure on him for a give-away Budget; the Bank of England and some senior Treasury officials (including Edward Bridges) thought income tax was too high and should be cut; advisers in the Economic Section opposed a reduction; officials also pressed for tighter monetary policy (higher interest rates to balance the inflationary effects of tax cuts). William Armstrong (still in the third level of the OF hierarchy) stayed the weekend with Butler shortly before the Budget and apparently advised strongly against a big tax cut and reliance on monetary policy as a fall-back.116 His advice was not heeded but, all the same, the episode is suggestive both of Butler’s confidence in him and of his own self-confidence and powers of economic analysis and judgement. However, the Treasury was in the end, argues Dell, ‘too accommodating’ in a general election year.117 A give-away Budget helped the Conservatives win the May 1955 election but, that autumn, pressure on sterling forced Butler to reverse course and introduce a second, deflationary, Budget that put up purchase tax and profits tax. Armstrong was switched across to the Treasury’s Home Finance division in the autumn of 1957, and a year later was promoted to third secretary and replaced Sir Edmund Compton as head of HF. Other changes at the same time saw Denis Rickett put in charge of OF and ‘Otto’ Clarke become head of the Treasury’s planning staff (HOPS). These moves represented the emergence of a new generation of more economically-literate senior officials: Rickett and Clarke had strong backgrounds in economics, and Armstrong was certainly more familiar with contemporary Keynesian economic analysis than his HF predecessors, particularly through his private office work. As Robert Hall commented: ‘Armstrong was really trained by the Economic Section when we had to work with him (as the Chancellor’s PPS) over the Budget speeches 1950/53. … He has a very good brain, a very strong character and quite a modern outlook.’118 In December 1957, shortly after arriving in HF, he was made a member of the Budget Committee, the secretive body of senior officials, chaired by the permanent secretary, that holds a cycle of meetings through the CLIMBING THE WHITEHALL LADDER 83 year to review economic forecasts, discuss tax changes and options, and provide the main channel of advice on the Budget to the Chancellor. A sign both of the regard for Armstrong’s abilities and probably of what was being planned for his next step up the ladder (i.e. to head the HF division), Compton’s memorandum proposing this was instantly agreed by Sir Thomas Padmore (in charge of the Treasury’s establishments work) and the permanent secretary Sir Roger Makins. As Compton wrote:

Apart from his personal merits, I believe it would be of great help to us all in the Budget work. He is in immediate charge of the revenue and expenditure estimates. He also provides the link with the national income forecast work and the investment programme. … At a later stage in the Budget preparations we have in the past felt the need of a ‘Chief of Staff’ to support the Chancellor’s Private Secretary in keeping a central control over the Budget proposals and in preparing the speech. Mr Armstrong is particularly well equipped to carry out this function, and if he were a member of the Budget Committee now, he would be ready to take it on at the appropriate time when the need is felt for it.119

Budget Committee files and minutes over the next few years show evidence of Armstrong briefing the Chancellor, and working and reporting on a wide range of matters such as revenue and expenditure estimates and outturns, Budget and Finance Bill timetables, vehicle excise duty, profits tax, the shipping industry and flags of convenience, share ownership, Stamp Duty, proposals for a Capital Gains Tax, surtax, motor vehicle duties, television advertisement duty, and so on.120 He was clearly in complete command of this detailed, complex and often highly technical material, and able to put across ideas and analyse proposals with clarity, authority and persuasiveness. There were some moments of levity, as when in 1958 the Budget Committee secretary, Shirley Marsh, reminded him that he had promised to look into the question of a possible tax on budgerigars, and he replied in verse121:

If the Chancellor wanted a budgerigar No one would willingly grudgerigar; Though not economic, It’s certainly comic To think of a figure and fudgerigar! 84 K. THEAKSTON AND P. CONNELLY

Selwyn Lloyd, Chancellor 1960–62, seems to have relied greatly on Armstrong. Anxious about parliamentary questions, Lloyd would, the afternoon before he was due at the despatch box, call together the Treasury top brass (the permanent secretary, Sir Frank Lee, Padmore, Rickett and Armstrong) to brief and reassure him. Lloyd’s biographer notes his ‘excessive reliance on William Armstrong, whom he much admired. “What do you think, William?” would always be his overriding concern, irrespective of whether the matter under discussion was Armstrong’s province or not.’ In another scene from that period, Alec Cairncross, appointed as the government’s chief economic adviser in 1961, reported being called to Chequers one Sunday in July 1961 to find the prime minister, Harold Macmillan, and the Chancellor ensconced with David Hubback (the Chancellor’s private secretary) and William Armstrong, wrestling with the draft text of the Chancellor’s statement on the emergency expenditure cuts and deflationary measures to deal with a balance of payments crisis. There was a typical Macmillan performance, with ‘grunts of “what?” and half-dictated, half-musing suggestions’, a prime-ministerial ‘harangue on the two functions of bank rate’, an anecdote about the Governor of North Carolina, and drinking of whisky. Then, as Macmillan and Lloyd went off to play croquet, Armstrong and Cairncross were left trying to piece it all together, add up the various cuts, and worry about whether the Cabinet would agree to them all.122 In this period Armstrong started to make his first appearances on a slightly wider stage, albeit as an expert Treasury witness on technical matters rather than as a more public or quasi-public figure. In 1959 he gave evidence on the finances and borrowing of local authorities and nationalised industries to the Radcliffe Committee on the Working of the Monetary System, alongside the Treasury’s permanent secretary and a couple of other senior Treasury men. Robert Hall’s verdict was that Armstrong ‘did very well’ at this session; Alec Cairncross (who at that time was a member of the committee of enquiry) thought that Armstrong was ‘a good stonewaller’.123 In Whitehall terms, of course, these two views are not necessarily contradictory. He made his first appearances, as Treasury Officer of Accounts, before the Public Accounts Committee, too, in 1958 and again in 1960. In that latter meeting of the PAC—the committee then chaired by Harold Wilson—he was given something of a grilling about the basis on which the Independent Television Authority was operating in relation to the broadcasting television companies (who were making large amounts of money on contracts made without competition, and with no CLIMBING THE WHITEHALL LADDER 85 provision for the Exchequer to share in the profits). Members of Parliament on the PAC were clearly unhappy about this situation, which was rooted in the legislation setting up the ITA, and all Armstrong could do—which he did with skill and politeness—was point that out, note the Treasury had no jurisdiction, stonewall as best he could, and say the government would take into account the PAC’s report when considering what to do when the relevant legislation expired in a few years’ time.124

* * *

At the start of the 1960s, William Armstrong was really a name not known much beyond the closed world of government and Whitehall. Top civil servants were then much more shadowy and anonymous figures than they (or some of them—including him) were to become in later decades. But in the governing community of the ‘Whitehall village’, among senior civil servants and ministers, and in the key power centres of the Treasury, the Cabinet Office and Downing Street, he had won a golden reputation for his professional and personal abilities and skills. He was near but not yet at the very top rung of the civil service ladder, but there could be few doubts that he would make it there and become a permanent secretary—one of the elite of the elite—before too long. His career path and professional formation had had some distinctive characteristics, however. ‘The trouble with Armstrong’, said a former Labour minister in the 1964–70 government, ‘is that he’s always been somebody’s secretary.’125 Even though private office service had become an established feature of a high-flyer’s Whitehall apprenticeship and career, in William Armstrong’s case this was so to a remarkable degree. He spent fully 10 out of the first 15 years of his career in Whitehall, while still a relatively young man, working in a secretarial role for a succession of important and powerful figures (for the President of the Board of Education in 1940; Swinton and the Security Executive 1940–43; Bridges at the Cabinet Secretariat 1943–46; the Chancellor of the Exchequer 1949–53). He proved himself to be a brilliant private secretary, in his element in the ‘departmental courts’, as Rod Rhodes calls them, of Whitehall.126 The private office route to the senior posts in Whitehall, says Peter Hennessy, ‘tests your mettle at a very young age. You’ve got to do other things as well. But if you can’t manage the quite often over-anxious and het-up horses [ministers] at a young age, you’re not going to be able to hack it at a later stage.’127 86 K. THEAKSTON AND P. CONNELLY

In addition, Armstrong’s exhibited to a high degree the characteristics of the Whitehall ‘generalist’. In his first eight years in the civil service (1938–46), he served in four different departments or offices, though after that he then stayed in the Treasury for the next two decades. And in the 24 years between 1938 (when he joined the civil service) and 1962 (when he became Treasury permanent secretary), he did ten different jobs: an average of two and a half years in each post. What he never did in all this succession of jobs and promotions was have responsibility for large-scale executive management of a block of departmental work—but that would not be untypical for the generalist administrative class civil servants of his era, who were essentially facilitators, mediators and arbiters128 and whose primary role was advising ministers on policy and working the machinery of government. Even inside the Treasury, though, he did not share the experience of many other officials who, at some point in their careers, would pass through the core Supply Divisions controlling public spending and/or do a stint on the Establishments side dealing with civil service manpower issues (giving them ‘a sense of being at the centre of unlimited pressure for scare resources’ as they dealt with the clamour of the spending departments).129 His Treasury experience was of the private office, of high-level policymaking and economic coordination, and of the technical financial side. Earlier, his work with Bridges, in the Cabinet Office and in the MG branch had developed in him a great awareness of and concern for the structures and machinery of government—of the Cabinet committee system, of the departmental architecture of Whitehall. Armstrong’s first civil service job (on the Lancashire and Cheshire ‘desk’ of the Board of Education) was, as we have seen, as part of an established system of administration. This was about mistake-avoidance rather than managing resources; consistency and conformity to legislation, procedure and precedent; and limited delegation in a hierarchical structure.130 His war-related work (on school evacuation and then with the Security Executive) required a rather different, more constructive and results-oriented approach. As he once said of that work: ‘there was no question of what the Act said and the legal thing was, you just try to think what would happen and what you ought to do about it … and you tried to find ways of dealing with that … this threat is occurring, this is happening, how do we counter it without any thought of what is the regulation or … are there any precedents … just get on with it.’131 Then he became very much part of the ‘diplomatic system’ at the top and the centre of government, to use Desmond Keeling’s terminology. CLIMBING THE WHITEHALL LADDER 87

For Keeling, the government official in anadministrative system has to deal with casework correctly, in a management role use resources effectively, and in a diplomatic system process business and manage policy- making; network, negotiate, adjust, coordinate and broker; advise and fix for ministers.132 The emphasis is on serving political masters, understanding and advancing their objectives, and helping them deal with the demands on them at the interface between government, politics and policy. One possible danger in this model or role, however, is over-identification with political masters and their aims. Another would be if the traditional detachment, self-effacement and anonymity associated with, and perhaps necessary for, this classic ‘behind-the-scenes’ work were to erode or break down. But no one in the 1940s, ’50s and early ’60s, it must be said, would have thought of Armstrong in connection with these possible negative aspects. As he climbed the ladder, William Armstrong became, in the best sense, a master of Whitehall’s diplomatic system, and it was because of that, together with his analytical approach and economic expertise that he got to the top.

Notes 1. Peter Hennessy, Whitehall (London: Secker & Warburg, 1989), p. 513. 2. Autobiographical chapter, based on an interview with Eric Jacobs, Armstrong papers. 3. Civil Service Commission Results for Administrative Group Competition 1938, Armstrong papers. 4. Autobiographical chapter, Armstrong papers; transcript of Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 5. Gail Savage, The Social Construction of Expertise: The English Civil Service and its Influence 1919–1939 (Pittsburgh, PA: University of Pittsburgh Press, 1996), pp. 37, 39. 6. Report of the Committee to consider and report upon the scheme of examination for Class I of the Civil Service (Cd. 8657), (London: HMSO, 1917), para. 18; Richard A. Chapman, Leadership in the British Civil Service (London: Croom Helm, 1984), pp. 18, 153. 7. R.K. Kelsall, Higher Civil Servants in Britain: From 1870 to the Present Day (London: Routledge & Kegan Paul, 1955), p. 86; Rodney Lowe, The Official History of the British Civil Service: Reforming the Civil Service, Volume 1: The Fulton Years, 1966–81 (London: Routledge, 2011), p. 52. 8. Richard A. Chapman, The Civil Service Commission 1855–1991 (London: Routledge, 2004), p. 53. 88 K. THEAKSTON AND P. CONNELLY

9. Chapman, Leadership in the British Civil Service, p. 17. 10. Ibid., p. 156. 11. Kelsall, Higher Civil Servants in Britain, pp. 77–79, 81–85. 12. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 13. Chapman, Leadership in the British Civil Service, p. 153. 14. J.P.V.D. Balsdon reference for William Armstrong, 17 May 1938, National Archives (NA) CSC 11/10. 15. W. Armstrong, ‘What should we fight for?’,The Spectator, 1 July 1938, p. 15. 16. Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 17. Savage, The Social Construction of Expertise: The English Civil Service and its Influence 1919–1939, pp. 23–27, 54–56, 60, 75; Anthony Sampson, The New Anatomy of Britain (London: Hodder and Stoughton, 1971), p. 250. 18. Antony Part, The Making of a Mandarin (London: Andre Deutsch, 1990), p. 21. 19. BBC television, ‘A Chance to Meet—Sir William Armstrong’, 17 October 1971, transcript in NA BA 6/80. 20. H.E. Dale, The Higher Civil Service of Great Britain (Oxford: Oxford University Press, 1941), pp. 78–84. 21. The sources for Armstrong’s work at the Board of Education in this and the following paragraphs are: Armstrong interview with Eric Jacobs, 1977, Armstrong papers; Autobiographical chapter, Armstrong papers; ‘Sir William Armstrong, the new head of the Civil Service, in conversation with George Scott’, The Listener, 9 May 1968. 22. Sir William Armstrong, ‘Management Training for Statisticians and Opportunities to enter Top Management’, Journal of the Royal Statistical Society, 136 (1), 1973, pp. 95–99. 23. Sir William Armstrong, speech on ‘The Civil Service’, Society of Civil Servants Conference, 15 May 1968, Armstrong papers. 24. Lowe, The Official History of the British Civil Service: Reforming the Civil Service, Volume 1, p. 58. 25. Part, The Making of a Mandarin, p. 22. 26. Dale, The Higher Civil Service of Great Britain, p. 85. 27. Ibid., pp. 9–10. 28. ‘Red tape called necessary governmental evil’, New Haven Register, 11 March 1970, in: NA BA 6/64. 29. Kevin Theakston, Leadership in Whitehall (London: Macmillan, 1999), p. 56. 30. Peter Barberis, The Elite of the Elite: Permanent Secretaries in the British Higher Civil Service (Aldershot: Dartmouth, 1996), pp. 176–177; Kevin Theakston and Geoffrey K. Fry, ‘Britain’s Administrative Elite: Permanent Secretaries 1900–1986’, Public Administration, vol. 67, no. 2, 1989, pp. 138–140. CLIMBING THE WHITEHALL LADDER 89

31. Transcript of ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. 32. Armstrong, speech on ‘The Civil Service’, Society of Civil Servants Conference, 1968, Armstrong papers. 33. Armstrong papers. 34. Transcript of ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers—this gives more information than the edited version of the interview published in The Listener, 9 May 1968, pp. 596–597. 35. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 36. ‘Tinker, tailor, soldier, banker’, Financial Times, 15 July 1991. 37. See: NA CAB 165/739; CAB 165/740; CAB 134/3273. 38. New Haven Register, 11 March 1970, NA BA 6/64. 39. Peter and Leni Gillman, ‘Collar The Lot’: How Britain Interned and Expelled Its Wartime Refugees (London: Quartet, 1980); David Cesarani and Tony Kushner (eds), The Internment of Aliens in Twentieth Century Britain (London: Frank Cass, 1993). 40. House of Commons debates, 15 August 1940, col. 959. 41. House of Commons debates, 23 July 1940, col. 736. 42. Gillman and Gillman, ‘Collar The Lot’, pp. 142–145; Nigel West, MI5: British Security Service Operations 1909–1945 (London: Bodley Head, 1981), p. 154. 43. See in general: F.H. Hinsley and C.A.G. Simkins, British Intelligence in the Second World War, Volume Four: Security and Counter-Intelligence (London: HMSO, 1990). 44. J.A. Cross, Lord Swinton (Oxford: Clarendon Press, 1982), pp. 226–227. 45. Keith Robbins, ‘Philip Cunliffe-Lister, first earl of Swinton (1884–1972)’, Oxford Dictionary of National Biography, www.oxforddnb.com 46. Cross, Lord Swinton, p. 231. 47. Armstrong speech on ‘The Civil Service’, Society of Civil Servants Conference, 1968, Armstrong papers. 48. Cross, Lord Swinton, p. 225. 49. ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. 50. H.D.(S) E. 2nd meeting, 28 May 1940; H. D. (S) E. 16th meeting, 24 October 1940: NA CAB 93/2. 51. House of Commons debates, 15 August 1940, col. 959. 52. See: NA CAB 93/2 for minutes of the meetings of the Security Executive and NA CAB 93/3 for circulated papers, including H.D.(S) E. paper no. 1 from May 1940, and ‘The functions of the Security Executive’, note by Duff Cooper, 16 October 1942. 53. Duff Cooper note, ibid. 54. Report by Sir David Petrie on the Security Service, NA CAB 301/25. 90 K. THEAKSTON AND P. CONNELLY

55. Derek Wellman, recollections of Lord Armstrong, CSD News, September 1980 (Armstrong papers). 56. ‘The functions of the Security Executive’, note by Duff Cooper, 16 October 1942, NA CAB 93/3; ‘Security Arrangements in Government Departments: Note by the Secretary to the War Cabinet’, 24 January 1942, NA CAB 98/48; minutes and papers of the Bridges Panel are in NA CAB 98/48, CAB 98/49, CAB 98/50. 57. British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, transcript in NA BA 6/82; ‘Sir William Armstrong, head of the Civil Service, talks to Robert McKenzie about the Fulton Report’, The Listener, 30 January 1969, p. 136. 58. The Listener, 9 May 1968, p. 596. 59. Ronald Harris, Memory-soft the air (Edinburgh: The Pentland Press, 1987), p. 2. 60. Armstrong speech on ‘The Civil Service’, Society of Civil Servants Conference, 1968, Armstrong papers; Harris, Memory-soft the air, p. 3; Armstrong memoir notes, Armstrong papers. 61. Richard Holmes, Churchill’s Bunker (London: Profile Books, 2009), pp. vi–vii, 128; Harris, Memory-soft the air, pp. 15–16. 62. Armstrong speech on ‘The Civil Service’, Society of Civil Servants Conference, 1968, Armstrong papers. 63. ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. 64. Armstrong to Bridges, 9 March 1945, NA CAB 301/11. 65. Theakston, Leadership in Whitehall, pp. 69–94; Sir William Armstrong, ‘Edward Bridges 1892–1969’, Public Administration, vol. 48, no.1, 1970, pp. 1–2; Richard A. Chapman, Ethics in the British Civil Service (London: Routledge, 1988); Harris, Memory-soft the air, pp. 36–38; Anthony Seldon with Jonathan Meakin, The Cabinet Office 1916–2016 (London: Biteback Publishing, 2016), pp. 73–103. 66. Armstrong speech on ‘The Civil Service’, Society of Civil Servants Conference, 1968, Armstrong papers. 67. William Armstrong to Priscilla Armstrong, 8 July 1945, Armstrong papers; Joan Bright Astley, The Inner Circle: A View of War At The Top (London: Hutchinson, 1971), pp. 193–207; Duff Hart-Davis (ed), King’s Counsellor: Abdication and War—the Diaries of Sir Alan Lascelles (London: Weidenfeld and Nicolson, 2006), p. 339. 68. Armstrong speech on ‘The Civil Service’, Society of Civil Servants Conference, 1968, Armstrong papers. 69. Ibid. 70. NA CAB 21/1703 and CAB 21/1622 (Armstrong to Brook, 16 April 1946); ‘Function of the Prime Minister and his Staff’, NA CAB 21/1638; Peter Hennessy, ‘“Harvesting the Cupboards”: why Britain has produced CLIMBING THE WHITEHALL LADDER 91

no administrative theory or ideology in the twentieth century’, Transactions of the Royal Historical Society 6th series, vol. 4, 1994, p. 216; Peter Hennessy, ‘Searching for the “Great Ghost”: The Palace, the Premiership, the Cabinet and the Constitution in the Post-War Period’, Journal of Contemporary History, vol. 30, no. 2, 1995, p. 220; Peter Hennessy, ‘What are prime ministers for?’, Journal of the British Academy, (2), 2014, p. 218; J.M. Lee, Reviewing the Machinery of Government 1942–1952 (London: Birkbeck College 1977), p. 90. 71. Lee, Reviewing the Machinery of Government, p. 39; Chapman, Ethics in the British Civil Service, p. 82. 72. The text of the play, called ‘The Dark Valley: a Biblical Portrayal for Five Women and Two Men’, is in The International Senior Demonstrator, 1 June 1949, a Salvation Army publication (Armstrong papers). 73. Padmore to Barlow, ‘Machinery of Government’, 6 October 1947, NA T222/1260; Armstrong to Simpson, ‘MG Branch: Allocation of Duties, September 1948’, 15 September 1948, NA T222/104; B. Schaffer, ‘Lord Armstrong: a personal note’, Public Administration Bulletin, no. 34, 1980, pp. 6–8; Armstrong interview with Eric Jacobs, 1977, Armstrong papers. 74. NA T222/75 and T222/1260 (see in particular: Armstrong’s note of 10 September 1947 on ‘The work of the Machinery of Government Section’); Lee, Reviewing the Machinery of Government, pp. 40, 47,144. 75. Schaffer, ‘Lord Armstrong: a personal note’, p. 7; Organisation and Methods and Its Effect on the Staffing of Government Departments, Fifth Report from the Select Committee on Estimates, HC 143, 1946–47, Minutes of Evidence, p. 100. 76. Armstrong to Humphreys-Davies, ‘Organisation for the study of Machinery of Government questions’, 25 May 1946, NA T222/79; Schaffer, ‘Lord Armstrong: a personal note’, p. 7; Armstrong note on ‘The work of the Machinery of Government Branch: General Review of Progress’, 11 June 1949, NA T222/1260. 77. Armstrong papers. 78. ‘Lord Armstrong of Sanderstead’, obituary, The Times, 14 July 1980. 79. Barberis, The Elite of the Elite, pp. 130–133. 80. Evelyn Shuckburgh, Descent to Suez: Diaries 1951–56 (London: Weidenfeld and Nicolson, 1986), pp. 8, 10; Dale, The Higher Civil Service of Great Britain, pp. 85–88. 81. Nicholas Henderson, The Private Office Revisited (London: Profile Books, 2001), pp. 1, 10, 162. 82. Dale, The Higher Civil Service of Great Britain, p. 10. 83. Douglas Jay, Change and Fortune: A Political Record (London: Hutchinson, 1980), p. 172. 92 K. THEAKSTON AND P. CONNELLY

84. The Listener, 9 May 1968, p. 597; Peter Hennessy, Never Again: Britain 1945–51 (London: Jonathan Cape, 1992), pp. 374–5; Edwin Plowden, An Industrialist in the Treasury (London: Andre Deutsch, 1989), p. 62. 85. Hennessy, Never Again, pp. 375–6. 86. ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers; William Armstrong speech at City University, 15 May 1974, Armstrong papers. 87. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). 88. Attlee to Bridges, 7 January 1950; Armstrong note on ‘Ministerial Assistance for the Chancellor of the Exchequer’, 10 January 1950, NA T273/140. 89. ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers; Philip Williams, Hugh Gaitskell: A Political Biography (London: Jonathan Cape, 1979), pp. 234–5, 240. 90. Philip M. Williams (ed), The Diary of Hugh Gaitskell 1945–56 (London: Jonathan Cape, 1983), pp. 245, 248, 252, 305; Williams, Hugh Gaitskell: A Political Biography, p. 251. 91. Alec Cairncross (ed), The Robert Hall Diaries 1947–1953 (London: Unwin Hyman, 1989), p. 162; Williams, Hugh Gaitskell: A Political Biography, pp. 239–40; Plowden, An Industrialist in the Treasury, p. 106; Samuel Brittain, The Treasury Under The Tories 1951–1964 (Harmondsworth: Penguin, 1964), p. 155; Williams (ed), The Diary of Hugh Gaitskell, pp. 220–1; Scott Kelly, The Myth of Mr Butskell: The Politics of British Economic Policy, 1950–55 (Aldershot: Ashgate, 2002), pp. 66–73. 92. R.A. Butler, The Art of the Possible (London: Hamish Hamilton, 1971), pp. 156–7; Kelly, The Myth of Mr Butskell, p. 16; Anthony Seldon, Churchill’s Indian Summer: The Conservative Government 1951–55 (London: Hodder and Stoughton, 1981), p. 165; Cairncross (ed), The Robert Hall Diaries 1947–1953, pp. 209, 226, 248, 256, 257, 275. 93. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 94. Interview with Peter Armstrong (PC). 95. Shuckburgh, Descent to Suez: Diaries 1951–56, pp. 71–2, 88. 96. ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. 97. Seldon, Churchill’s Indian Summer, p. 171; Cairncross (ed), The Robert Hall Diaries 1947–1953, pp. 209, 226, 233. 98. Cairncross (ed), The Robert Hall Diaries 1947–1953, p. 226; Seldon, Churchill’s Indian Summer, p. 160; Butler to Bridges, 27 May 1953; Hall to Bridges, 10 June 1953, NA T273/138. CLIMBING THE WHITEHALL LADDER 93

99. Cairncross (ed), The Robert Hall Diaries 1947–1953, pp. 263–4; Alex Danchev, Oliver Franks: Founding Father (Oxford: Clarendon Press, 1993), pp. 139–40; Butler to Bridges n.d (1952?); Butler to Bridges, 27 May 1953, NA T273/138. 100. Cairncross (ed), The Robert Hall Diaries 1947–1953, p. 264; Alec Cairncross (ed), The Robert Hall Diaries 1954–61 (London: Unwin Hyman, 1991), pp. 20, 51, 170; Bridges to Butler, 18 August 1955, NA T273/141. 101. Anthony Sampson, Anatomy of Britain Today (London: Hodder and Stoughton, 1965), p. 295; interview with Lord Butler of Brockwell. 102. Leo Pliatzky, Getting and Spending (Oxford: Basil Blackwell, 1982), p. 77; G.C. Peden, The Treasury and British Public Policy 1906–1959 (Oxford: Oxford University Press, 2000), pp. 435–6; Edmund Dell, The Chancellors (London: HarperCollins, 1996), pp. 166, 191–3. 103. See: NA T236/3900; T236/3901; T236/4699; Steven G. Galpern, Money, Oil, and Empire in the Middle East (Cambridge: Cambridge University Press, 2009). 104. Cairncross (ed), The Robert Hall Diaries 1954–61, pp. 3, 5; R.F. Holder, ‘The Commonwealth Finance Ministers’ Conference’, The Australian Quarterly, 26 (1), 1954, pp. 16–28. 105. CP (55) 171, ‘Colombo Plan’, 9 November 1955, NA CAB 129/78. 106. See: NA T236/3893; T236/3905; T236/4153; T236/4154. 107. Rampton to Armstrong, 12 April 1956; Armstrong to Petch, 25 August 1956, NA T236/4841. 108. NA T236/4767 (includes Macmillan to Rowan, 6 September 1956); T236/4768; T236/4769 (includes Johnston to Armstrong, 24 October 1956, with Armstrong’s comments, 25 October 1956). 109. Keith Kyle, Suez (London: I.B. Tauris, 2003), p. 228; Saul Kelly and Anthony Gorst (eds) Whitehall and the Suez Crisis (London: Frank Cass, 2000); Anthony Seldon interview with Lord Sherfield, British Oral Archive of Political and Administrative History (London School of Economics, 1980); Theakston, Leadership in Whitehall, p. 151; Marguerite Dupree (ed), Lancashire and Whitehall: The Diary of Sir Raymond Streat, vol. 2: 1939–57 (Manchester: Manchester University Press, 1987), p. 854. 110. ‘Sir William Armstrong talking with Desmond Wilcox’, The Listener, 28 March 1974, p. 390; BBC television, ‘A Chance to Meet—Sir William Armstrong’, 17 October 1971, NA BA 6/80; British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, NA BA 6/82; Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 94 K. THEAKSTON AND P. CONNELLY

111. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). 112. Lord Wilson of Dinton, ‘Tomorrow’s Government’, lecture to the Royal Society of Arts, 1 March 2006. 113. Armstrong to Gore-Booth, 9 November 1956, NA T236/5152. 114. Armstrong to Rowan, 14 January 1957, NA T236/5152. 115. Armstrong memo on Middle East Policy, 24 January 1957, NA T236/5153; G.C. Peden. ‘Suez and Britain’s Decline as a World Power’, The Historical Journal, 55 (4), 2012, pp. 1073–1096. 116. Seldon, Churchill’s Indian Summer, p. 176. 117. Dell, The Chancellors, p. 200. 118. Peden, The Treasury and British Public Policy, p. 437; Cairncross (ed), The Robert Hall Diaries 1954–61, p. 167. 119. Compton to Padmore, 16 December 1957, NA T171/491. 120. See: NA T171/491; T171/501; T171/502; T171/521; T171/522; T171/523. 121. Marsh to Armstrong, 27 January 1958, and Armstrong’s handwritten verse response, 28 January 1958, NA T171/491. 122. D.R. Thorpe, Selwyn Lloyd (London: Jonathan Cape, 1989), p. 316; Sir Alec Cairncross, Diaries: The Radcliffe Committee and the Treasury 1961–64 (London: Institute for Contemporary British History, 1999), p. 43. 123. Minutes of Evidence Taken Before the Committee on the Working of the Monetary System, Fifty-Ninth Day, 30 April 1959 (London: HMSO, 1960), pp. 925–934; Cairncross (ed), The Robert Hall Diaries 1954–61, p. 197; Cairncross, Diaries: The Radcliffe Committee and the Treasury 1961–64, p. 26. 124. Special Report and First, Second and Third Reports from the Committee of Public Accounts, Session 1958–59, HC 76-I, 93-I, 201-I, 248-I, Minutes of Evidence, 11 December 1958, qs. 8–9; Special Report and First and Second Reports from the Committee of Public Accounts, Session 1959–60, HC 51-I, 219-I, 256-I, Minutes of Evidence, 25 February 1960, qs. 641–705. 125. Sampson, The New Anatomy of Britain, p. 250. 126. R.A.W. Rhodes, Everyday Life in British Government (Oxford: Oxford University Press, 2011), pp. 137–165. 127. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). 128. R.G.S. Brown and D.R. Steel, The Administrative Process in Britain, second edition (London: Methuen, 1979), pp. 322–323. 129. Kelly, The Myth of Mr Butskell, pp. 40–41. CLIMBING THE WHITEHALL LADDER 95

130. Desmond Keeling, Management in Government (London: Allen and Unwin, 1972), pp. 91–99. 131. British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, NA BA 6/82. 132. Keeling, Management in Government, pp. 106–108. CHAPTER 4

Head of the Treasury 1962–68

Taking the Helm William Armstrong was appointed Joint Permanent Secretary to the Treasury, responsible for economic and financial policy, with effect from 1 October 1962. It was a dramatic and rapid promotion in which, two ranks from the top as a third secretary, he leap-frogged several senior men often talked of for the post. Aged only 47, he was the youngest Treasury chief for 40 years (Warren Fisher having been appointed to that post in 1919 aged just 40; and all but two of Armstrong’s successors to date were older than he was when first appointed). Samuel Brittan claimed that Armstrong had ‘probably a better grasp of the conceptual framework of modern economic policy than any previous [Treasury] Permanent Secretary’,1 though his immediate predecessor, Sir Frank Lee, was a very experienced economic policy adviser, having been permanent secretary of the Board of Trade for nine years before going to the Treasury in 1960 (he had previously served in the Treasury during the war). Looking back in an interview, however, one former Treasury insider and economist felt—in contrast to Brittan—that Armstrong ‘didn’t know all that much more economics than Frank Lee.’2 What is clear is that Armstrong was, by education, the last of the classicists to head the Treasury—subsequent permanent secretaries all being men who had studied economics or maths/statistics at university—but if not academically qualified in the subject, he had made himself economically literate while

© The Author(s) 2018 97 K. Theakston, P. Connelly, William Armstrong and British Policy Making, Understanding Governance, https://doi.org/10.1057/978-1-137-57159-5_4 98 K. THEAKSTON AND P. CONNELLY working in the Treasury. Another former Treasury official, in interview, rated him highly as an economic ‘technician’, pointing to his experience as principal private secretary and in OF and HF, with numerous Budgets, and with the details of fiscal and monetary policy, understanding of finance, and the City and the Bank of England.3 Here, it seemed was a modern economic manager: an economic liberal, according to Brittan, ‘but the type of liberal who accepts as a fact of life that the Government is inextricably mixed up in the national economy in hundreds of different ways. He is more at home thinking how to make government intervention better informed, more relevant and less ham-fisted than in dreaming up projects for a self-regulating laissez-faire world.’ The Observer newspaper called him simply ‘an economic “new man”’: someone with ‘a modern logical approach to financial policy, and little in common with the traditional dogmas that are still reputed to linger in the Treasury corridors.’4 Armstrong perhaps got his chance a year or two earlier than he might otherwise have done because of Sir Frank Lee’s early retirement following a heart attack. The question of the succession to Lee was on the cards in any case because he was due to turn 60 in August 1963, but by early 1962 it was apparent that the appointment would have to be made sooner. Frank Lee himself seems to have been clear about who should get the job. Lee’s son-in-law, (who was later Cabinet Secretary and Head of the Civil Service 1998–2002) Richard Wilson, has described his thinking:

Lee did not particularly enjoy the Treasury. He found the tier of people below him were quite hard to influence. Their style was fairly closed and he was not impressed by their ability. Lee himself was a very extrovert man, energetic, enthusiastic, hands on. He found the atmosphere very hierarchical, quite snobbish. In 1962 he had to retire following a heart attack and Macmillan wanted his advice on the succession. Frank Lee’s advice was decisive. He had a very clear view that there was a need to dip down below the tier of Second Secretaries to William Armstrong, a man of outstanding ability and much more fresh in his views on economics, the role of economists and the running of the economy. He gave his advice … and it was primarily on Frank Lee’s word that William Armstrong got the job.5

Other key voices pressing for Armstrong’s appointment were Sir Norman Brook (who as Head of the Civil Service formally advised the prime minister on top civil service promotions and appointments) and Lord Plowden (responsible for a key report on the Treasury and public expenditure); HEAD OF THE TREASURY 1962–68 99

Plowden later claimed he and Brook had ‘decided together’ that Armstrong should succeed Lee.6 Sir Thomas Padmore, who had been a second secretary since 1952, had been standing in for Frank Lee when he was ill and, according to insiders, it was more or less assumed in the Treasury that when Lee retired he would succeed him. Padmore apparently assumed this too.7 William Armstrong certainly did not expect to become the permanent secretary at this time, and was surprised when it happened.8 The crucial factor in his selection, however, appears to have been the strong feeling of dissatisfaction that Prime Minister Harold Macmillan had with the workings of the Treasury and the economic advice coming from that department. Although he would sometimes talk about it as ‘the Balliol of Whitehall’, Macmillan’s expansionist instincts set him permanently at odds with the Treasury’s traditional caution. His operating assumption, it has been claimed, was that ‘the Treasury was Up To No Good’, and he was permanently suspicious that it would plunge the country into a slump, provoking officials to keep a tally of the number of times he mentioned Stockton-on-Tees (his old constituency, devastated by unemployment between the wars) in any one week. He was convinced, he wrote in his diary, that reforming the Treasury would be ‘like trying to reform the Kremlin or the Vatican.’9 In 1962 he was complaining privately about Treasury short-termism and its inability to ‘think ahead’ or produce what he regarded as a ‘convincing long-term policy’. He had rejected internal candidates to appoint a career Foreign Office diplomat (Sir Roger Makins) to fill the permanent secretaryship back in 1956 (an appointment that had not really worked out), and then had chosen another outsider (Frank Lee) four years later. Now the Treasury second secretaries, Sir Thomas Padmore (despatched to head Transport) and Sir Denis Rickett, fell foul of the premier’s anti-Treasury bias and were passed over. Armstrong, however, he thought ‘brilliant’, his press secretary recorded in his diary, and he looked to him as a new broom in the Great George Street citadel.10 Perhaps an early sign of the way his mind was working was the way in which, in late 1961, Armstrong had been asked to lunch with the prime minister and his economic guru and unofficial adviser, Oxford economist Roy Harrod—Macmillan provoking and then carefully listening to the debate between his two guests.11 By an accident of timing (there had been a leak to the press and an official announcement was rushed out), the news of Armstrong’s appointment was made public at the end of July 1962, two weeks after Macmillan had dramatically and unexpectedly sacked his Chancellor and a third of his Cabinet. But it is known that the 100 K. THEAKSTON AND P. CONNELLY outgoing Chancellor, Selwyn Lloyd, rated Armstrong very highly and had backed the move, which was then endorsed by his successor, Reginald Maudling (who knew him well, having been one of Armstrong’s Oxford contemporaries).12 It has been suggested that this appointment marked the first occasion when William Armstrong succumbed to stress, but the evidence is equivo- cal. At the time of his appointment he was at home in bed awaiting an appendix operation. The Cabinet Secretary, Sir Norman Brook, called upon him to tell him the news of his promotion. Although Lady Armstrong recalls that he was exercised over the likely reaction of Sir Thomas Padmore to the news, he nonetheless rose from his bed, went into the office to work and flew soon afterwards to the United States for a meeting. The appen- dicitis did not recur. This would indicate that while the condition may have been psychosomatic, the stress of being appointed to the senior job in the Treasury did not prevent him from picking up the traces right away.13 Armstrong was not even one of the fabled ‘Treasury knights’ when his promotion was announced, remaining plain ‘Mr’ until mid-1963, when he was knighted in the Birthday Honours. His appointment attracted an unusual amount of media attention: it coincided with a major shake-up of Treasury organisation and, together with other moves (the announcement of the appointment of Burke Trend as Cabinet Secretary and of Laurence Helsby as Head of the Civil Service, both with effect from 1 January 1963), a new generation of civil servants seemed to be taking over in Whitehall. The Express sent a journalist down to his home in Sanderstead, and published a warm and sympathetic interview with some personal details, including the first public reference to his Salvation Army background, something also mentioned a couple of months later, in September 1962, in a fairly lengthy profile—one of the first of its kind about a top civil servant—in The Observer.14 Other coverage (Financial Times) praised ‘an unconventional choice … [but] by no means a surprising choice on ability’, describing Armstrong as ‘technically expert and very rational’ and saying his ‘combination of new ideas and good judgment has been very impressive.’ He ‘holds no brief for the idea of Treasury infallibility’, wrote The Sunday Times, identifying precisely what had appealed to Macmillan.15 The Sunday Times referred to the ‘young and dynamic team’ formed by the combination of Reginald Maudling (then aged 45) as Chancellor and William Armstrong as permanent secretary. It says something about the nature of British society at the time that a 47-year old civil servant who HEAD OF THE TREASURY 1962–68 101 wore a waistcoat should be thought of as youthful and fresh. Still, in Whitehall terms he was relatively youthful for a permanent secretary. Hardly any twentieth century permanent secretaries heading government departments were appointed under the age of 40: only ten in the 1900–1919 period, two in the 1920–44, and only one after 1945. In the 1945–64 period, only 15 individuals (20 per cent of the total) were, as he was, appointed as permanent secretaries in their forties. Armstrong had got to the top after 24 years in the civil service, but three-quarters of all permanent secretaries appointed in the 1945–64 period had clocked up even longer periods of prior service in Whitehall before they made it to the top rank.16 In a very hierarchical, lifetime career system, he had made what counts as unusually rapid progress to the top. Samuel Goldman (who served in the Treasury 1947–72) reported an odd episode from soon after William Armstrong’s promotion. Apparently, at a meeting of permanent secretaries (at which Goldman was not himself present, it should be said), Armstrong had been heard by a colleague of Goldman’s as saying that his promotion was due to ‘divine intervention’. Goldman spoke of his colleague, and others present at the meeting, taking this remark seriously, and considering it odd.17 It may have been a peculiar joke—if so, one clearly not fully shared by Armstrong’s colleagues. But it could also have been a reversion to the Salvation Army language that he would subconsciously recall from his childhood. A decade later, giving a talk to a Congregational Church group in 1972, Armstrong was surely referring to his appointment as the Treasury’s permanent secretary when he referred to a time when he received an ‘unexpected promotion in the Civil Service’ as an instance when he had a ‘personal experience … of the presence of God.’ On that occasion, he went on, ‘he had felt impelled to recall his fairly humble beginning as the son of Salvation Army officers and had resisted an embryo temptation to hide the facts of his early life from the public.’18 In another strange episode from this period—shortly after his appointment was announced, but before he had taken up his duties—one Treasury colleague met him by chance in a passage. Armstrong had his arm in a sling, and the Treasury man said he was sorry to see that he had suffered an injury. ‘No, you aren’t’, Armstrong said, his colleague replying that he was, actually, but if he did not want him to be sorry he would try not to be. Armstrong explained that he had stopped smoking, and the colleague attributed his brusqueness to nicotine deprivation (the abstinence did not last very long).19 102 K. THEAKSTON AND P. CONNELLY

Whatever the case, Robert Armstrong (who had joined the Treasury in 1950 and while sharing the same surname was, of course, no relation) commented:

There were other people of greater seniority, but he was the most outstanding and able man amongst the senior people in the Treasury at that time. No one argued about William’s ability, his extraordinary intelligence and speed of intelligence, his rationality and coolness; all this was widely recognized. There had been a lot of discussion about the organization of the Treasury and the need to separate the pay and management side from the finance and economic side. William had taken a lead on this, and when the time came, he was the obvious person to make it happen. He was very much the archi- tect of the re-organisation of the Treasury in 1962 which separated the two bits and he must have seemed to the powers that be the right person to take charge. Everyone thought he was lucky, but I don’t think anyone thought it [the appointment] was unmerited. He was unerring in his judgement and very efficient in the business of handling bureaucratic affairs.20

Reorganizing the Treasury Accompanying Armstrong’s promotion was a radical reorganisation of the Treasury. It was not appreciated at the time that the dissatisfaction with the workings of Whitehall in general, and the Treasury in particular, so loudly voiced by outside critics and would-be reformers in the early 1960s (such as Thomas Balogh, with his blistering attacks on the ‘Treasury clique’—its power, lack of economic expertise, dilettantism and amateur- ishness, and repeated policy blunders),21 was actually shared by many insiders, who were well aware of institutional short-comings and the need to adapt the government machine to deal with the new challenges of post- war British society and the mixed economy, and respond to the sense that Britain was starting to slip behind its international partners and competi- tors. The Treasury seemed slow-moving, cumbersome and out-of-touch; its organisation and its pattern of work needed revamping, it was felt, to better perform the functions of a modern economics ministry that had been grafted on to its traditional structure after the war. Earlier in the 1950s, Rab Butler (as we have seen), and William Armstrong, as his private secretary, had not been altogether happy with the Treasury’s organisation. ‘The Treasury problem’, as Robert Hall labelled it, was partly structural and partly about senior personnel, but it is difficult to say that the various internal adjustments made in the 1950s, as HEAD OF THE TREASURY 1962–68 103 roles and responsibilities were switched around following retirements and job changes, significantly improved things.22 When Edward Bridges retired in 1956 it was obvious that the combined load of being permanent secretary to the Treasury and Head of the Civil Service was too heavy for one man. Joint Treasury permanent secretaries were appointed: Roger Makins took on the economic side while Norman Brook became responsible for civil service management and Treasury Establishments work, becoming Head of the Civil Service, as well as remaining Cabinet Secretary. This arrangement may have tackled the issue of overloading the head of the Treasury (by splitting Bridges’ job) but at the cost of overloading the Head of the Civil Service/Cabinet Secretary (Brook), who never had much time to deal with, or interest in, issues of civil service management and reform, as opposed to running the Cabinet system and advising the prime minister.23 And some critics wondered whether the post-1956 set- up was right in other ways. ‘The Treasury monster has, in fact, not two heads but three at least’, argued The Economist, saying that as well as a separate public service side, responsibility for economic policy and planning needed to be separated (in terms of ‘organisation from the ministerial level downwards’) from the work on Supply (i.e. public spending) and the Budget.24 The appointment of the Plowden Committee on the control of public expenditure, 1959–61, gave a crucial opportunity to advocates of reform and modernisation within the Treasury and the civil service itself. It opened the way to major changes in the Treasury’s structure and a new system for planning and managing public expenditure. ‘Otto’ Clarke—a brilliant and innovative Treasury official, a man of strong character and views, difficult, masterful and domineering, and impatient with the traditional norms and style of the mandarinate—exercised a decisive influence over the thinking of the Plowden Committee and then in the reforms implementing its report.25 For 20 years his career and William Armstrong’s were intertwined, and in 1962—both then still third secretaries—they had a major combined influence over the restructuring of the Treasury. Edmund Dell has claimed that Clarke’s ‘nose was put out of joint’ by Armstrong’s subsequent promotion to the top job in the Treasury, saying that it was not surprising that the safer pair of hands was chosen.26 But ‘Otto’ Clarke was simply not in the running for the permanent secretaryship. Larger than life to the tastes of most Treasury ministers, he was not regarded as ‘sound’ and it has been claimed that, for his part, he held most ministers and civil service colleagues ‘in high disesteem.’27 104 K. THEAKSTON AND P. CONNELLY

Lord Plowden wrote privately to the Chancellor in June 1961 recommending that the roles of Cabinet Secretary, Head of the Civil Service, and Head of the Treasury (responsible for economic policy) be three separate posts held by three separate people. This led directly to an internal review of Treasury organisation (the Treasury Organisation Committee), headed by Norman Brook and Frank Lee, starting in December 1961. After ruling out the alternatives (a single Treasury permanent secretary, transferring civil service management to a separate department or public services commission, or combining civil service management with public spending in a Bureau of the Budget), the TOC agreed on the organisation of the Treasury into two ‘sides’ (management of the national economy, and management of the civil service), each under a joint permanent secretary, who would have no other responsibilities.28 The TOC invited evidence and views from senior staff on the organisation of the Treasury. The blueprint that emerged for the economic and financial side was largely the work of William Armstrong and Otto Clarke who, from an early stage, dominated the exercise, sending in memos and discussing their views informally with Brook, with the committee, and with its secretary, Ian Bancroft. The idea of a ‘functional’ regrouping, contained in the TOC’s report of June 1962, with the merger of overseas and home finance, the reorganisation of the public spending divisions, and the creation of a ‘national economy group’ bringing economists and administrators together to work on economic planning and forecasting, together with the redefinition of the boundaries between the economic policy aspects of the Treasury’s work and its responsibilities for civil service management, sprang directly from plans developed by Armstrong and Clarke. Armstrong had proposed a division into three groups (‘fiscal’, dealing with public sector revenue and expenditure; ‘financial’, based on a merger of OF and HF, which he believed it would make little sense to keep separate if the UK joined the Common Market; and ‘economic’, concerned with forecasting, planning and incomes policy), and he assumed that establishment matters would be dealt with in an ‘organisation which, even if it is still part of the Treasury, will be more or less completely separate.’ But while his main concern at that time was with the structure for economic policy-making, he did also raise a wider question relating to civil service management and expertise. As he told Brook, he had ‘become more and more impressed in recent years for the need for some more “professional” training for Treasury officials. There is a whole corpus of financial expertise which has to be more or less painfully acquired by HEAD OF THE TREASURY 1962–68 105 people as they move from division to division in the Treasury; it seems to me that we ought at any rate to consider whether we could not have some much more systematic means of training people when they first come in.’29 In effect, in 1962, William Armstrong was put in as permanent secretary to operate a machine he had himself designed (or rather co-designed, for talking to Peter Hennessy, he later gave ‘the lion’s share of the credit’ for the new structure to ‘Otto’ Clarke).30 It was a long-overdue and far- reaching reorganisation, amounting virtually to the creation of a new department. In a talk to Treasury staff in 1963, Armstrong indeed described it as ‘a more fundamental remodelling of the Treasury than has ever been done before.’ To have divided the Treasury into two separate departments, he insisted, would ‘create more problems than it would solve.’ The links between the two sides were ‘so close, and so necessary, that to split them into two separate departments would have been a great mistake.’31 Within a few years, he changed his mind on this point, as we will see. What would have happened had the new organisation been allowed to develop with its own momentum must remain a matter of con- jecture, of course, because of the way in which the advent of a Labour government in 1964 changed the economic policy-making scene by carving out the Department of Economic Affairs (DEA). But the Ar mstrong/ Clarke model was certainly an improvement on the old Treasury set up, and it was a significant step forward in terms of making the Treasury look like a modern instrument of government in the economic and financial sphere.32

Chancellor’s Right-Hand Man Armstrong had a distinctive style as Treasury permanent secretary, according to Samuel Brittan. His predecessor, Frank Lee, he says, ‘was an expan- sive extrovert, while Armstrong was more of an introvert, although of an exceptionally approachable variety. While Lee would take charge of an investigation from the beginning, Armstrong would, in his early years at least, let his subordinate officials pursue their own course before coming in with his comments.’ There was a strong contrast, too, between his method of working and that of his successor, Douglas Allen (Treasury permanent secretary 1968–74). ‘Armstrong was on the whole content to let official committees and groups take their course, exerting his very real influence by careful hints to the participants, and in his confidential conversations with ministers. Allen on the other hand [was] more inclined to 106 K. THEAKSTON AND P. CONNELLY take a definite line and exert his influence through the machine.’ Armstrong was careful, Brittan argued, ‘not to become associated with strongly defined ideological attitudes. He disliked shibboleths and insisted on bas- ing policies on facts and logic. … But he was very conscious of the widespread criticisms that the Treasury had tried to foist certain doctrines on governments; and he was careful not to arrogate for himself the choice of policy goals, perhaps being even a shade too scrupulous in this respect.’33 A former Whitehall insider made a similar comparison, saying in interview Armstrong ‘somehow didn’t have that firmness which in a way the head man in the Treasury ought to have in handling the minister—making clear to the minister what he personally thought. Frank Lee had that firmness. William Armstrong was more in the Bridges mould, because Bridges on the whole didn’t carry himself as if he knew better than the minister or try to impose his view on the minister.’34 He developed a close, influential relationship with Reginald Maudling, Conservative Chancellor from 1962, and Labour’s James Callaghan after 1964 but, insiders say, never really managed to hit it off with Roy Jenkins, who took over after the 1967 devaluation. He was ‘a great consolation’, Maudling once said. ‘One felt that if Armstrong was behind you it couldn’t be so bad. And he was always calm. I never saw him angry.’ ‘For anyone who has met him’, Peter Hennessy wrote in 1977, ‘it is easy to see why ministers sought his advice. Fascinating and allusive in conversation, he weaves ideas from thin air and proposes them in a soothing, persuasive voice.’35 Armstrong had in fact an almost hypnotic ability to communicate and persuade. It had something to do with his voice, and something to do with his searchlight eye contact. It was also because his arguments were well-chosen and expressed with eloquence; he was capable of masterly analyses of problems and exposition of policy options. But there was something more. He could not only communicate, but commune, with his interlocutors, and he was aware of this. The economist, administrator and banker, Eric Roll, recalled William Armstrong saying to him one day: ‘You know, we have something in common.’ Upon being asked what, he replied: ‘We are both slightly feminine in our attitude. There is something about you and me in our appreciation of a situation which is not very evident from what is going on; there is something we instinctively recognise somewhere in the background.’36 This meant, suggested Roll, that Armstrong was very good at an instinctive understanding of people’s HEAD OF THE TREASURY 1962–68 107 inward nature; he was sensitive to the personal chemistry and the personal factor. The relationship between senior civil servants and ministers, Armstrong himself described once as ‘a subtle mixture. We do the thinking. The politicians contribute imagination, intuition, ideas, and perhaps above all the will’ (emphasis in the original). He then added: ‘Of course, we do have some ideas, and they do do some thinking!’37 Asked what senior civil servants looked for in a minister, he replied: ‘a man [sic] who is ready to take decisions, who knows the kind of information he ought to have before he takes them, who understands the element that he himself must bring to the decision, the element which the civil servants can’t supply, and who, having taken the decision, knows how to present it and defend it.’ In this relationship he was clear that ministers were not amateurs: ‘I don’t think I’ve ever had a Minister who seemed to me to be amateur. I look on this business as a marriage of several professions—the profession of politicians with the profession of administration, with the profession of economics etc.’38 Should the Chancellor of the Exchequer be an economist, he was once asked, replying: ‘First and foremost, he needs to be a skilled politician. … To my way of thinking this is much more important than to have skill in economics. The Treasury can supply the economic facts and figures, can supply the economic analysis, and if a Chancellor is not satisfied with what we supply he can get it from elsewhere. But none of us can supply the political nous.’ Economic policy-making and Budget-making, he said, was ‘an intensely political business’ and what was needed was a minister who could stand ‘at the cross-roads between economics and politics, to look both ways and carry out business with … due regard to both.’ It did take time to get on top of, or get a full feel for, the Chancellor’s job, he admitted, saying that ‘a Chancellor who is a good politician has every chance of being better in his second year than his first, and better in his third year than his second.’39 On this basis it is worth noting there were eleven different Chancellors at the Treasury over Armstrong’s years in that department, averaging 2.3 years each in the post, but only three of them (Cripps, Butler and Callaghan) served three years or more, while three served for only a year or so (Gaitskell, Macmillan and Thorneycroft). The civil servant’s job, as he once described it, was to be ‘the eyes and ears of Ministers’ and to bring the politicians face to face with ‘a picture of ongoing reality’. It was then to ‘work out for them … the various alternative policy options open to them and the likely consequences of a choice of any one of them.’ He went on: ‘The chief danger to which politicians 108 K. THEAKSTON AND P. CONNELLY and Ministers are exposed is not, as is often supposed, that obstructive bureaucrats will drag their feet in implementing their schemes, but that their own optimism will carry them into schemes and policies which will subsequently be seen to fail—failure which attention to the experience and information available from the [Civil] Service might have avoided.’ He was not opposed to the appointment by ministers of ‘personal politically oriented advisers’ brought temporarily into government (the numbers of which were much smaller in his day than subsequently), but he insisted that ‘it is better that their contribution should supplement, and not take the place of, the face-to-face and continuous dialogue between Ministers and their permanent advisers.’40 ‘The higher you rise’ in the civil service, he once explained, ‘the fewer decisions you take, when you’re down at the lower level you’re busy taking a lot of little decisions in particular cases and the higher up you get the only decision you’re taking is what recommendation to make to a politician.’ In his own case, he went on, ‘I haven’t tried to keep a score but I’m sure that my advice was rejected at least as often as it was accepted and that in fact in most cases, it was totally modified in discussion so that in the end you couldn’t say whether the decision was following my advice or not.’41 Looking back, however, he acknowledged that in practice he had ‘a great deal of influence’:

The biggest and most pervasive influence is in setting the framework within which the questions of policy are raised. We, while I was in the Treasury, had a framework of the economy [which was] basically neo-Keynesian. We set the questions which we asked ministers to decide arising out of that framework and it would have been enormously difficult for any minister to change the framework, so to that extent we had great power I don’t think we used maliciously or malignly. I think we chose that framework because we thought it the best one going. We were very ready to explain it to anybody who was interested, but most ministers were not interested, were just prepared to take the questions as we offered them, which came out of that framework, without going back into the preconceptions of them.

‘I tried always never to make a specific recommendation but always to say here are various options. This is what I think would be the consequence of acting on any of them’, Armstrong recalled. ‘And only if, as often happened, the Chancellor said “yes, well, which would you choose” then I would say … but never without having paraded them all in advance.’42 HEAD OF THE TREASURY 1962–68 109

He made the same point about setting the framework for ministers in another interview. Although, as he put it, the civil service ‘bend over back- wards’ to advise politicians ‘in a way which gives them the fullest range of options and choices’, there was ‘a sense in which the framework has become very tight and it’s very difficult to move out of it.’ ‘There is a range of options’, he went on, ‘but they range over the middle ground.’ More radical (or, the word he actually used, ‘extreme’) options, whether of the left or right, were, he said, ‘very difficult to get at.’43 As he put it in a lecture in 1970, there was ‘a great deal of common ground—what I have called ongoing reality—which is properly, necessarily, and desirably the concern of a permanent Civil Service.’44 Inasmuch as he could be labelled politically, Armstrong was a ‘middle ground’ or ‘common ground’ man. Some in Whitehall thought he was perhaps a bit left-of-centre; one profile claimed ‘some of his colleagues have noticed a glint of personal understanding when something affecting the less affluent corners of society crops up … [and] feelings of sympathy for the underdog.’ Given his Salvation Army background, this would be very understandable. Peter Hennessy described him as ‘the very incarnation of Butskellism’, quoting Armstrong describing to him the stance of senior civil servants: ‘After all those years you tended to be within a narrow line either side of the centre.’45 However, the ‘Butskellite’ label as a sort of short-hand term for consensus politics has been shown to be misleading by Scott Kelly, who has demonstrated the serious differences of economic doctrine, objectives and policy that in fact divided Gaitskell and Butler as Chancellors—differences, of course, that William Armstrong was well aware of from his own experience and vantage point.46 He once told the Labour minister, Barbara Castle, in 1969, that as a young civil servant he had ‘greatly admired’ Stafford Cripps and been ‘deeply attached’ to Hugh Gaitskell, when he had worked as their private secretary, continuing that when the Conservatives came in in 1951, he had at first thought ‘he could never stomach serving them.’ But he had then come to realise that ‘in practice, different Governments had very little room for manoeuvre and that, as the boundaries were set within such limits, he need have no difficulty about serving Tories too.’ Castle responded that the trouble with that approach was that it meant the civil service ‘tended to pull all politics into the centre.’ ‘He saw that, too’, she wrote in her diary. After another discussion, six months later, she commented that ‘William, of course, was as rational and progressive as they come.’47 He believed in the public sector, and in the power and the role of government, and was 110 K. THEAKSTON AND P. CONNELLY operating in an era when the political and policy arguments between the parties were largely about how government would or should intervene and act, rather than about shrinking the state. He admitted, in a lecture in 1970, that it was ‘possible that a government, or series of governments, might reverse the post-war trend’ and reduce the role of the state by cutting back on the role and size of the public sector and intervening less, but seemed rather doubtful that the political will existed to do that or that it was likely to ‘happen overnight’.48 He liked to say the civil servant’s job was analogous to building sand- castles, with ‘the tide coming in and sweeping it away and then when it went out again you built another one.’

This would be, I think, more frustrating than I found it in fact to be, if the two political parties were really as different as they make out and if each party totally destroyed what the other one had done and started again. … But the remarkable thing is not how much destruction they do, but how little and how much one side does that you would think it was the business of the other side to do. Capital gains tax was introduced by a Conservative Chancellor of the Exchequer, the first crack at the trade unions was by a Labour Minister of Employment and Productivity. There is a criss-cross between the parties which means that if you are pretty patient, if you think that … you’re not the sole repository of wisdom, that maybe there is something in the other chap’s point of view as well … you see a sort of rather crablike inching forward.

‘The plunge backward’, he said, ‘is pretty rare though it does happen but not as bad as it looks.’49 It was, perhaps, easier to maintain this sophisticated and worldly-wise understanding and acceptance of politics (and politicians), concern for practicalities and realities, preference for the largest area of agreement and continuity between the parties, and recognition of the interdependence of politicians and civil servants in governance and policy-making in an era when the ideological and political distance between the two main parties was closer than it later became. Later ‘conviction’ politicians would have no truck with Armstrong’s notion of ‘ongoing reality’—the civil service as ‘the connection between politics and reality, between politics and facts’, as he once put it.50 When officials protested about prime-minister Margaret Thatcher turning down their recommendations that were ‘based on the facts’, she was emphatic: ‘The facts. The facts. I have been elected to change the facts.’51 And where Armstrong enunciated a partnership model HEAD OF THE TREASURY 1962–68 111 at the top of government, later governments (of both parties) after 1979 operated with a much more assertive model of ministerial control over Whitehall officialdom. ‘Armstrong was objectivity personified’, Leo Pliatzky later wrote about his Treasury chief. ‘If there was anything he wanted to talk about, he … always found all the time that was needed for it, no matter what else was happening. He seemed, in fact, incapable of having a view until he had gone through this process of weighing all the evidence and all the arguments.’52 ‘He was intense, but he wasn’t tense’, recalled a very senior insider. ‘If you went to see William, you had a job getting away. You never felt that this was a chap driving on, waiting to do the next thing. He would give you endless time.’53 Another view was that he had a great capacity for listening to people and making them believe that he was on their side when he wasn’t. Some colleagues believed that the views he expressed to ministers could be quite different from the advice he was getting from inside the department. He played his cards very close to his chest, as it were. Alec Cairncross, chief economic adviser in the 1960s, admitted (in his diary) that he hardly ever knew what Armstrong was saying to the Chancellor. He summed up his character like this:

He is an extraordinary man with tremendous resilience and an astonishing mixture of frankness and reserve. He will say so much and yet seem to keep back even more, giving the impression of layers below layers while remaining superficially candid and almost voluble. It is impossible to get cross or excited with him. I know nobody who can bring down the temperature more successfully and ensure rational discussion. He has such a well- organized mind that he recalls without effort the rationale of any policy and the issues involved, even when it is not of immediate importance to his normal duties. When he does so, the logic is clear, the facts are stripped of inessentials and he brings out some facets that even the expert might not notice especially if they have a political slant.54

In meetings, Armstrong ‘often gave the impression of being either bored or exhausted’, Cairncross recalled in his memoirs. ‘But he was always capable of interventions that went to the heart of the matter with a phrase or a question.’ (‘Meeting today with the Chancellor on credit control’, reads one Cairncross diary entry from March 1967. ‘S.G. very long winded … William as usual kept quiet until the end and then put in a devastating question.’) Other insiders also remark on his great sense of 112 K. THEAKSTON AND P. CONNELLY timing.55 ‘He seemed to have read everything, and to have heard all the gossip, as if he had been up all night’, Cairncross comments. ‘He could dominate a meeting with an occasional intervention, but was never aggres- sive or rude. He would make a Budget submission that did full justice to the views of the Budget Committee and add something of his own; and in negotiations with the International Monetary Fund … he would draft at great speed the Letters of Intent inserting conditions that he knew would be acceptable to the IMF but for which, I suspect, he had no specific authority.’ ‘Although I did not get the feeling that he was deliberately withholding anything from me’, wrote Cairncross, ‘I was rarely sure that I really knew what he thought, especially on the dominant issue of the first half of the 1960s, the question of devaluation.’56 ‘He was an innovative thinker’, a senior Treasury colleague recalled. ‘Intellectually, nothing fazed him at all. He was open-minded and deeply reflective.’57 ‘He had the best mind I ever encountered in the civil service’, agreed another very senior Whitehall figure. ‘But you were never quite sure what agenda he was working to. He was an extremely skilful operator.’58 He could appear friendly, informal and approachable, but always with a certain ultimate reserve; and some people did find him remote and enigmatic. ‘I don’t think I’ve ever known anyone who really understood him’, said another insider.59 The view that he took in more than he communicated in response was widely expressed: ‘Although I worked very closely with William for years and years’, said a senior Treasury economist, ‘I was never sure that I had his frank opinion on the matters that we were dealing with or about the people we were dealing with.’60 Younger officials in the Treasury found him unstuffy and accessible. Robin Butler, who joined the department in the early 1960s, recalled Armstrong arranging a meeting of a group of assistant principals in a back room of The Albert pub in Victoria Street, at which he asked for their thoughts on the Treasury, and listened rather than lectured. Armstrong struck Butler as personally modest and not intellectually arrogant.61 Around the same time, Robert Armstrong recalls going to see William Armstrong in what was then his second-floor office overlooking Parliament Square, to discuss some issue about monetary policy. ‘There was a State Visit that day’, Armstrong remembered, ‘and while we were talking, a band in the Square struck up with Non piu andrai from The Marriage of Figaro. With that music coming through the window, I found it impossible to concentrate on what we were talking about, and I had to ask whether we could continue the conversation in the afternoon. William readily HEAD OF THE TREASURY 1962–68 113 agreed, and I think understood my problem, but he explained with a smile that he did not suffer from this difficulty; he said that as a boy he had done much of his reading under a Salvation Army bandstand … and that he had learned to shut his ears and his mind to the sound of the band and concentrate all his attention on what he was reading.’62 Peter Jay, who spent just under a year as William Armstrong’s private secretary in 1964, found him to be ‘a most fascinating and unusual man’. After he left the civil service to become economics editor of The Times, Jay wrote in a (1968) profile of him: ‘Few practical men of affairs—very few as successful and as unspeakably busy as Sir William—manifest anything like his seemingly passionate intellectual desire to find the truth behind the rival sets of theories and assumptions which are endlessly paraded in support of alternative decisions.’ He described his former master’s patience and skill in the conduct of business:

What is most impressive, perhaps, is the confidence in his ability to get results, to win people round, and to create agreement where nothing but dissension could be discerned by ordinary eyes. This reputation is all the more striking in someone who at times appears to the casual observer to carry the doctrine of festina lente63 to the point of indecision. There have reportedly been moments when Sir William seems to have dribbled the ball so far back towards his own goal-line for the sake of a better opening that he has looked in danger of scoring against himself. But a more apposite metaphor is to be found from his own favourite hobby—sailing. Sailing boats progress not into the teeth of the elements but obliquely, harnessing their energy to the boat’s own purposes; and the best helmsman is he who most accurately judges the shifts and changes of wind and tide. At times he may seem ‘no painful inch to gain’; but then, suddenly, when the untutored least expect it, they come ‘silent flooding in’ to port. Sir William is incomparably the master helmsman of Whitehall.64

David Walker, who succeeded Peter Jay, as the permanent secretary’s private secretary, found William Armstrong to be ‘both intellectually very rigorous and demanding and, at the same time, extraordinarily modest and kind. … The personal modesty when I worked with him extended to … a very frugal sandwich regularly taken for lunch at his desk, his reluctance to use an official car—he usually walked home, whatever the weather, to his flat in Great Peter Street, and I would often accompany him, as this was a practical opportunity for his assistant to catch up on the events of the day. It was wholly typical of William’s modesty to be ready to do this, 114 K. THEAKSTON AND P. CONNELLY quite often late in the evening after a gruelling day at his desk.’65 A workaholic, Armstrong indeed put in some extraordinary hours as permanent secretary, including at weekends and into the small hours if necessary, together with gruelling international travel for meetings and talks. He was discreetly accessible to the press. He gave Samuel Brittan a lot of help with his book The Treasury Under the Tories (published in 1964). ‘He would talk to me freely at home in the evenings’, recalled Brittan, ‘but none the less warn me the following morning not to delve too deeply in my book into Treasury advice.’66 He once admitted, ‘I talked a great deal to journalists and I wasn’t leaking information, but there was some trade I suppose in that I expected some kind of better treatment.’ Indeed, the commentator Hugo Young noted (in 1980): ‘I have never heard a civil servant, before or since, capable of giving a more candid, arresting and relaxed account of government policy on any given question.’67 At the end of the 1950s, a few years before he became head of the Treasury, Armstrong had in fact been authorised by the Chancellor to get together with economic journalists on ‘a confidential and personal basis’, to explain to them ‘the background of Treasury thinking, and the framework of thought in which we worked.’ ‘Frequently’, Armstrong later said, ‘the kind of thing I was doing was putting a construction on known public information’. On the change of government in 1964, Callaghan re-authorised the continuation of this off-the-record briefing activity.68

Economic Policy Because there were more crises than triumphs in the six years in which William Armstrong was the top economic policy adviser to three successive Chancellors—Reginald Maudling, James Callaghan and (for a relatively short time) Roy Jenkins—his record has come in for criticism, and some blame for failures of policy in that period has fallen to him.69 In 1970 Douglas Allen, his successor, let Roy Jenkins know that he felt Armstrong had behaved weakly in not restraining Reginald Maudling in the spring and summer of 1964 as the Conservatives’ pre-election boom and ‘dash for growth’ lead to a massive balance of payments crisis. Edmund Dell also suggests that senior Treasury officials, and Armstrong in particular, were too understanding of the political dilemma facing Maudling with an election coming to step in with some sort of démarche insisting on tough but necessary measures.70 HEAD OF THE TREASURY 1962–68 115

Top civil servants, it is true, cannot ignore political and election timetables, or at least ignore their importance to politicians, and, as we have seen, Armstrong understood and accepted that Chancellors had to manage politics and economics. But was he too accommodating? By early 1964, the countdown to a general election had started to the extent that Treasury officials, including Armstrong, and the Budget Committee were privately discussing the ‘merits of different election dates’ at least in terms of what that might mean for the date of the Budget, its format (short or long) and its actual substantive content.71 The real issue, however, was that Maudling was both a very political Chancellor (inevitably, coming into office, as he did in 1962, with an election due in the next two years) and determined to make his own decisions. Unlike his predecessor, he was at home on economic issues (having been a Treasury junior minister, Minister of Supply and then President of the Board of Trade) but, as Alec Cairncross noted, was ‘less disposed to seek advice from officials’ and sometimes ‘fairly free in rejecting advice’. Relations between him and Treasury officials were somewhat cool and distant. Maudling’s biographer says Armstrong found the Chancellor ‘a puzzling man to deal with.’ He often seemed laid-back and bored by policy detail. When economic commentator Samuel Brittan said to Armstrong that one needed to stick pins into Maudling to get him to respond, Armstrong replied drily, ‘Very long pins.’72 This did not stop Maudling, at the end of his time in office, recommending William Armstrong to his successor, James Callaghan, as ‘the best civil servant he knew.’73 In the face of an economic downturn and rising unemployment over 1962–63, and with Treasury advice that an economic stimulus was needed, Maudling in fact opted for something broadly in line with his permanent secretary’s recommendations in his 1963 Budget. Through the Budget Committee, Armstrong recommended tax concessions of between £200 million and £300 million, saying this ‘could be presented as fitting in with the policy of securing a more efficient and faster-growing economy’, with ‘a reasonable chance of avoiding an adverse movement of confidence abroad.’ In Number 10, Macmillan, as ever, wanted more, suggesting £400 million of tax cuts, as did many outside economists, but Armstrong warned something on that scale was likely to produce ‘excessive pressure of internal demand’ in 1964–65, requiring unpopular measures to stop the economy over-heating and defend sterling and the balance of payments in what would be an election year, and the PM took the warning 116 K. THEAKSTON AND P. CONNELLY and stopped pressing for a bigger give-away. In the end Maudling announced £269 million of tax cuts.74 Macmillan had been urging Maudling to focus on ‘the big stuff—the national plan, the new approach, the expand or die.’ The background to this was that in 1962, the government had committed itself to an economic growth target of 4 per cent, announced its conversion to indicative economic planning and, to that end, created the National Economic Development Committee (NEDC), bringing together government, management and the unions to discuss economic and industrial issues and plans. The idea was to break out of the constraints of ‘stop-go’ economics and plan an economic course that would deliver the Holy Grail of economic expansion, higher standards of living, low inflation, increased exports and a stronger balance of payments. The key figures in the Treasury at the centre of what Hugh Pemberton calls the ‘growth advocacy network’ driving this new agenda at the beginning of the 1960s had included Sir Frank Lee, Otto Clarke, Robert Hall and Peter Vinter—from the files, William Armstrong (then head of HF) appears rather on the side of the exercise at that time (copied in to some of the papers but not at the top- level meetings, for instance).75 From the start, however, there had been considerable Treasury scepticism about the 4 per cent target figure as unrealistic and beyond the capacity of the economy; William Armstrong himself later called the 4 per cent target an ‘illusion’. Moreover, there was the risk of projecting public spending increases on the basis of over- optimistic economic growth forecasts that then did not materialise, and, looking back after the 1964 election, Armstrong felt that Maudling had failed to control public expenditure. (Earlier, Armstrong had expressed some doubts about the feasibility of the public expenditure survey reforms Otto Clarke had driven through in 1960–61 because of the unreliability of economic and resource forecasts.)76 By the start of 1964, the economy was improving strongly, with production rising, unemployment falling, and public spending and consumer spending booming, but with imports being sucked in at a higher rate there were growing worries about the sustainability of the expansion and the deteriorating balance of payments. The criticism is that not enough was done to restrain or put the brakes on the ‘Maudling boom’ for electoral reasons. In the circumstances, the April 1964 Budget was rather lenient, increasing taxes by £100 million—in line with what Armstrong had been saying during Budget Committee meetings, though his views were influenced by his understanding of the maximum Maudling was prepared to HEAD OF THE TREASURY 1962–68 117 countenance, and a smaller figure than some outside commentators felt was necessary.77 Maudling then went against Treasury advice in June 1964 when he decided not to issue a call to the banks for special deposits (to restrain lending)—something, again, Armstrong felt retrospectively was a mistake (he had advised the Chancellor in favour of this step on 11th June and on 13th July but then changed his mind and said it was not needed in a meeting a week later, saying the situation should be kept under review with the possibility of a Bank Rate increase kept in reserve—exactly the advice Maudling wanted to hear).78 Maudling had a private discussion with Callaghan in June 1964, giving a rather complacent message about the state of the economy and telling the Labour Shadow Chancellor that William Armstrong had not advised further measures to strengthen the economy.79 This was misleading. As early as December 1963, in a report on economic prospects for 1964 circulated to the Cabinet, Armstrong had warned about the rising—indeed ‘excessive’—pressure of demand in the economy, the likelihood of damaging increases in costs and prices, excessive wage increases threatening competitiveness, and a growing (at that stage projected to be £300 million) balance of payments deficit.80 By May 1964, Armstrong was saying to his senior colleagues that the Budget Committee needed to think seriously about the need for measures to restrict demand before the end of the year (using the regulator to increase taxes mid-year and/or a squeeze on credit), though he also stressed the political context, saying that if action was needed to control the economy before the election, the end of July was the last possible time. In a meeting with Maudling on 11th June, with the latest forecasts showing what was threatening to become ‘an unman- ageably large’ balance of payments deficit for 1964 of upwards of £600 million, Armstrong argued that action was needed to ‘damp down’ the pressure of demand; a series of measures should be started soon, he advised, rather than deferring action and then undertaking ‘a big package’. Maudling was averse to action, however. In a one-to-one between them on 18th June, Maudling made it clear his opposition to taking action before the election for fear of an ‘adverse political effect’. His policy was, in effect, to hang on and hope for the best until the election. Post-election, Maudling said, there should be a large long-term loan, some form of import controls (quantitative restrictions or surcharges), and a push on incomes policy. Armstrong replied that he did not dissent from these measures but added that a ‘radical redeployment’ of national resources was also necessary, and in particular the release of ‘a large proportion’ of the 118 K. THEAKSTON AND P. CONNELLY resources tied up in defence and associated research and development. In July, however, Armstrong acknowledged that immediate action by the Treasury (to use the regulator or put up interest rates) would ‘come as a shock to public opinion’, perhaps a ‘considerable shock’, and with a ‘sharp reaction internally’ as the government’s long-term policies would be, in effect, ‘called into question’, concluding that ‘at the present time’ he would prefer to ‘do nothing’ and ‘keep the situation under close review’— all of which does read rather like a coded way of saying that with an elec tion looming, ‘we’ (the Treasury) know that there is a limit to what ‘you’ (the Chancellor) will or can do.81 Armstrong was very clear with Maudling, though, on the need for ‘a major reappraisal’ and for ‘a radical review of economic policy’ in the autumn to devise a ‘viable long-term solution to our problems’ and come up with ‘a different approach’.82 At a Treasury meeting in June 1964 on long-term economic prospects, he had said that the 4 per cent growth target did not seem feasible over the next five years, meaning that cuts or slowdowns in the growth of private consumption and public expenditure were in prospect, together with serious balance of payments problems. ‘Drastic’ decisions would be needed but it was recognised that nothing would be possible before the election. The meeting identified defence expenditure as a big strain on the balance of payments and a wasteful diversion of resources and technological capacity away from more productive civil uses crucial to economic growth. A detailed paper called ‘The Next Five Years’ was sent to Maudling on 6th July. It must have made difficult reading, containing as it did some stark warnings about the problems ahead. ‘Prospective demands are greatly in excess of the possible production’, it warned. The balance of payments position was ‘very bad’ and likely to be one of ‘continuing weakness.’ Looking ahead to 1968–69, economic growth would probably be ‘well below’ the 4 per cent per year target. With public spending increasing at a faster rate than that, a large ‘resources gap’ would open up and consumer spending faced a major squeeze. ‘Something has to give’, it warned, and if present policies were continued the probable outcome was a succession of sterling crises and/ or a series of severe Budgets with large tax increases. Import restrictions could only be a temporary resort not a long-term solution. Redeployment of resources on the scale of at least £500 million a year was needed, in a way that boosted productive and export capacity and eased the fiscal and balance of payments problems—defence being pretty clearly identified as the most promising area for those cuts.83 HEAD OF THE TREASURY 1962–68 119

Maudling sat on the paper, ‘disinclined’ to circulate it to the Cabinet, the Chancellor’s private secretary told Armstrong. One way or another, reality would have to be faced after the election, seemed to be the Treasury’s attitude in the summer of 1964—and William Armstrong’s too. But Maudling seemed to be in denial, taking risks with the economy and not expecting the Conservatives to win, and therefore leaving the problems to Labour.84 In 1963 there had been some internal Treasury discussion and also exchanges between Macmillan and Maudling about devaluation, floating the pound and other ways of dealing with balance of payments problems, but nothing had come of them, both the prime minister and the Chancellor not attracted by the difficulties in the run-up to an election, particularly the deflation that would be needed to make a devaluation work.85 Armstrong returned to this issue in the summer of 1964, sending the Chancellor a memorandum written by Alec Cairncross, the chief economic adviser, rehearsing the difficulties and consequences of devaluation, saying there should be a ‘very strong presumption against devaluation as a calculated act of policy.’ Maudling simply replied, rather flippantly, ‘It seems as if devaluation under any other name would smell more sweet.’86 But knowing that the chickens were going to come home to roost, as it were, Armstrong had work set in progress on the balance of payments prospects and policies, which resulted in a major report in September 1964 that would clearly form the basis of advice and possible action for a new government after the general election (and what became called the ‘Armstrong Report’ was at the heart of the ‘General Brief’ prepared for the incoming Chancellor after the election). The balance of payments deficit for 1964 was now put at £600–700 million, with a forecast of £300 million for 1965. Devaluation was, at this stage, ruled out: it should be regarded, said Armstrong, ‘not so much as a policy as a confession of failure; and we do not accept that the position is desperate.’ The full report added to this, damning devaluation as ‘fraught with danger’, likely to shock international confidence, weaken the dollar and possibly undermine the reserve currency system, increase import costs and the cost of living, and make no direct contribution to strengthening industrial efficiency. Import controls or export subsidies would provoke a hostile international reaction and were not a solution to the long-term problems, but they might become inevitable as a temporary measure, if international borrowing proved insufficient to finance the deficit, and schemes were in preparation and should be kept in readiness. Fundamentally, British industry was 120 K. THEAKSTON AND P. CONNELLY still not efficient, dynamic or competitive enough, and policies were needed to address that. Setting an over-ambitious growth target was not a panacea. Deflation by itself was rejected as a solution (it would impose a disproportionate cost on the economy and in jobs) but if possible, the economy should be run at a lower pressure of demand at home, accepting a slightly higher rate of unemployment (between 1.8 and 2.0 per cent). And once again, defence was identified as one of the areas (along with atomic energy and ‘prestige’ projects like Concorde) where there was a need to examine whether ‘the government’s activities may be producing adverse economic effects outweighing the non-economic benefits.’87 Armstrong’s report was sent to the Chancellor three days after parliament was dissolved and the election called; a month later Maudling and the Conservatives were out of office and Armstrong and the Treasury found themselves advising a Labour government. Armstrong and James Callaghan had a good working relationship during the latter’s three embattled years as Chancellor. Callaghan knew little economics but he was open-minded and a fast learner, and while he was a tough and robust politician, the pressures and strains of 1964–67 did at times hit his self-confidence. Callaghan’s biographer describes Armstrong as ‘the dominant intellectual force’ among the Chancellor’s advisers in the making of economic policy, though Callaghan apparently ‘found the introverted Armstrong unduly inclined to keep his own counsel at times.’ Callaghan was a Cardiff MP and collaborated with Armstrong in the decision to transfer the Royal Mint (ahead of the move to decimalisation) out of London to South Wales, Armstrong taking the opportunity to push for improvements to the management and organisation of the Mint. The Chancellor took the permanent secretary along to watch an international rugby game at Cardiff Arms Park, which Armstrong apparently much enjoyed, despite the heavy rain and the English defeat by the Welsh team.88 On the dominant issue during Callaghan’s chancellorship, Edmund Dell strongly criticises William Armstrong for not giving firmer guidance to ministers after October 1964 on devaluation, implying that the Treasury’s failure to take a strong pro-devaluation position from the onset of the new Labour government reflected the permanent secretary’s unwillingness to take a lead on policy or put pressure on ministers. At best, says Dell, he wanted to preserve the constitutional niceties about the proper role of civil servants, at worst, he was simply giving the advice he knew ministers wanted to hear.89 HEAD OF THE TREASURY 1962–68 121

William Armstrong’s personal views on devaluation remain hard to pin down. ‘Did he ever make up his mind whether we ought to devalue, and if so, when?’ wrote Alec Cairncross. ‘On this controversial issue’, says the Treasury’s top official economist in that period, ‘I never heard him give his point of view.’ On the other hand, Callaghan’s biographer, Kenneth Morgan, states that in 1964, ‘[Armstrong] was strongly opposed to the devaluation of sterling.’ And Susan Crosland, who interviewed Armstrong for her biography of Tony Crosland, also says ‘Armstrong was against devaluation.’ Edmund Dell claims that Armstrong recognised, however, the ‘high probability that, in the end, the government would be forced into devaluation.’90 There is a suggestion that Labour leaders had privately communicated their rejection of devaluation to Armstrong before the 1964 election. According to Bruce-Gardyne and Lawson’s well-informed account of the whole devaluation saga: ‘When, in the summer of 1964, Callaghan, with Maudling’s full knowledge and approval, began to have private discussions with Armstrong in anticipation of a possible change of Government later that year, he left the permanent head of the Treasury in no doubt about his firm commitment to the rejection of devaluation—a commitment he knew Wilson shared.’91 It is true that Armstrong did not advocate devaluation on the crucial first weekend of the new administration, when the decision to maintain the exchange rate was taken. He had handed Callaghan, as he first stepped into Number 11 Downing Street, a two inches thick volume of economic policy briefs. It began with the words, ‘We greet the Chancellor.’ ‘The rest of the contents were not so happy’, Callaghan recalled. Armstrong’s intro- ductory note now put the 1964 balance of payments deficit at an unprec- edented £800 million, with another deficit of £450 million for the following year. This, he continued, posed serious short-term problems in terms of financing the deficit. Increases in taxation would be necessary for that, and also if public expenditure was to increase over currently-planned levels. ‘As a long-term strategy, we reject deflation by itself and devaluation’, his note continued, proposing instead, in line with the earlier ‘Armstrong Report’: a drive to increase industrial efficiency and competitiveness; measures to release for more productive employment manpower where it was not fully or efficiently employed (e.g. in the coal and rail industries); an attack on cost inflation (including a policy for prices and incomes); a ‘realistic’ long-term public spending/taxation plan; reducing the amount of resources devoted to non-economic purposes (especially 122 K. THEAKSTON AND P. CONNELLY defence and ‘prestige’ projects); a lower pressure of demand at home. But, he warned, it would take three to four years for the longer-term policies to begin to show their effects, and in the meantime large-scale international borrowing would be required and import controls should only be resorted to if other policies failed. It was a stark warning of the risks and problems ahead.92 At the start, the ‘troika’ at the top of the government—Wilson, Callaghan, and George Brown, head of the Department of Economic Affairs (DEA)—were united in rejecting devaluation on political and economic grounds, recognising that, because of the international repercussions, and the impact on the world economy, together with the tough domestic deflation needed to accompany it and make it work, it would never be the sort of soft option or ‘get out of jail free’ card that some writers and commentators on the subject seem to imagine. Devaluation ‘we have rejected now, and for all time’, Wilson told US President Lyndon Johnson; but Brown changed his mind the following year, and Callaghan also wobbled in 1966. Labour’s tiny 1964 majority would have made devaluation political suicide and destroyed the government’s international credibility, but even after winning a big majority in 1966, Wilson stuck it out. In Whitehall, Donald MacDougall, the DEA’s director-general consistently pressed for devaluation (later joined in that view by Eric Roll, DEA’s permanent secretary), as did Labour’s politically-appointed economic advisers, while, at the Treasury, Alec Cairncross had personally been convinced from the early 1960s that the pound would have to be devalued at some stage but saw no point in doing so without the supporting stringent deflationary measures, which he believed there was no likelihood Labour ministers would adopt.93 The government’s three-year trial-by-fire took it through temporary import surcharges, emergency budgets, major public spending cuts (in July 1966) and successive foreign exchange crises. Whatever short-term respite its actions and responses brought, it appears that William Armstrong could see the writing on the wall from a fairly early stage. In June 1965, he had a talk with Callaghan at Chequers, when they took a walk together, and told the Chancellor he thought the government would be lucky to avoid devaluation but that ‘it wouldn’t be the end of the road.’ ‘It would be the end of the road for me’, Callaghan immediately shot back, suggesting that his reputation and political future were tied to the exchange rate. Later, in May 1967, Armstrong told Cairncross that Callaghan—unlike Cripps in 1949—would resign when the crunch came. ‘Of course’, HEAD OF THE TREASURY 1962–68 123

Armstrong said, ‘this means that if we consider what to do, we may be thought to be planning for a new Chancellor.’ Dell exaggerates when he takes this to mean that it was ‘almost impossible’ for Armstrong to advise Callaghan to devalue lest it appeared that he was trying to force his resignation.94 But Armstrong understood that all the possible alternatives would have to be tried and be seen to fail—things would have to be taken to the bitter end—before Callaghan and Wilson would entertain the idea of devaluation. Despite Wilson’s ban on all mention of the term, he saw to it that there was some quiet contingency planning for devaluation from 1965 onwards, having a devaluation ‘war book’ and a bank of policy papers setting out the technical and practical steps that would have to be taken prepared by the top-secret ‘F.U.’ (‘Forever Unmentionable’) committee of Treasury and Bank of England officials.95 In July 1965, Armstrong seems to have still hoped that devaluation could be avoided but, at one point, told Cairncross he would be surprised if there wasn’t devaluation by Christmas of that year. The government staggered on, and in March 1966, he thought ministers would not devalue as things then stood, saying at a Whitehall meeting a month later that he was then himself unwilling to recommend devaluation and passing on the information that the prime minister had said he wasn’t willing to receive advice based on a change in the exchange rate. When a major sterling crisis hit in July 1966, Armstrong was clear with the Chancellor that the only way to hold the rate was by massive deflation, the government finally taking action only after a fierce internal struggle over economic strategy and spending cuts (the tough package of measures worked out by Armstrong and Eric Roll).96 Then, at a Chequers weekend conference in October 1966, he made clear to ministers that a decision to apply for membership of the Common Market would make devaluation almost unavoidable, the economy and the balance of payments being too weak to withstand the strains of entry, something he again warned the prime minister about in April 1967.97 Armstrong put the point, however, not as an argument for devaluation but implicitly as an argument against applying to join Europe. Wilson brushed him aside, leaving Armstrong baffled by what he saw as the contradiction between the government’s two main policy objectives. He said no more on the subject, justifying his silence by the private assumption (a correct one) that Labour’s Common Market approach would fail.98 Callaghan’s biographer states that Armstrong indicated to the Chancellor in October 1966 that he was now in favour of devaluation. By 124 K. THEAKSTON AND P. CONNELLY the summer of 1967 Armstrong knew it was just a matter of time before the exchange rate went. That September, both Cairncross and Leslie O’Brien, Governor of the Bank of England, told Armstrong the government would be forced to devalue within months but Armstrong, understanding the views and thinking of the PM and the Chancellor, counselled ‘we must await events.’ By mid-October, Cairncross felt ‘the game was up’, as pressure on the pound intensified and with terrible trade figures, but Armstrong reported to him that the Chancellor was still unwilling to listen, wanting with the PM to try and hold on and get through to spring 1968. But at the start of November, having worked on his memo and discussed tactics and plans with Armstrong, Cairncross finally got the message across and the PM and Chancellor accepted the inevitable.99 After devaluation and Callaghan’s resignation, William Armstrong served as Treasury permanent secretary for only five months under Roy Jenkins as Chancellor. He later told Susan Crosland that Treasury officials had ‘great respect’ for Jenkins: ‘I don’t remember anything where we were across each other. And once you were together with Roy, you knew you had the PM behind you. Each needed the other. … We saw the two of them as a kind of centaur—which is a Treasury man’s dream of bliss—the Prime Minister and Chancellor locked together.’100 Jenkins’ view of his first months at the Treasury was altogether more jaundiced and, in his memoirs, he was critical of the department in general and Armstrong in particular. Part of the problem was the way in which Jenkins liked to operate as a minister through a small exclusive clique of trusted personal advisers. He insisted on importing his team from the Home Office: John Harris, who was not an economist and who handled political and press issues, and David Dowler as civil service private secretary, who worked in an awkward joint arrangement alongside Treasury private secretaries—first Peter Baldwin, then Robert Armstrong—who knew the department and its business much better. On top of that, Jenkins had form as a minister finding fault with and rejecting his permanent secretary: when he became Home Secretary in late 1965 he had insisted on the removal of the veteran permanent secretary he had inherited (Sir Charles Cunningham) and the appointment of a new top official there. Jenkins says that he had ‘arrived with a considerable respect for the smooth-working Treasury machine’, but his expectations of expertise and competence were disappointed. He felt that senior officials, from Armstrong down, were ‘exhausted and demoralised by the long and unavailing battle against devaluation.’ ‘The one time in my ministerial career when I consider that I was badly advised HEAD OF THE TREASURY 1962–68 125 on major questions’, he said, ‘was in my first two or three months as Chancellor.’101 A senior Whitehall figure who saw their relationship up close was clear: ‘Jenkins and William Armstrong did not hit it off.’102 For good measure, Jenkins also felt that Laurence Helsby, the other joint permanent secretary and head of the pay and management side of the Treasury, was ‘a thoroughly third rate man.’103 Even when he was well- established as Chancellor, and after William Armstrong had been succeeded as permanent secretary by Douglas Allen (with whom Jenkins got on much better than he had with Armstrong),104 senior Treasury officials were still concerned about his ‘tendency to discuss policy with his little “Court” (Harris and Dowler) and then call together officials briefly to hear judgement before he invites them to give evidence.’105 Jenkins ‘knew that he was being advised by a permanent secretary who had signally failed his predecessor’, is how Dell puts it. It was perhaps fortunate for both the new Chancellor and the Treasury itself that in early January 1968 it was announced that Armstrong would be taking over as Head of the Civil Service when Sir Laurence Helsby retired at the end of April. The decision—one that Armstrong told Alec Cairncross he welcomed—had in fact been taken by the prime minister just as Callaghan was resigning.106 If Jenkins was unhappy with Armstrong, the latter himself now wanted to move on from the Treasury for his own reasons. For his part, Alec Cairncross detected one or two signs of Armstrong’s mind starting to gravitate away from economic policy problems, and him looking forward to dropping his Treasury responsibilities in his last couple of months there.107 Jenkins’ main criticism of the Treasury and Armstrong in the aftermath of devaluation boils down to a sense of drift and irresolution in what was a dangerous situation, with the pound still under pressure and the risk of another forced devaluation. He wrote in his memoirs that he should have been—but wasn’t—immediately and ‘forcefully’ presented with ‘an urgent package of measures which would promote the diversion of resources into exports.’ In early January 1968, when the new Chancellor had the idea of bringing the Budget forward to mid-February and announcing tax increases at the same time as the big programme of public spending cuts that were needed to restore confidence and create the economic conditions for devaluation to work, Armstrong advised him against this sort of combined big-bang operation: it would ‘irresponsible’, he said, to do the Budget without the evidence of the short-term economic forecasts due only at the end of February. The public spending cuts were therefore 126 K. THEAKSTON AND P. CONNELLY announced in January and the Budget was presented in mid-March, and Jenkins paid little attention to the short-term forecasts anyway. Armstrong’s advice on the issue, he stated flatly, was ‘as wrong as it was well inten- tioned.’ He also criticised his permanent secretary (along with the Governor of the Bank of England) for not pressing him strongly enough for the use of the regulator (to raise indirect taxes). Consumer spending and imports surged before the squeeze was finally applied, jeopardising the gains of devaluation, risking a further one, and delaying (albeit probably only for a few months) improvements in the balance of payments.108 It is odd that Jenkins—a supporter of devaluation from the start of the government—did not immediately exert himself to push through at top speed the necessary and urgent accompanying deflationary measures he surely knew were required. Armstrong had made it clear in November that devaluation without them would be ‘futile’. He told Cairncross that Callaghan had spoken of a possible large backbench rebellion against the government, the ‘disarray in the party’ meaning they could not be sure of carrying them through Parliament. The political difficulties were also behind the decision to have full discussion in a series of Cabinet meetings. The package of measures announced in November immediately after devaluation, was felt by the official steering committee on economic policy to be ‘insufficient’, recorded Cairncross. Callaghan had been advised by officials to ‘do more than enough’, to make devaluation work, but there was Cabinet resistance and Wilson even wanted to defer the full cuts to the April Budget. When Jenkins became Chancellor he had to do battle with his colleagues for more substantial reductions in public expenditure. This was the background to the story recorded by Denis Healey in his diary in January 1968, when he was told by his permanent secretary, Sir James Dunnett: ‘Willie Armstrong delighted to be leaving the Treasury because no one ever took his good advice. PM had refused a package of measures to go with devaluation.’109 Roy Jenkins was also critical of Armstrong’s performance in March 1968 when he was despatched to Washington DC when sterling was under massive pressure again during a major international dollar and gold crisis. It was not just that the British delegation managed to secure a smaller stand-by credit than the government wanted to hold the exchange rate ($4 billion as opposed to $6 billion). It was also that, following the closure of the London gold market and the declaration of a special Bank Holiday on Friday 15 March (which had triggered the resignation of George Brown from the Cabinet), in the back and forth flurry of transatlantic HEAD OF THE TREASURY 1962–68 127 messages over the weekend Armstrong recommended—with the Budget due to be delivered on Tuesday 19 March—the proclamation of further Bank Holidays (keeping the foreign exchange market closed) for the Monday and Tuesday as well, unless the Budget could be brought forward to Monday afternoon. He was actually forwarding the suggestion of Leslie O’Brien, Governor of the Bank of England, but Jenkins rejected it as completely impracticable, complaining that Armstrong ‘ought to have known better’.110 It could have provoked further panic on the markets111 as well as being impossible in terms of the Budget logistics and timetable. The episode can have done little for Jenkins’s confidence in the soon-to-depart Armstrong.

‘Creative Tension’ On the credit side of the balance sheet, so to speak, during William Armstrong’s stint in charge of the Treasury, would have to be put his important role in holding the Whitehall machine together during the first couple of years of the 1964 Labour government in the face of strong fis- siparous pressures—the creation of the Department of Economic Affairs under the volatile George Brown, and an influx of politically-committed and sometimes prickly economic advisers, such as Thomas Balogh and Nicholas Kaldor. Armstrong felt that it was very important to build per sonal relationships of confidence with the incoming government. Although he went back to the Cripps and Gaitskell period, there were few people in the new Labour government who had been significant figures in the previous Labour government (1945–51). Some from the Attlee period who knew Armstrong—such as Douglas Jay—could say to new ministers, including Callaghan, ‘you can trust this man, he’s wonderful.’ Harold Wilson also knew him from that time, and held him in very high regard. Armstrong saw it as his duty to win and hold the confidence of the ‘Big Three’, as it were: Wilson, Callaghan and Brown (who, in his memoirs, absolved Armstrong from any blame in sabotaging the DEA). ‘Some of the early discussions were disorderly and chaotic’, one former insider recalls. ‘All of the Whitehall disciplines simply collapsed under the sheer number of people who didn’t understand that you have to have certain orderly rules of procedure.’ Armstrong dedicated himself to ‘hold the thing together and make it work.’112 Armstrong accepted that ministers wanted, and that there was a role for, the ‘new kind of animal’ arriving in Whitehall. He devoted considerable 128 K. THEAKSTON AND P. CONNELLY time, energy and patience in the early weeks of the government to the arrangements around their appointment (such as office space, access to papers and meetings, and the knock-on effects on the position of Alec Cairncross and the Treasury’s Economic Section). The caustic and venomous-tongued Balogh—Harold Wilson’s economic adviser—had, as Wilson put it, ‘running rows with … Treasury officials, whom he regarded as a mixture of saboteurs and ignoramuses.’ From the Treasury’s side, Alec Cairncross felt that ‘utter chaos’ reigned in the early days of the new government, that Balogh did not know ‘how to fit into the machine’ and that the new ‘irregulars’ were often ‘bogus experts’.113 Balogh’s view was that advisers had to work against the civil service, not with it, which was perhaps one reason why he was less influential than Kaldor, who was more genial and approachable, and more aware of the administrative practicalities and problems in economic policy-making. Kaldor fitted quite effectively into the Treasury and advised the Chancellor particularly on tax reforms. The Selective Employment Tax (SET), introduced in 1966, was Kaldor’s brain-wave, designed to boost manufacturing industry and exports. But events proved Armstrong right when he advised the Chancellor against the SET scheme (which he told Cairncross he ‘hated’), arguing that the economic effects would be modest and the bureaucracy involved burdensome, with the intended objectives better achieved in other ways.114 The issues around the Department of Economic Affairs (DEA) go back to before the 1964 general election. More organisational changes were inevitable, Armstrong had warned Treasury staff after the 1962 reorganisation, but at that stage he was thinking primarily of developments and adjustments within the department.115 In the event, the major issue soon became a more fundamental one as the Labour Party in opposition started to develop plans for a new ministry designed to challenge the Treasury’s dominance over economic policy and split up the department itself. To some extent there was a political motivation, with Wilson seeking to divide-and-rule his two top colleagues, Callaghan and Brown, who had each stood against him for the leadership, and needing to create a big job for Brown—and Armstrong and other civil servants were not unaware of those considerations. Wilson himself seems also to have had a deep personal suspicion and antipathy towards the Treasury (one shared by his adviser, Thomas Balogh), and a desire to check its power and cut it down to size. But there was, in addition, a genuine policy commitment in Labour circles to creating new departmental machinery to foster economic HEAD OF THE TREASURY 1962–68 129 growth, plan the economy, and prioritise expansion and production over what was seen as the Treasury’s blinkered short-term financial focus. Even Callaghan, as Shadow Chancellor, supported the scheme, as linked to ideas of economic planning, or at least recognised that it was pretty inevitable that a Labour government would set up some sort of new ministry. (However, Callaghan later recalled that ‘William Armstrong had convinced me that as a result of a reorganisation at the Treasury department in 1962 there was a change in atmosphere—that the Treasury would no longer operate as it had done in the 1950s’—but this was probably too nuanced a view to influence most Labour politicians and advisers, though not all—Douglas Jay thought the idea of a separate ministry was flawed and bound to produce muddle and friction.)116 Whitehall preparations for possible departmental changes had started in May 1963 when Helsby sought the prime minister’s approval to start with the permanent secretaries concerned a review of the machinery of government in the area of the economic departments. But it was not until November 1963 that the Machinery of Government Steering Group asked William Armstrong to chair a small sub-committee to consider the distribution of functions between the economic departments.117 In February 1964 Armstrong circulated a long personal memorandum looking at the implications of the appointment of a Minister for Economic Affairs. He argued strongly that the four basic Treasury roles and powers—control of public expenditure, responsibility for the Budget, monetary policy, and exchange rate policy—were inextricably interlinked and could not be separated, by transferring responsibility for some of them to another department, without producing confusion and incoherence in economic policy, while transferring them all would simply be to make a new minister Chancellor by another name. A new Economic Affairs minister, on this basis, would therefore not have executive powers but would primarily have a coordinating role, chairing the Cabinet’s economic policy committee and chairing the NEDC, with a staff preparing long-term assessments and economic modelling, responsible for economic planning and cooperation with both sides of industry.118 The sub-committee, however, starting from the assumption that there would be an overall national economic plan favoured thinking in terms of a minister of Production and Planning, rather than Economic Affairs. General coordination of economic policy would then remain with the Treasury, or alternatively might be taken over by the prime minister. An Economic Affairs minister responsible for coordinating economic policy, the sub-committee thought, 130 K. THEAKSTON AND P. CONNELLY would hardly be content to leave short-term economic regulation entirely to the Chancellor and the Treasury. The Ministry of Planning model, Alec Cairncross (a member of the sub-committee) thought, ‘makes it much easier to see where Treasury fits in and would indeed involve relatively little change.’ However, it was a problem that the ‘new department would be a small one for a big minister.’ ‘William’, he noted in his diary, ‘would like to give it incomes policy to make sure that it had to grapple with things that might go wrong, not just sets of targets for other people to hit.’ (Naturally the formal minutes do not put it in quite those terms!)119 The report of the Armstrong sub-committee in June 1964 described a plan for a new Secretary of State for Economic Affairs who would be responsible for a Plan for long-term economic development and stand as an ‘overlord’ over economic departments, coordinating economic policy. But Bank rate, monetary policy, the Budget, and control of public spending would all remain with the Treasury.120 In a note to Helsby marked ‘secret’, however, Armstrong spelt out his own personal views on the merits of the Labour Party’s proposal (which he said accorded with those of Otto Clarke, Alec Cairncross, Denis Rickett and Douglas Allen—all members of the sub-committee). They were damning. Armstrong expressed serious doubts about whether the prime minister could devote the time and attention, or had the official support at the centre necessary, to coordinate economic policy. He noted that Labour was now saying that the new minister would coordinate economic policy and chair the Cabinet’s Economic Policy Committee, as well as being responsible for the ‘National Development Plan’. The previous Labour government in the late-1940s had tried to set up an alternative focus of economic coordination, first through the Lord President and then the short-lived Minister of Economic Affairs, and those attempts, he argued, had failed. In the new circumstances, too, he questioned whether Labour’s proposed new secretary of state would have the prestige, position, influence and powers necessary to make his coordination of economic policy a reality. It was also, he went on, unwise and unrealistic in a mixed and open economy to think that ‘long- term planning can take precedence over the short-term regulation of demand.’ Accordingly, real power will remain in the hands of the Chancellor of the Exchequer. Trying to divide up responsibilities between long-term and short-term or ‘real resources’ and ‘finance’ was misleading and unworkable. Given ‘a great deal of goodwill, mutual understanding and close working’ between ministers and the departments, the arrangements could be made to work for a time. But his conclusion was the new HEAD OF THE TREASURY 1962–68 131 set-up, with an Economic Affairs department, ‘would not be as efficient as the present system and probably would not last very long.’121 At the subsequent meeting of the Machinery of Government Steering Group, Armstrong wondered whether a better way forward might be the idea of a ‘federal Board of Trade’ with wider responsibilities in industrial and commercial matters, the Treasury then being responsible for financial work, ‘supervision over the economy as a whole’, and taking over economic planning from the National Economic Development Office. At Sir James Dunnett’s suggestion, the possibility of abolishing the Treasury altogether, substituting a Secretary of State for Economic Affairs and a Minister of Finance, was then considered, William Armstrong writing a paper demolishing the thinking behind that proposal. Essentially, the senior officials concerned understood that Labour was committed to a scheme that would result in friction and difficulties, and which in the long- run would or could not last, but which in the meantime they would have to try to make work.122 At the end of July, Helsby and Armstrong instructed Treasury officials to start drawing up plans for a Ministry of Economic Affairs and to work out the effects of that on the Treasury itself and its organisation.123 Alongside these official deliberations, Labour leaders had opened up secret ‘back channel’ lines of communication about their machinery of government plans with Whitehall. Helsby briefed the prime minister, Alec Douglas-Home, that this was happening, on the basis that the PM could not, of course, officially know about it. (Several years later, there was some embarrassment when George Brown revealed those private talks in a newspaper article after he had resigned from the government, and the former Chancellor, Reginald Maudling, phoned William Armstrong to complain that he had not approved any such contacts or preparations, to be told that Douglas-Home had agreed.)124 On 15 April 1964, George Brown met with William Armstrong, showing him various Labour Party documents and talking freely about the plans for the new ministry, including his proposal to appoint Eric Roll as permanent secretary and Donald MacDougall as chief planner. Lord Plowden talked, in the role of intermediary for Helsby, to George Brown and Harold Wilson, and in July 1964 Helsby, Plowden and Wilson dined privately together, discussing the Labour leader’s thinking about the organisation of Number 10 Downing Street and the Cabinet Office, and about the proposed DEA and other machinery of government proposals. Helsby came away with the strong impression that the whole idea for the new ministry ‘was intended as a solution of a 132 K. THEAKSTON AND P. CONNELLY personal problem.’ Wilson apparently ‘spoke quite frankly of George Brown’s position: for health and other reasons he did not expect him to survive long in this position.’ Wilson showed, Helsby thought, ‘a great sense of the importance of the Treasury’s function.’ And at one point, extraordinarily, Wilson even ‘emphasised that it was essential to keep the Treasury strong.’ ‘There was much, he said, that the Treasury must do over the next few years.’ On this count, Wilson, as a putative prime- minister-in-waiting, seemed to be hedging his bets, regarding the plans for the DEA as an ‘experiment’ (as Helsby recorded), and perhaps not really expecting it to succeed.125 Wilson could say different things to different people, and his real views remain opaque. But for all his supposed mistrust of the Treasury, it is significant that Wilson—if Helsby’s account was reli- able—was saying all this about the Treasury and the DEA before the 1964 election. At the very least, it must have strengthened the Treasury’s reservations and doubts about the new department. George Brown later said in his memoirs that he had made a ‘grave misjudgement’ over the choice of Eric Roll as permanent secretary of the DEA, feeling that if he had been able to persuade William Armstrong to head the ill-fated new department, then he would have won his battle with the Treasury. And Roll was indeed the Treasury’s choice for that job, according to one former official, partly because of the belief that ‘he would be no match for the Treasury’ in the likely Whitehall infighting. William Armstrong would always carry more personal clout than Roll. As Reginald Maudling put it, in a note he sent to Armstrong when the DEA was set up: ‘It doesn’t matter what departments they set up. The real power will still lie behind the door which has your name on it.’ But Armstrong was quite determined not to do the DEA job. ‘I do not think for one moment that Armstrong would have left the Treasury’, recalled Eric Roll.126 Brown had in fact come away from his secret meeting with Armstrong in April 1964 with the clear understanding that Armstrong wanted to stay put in the Treasury and did not wish to be moved across to head the new department, and Harold Wilson knew that too. However, Lord Plowden, acting as an intermediary between Helsby and the Leader of the Opposition, strongly urged Wilson that ‘the only way in which this machinery could be made to work was to put Armstrong in charge of the new Department.’127 Wilson would not hear of it; in their secret meeting in July 1964, he told Helsby that ‘it would be a great mistake that Armstrong should move from the Treasury: it would be the more important that he should stay there in that the inauguration of the new Department might tend in some HEAD OF THE TREASURY 1962–68 133 people’s eyes to lower the standing of the Treasury.’ Plowden still nevertheless stressed to Helsby ‘that if a Ministry of Economic Affairs is to remain a permanent feature of a Labour Administration’ then the permanent secretary should ultimately be William Armstrong. Helsby replied that he fully accepted that point and had spoken to Armstrong in that sense.128 Believing what he did about the difficulties of the new set up, thinking it was unlikely to last long, recognising that real power would stay with the Treasury—and determined that it should remain the top department—it is, however, obvious why Armstrong wanted and intended to stay there. If he had gone to the DEA at the start, it might have been an important symbolic move, but it is not clear how much difference that would have made because the DEA did, in the end, have plenty of able officials, and it did not fail simply because William Armstrong was not at its head. In any case, as Dell observes, ‘Armstrong with his deliberate, uncom- mitted approach to problems was not the man to work comfortably with George Brown.’ This is surely right. ‘On his day’, Douglas Allen once said, George Brown was ‘a very fine minister indeed’, and he had real political gifts and remarkable passion and energy, but also hugely destructive character flaws (including his drunken outbursts and alcoholism). William Armstrong’s view of Brown was that ‘he had the trade unionist’s outlook.’ ‘Everything was a deal on its own: you go from deal to deal. … He had insights; he had negotiating skills. He was good at demolishing silly arguments.’ But he wasn’t interested in a philosophical approach or long-term thinking, and could not build an organisation: ‘What mattered was that he had the National Plan, not what was in it.’129 Other mandarins worried that Brown would be difficult to handle: talking to Alec Cairncross before the election, Laurence Helsby expressed fears that the new ministry under George Brown would ‘chase off after all kinds of hares’, adding that ‘it would be the responsibility of the Treasury to see that continuity of purpose was maintained in spite of this.’130 It is understandable why, commenting on the ministerial/permanent secretary combinations at the Treasury and DEA, Alec Cairncross mused that ‘our influence must be due quite largely to the superior rationality of W.A. + J. Callaghan as against E.R. + G. Brown’ (emphasis in original).131 Armstrong went to considerable trouble to try to make the experiment work: ensuring that the DEA had high-quality staff; maintaining friendly, frank and open personal relations with its permanent secretary, Eric Roll; and even replacing his own private secretary, Peter Jay, who, as Callaghan’s 134 K. THEAKSTON AND P. CONNELLY son-in-law, had somehow fallen foul of the ever-suspicious Brown.132 Tremendous effort went into the negotiation and agreement of what was called the ‘Concordat’ (a term devised by Peter Jay), setting out the division of functions and the relationship between the Treasury and the DEA. Work on this had started inside the Treasury in the couple of months before the election and the advent of the new government.133 Negotiations then continued between officials and Labour advisers and ministers into early December. At the centre of this, as Armstrong explained to the Chancellor, was the ‘unity in diversity’ of economic policy: ‘a unity in the sense that the economy upon which it operates is itself a unity, so that any given measure of policy cannot be looked at in isolation but only in con- junction with the effects of all other policies on the economy as a whole, and at the same time a diversity in that the policies of the Government which have economic effects are so numerous and so widespread that they cannot be brought together under the exclusive control of a single Minister.’ The DEA would be ‘primarily responsible for the Government’s plan for national economic development, and thus for the long-term aspects of economic policy’, while the Treasury would be ‘primarily responsible for the control of public sector expenditure and the short- term aspects of economic policy.’ But, it was emphasised, ‘in neither case can the word “primarily” mean “only” or “exclusively”.’134 There was a particular argument over responsibility for public sector investment, and a power grab by Brown (backed up by Thomas Balogh and Tony Crosland) to try to get control of that for DEA, which was fiercely resisted from inside the Treasury by Otto Clarke. Eventually, at a meeting of the top officials from each side (Armstrong and Clarke for the Treasury, Roll and MacDougall for DEA, Helsby in the chair) a fudge was arrived at, in terms of the different points of view from which the two departments would approach the issue: the Treasury supposedly being concerned with the ‘vertical’ division of resources between the various public services, while the DEA looked at the ‘horizontal’ division between categories of resources and industries.135 As James Callaghan was later to write:

The Concordat represented a verbal truce rather than a true meeting of minds with a genuine and rational division of responsibilities. The principal officials in the Treasury and the DEA tried to make the agreement work, but there were what the Americans call frequent ‘turf fights’. It was sometimes said that No. 10 believed in something called ‘creative tension’ and that the HEAD OF THE TREASURY 1962–68 135

friction between the Departments would produce the desired pearls. This was not my experience.

Eric Roll later described the Concordat as ‘a pretty hopeless mish-mash’, and it was never referred to afterwards for the purpose of settling disputes between the two departments.136 By July 1966, Alec Cairncross was recording a conversation with Eric Roll in which ‘E. recognises the absur- dity of the split of the two main departments—creative tension is really destructive tension or just tension—but appreciates that the P.M. prefers things that way.’137 Eric Roll perhaps identified the crucial factor when he remembered William Armstrong saying to him, at an early stage in the 1964 government, ‘“Look, I am going to look after the cold war”, by which he meant the balance of payments problem, the reserves problem, and all the rest of it.’138 Dealing with the realities of the ‘cold war’ and the struggle against devaluation trumped the planning commitment. Then, the departure of Brown as DEA’s minister in August 1966 removed its remaining political force and rationale. DEA staggered on until it was finally abolished in 1969, with the prime minister himself taking notional responsibility for it in 1967, but the Treasury’s primacy was by then clear to all. In the end, DEA failed not because of bureaucratic sabotage but because it was handi- capped by an ill-thought-out division of functions between it and the Treasury and by a lack of executive powers on key issues, and primarily because of political decisions giving priority to the defence of the exchange rate which ensured that the Treasury would inevitably come out on top in the inter-departmental struggle.

Notes 1. Samuel Brittan, The Treasury Under the Tories 1951–1964, (Harmondsworth: Penguin, 1964), p. 52. 2. Interview with former economic adviser (KT). 3. Interview with former permanent secretary (KT). 4. Samuel Brittan, ‘A new Treasury—At last’, The Observer, 5 August 1962; ‘New men at top of Civil Service’, The Observer, 29 July 1962. 5. Interview with Lord Wilson of Dinton (PC). 6. Laurence Helsby note for the record, 8 May 1964, National Archives (NA) T330/19. 7. Interview with former permanent secretary (KT). 136 K. THEAKSTON AND P. CONNELLY

8. Interview with former permanent secretary (KT). 9. Kevin Theakston, The Civil Service Since 1945 (Oxford: Basil Blackwell, 1995), p. 22; Peter Catterall (ed), The Macmillan Diaries: The Cabinet Years 1950–1957 (London: Macmillan, 2003), p. 494. 10. Harold Evans, Downing Street Diary (London: Hodder and Stoughton, 1981), pp. 131, 197, 210. 11. Peter Hennessy, Whitehall (London: Secker and Warburg, 1989), p. 216. 12. Kenneth Fleet, ‘Treasury Team Reshaped’, The Guardian, 30 July 1962. 13. Private information; Hennessy, Whitehall, p. 216. 14. Jeremy Hornsby, ‘Secrets All My Life’, Daily Express, 30 July 1962; ‘The Chancellor’s right-hand man’, The Observer, 30 September 1962. 15. ‘Not the Mandarin Type’, Financial Times, 30 July 1962; ‘Young Men to Take Over in Sweeping Treasury Changes’, The Sunday Times, 29 July 1962. 16. Kevin Theakston and Geoffrey K. Fry, ‘Britain’s Administrative Elite: Permanent Secretaries 1900–1986’, Public Administration, vol. 67, no.2, 1989, pp. 137–8, 141. 17. Interview with Sir Samuel Goldman (PC); interview with former permanent secretary (KT). 18. ‘Do Christians need a personal experience of God?’, William Armstrong talk to Congregational Church group, meeting of the 1662 Society, May 1972, National Archives (NA) BA 6/83. 19. Private information (KT). 20. Interview with Lord Armstrong of Ilminster (PC). 21. Thomas Balogh, ‘The Apotheosis of the Dilettante: The Establishment of Mandarins’, in Hugh Thomas (ed), The Establishment (London: Anthony Blond, 1959), pp. 83–126; Thomas Balogh, ‘The Treasury Purge’, New Statesman, 3 August 1962. 22. Alec Cairncross (ed), The Robert Hall Diaries 1947–1953 (London: Unwin Hyman, 1989), p. 263; G.C. Peden, The Treasury and British Public Policy 1906–1959 (Oxford: Oxford University Press, 2000), pp. 432–437. 23. Kevin Theakston, Leadership in Whitehall (London: Macmillan, 1999), pp. 102–103. 24. ‘Number Ten and Number Eleven’, The Economist, 28 July 1956, pp. 293–4. 25. Theakston, Leadership in Whitehall, pp. 148–172; Rodney Lowe, ‘Milestone or Millstone: the 1959–61 Plowden Committee and its Impact on British Welfare Policy’, Historical Journal, 40(2), 1997, pp. 463–491. 26. Edmund Dell, The Chancellors (London: HarperCollins, 1996), pp. 315–316. 27. Sir Douglas Wass quoted in: John Rentoul, ‘“I’ve got a typewriter and a bottle of gin”: Sir Richard “Otto” Clarke, titan of the Civil Service’, The Independent, 22 July 2015. HEAD OF THE TREASURY 1962–68 137

28. Rodney Lowe, The Official History of the British Civil Service: Reforming the Civil Service, Volume 1: The Fulton Years, 1966–81 (London: Routledge, 2011), pp. 85–86, 106–107. 29. The work of the Treasury Organisation Committee can be followed in: NA T199/930, T199/931, T199/932, T199/934, T199/938, T199/805. The final TOC report is in T199/935. Armstrong’s memo of 9 January 1962 is in T19/930. 30. Hennessy, Whitehall, p. 762, fn.57. 31. Sir William Armstrong, ‘The Reorganised Treasury’, NA T230/711. 32. Samuel Brittan, ‘A new Treasury—At last’, The Observer, 5 August 1962. 33. Samuel Brittan, Steering the Economy (Harmondsworth: Penguin, 1971), pp. 72, 272. 34. Interview with former economic adviser (KT). 35. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968; Peter Hennessy, ‘Headship of the Civil Service 3: Not biscuits but a slice of cake when dispute became serious’, The Times, 6 October 1977. 36. Interview with Lord Roll (PC). 37. Jeremy Hornsby, ‘Secrets All My Life’, Daily Express, 30 July 1962. 38. Sir William Armstrong, the new head of the Civil Service, in conversation with George Scott’, The Listener, 9 May 1968, p. 597. 39. Transcript of ‘In the Public Eye’, BBC Radio interview, 26 April 1968, Armstrong papers. 40. Sir William Armstrong, ‘The Role and Character of the Civil Service’, Proceedings of the British Academy, vol. 56 (London, 1970), pp. 221–222. 41. British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, NA BA 6/82. 42. Brian Connell, ‘Lord Armstrong: A hardly-noticed transition from Whitehall to the City’, The Times, 15 November 1976. 43. British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, NA BA 6/82. 44. Armstrong, ‘The Role and Character of the Civil Service’, p. 223. 45. ‘The Chancellor’s right-hand man’, The Observer, 30 September 1962; Hennessy, Whitehall, p. 219. 46. Scott Kelly, The Myth of Mr Butskell: The Politics of British Economic Policy, 1950–55 (Aldershot: Ashgate, 2002). 47. Barbara Castle, The Castle Diaries 1964–70 (London: Weidenfeld and Nicolson, 1984), pp. 722–723, 786. 48. Armstrong, ‘The Role and Character of the Civil Service’, p. 214. 49. British Forces Broadcasting Service, ‘On Reflection—Sir William Armstrong’, April 1972, NA BA 6/82. 138 K. THEAKSTON AND P. CONNELLY

50. ‘Sir William Armstrong, head of the Civil Service, talks to Robert McKenzie about the Fulton Report’, The Listener, 30 January 1969, p. 136. 51. Peter Hennessy, The Prime Minister: The Office and Its Holders Since 1945 (London: Allen Lane Penguin Press, 2000), p. 422. 52. Leo Pliatzky, Getting and Spending (Oxford: Basil Blackwell, 1982), pp. 77–8. 53. Interview with former permanent secretary (KT). 54. Alec Cairncross, The Wilson Years: A Treasury Diary, 1964–1969 (London: The Historians’ Press, 1997), pp. 175, 291. 55. Interview with former second permanent secretary (KT). 56. Alec Cairncross, Living With The Century (Fife: iynx, 1998), pp. 229–30; Cairncross, The Wilson Years, p. 206. 57. Interview with former permanent secretary (KT). 58. Interview with former permanent secretary (KT). 59. Interview with former permanent secretary (KT). 60. Interview with former economic adviser (KT). 61. Interview with Lord Butler of Brockwell (PC). 62. Correspondence with Lord Armstrong of Ilminster (PC). 63. ‘Make haste slowly.’ 64. Interview with Peter Jay, British Diplomatic Oral History Programme, Churchill College, Cambridge (2006); Peter Jay, ‘New man at the helm in Whitehall’, The Times, 1 May 1968. 65. Correspondence with Sir David Walker (PC). 66. Samuel Brittan, Capitalism with a Human Face (London: Fontana, 1996), p. 11. 67. Gay Davidson, ‘The “British tradition”: C.S. Heads Talk to Both Sides’, Canberra Times, 27 October 1973; Hugo Young, ‘Arch-mandarin who went public’, The Sunday Times, 13 July 1980. 68. Departmental Committee on Section 2 of the Official Secrets Act (Franks Committee), Cmnd 5104 (London: HMSO, 1972), vol. 3, pp. 106–107, 119. 69. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 70. Roy Jenkins, Life At the Centre (London: Macmillan, 1991), p. 291; Dell, The Chancellors, pp. 300–301. 71. Sir Alec Cairncross, Diaries: The Radcliffe Committee and the Treasury 1961–64 (London: Institute for Contemporary British History, 1999), pp. 82, 85. 72. Cairncross, Diaries: The Radcliffe Committee and the Treasury 1961–64, p. 50; Lewis Baston, Reggie: The Life of Reginald Maudling (London: Sutton Publishing, 2004), p. 184. HEAD OF THE TREASURY 1962–68 139

73. James Callaghan, Time and Chance (London: Collins/Fontana, 1988), p. 155. 74. B.C. (M) (63) 8, Armstrong to Mitchell, 20 February 1963, NA T 171/625; Baston, Reggie, p. 192; Richard Lamb, The Macmillan Years 1957–1963: The Emerging Truth (London: John Murray, 1995), pp. 94–95. 75. See: NA T230/524, T230/525, T230/579; Hugh Pemberton, Policy Learning and British Governance in the 1960s (Houndmills, Basingstoke: Palgrave Macmillan, 2004), pp. 70–72. 76. Baston, Reggie, pp. 224, 237, 241; Cairncross, The Wilson Years, p. 3; Armstrong to Clarke, 2 February 1960, NA T325/64. 77. Baston, Reggie, p. 227; Cairncross, Diaries: The Radcliffe Committee and the Treasury 1961–64, p. 85. 78. Armstrong to Bancroft, 13 July 1964; Note of a meeting at No. 11 Downing Street, 21 July 1964, NA T171/755. 79. Kenneth O. Morgan, Callaghan: A Life (Oxford: Oxford University Press, 1997), p. 189. 80. ‘NIF Report and Balance of Payments Prospects Report’, note by W. Armstrong, 16 December1963, annex to C.P. (64) 3, ‘Economic Prospects, 1964’, 6 January 1964, NA CAB 129/116. 81. BC (64) 3rd meeting, 1 May 1964; Meeting with Chancellor of the Exchequer 11 June 1964; Bancroft note for the record, 18 June 1964; Armstrong to Bancroft, 13 July 1964; Note of a meeting at No. 11 Downing Street, 21 July 1964, NA T171/755. 82. Armstrong to Bancroft, 13 July 1964; Note of a meeting at No. 11 Downing Street, 21 July 1964, NA T171/755. 83. Long-term Prospect for the Economy and Deployment of Resources, note of a meeting in Sir William Armstrong’s room, 18 June 1964; Armstrong to Bancroft, ‘The Next Five Years’, 6 July 1964, NA T368/7. 84. Bancroft to Armstrong, 8 July 1964, NA T368/7; Baston, Reggie, p. 230. 85. Dell, The Chancellors, p. 297; Baston, Reggie, pp. 190–191. 86. Armstrong to Bancroft, with Cairncross memo on ‘Devaluation’, 23 July 1964; Bancroft to Armstrong, 28 July 1964, NA T171/755. 87. Armstrong to Bancroft, ‘Economic Policy: Report on the Balance of Payments’, 18 September 1964, NA T368/7; printed version of the report also in T171/755. 88. Morgan, Callaghan, pp. 206–207; Royal Mint papers of Sir William Armstrong, NA T368/1, T368/2. 89. Dell, The Chancellors, pp. 315–316, 319–320. 90. Cairncross, Living With The Century, p. 230; Morgan, Callaghan, p. 206; Susan Crosland, Tony Crosland (London: Jonathan Cape, 1982), p. 125; Dell, The Chancellors, p. 319. 140 K. THEAKSTON AND P. CONNELLY

91. Jock Bruce-Gardyne and Nigel Lawson, The Power Game: An Examination of Decision-making in Government (London: Macmillan, 1976), p. 127. 92. Callaghan, Time and Chance, p. 162; Armstrong to Bancroft, 16 October 1964, NA PREM 13/032. 93. Wilson to Johnson, 24 October 1964, NA PREM 13/032; Tim Bale, ‘Dynamics of a Non-Decision: the “Failure” to Devalue the Pound, 1964– 7’, Twentieth Century British History, 10 (2), 1999, p. 210; Bruce-Gardyne and Lawson, The Power Game, p. 133; Cairncross, The Wilson Years, p. 1. 94. Cairncross, The Wilson Years, pp. 64, 210; Dell, The Chancellors, p. 334. 95. See NA T312/1401 and T312/1637 for minutes of meetings of the F.U. committee, chaired by William Armstrong. 96. Cairncross, The Wilson Years, pp. 68, 74, 129–30, 148. 97. Tony Benn, Out of the Wilderness: Diaries 1963–67 (London: Hutchinson, 1987), p. 480; Castle, The Castle Diaries 1964–70, p. 177; Douglas Jay, Change and Fortune: A Political Record (London: Hutchinson, 1980), p. 365; Richard Crossman, The Diaries of a Cabinet Minister, Volume 2: Lord President of the Council and Leader of the House of Commons 1966–68 (London: Hamish Hamilton and Jonathan Cape, 1976), pp. 82, 88; Dell, The Chancellors, p. 338. 98. Bruce-Gardyne and Lawson, The Power Game, p. 133. 99. Morgan, Callaghan, p. 255; Cairncross, The Wilson Years, pp. 229, 233, 236, 240, 244. 100. Crosland, Tony Crosland, pp. 202–203. 101. Roy Jenkins, A Life at the Centre (London: Macmillan, 1991), pp. 220–221. 102. Interview with former permanent secretary (KT). 103. June Morris, The Life and Times of Thomas Balogh: A Macaw Among Mandarins (Brighton: Sussex Academic Press, 2007), p. 117. 104. John Campbell, Roy Jenkins (London: Jonathan Cape, 2014), p. 325. 105. Cairncross, The Wilson Years, pp. 336–337. 106. Dell, The Chancellors, p. 354; ‘New head of home Civil Service’, The Times, 5 January 1968; Cairncross, The Wilson Years, p. 257. 107. Cairncross, The Wilson Years, pp. 272, 291. 108. Jenkins, A Life at the Centre, pp. 221, 230. 109. Dell, The Chancellors, pp. 351, 353; Cairncross, The Wilson Years, pp. 244– 5, 247, 255, 266–7; Edward Pearce, Denis Healey: A Life In Our Times (London: Little, Brown, 2002), p. 347. 110. Ibid., pp. 241–242. 111. Cairncross, The Wilson Years, p. 289. 112. Interview with Peter Jay (KT); George Brown, In My Way (Harmondsworth: Penguin, 1972), p. 113. 113. Cairncross, The Wilson Years, pp. 10, 23, 28; Morris, The Life and Times of Thomas Balogh, p. 120. HEAD OF THE TREASURY 1962–68 141

114. Morris, The Life and Times of Thomas Balogh, pp. x, 143; Cairncross, Living With The Century, pp. 242–3; Cairncross, The Wilson Years, pp. 131, 134; ‘Employers’ National Insurance Contributions’, Note of a meeting in the Treasury, 14 April 1966; Armstrong to Bancroft, 15 April 1966, NA T171/813. 115. Sir William Armstrong, ‘The Reorganised Treasury’, NA T230/711. 116. Crosland, Tony Crosland, pp. 122–3, 126; Hennessy, Whitehall, pp. 180– 1; Christopher Clifford and Alistair McMillan, ‘Witness Seminar: The Department of Economic Affairs’, Contemporary British History, 11 (2), 1997, p. 125; Jay, Change and Fortune, pp. 295, 299–300. 117. Helsby to Prime Minister, 9 May 1963, NA T330/19; MG (63) 1st meeting, 4 November 1963, NA CAB 21/5081. 118. Armstrong memorandum, 7 February 1964, NA CAB 21/5082. 119. Minutes of the MG (E) (64) Committee on Machinery of Government: Economic Departments are in: NA CAB 21/5082 and T330/19; see also: Cairncross, Diaries: The Radcliffe Committee and the Treasury 1961–64, p. 91. 120. MG (64) 4, ‘Distribution of Functions between Economic Departments’, 5 June 1964, NA T330/20. 121. Armstrong to Helsby, ‘Redistribution of functions between Economic Departments’, 5 June 1964, NA T330/20. 122. MG (64) 2nd meeting, 10 June 1964; Armstrong to Helsby, ‘ The organization of Economic Departments’, 16 June 1964; MG (64) 3rd meeting, 22 June 1964, NA T330/20. 123. A.J. Collier, note for the record, 30 July 1964, NA T199/962. 124. Helsby note of conversation with prime minister, 27 April 1964, NA T330/19; M.V. Hawtin, note for the record, 5 April 1968, NA T330/135. 125. William Armstrong note, 17 April 1964; Helsby note, 8 May 1964, NA T330/19; Helsby note, 28 July 1964, NA T330/20. 126. Brown, In My Way, pp. 89–90; Ben Pimlott, Harold Wilson (London: HarperCollins, 1992), p. 361; Hugo Young, ‘Arch-mandarin who went public’, The Sunday Times, 13 July 1980; Eric Roll, Crowded Hours (London: Faber and Faber, 1985), p. 152. 127. Laurence Helsby note, 8 May 1964, NA T330/19. 128. Helsby note, 28 July 1964; Lord Plowden to Helsby, 5 August 1964; Helsby to Plowden, 5 August 1964, NA T330/20. 129. Dell, The Chancellors, p. 309; Clifford and McMillan, ‘Witness Seminar: The Department of Economic Affairs’, p. 128; Roger Middleton (ed), Inside the Department of Economic Affairs: Samuel Brittan, the Diary of an ‘Irregular’, 1964–6 (Oxford: Oxford University Press, 2012), pp. 14–15. 130. Helsby to Armstrong, 5 August 1964, NA T199/962. 131. Cairncross, The Wilson Years, p. 197. 142 K. THEAKSTON AND P. CONNELLY

132. Roll, Crowded Hours, p. 155; Clifford and McMillan, ‘Witness Seminar: The Department of Economic Affairs’, p. 128; interview with Peter Jay (KT). 133. See: TOC (64) 4, ‘Organisation of the Treasury after the appointment of a Secretary of State for Economic Affairs’, 16 September 1964; TOC (64) 6, ‘A Department of Economic Affairs’, 17 September 1964; TOC (64) 2nd meeting, 23 September 1964; Armstrong to Bancroft, ‘Department of Economic Affairs: Division of Functions with the Treasury’, 16 October 1964, NA T199/962. 134. Armstrong to Bancroft, ‘Department of Economic Affairs: Division of Functions with the Treasury’, 16 October 1964, NA T199/962. 135. Jay, note for the record, 29 October 1964; Clarke to Bancroft, 29 October 1964; Note of a meeting held in Sir Laurence Helsby’s room, 2 November 1964, NA T199/962. 136. Callaghan, Time and Chance, p. 166; Roll, Crowded Hours, pp. 152–3. 137. Cairncross, The Wilson Years, p. 45. 138. Clifford and McMillan, ‘Witness Seminar: The Department of Economic Affairs’, p. 126. CHAPTER 5

Head of the Home Civil Service 1968–74

William Armstrong started out as Head of the Home Civil Service in 1968 in a blaze of favourable publicity, hailed as a ‘new broom’ reformer and taking over the reins at a time when the civil service seemed poised on the brink of a new period of change and modernisation. Press headlines gave the impression of expecting or anticipating a strong personal role, power and impact on what was, at the time, a large, sprawling and complex bureaucratic organisation of 677,000 staff (of which 471,000 were ‘non-industrial’ civil servants and 206,000 ‘industrial’1): ‘New man at the helm in Whitehall’, ‘The machine’s new minder’, ‘The civil service chief with the job of revolutionising Whitehall’, ‘Cleaning up the corridors of power’, ‘Sir William Armstrong plays crucial role’.2 There was even a story headlined, ‘Armstrong, bringer of civil service salvation’, punning on his family background and arguing it was ‘a perfect counter to lingering sus- picions about the … old-school-tie complex’, asking ‘what sort of Home Civil Service will Sir William Armstrong … be able to create [sic]?’ and predicting he would ‘open a lot of musty windows fast’, and prove to be Whitehall’s ‘best, most reforming boss for decades.’3 This sort of slant would inevitably over-personalize the process and over-dramatize the extent and nature of change and reform of the administrative machine that was possible in Whitehall. He formally took over as civil service head on 1st May 1968, still based in the Treasury as joint permanent secretary (in line with the 1962 set-up),

© The Author(s) 2018 143 K. Theakston, P. Connelly, William Armstrong and British Policy Making, Understanding Governance, https://doi.org/10.1057/978-1-137-57159-5_5 144 K. THEAKSTON AND P. CONNELLY but he moved across to become the first permanent secretary of the newly- formed Civil Service Department (CSD) on 1st November 1968. Taking away management of the civil service from the Treasury and locating it in a separate department was one of the Fulton Committee’s central recommendations, a move strongly backed by Whitehall’s outside critics and by the civil service unions, but also supported in some quarters of the mandarinate where there was some discontent at the Treasury’s dominance and style.4 In his private evidence to the Fulton Committee in July 1966, Armstrong had given powerful support to the proposal to carve out a separate public service department outside the Treasury, reporting to the prime minister, but with its own minister in day-to-day charge.5 The relationship between him and Laurence Helsby as Joint Permanent Secretaries of the Treasury heading its two ‘sides’ 1962–68 had not always worked smoothly. ‘It didn’t work well—they were two different charac- ters. Helsby didn’t have the broadness of mind and imagination needed [in a Head of the Civil Service]’, said a former insider who saw them in action from close up. Another insider described it as ‘a very uneasy relationship’. Helsby—a grey and undynamic figure—was not in fact well- regarded at the top levels of Whitehall, and did not have Armstrong’s access to, or clout with, the Chancellor. ‘Helsby was not a leader’, a senior Whitehall figure recalled. ‘He got across half the permanent secretaries, who’d have nothing to do with him and they tended to go to the number two there’ (Philip Allen, who later became permanent secretary of the Home Office). According to one insider, Helsby only infrequently saw the Chancellor, and would have to contact his principal private secretary to arrange an appointment, which was not always possible, whereas ‘William was in every day.’6 Even when he got through to the Chancellor, Helsby seems to have carried limited weight: ‘Helsby has no influence on him comparable to William’s’, noted Alec Cairncross when Callaghan was Chancellor.7 Helsby also often had great difficulty in getting access, via the Number 10 private office, to the prime minister, whereas the Cabinet Secretary (Burke Trend) would be seeing the PM constantly.8 Armstrong felt that Norman Brook had ‘failed to get to grips with the management side of the Treasury [after 1956] and much of the need for Fulton came out of this.’ And he believed that, under Helsby, ‘inadequate thought was being given to the role of the HCS [Head of the Civil Service] and to the problems facing the Service.’9 It was not just a matter of personalities, however, but a feeling that the institutional arrangements for running the civil service needed reform. There were concerns within the HEAD OF THE HOME CIVIL SERVICE 1968–74 145

Treasury that the two ‘sides’ (for instance with relations between the management side and the public sector group) did not always work together sufficiently closely.10 The Chancellor was usually too busy with economic policy to give proper ministerial attention to civil service matters. Years later (in 1977), Armstrong reminded Callaghan (by then prime minister) how, pre-Fulton, ‘in the middle of some complex monetary or fiscal operation, there would be need for some urgent meetings in connection with the Staff Side to which the Chancellor had not had time to apply his mind, and therefore complained about the lack of notice—to which his officials could only reply that they had been trying to see him about the matter for weeks.’ Armstrong told Callaghan that, at the time of Fulton, ‘he had been the only one of the senior officials in the Treasury who had wanted to split Civil Service management away from it.’ ‘The Treasury was too big as it then was’, he said, and ‘civil service management was in consequence grossly neglected.’11 Helsby had indeed held meetings in the Treasury and then with a wider group of Whitehall permanent secretaries in 1966 before putting the case to Fulton for maintaining the status quo, and saying there was virtually unanimous support for that, though admitting that the ‘restrictionist image of the Treasury’ was a problem. But it had been apparent—certainly from what was described as a ‘tussle’ between Helsby and Armstrong at a Treasury meeting on 29 July 1966— that Armstrong backed the idea of a separate department, though ‘without specifically saying so’ (three weeks earlier he had given his private evidence on that point to the Fulton Committee).12 ‘It astonished Whitehall that he gave up the Treasury’, Douglas Allen later told Jon Davis.13 The main reason is probably that with Helsby due to retire in 1968, Armstrong was attracted by the idea of becoming a reforming Head of the Civil Service, with a separate department of his own to support him in that role. He had been at the top of the Treasury for six years and involved in stressful Budget judgements and economic management for much more than that. He may well have felt, consciously or unconsciously, that he wanted some release from the stresses which sometimes laid him low. He was tired and wanted a change. More than one former official makes this point: ‘He had had enough. Fulton had a tinge of excitement about it. He was genuinely interested in it.’14 He may have thought that heading the Civil Service Department would invigorate him and give him the opportunity to introduce changes which he believed were vital to the future of the country. John Chilcot, his private secretary in the CSD, 1971–1973, saw him at first hand in those early days in the 146 K. THEAKSTON AND P. CONNELLY

Civil Service Department and says: ‘William was a very tired man. He had done probably ten to fifteen Budgets in one capacity or another—enormously exhausting for any man. He struck me as old for his years; by no means passive but like a boxer who, though winning, had done twelve rounds out of fifteen.’15 In a radio interview when he took up his new post, he said that moving across to work on government organisation was ‘a return to my first love’, recalling his ‘MG’ work in the 1940s, and saying that there was now ‘an almost unique chance of helping to bring about a Civil Service and a government organisation that will be fit for—I hardly like to say the next 100 years—but anyway for the period ahead of us.’16 He genuinely wanted to reform and improve the civil service. Fulton was clear that a change in civil service management and a new separate department were necessary to signal a fresh start, and a new ministry was the fashionable option at the time. The civil service unions wanted it. And Harold Wilson—as Armstrong well knew—was always aware of the presentational advantages from rejigging the Whitehall departmental architecture. Everything pointed to him moving jobs. As Rodney Lowe sums it up: ‘It was, in short, not a negative reaction to the battle over devaluation and his uneasy relationship with the new Chancellor, but rather a positive move to associate himself closely with the Prime Minister in forging a more efficient and responsive administrative machine.’17 Armstrong deliberately cultivated a higher public profile and made himself more available to the media than his predecessors in the job. He was impatient with the traditions of civil service anonymity or facelessness. ‘He believed in personal leadership and exposure and visibility’, said an aide from this period. Another commented that ‘he represented a new style in the civil service—he liked being photographed with his jacket off, his braces on, sitting at his desk. Actually, I’m not sure he believed much in sitting at a desk!’18 He believed that the Head of the Civil Service had an important role as a public spokesman. As he later explained, he ‘saw public misconceptions about the Service becoming current and the failure by politicians to counteract them. Politicians were generally too busy and too concerned with other more immediately pressing matters to defend the Civil Service. … Only the HCS could effectively defend the Service in public.’19 He decided therefore to become the public face of the civil service. He was the first Head of the Civil Service to give a long interview on television (quizzed by Robert McKenzie on a programme called ‘The HEAD OF THE HOME CIVIL SERVICE 1968–74 147

Change Makers’).20 On the day Fulton was published, he appeared with comments on both TV channels. He made the round of civil service union conferences—again, the first civil service head to do such a thing—making speeches and mixing informally with delegates afterwards.21 He took on board the necessity of bringing them in to the discussions about implementing Fulton and that this meant developing good relations with them. Nor did he feel that this was best accomplished by descending upon the union gatherings and delivering a well-crafted speech before departing on the early afternoon train. He, and his wife, stayed in the various seaside resorts and he would drink and chat late into the night with the delegates (his wife had a separate programme.) ‘He was easy to talk to’, recalled Bill McCall, general secretary of the Institute of Professional Civil Servants (IPCS).22 ‘We are not in business in our own account, we are not a debating society, a private army or a social club’, he memorably told one union audience, ‘we are the instrument through which our fellow countrymen seek to exercise their collective will—for their benefit and only incidentally for ours’.23 Over the next few years, there were television and radio interviews about his life and background; talks and lectures on a wide range of management and administrative subjects; talks to church groups on questions of faith and religion. CSD staff were kept busy preparing briefing material and drafts of speeches, gathering together notes on what one sardonically called ‘trendy topics’.24 Armstrong sincerely believed that senior civil servants should be prepared to explain the workings of government and even join more in public debate on policy matters. He felt that as civil service head he had an important figurehead role to play. Sometimes, it is true, he strayed from what might be thought the proper range of subjects appropriate for a Head of the Civil Service and provoked controversy, for instance with remarks (in a 1970 speech) that schoolboys should ‘swap’ parents or live away from their families in digs—something clearly reflecting his own personal experience, but whipping up a fuss in the press for a day or two—or (in a 1972 church conference speech) with comments on sex education.25 Eyebrows were often raised in the permanent secretaries club, some senior men being irked and thinking he overdid this sort of thing, and was too PR conscious.26 Another striking feature of his leadership style was the way in which he would occasionally clear a block of time and take himself away from the office—away from the telephone and other interruptions—to engage in ‘forward thinking’ about the problems he faced. Just dealing with the 148 K. THEAKSTON AND P. CONNELLY in-tray was not enough. Before taking over as Head of the Civil Service, he spent a fortnight at Nuffield College, Oxford mulling over the evidence given to the Fulton Committee and a pile of other papers and reports on the problems of the civil service. He would sometimes snatch a day in a private room at the Civil Service College at Sunningdale. ‘He was one of the few senior civil servants I’ve known who actually made and used time to think’, commented a former aide. ‘He felt a sense of responsibility to important matters of business to think about them in a fundamental way.’27 The evangelist seeking a platform to get a message across is one facet of his complex personality; and the eremitical brooding on problems and critical issues is another. He decided to leave the main administrative load of running CSD to the department’s second permanent secretary (a position occupied by Philip Rogers 1969–70, David Pitblado 1970–71 and then Ian Bancroft 1973–75) and to concentrate initially on Fulton and on representing the civil service to the world. He gave the CSD a great deal of intellectual horsepower. One former official, who was relatively junior at that time, recalled those days with pleasure: ‘One of the joys for a young civil servant in working for William was the very high degree of intellectual freedom he gave you … he had remarkably little pride of personal intellectual construction in drafting.’28 Another aide from this period recalled that he was superb to work for and easy to work for: ‘He was intellectually supreme. If you just listened, it came out. He would say, “Well, perhaps you could draft a minute to so and so, and what you might say is …” And there was the minute.’29 His style was to sit around in armchairs and listen to the views of his staff, to whom he largely delegated drafting work. He gathered round him a small group of smart and irreverent officials (including Ian Bancroft, Tom Caulcott, John Chilcot, Peter Mountfield, and Richard Wilding) whom he treated as members of a common room of a College, with genuine intellectual exchange. Other senior figures such as Frank Cooper (deputy secretary 1970–73) and John Hunt (deputy secretary and First Civil Service Commissioner 1968–71) also added weight to the department. As in the Treasury, he paid attention to staff morale. One official recalls him addressing the staff of the new department in Church House, rallying and enthusing them with his oratory.30 Crucially, too, he maintained a very close relationship with Cabinet Secretary Burke Trend. Armstrong had seen how Edward Bridges and Norman Brook, previously very close to each other, had—damagingly— drifted apart after 1951. He and Trend had been colleagues and friends in HEAD OF THE HOME CIVIL SERVICE 1968–74 149 the Treasury for a long time, and they kept in close touch after Trend became Cabinet Secretary and Armstrong moved to become head of the Treasury and then at CSD. Trend was slightly the senior in age and experience and Armstrong would affectionately refer to him as ‘Pasha’.31 ‘They did little without consulting each other’, recalled Lord Armstrong of Ilminster. So, they operated together and it was an absolutely crucial partnership at the top of Whitehall in the 1960s and early 1970s. The two of them had consciously made an ‘alliance, a policy of working together’, was the view of a former close aide to Armstrong. ‘They realised that they were a nexus which it was essential to preserve. … They were very close and sharing information, working together on all aspects of policy … ensuring that neither was acting nor operating in a way that cut across. It was a piece of genuine coordination, and it was willed.’32 They ‘had made a private compact never to cross each other’, as William Armstrong himself later recalled. ‘The top three [Head of the Civil Service, Cabinet Secretary, permanent secretary to the Treasury] absolutely must work together,’ he said; ‘friction could only create trouble as in the days when Sir M. Hankey had done battle with Sir W. Fisher.’33 Armstrong and Trend would have lunch together at the Cabinet Office Mess every Monday, along with Helsby (before 1968) and then Douglas Allen (after 1968), to help keep in touch with developments in each other’s spheres.34

Fulton and Civil Service Reform William Armstrong has a central place in the conspiracy theory peddled by the apostles of the Fulton Report on the Civil Service,35 blaming what they interpret as the patchy and half-hearted implementation of its main proposals after 1968 on civil service sabotage and obstruction. ‘How Armstrong Defeated Fulton’, a chapter heading in the book Norman Hunt (a leading member of the committee) co-authored with Peter Kellner, graphically identified the main villain in the story of the so-called ‘Lost Reforms’. They detail Armstrong’s ‘rearguard action’ and his under- mining of key reforms to the civil service class structure. ‘In anaesthetising Fulton, while retaining his reputation as a progressive-minded man’, says Hugo Young, ‘Armstrong demonstrated perhaps the highest measure of his finesse as a public servant and private operator.’ The view that William Armstrong had a clear idea about what he wanted to do about Fulton, saw that the things he really cared about happened, and let progress on the rest peter out, has also been backed by Robert Armstrong, one of his successors 150 K. THEAKSTON AND P. CONNELLY as Head of the Civil Service. Such impetus as there was with the Fulton programme came largely from him, it is suggested, and this faded once he was diverted into running economic policy under Heath.36 It is true that Armstrong refused to treat the Fulton Report as the public administration equivalent of the Bible—he felt that the picture of ‘amateurism’ that it drew was a caricature and a total misunderstanding of the civil service. He was also sceptical about the practicability of some of Fulton’s ideas. ‘He had very clear ideas that the civil service needed reforming’, a senior insider recalled, ‘but he felt that Fulton hadn’t got it all right—there were good parts of Fulton and bad parts of Fulton.’37 As suggested above, he had his own reasons for welcoming the establishment of a separate CSD. Well before becoming Head of the Civil Service, he saw the need for change and was thinking about possible reforms in a number of areas. Personally, he thought that he would have benefitted from ‘more training in specific subjects and specific skills at various points’ in his career, rather than just being flung in at the deep end, and if he had had ‘a chance to see the Civil Service from outside.’ In the ‘middle Fifties’, he once explained,

I became very concerned that in such matters as the credit squeeze, the people who were putting before us the facts of the situation didn’t know what it was like to be the victim of a credit squeeze. They had never been in a building society or a bank or a finance house. They got it all from text- books, from the files, or from such conversations as they could have with people working in these fields.38

At the Treasury in the early 1960s he had urged the need for better training in economics and finance for officials (as noted in Chap.4 ). In May 1965, he gave evidence to the House of Commons Estimates Committee which was investigating recruitment to the civil service, saying that he would like to widen the experience of young officials (assistant principals or principals around 28 or 30 years old). One way to do that, he suggested, would be for them to go out into industry, business or banking for a year or so (any shorter period would be less valuable), so that they would get practical experience and know about the issues they were dealing with from ‘the other side’: ‘It is very often apparent that a Principal who is extremely intelligent knows very little about life other than what he gets out of the files’. For some departments, experience of working in local or regional offices handling big executive operations would be valuable for HEAD OF THE HOME CIVIL SERVICE 1968–74 151 young administrators. More experts, such as economists, were also needed. But at that stage—in line with what Laurence Helsby was saying—he argued that the government should not rush into a full-scale review of the whole pattern of the civil service by a Royal Commission or committee of inquiry of the sort outside critics and Labour advisers were pressing for, but he clearly recognised that one could or would not be delayed for long (the Fulton Committee being set up in February 1966 to examine the structure, recruitment and management, including training, of the civil service).39 He also gave evidence in June 1966 to the Osmond Working Party on Management Training in the Civil Service, set up in the Treasury in late 1965 (and reporting in 1967). Apart from training on the job, he confessed, he had never himself attended a training course or been granted sabbatical leave; at times in his career, he had had to fill gaps in his knowledge as best he could simply by reading up on new subjects. He felt, however, that academic literature and teaching often ‘bore little relation to reality’, so there was a need for more applied research for administration and policy-making. There needed to be more systematic and formal training at an early stage in a civil servant’s career, particularly in economics and in statistics, but also in ‘general administrative subjects’, in ‘accoun- tancy concepts’ and even quasi-legal aspects of contracts and financial agreements (relevant for the work of officials on subjects like overseas finance and dealing with industry). What was needed, he thought, was a year-long course, taken between two and four years after joining the civil service, with officials’ subsequent careers depending on taking the course and passing an exam at the end of it. This idea clearly owed something to the-then fashionable admiration for the French elite training college, the Ecole Nationale d’Administration. Part of the course, Armstrong said, might be wide-ranging and general before some later specialisation in matters relevant to certain groups of departments. This related to his argument that ‘the idea of an undifferentiated group of administrators capable of tackling any problem was likely to give way to increasing specialization.’ A ‘certain degree of specialization’ was now necessary in the civil service, though if there was too much specialism, mobility between departments would be affected. He had studied the work of the French Inspecteurs des Finances, he said, and had considered whether there could be a specialisation of financial training here. Equally, he suggested, ‘not all civil servants needed to be well informed on scientific or international affairs.’40 152 K. THEAKSTON AND P. CONNELLY

His personal evidence to the Fulton Committee, in July 1966, was bold and provocative. As noted earlier, he broke from the Helsby/Treasury line by backing the creation of a separate department to manage the civil service. He argued that to work out the sort of civil service the country needed, one had to start with the functions of government, looking at the kinds of organisation and structure they called for, and then at the apti- tudes, training and personnel necessary. He stressed the government’s responsibilities for the provision of public services, increasingly close relations with industry, the management of the economy, and the country’s changed international position. There were then four key official functions: executive management, policy formation, regulatory work and negotiation, but he conceded that these were mixed in varying propor- tions in most departments and in individual civil service jobs. For the executive management of public services (such as health, education, welfare benefits), he advocated a radical transformation of the structure of government, with a split between small policy-making departments and large attached executive agencies that anticipated the Next Steps reforms over 20 years later. Ministers would remain responsible for major policy and forward thinking, but management boards would have public accountability for service efficiency and delegated financial responsibility within the framework of an overall budget set by ministers. This new system would change the role of civil servants, he argued. High-flying officials would reach the peak of their careers as departmental policy-makers and ministerial advisers in their mid-40s, and then in their 50s would move on to direct the execution of policy in the agencies. A ‘new concept of accountability’ would be needed, he saw, since the head of an executive board would be ‘a public figure in his own right.’ This model would not fit all the civil service, he acknowledged. There were departments, such as the Home Office, where much of policy emerged from case-work, and the functions could not be split up. And there were other parts of Whitehall where the main focus was policy- making, regulatory work, or relations with the private sector and industry. Different sorts of people and structures would be needed for those areas, and he argued there would be a need for more economists, people with knowledge of industry, and more movement in and out of the civil service. He saw no great principles at stake in the practice of bringing in from outside the service special advisers to ministers, to work on the policy side. No one could reasonably get the impression, on the basis of his performance, that this was a man opposed to change and reform in Whitehall. HEAD OF THE HOME CIVIL SERVICE 1968–74 153

He emphasised in fact that the civil service was in the middle of a period of great change, and suggested the Fulton Committee should study and build on the changes which were ongoing and had already taken place (something it arguably failed to do).41 Other senior civil servants always puzzled over how far Armstrong was ‘operating behind the scenes’ (Philip Allen) or had ‘contact “round the back” as it were’ (Douglas Allen) in relation to the Fulton Committee.42 We know that Harold Wilson and his Number 10 aide Michael Halls were kept in the picture and consulted about the progress of the committee’s work through private meetings from time to time with Lord Fulton and Norman Hunt, an energetic and influential member of the committee with strong views, and one of Wilson’s cronies.43 Norman Hunt admitted that there were ‘many discussions’ about the report between Armstrong and members of the committee.44 Armstrong was certainly discussing the government’s handling of the forthcoming report with Number 10 from early April 1968—i.e. before he formally became the Head of the Civil Service. He and the prime minister must have known about the committee’s main findings and recommendations in detail by then because, in early May, Armstrong undertook to ‘try to get the Committee’s report modified’ in terms of its recommendations about the number and role of ministerial special advisers brought in from outside.45 Then there is some suspicion that the note of reservation that Lord Simey insisted on append- ing to the report, dissenting from the tone and the main thrust of the criticisms of civil service ‘amateurism’ as unfair and inaccurate, was cooked up by William Armstrong. In fact the initiative appears to have been Simey’s, who felt that a lot of the criticisms of the mandarins coming from within the committee were hyperbolic, unjust and not supported by evidence. But Simey did apparently admit that he had informed Armstrong of this, that Armstrong and the Treasury were ‘helping him out’, and that Armstrong had said that ‘publication without some record of opposition from within the Committee would be disastrous for Civil Service morale.’46 Astonishingly, one person kept out of the loop on all this was the Chancellor of the Exchequer, Roy Jenkins, despite the fact that civil service management was still part of his Treasury bailiwick and Armstrong still his joint permanent secretary. ‘It was … agreed … that I would not bring the Chancellor in until we have an official text of the report, when it is signed in a week or two’s time’, Armstrong confirmed to Halls and the PM on 9 May 1968. The crucial to-and-fro and discussions about the government’s response to the committee’s recommendations were between Wilson, 154 K. THEAKSTON AND P. CONNELLY

Armstrong and Halls. As Jon Davis puts it, they ‘were acting as if a separate Civil Service Department under the control of the Prime Minister had already been created.’47 Jenkins was certainly piqued at not having been consulted by Wilson over the splitting of his department and by his exclu- sion from the pre-publication lobbying of ministers, senior officials and civil service unions undertaken by Fulton’s supporters to ‘sell’ their recommendations. He and some other ministers gave Wilson a hard time and there was a Cabinet battle over the report: it took two Cabinet meetings in June 1968—in between which William Armstrong warned the prime minister that the government would ‘be in danger of looking ridiculous’ if it kicked the Fulton Report into the long grass48—before Wilson could successfully manage the Cabinet to secure the decision he wanted to accept the main recommendations. Certainly, no bureaucratic reform is possible without strong support from inside the Whitehall machine. Armstrong described the Fulton Report as ‘a great opportunity’ but, with mandarin circumspection, was careful not to publicly declare full support for its recommendations. ‘I called it on television an ice-breaker’, he later explained. ‘What I meant was that it was a catalyst and enabled all kinds of ideas to come through.’49 He summed up his thinking at a meeting of Whitehall establishment officers in July 1968:

It was important that the attitude of the Civil Service towards the Fulton report should be a constructive one. The Service had already made changes and there was general agreement that more needed to be made. A report which advocated changes was therefore to be welcomed even if the particular changes which it recommended were not all agreed. The Fulton report did not mention a number of fields in which review and change were undoubtedly needed: the system of financial control, which needed a new look; the extent to which the Civil Service was conditioned by statute law, subordinate instrument and administrative discretion, and the question whether it was too much or too little influenced by legal considerations; the types of organisation appropriate for different types of work and the whole question of the sociology of people at work. The implementation of the Fulton report would be only a part of the reform and adaptation of the Civil Service. The report did not cover the whole ground, nor was it to be regarded as a bible for the part of the ground which it did cover.50

Armstrong’s ally at the centre of Whitehall, Burke Trend, was another influence for caution, arguing that the Fulton Report should be approached ‘pragmatically, with due regard for what is feasible.’51 HEAD OF THE HOME CIVIL SERVICE 1968–74 155

Armstrong’s attitude towards Fulton can also be gauged from the substantial briefs and memos he wrote on the report for the prime minister in May-June 1968. It ‘provided a basis for a most constructive reform of the Service’, he said. ‘I personally believe that action on the lines of the Committee’s report is essential, if the Civil Service is to be reformed and its efficiency increased.’ He admitted that ‘much of the criticism [in the report] is justified … personnel management and career planning are inadequate … too few civil servants are skilled managers … there is not enough contact between the Service and the community it is there to serve.’ However, he felt Fulton had failed to recognise the improvements made in recent years and the difficulties (including resource constraints) under which the service had been labouring. The committee had ‘completely missed the point’ with its attacks on the ‘amateur’ or ‘all-rounder’, he said, misunderstanding the nature of administrative work and the role of ‘generalist’ civil servants as professionals in working the government machine or in financial control, in assessing and balancing specialist advice, and in supporting lay ministers. But he did accept the need to ‘put an end to over-frequent and unrelated postings and to kill the already obsolescent idea that a good administrator can do literally anything without any background knowledge or training.’ In some ways, he argued, the committee had produced a blueprint for a command-and-control model of the civil service more apt for the 1940s or early 1950s than for the coming years because of its neglect of issues like ‘the psychology of office workers or the sociology of bureaucratic communities … the whole field of job satisfaction, work motivation, the relationships between colleagues.’ The committee had also not considered the ‘cumulative effect of their recommendations’, he thought, which if accepted in full could transform the character of the civil service. A more open service with more interchange with the private sector, more political appointments, and with staff more at liberty to speak their minds on government business, could develop into something more like an American-style service, which would be a change more marked than ministers or the public would want.52 A crucial point is that the Fulton report did not constitute a coherent programme for ‘reform’: some parts could be dismissed (as C.H. Sisson damningly put it) as like ‘a page out of a fashion magazine’, or ‘rather general and even woolly’ (in Donald McDougall’s words) and many of Fulton’s detailed proposals turned out, in fact, to be far from radical or original. There were plenty of shortcomings, weaknesses and ambiguities in the report’s analysis and recommendations, and it was not a question of simply ‘accepting’ the report and then ‘implementing’ it. ‘What actually 156 K. THEAKSTON AND P. CONNELLY happened was that Sir William Armstrong and the Civil Service Department made a perfectly genuine effort to take the Fulton Report and to extract the maximum number of practical proposals that they could’, argued Richard Wilding, a senior CSD official who had been secretary to the Fulton Committee. Asked in a television interview in the 1970s whether he saw himself as defending the civil service against Fulton’s attempts at change, Armstrong replied: ‘It has to be yes and no. I mean, a lot of ways I felt I was there to pull the civil service into the 20th century and/or to reform it in ways that appeared to me necessary over the years. And in other ways, I felt that the attacks on it were unfair and it needed to be defended.’53 There was also the point, as he told MPs on the Commons Expenditure Committee in the 1970s, that until questions about ‘the machinery and organisation of government’ had been settled, one could not really know what sort of civil servants were needed and how they should be recruited and trained. Fulton’s terms of reference, he maintained, ‘put the cart before the horse’.54 And Armstrong was, of course, centrally involved in that separate but related stream of machinery of government changes in the late 1960s and early 1970s (see below). After the initial burst of activity in 1968, helping Wilson burnish his rather battered ‘modernising’ credentials, there was little further top-level political attention then given to Fulton, and in effect the Whitehall machine was given the task of implementing the report (with its total of 158 recommendations), subject to only limited and episodic ministerial involvement. Lord Shackleton was appointed minister in day-to-day charge of the CSD (1968–70) and was also Leader of the House of Lords. Civil service closing of ranks and opposition to new ideas hindered the Fulton reforms, according to John Garrett, a Labour MP and champion of the report, but more importantly, he argued, they were thwarted by the lack of political interest in fundamental change and ministerial neglect of what seemed boring, nuts-and-bolts questions.55 Wilson himself maintained a close interest for a year or so, and expressed satisfaction with the initial progress made,56 but his attention was diverted elsewhere as other political issues crowded in during 1969 and 1970. The eventual outcome was probably inevitable: a process of piecemeal adaptation and of reforms implemented in a way which entailed less radical change than outside critics of the civil service had hoped. The creation of the CSD and the Civil Service College went quickly ahead though there were arguments over the departmental title of the CSD, and a scrap with the Ministry of Defence to secure its central location HEAD OF THE HOME CIVIL SERVICE 1968–74 157 in the Old Admiralty Building.57 The Civil Service College opened its doors in 1970 and although civil service training provision was expanded the college never really lived up to the reformers’ ambitious aims. Armstrong himself said in 1977 that he was disappointed with it, thinking it ‘insuffi- ciently attuned to the actual jobs to be done and too academic.’ There is a strong suspicion that its first principal, the academic demographer and stat- istician Professor Eugene Grebenik (who turned out to be a poor choice), was primarily appointed to block the Fultonite radical, Norman Hunt. Grebenik wanted the college to be the sort of elitist organization Armstrong had seemed to envisage in the mid-1960s: a centre for research in public administration and undertaking rigorous training of high-flyers and future senior managers. The trouble was this was not followed through on, the college being hampered by resource constraints, an impossibly-wide brief, civil service union opposition to an elitist staff college for the higher mandarins (Armstrong himself at one point voicing an egalitarian view: ‘a week at Sunningdale could be the crown of a messenger’s career’), and departmental scepticism about the relevance and delivery of the training courses. Rodney Lowe, the civil service’s official historian, pointed to a ‘lack of personal leadership at the top’ on this issue, and this criticism has some force. Grebenik believed that Armstrong was more of a supporter of the Civil Service College than many other senior officials (including Douglas Allen, his successor as Head of the Civil Service) but, even so, they disagreed over some aspects of running the college (Armstrong vetoing Grebenik’s proposal for security of tenure for academics working there) and Grebenik said he never got to know Armstrong well or understand what he wanted the college to be.58 The fact that Armstrong’s attention was increasingly diverted away from civil service issues during the college’s crucial early years (see Chap. 6) also did not help. The Fultonites’ most vehement criticism was of Armstrong’s role in the restructuring of the civil service after 1968. By 1971–72 the civil service class and grading structure had been reorganised: the ‘open structure’ was created for the top three grades, the old Administrative, Executive and Clerical classes were amalgamated, and new groupings were put in place for scientists and for professional and technical staff. But for the critics, all this did not go far enough. Armstrong was prepared to admit that the baroque system of classes made for a service only ‘half-open to talent’ and that there was a need to get rid of ‘artificial barriers’.59 The fact that there were fifty general service classes and over 1400 departmental classes was, he said, ‘patently absurd, 158 K. THEAKSTON AND P. CONNELLY and it is common ground that they must be drastically reduced.’ He accepted the need to simplify the system and reduce the rigidities, but he felt that Fulton’s proposal for a ‘classless’ unified grading structure went too far and was unrealistic and unworkable.60 Michael Halls, Wilson’s principal private secretary, pushed hard on this issue, arguing for a strong and binding commitment to unified grading and telling Wilson that it would eliminate ‘class snobbery’ in Whitehall and was central to radical reform of the civil service—‘without it the Fulton Report would finish up by producing merely one step forward.’61 Class with a capital ‘C’ was involved, as Armstrong soon realised. Wilson wanted what he called ‘an open road to the top’, but whereas officials were concerned about the cost implications, pay scales and other technical administrative details, he was more interested in radical-sounding talk about ‘abolishing’ classes and apparently bold reforms that would overturn the social class stereotypes in Whitehall. Eventually, a form of words was found about consultations with the staff associations ‘so that a practicable system can be prepared for the implementation of the unified grading structure.’ ‘We both knew what the other would make of it’, Armstrong later told Peter Kellner. ‘It was push and shove.’62 Wilson—and probably more so Halls and Hunt—took this as meaning the idea was practicable and the task was to find a way to implement it; for Armstrong there was no such commitment to a particular end result, and a study could lead to a conclusion that the idea was impracticable. The prime minister was, in contrast, at one with Armstrong in opposing Fulton’s proposal for ‘preference for relevance’ in administrative recruitment, both thinking that post-entry training was more important than what academic subjects new recruits had studied at university (it was ‘too naïve and mechanistic a solution to a complex problem’, said Armstrong).63 Michael Halls was clearly a crucial figure in this story, with strong views of his own about the need to reform the civil service. Wilson had picked him as his principal private secretary in 1966 (Halls had earlier worked in Wilson’s private office in the Board of Trade in the 1940s) against the opposition of Laurence Helsby, but he was widely seen as out of his depth and a poor appointment in the crucial and highly-pressured Number 10 post. Wilson saw him as ‘the epitome of the new management type envisaged by the Fulton committee’, and Halls was scathing about ‘the failure of Permanent Secretaries … either to give a lead or to take an interest in organisation’, arguing that the civil service ‘establishment’ should spend ‘more time on efficient management and a little less in their intrigues.’ When he told the prime minister that many middle-rank officials agreed HEAD OF THE HOME CIVIL SERVICE 1968–74 159 with the criticisms contained in Fulton, that the permanent secretaries were ‘so determined to maintain the concept of the Mandarin’ that they had ‘swept under the carpet’ every effort to get them to accept that the management of departments was as important as the policy advice function, and criticised ‘the dominance of the civil service by Treasury personnel’, Wilson responded: ‘I agree with your comments.’ There are claims that in 1969 he was pencilled-in to take up an appointment in CSD working on the implementation of the Fulton report, though in the event the post went to someone else. However, Armstrong denied that, noting that he and Trend had formed the view that Halls was not fitted for a top policy job but would instead be better in an executive or managerial post when he left Number 10, and Wilson had agreed that he should probably move in due course to a post at the Export Credit Guarantee Department.64 Tragically, Halls had a heart attack and died in April 1970. But before then, he and Norman Hunt had complained bitterly during 1969–70 that Armstrong and the CSD were watering down Fulton’s proposals and that little would change as a result, but there is no sign that Wilson paid much attention.65 Armstrong himself led a CSD team to the United States and Canada to study their experience with a unified structure.66 British officials formed a view that beyond a certain point unified grading would not work. Harold Wilson’s pledge about the ‘abolition of classes’ Armstrong felt had been effected by the removal of the horizontal barriers which impeded movement up the administrative ladder.67 Below the under-secretary grade, he believed that dismantling the vertical barriers (e.g. between administrators and scientists/professionals) was impractical: it would be expensive (increasing the salaries bill), he was sceptical about the real objectivity of the job evaluation exercise involved in comparing jobs in different set- tings, and there were civil service union divisions and vested interests to consider too. Armstrong subsequently persuaded Heath and his civil service minister Lord Jellicoe in late 1971 not to take unified grading any further.68 The idea had always been ‘a hell of a great pig in a poke’, as Armstrong much later described it.69 The real goal, he argued, was to tap a wider range of talent and enable people to move more freely upwards and between different parts of the civil service, and to that end improved personnel management, work on lateral movement, career development, and better training provision were more important than getting bogged down in a huge scheme to redesign the structure of the civil service from top to bottom.70 160 K. THEAKSTON AND P. CONNELLY

Unified grading was almost an article of faith with the Fultonites but it was always going to be a complex and lengthy process. Armstrong once said that one of the problems of dealing with Norman Hunt on the subject was that he treated the Fulton Report ‘as if it were the Holy Writ, and the mere quotation is sufficient for him.’71 Armstrong was probably wise in deciding to proceed by stages rather than attempting to press too far, too fast on a large scale. He was right, in May 1968, when he warned Wilson that premature acceptance ‘in principle’ of the proposal would result in ‘months of sterile argument and delay the real work’—the work, that is, of dealing with reforms to recruitment and training and modernising personnel management.72 The restructuring process stalled in the 1970s but the Thatcher government pushed unified grading further down the hierarchy (to principal or grade 7) in the mid-1980s, before, in the 1990s, the civil service took off in a different direction, becoming more fragmented. Whatever the theological arguments over unified grading, with hindsight Armstrong seems a man of his time, thinking of the civil service as a giant community, a national system linked by grades and standardised personnel arrangements, and he himself worked to reduce fragmentation. The prime target of the 1960s critics and reformers—the Administrative class—sur- vived in all but name, it is true, and kept its hold on the key policy-making posts in Whitehall. But, as Armstrong always emphasised, the dominant position of generalist administrators in the system (who were really spe- cialists in ministerial and parliamentary business, he would point out) was largely because it was their skills which ministers needed day to day— though he conceded that the mandarins’ financial and personnel management skills needed developing.73 Although personally not a ‘managerial’ type—his experience and his strength was on the policy rather than the management side and he had never had to run large executive operations—Armstrong has nevertheless been credited with understanding and nurturing within Whitehall what was in the late 1960s still the ‘tender plant of management’, as Peter Barberis put it. In some ways, he foresaw by a decade or more the sort of management developments that were later to transform much of the civil service, though, as Barberis cautions, it cannot be claimed that he perceived or would have welcomed without reservation the full wind of managerial change that blew through Whitehall during the 1980s, 1990s and beyond. In terms of handling civil service staff, for instance, he wanted to shift the emphasis away from the traditional ‘establishments’ approach (concerned with costs and negative controls) towards a more modern and HEAD OF THE HOME CIVIL SERVICE 1968–74 161 positive ‘human resources’ approach to personnel management. He could also be found (in 1968) talking of the ‘need above all to shorten our lines of decision-making, to bring management nearer to the scene of actual operations and to give local or specialised management clear operational objectives, the powers and resources necessary to carry them out and responsibility for the results.’ He looked ahead (in a 1970 speech) to ‘computer-aided management information systems’. He saw the need to improve financial management and control techniques and training, and get better ‘value for money’ within government. In a 1977 television interview he said: ‘I agree very much with the proposition … that departments should be made to pay for services they get from other departments, and that there should be opportunity for tendering and comparison with outside. I tried very hard to get that, and it’s one of my failures—if you like—that I did not succeed in persuading my colleagues to adopt this scheme, persuading the ministers of the day to adopt it.’74 As Rodney Lowe points out, Armstrong ‘consistently supported the import of managerial expertise into Whitehall.’ In 1968 he supported the appointment of the ‘Bellinger Panel’, a small team of businessmen and industrialists to undertake a programme of inquiries into particular areas of work, seeking staff savings and improved efficiency. This met with opposition from the staff-side unions and scepticism from permanent secretaries, and was in practice rather a damp squib, eliminating only a few hundred posts by the time of the 1970 election. The small team of businessmen introduced into Whitehall by Heath’s government, and based in the CSD, also struggled because of these reasons and the absence of strong and sustained political and ministerial backing from the top. Armstrong felt that they had a role, in terms of advising on specific problems or projects with the aim of improving management and performance, but resisted on practical and constitutional grounds initial demands in 1970 for the team to have a special independent status answering only to the prime minister. They had to fit into the system to be effective at reforming it, as the best of them realised (such as Derek Rayner from Marks and Spencer— highly rated by Armstrong—who later led Mrs Thatcher’s war on waste and efficiency drive). The business team was disbanded in 1972 but could point to the introduction of a scheme of programme and policy review (PAR), the establishment of two departmental agencies (one headed by Rayner—see below), and the reorganisation of the employment services of the Department of Employment as their main achievements. In 1972 Armstrong advised against the continuation of the businessmen’s team 162 K. THEAKSTON AND P. CONNELLY but backed the idea of a ‘central business adviser’, arguing presciently that the ‘major task ahead of us is improving the performance of government at the interface with the individual citizen’ particularly in relation to the delivery of services to the public in local offices (a central concern of the public sector reforms of the 1990s and 2000s), but the proposal came to nothing.75 The early years of the CSD were an optimistic and dynamic period. Under Armstrong, the department was expected to work wonders. Implementing the post-Fulton reforms and working on the machinery of government changes of 1970 placed it centre stage. It was the place to be and it attracted able staff and boosted the importance and effectiveness of personnel management in the civil service. Armstrong dominated the department: ‘he was the head and I was his political adviser’, Labour’s civil service minister, Lord Shackleton, would later joke. There was considerable activity and progress until about 1971–72, after which the reform programme lost momentum and was downgraded on the agenda. Armstrong talked of the need to ‘draw a line under Fulton’ but to blame him for obstructing the Fulton reforms over-simplifies and over- personalises the process. As David Dillman put it:

Armstrong was certainly not an obstacle to success. The reformers’ disappointment can be explained in part by the interaction of union and official self-interest, lack of clear principles and goals in the report itself to guide the reforms, and lack of parliamentary-political interest at the implementation stage. Within an array of competing perspectives and interests, Armstrong worked to develop a consensus that could be implemented. The truth is that while Armstrong looked to be a conservator of the status quo … he encountered opponents … who felt he was pushing for too much change … Armstrong was practising the art of the possible.76

The limitations of his scope were, in fact, acute. The vested interests of the main civil service unions were one important constraint and could be asserted in the National Whitley Council machinery (the civil service’s system of joint consultation) that was used to discuss and oversee the implementation of changes. Unlike the Thatcher years, this was a period when the process of reform was handled in a consensual manner and union views and interests taken into account. And then, because of the federal character of the civil service, progress with the reforms depended on the ability of the CSD to persuade, cajole and negotiate with the different HEAD OF THE HOME CIVIL SERVICE 1968–74 163

Whitehall departments—through the Fulton Steering Committee of permanent secretaries, and other supporting groups—and there was weighty permanent secretary opposition to parts of Fulton.77 In the end, several years before Mrs Thatcher abolished it in 1981, the problems involved in having two central co-ordinating departments in Whitehall (the Treasury and CSD) and the CSD’s limited power in relation to other departments had become very apparent. Armstrong always defended the set-up he had designed in 1968 but there is a sense in which his personal authority had masked the CSD’s institutional weaknesses. ‘Oh, yes, of course, you your- self, with your background, bring the power with you. What is going to happen when you are not there?’ people said to him, he admitted.78 Armstrong’s fall in 1974 weakened the headship of the civil service and left the CSD looking increasingly vulnerable, as his two successors— Douglas Allen and Ian Bancroft—discovered.

Machinery of Government Official interest in reorganising the machinery of government and the departmental architecture of Whitehall was probably at its height during William Armstrong’s time as Head of the Civil Service. Tinkering with the machine fascinated Harold Wilson and perhaps even more so Edward Heath. ‘Bigger is better’ was the fashionable business management idea. What Christopher Pollitt called the ‘organisational designers’ moved into senior positions in Whitehall in the late 1960s, and compared to his immediate predecessors as civil service chief Armstrong ‘gave the impression of greater interest in and energy for MG and was optimistic about the scope for institutional rationalisation in general and the advantages of large departments in particular.’ Although there had been increasing departmental reshuffling and organisational churn in Whitehall, Laurence Helsby, and before him Norman Brook, had generally been pragmatic, cautious and faintly sceptical on this subject, conscious of the impact of personalities and political requirements.79 Armstrong, in contrast, had ideas of his own that he was more prepared to set out and push forward. Otto Clarke, David Serpell, Antony Part and Ian Bancroft (placed in charge of CSD’s machinery of government division, which assumed a new importance) were key Armstrong allies in this work, though Cabinet Secretary Burke Trend—another powerful ‘player’ on these issues—was usually more concerned to make the machine work and to uphold constitutional proprieties than to expound ideas about good organisational design. 164 K. THEAKSTON AND P. CONNELLY

For Armstrong, it was a chance to do something about a subject that had deeply interested him and that he had thought about since the 1940s (see Chap. 3). He firmly believed that machinery of government problems were accessible to rational analysis and that there were certain principles of ‘good organisation’, though short-term political considerations could never, of course, be disregarded. There was ‘no tidy uniform solution’ or unfailingly ‘correct’ general formula, Armstrong acknowledged, and it could never be solely a question of finding the most ‘efficient’ form of organisation. ‘The disposition of managerial authority’, as he said, ‘is also the disposition of political power.’80 There was much talk of a ‘new Haldane’—the idea of a full-scale and formal committee of inquiry or Royal Commission on the machinery of government, along the lines of the famous Haldane Committee of 1917–18—and the Fulton Committee recommended a review into ‘hiving off’ activities to non-departmental organisations and that a general review of the machinery of government be considered. But while Armstrong was clear about the need to ‘look deeply at this problem’ he was also adamant that ‘you have to see these things from the inside’ and argued instead for an internal operation under senior officials, as in the 1940s exercise he had been involved in. As he (and Burke Trend) advised a receptive Wilson in 1968: ‘The solutions proposed by outsiders could easily prove too schematic and ignore practical political and administrative factors. Moreover, machinery of government is peculiarly the Prime Minister’s prerogative and, in the last resort, decisions on the number of Ministers and the allocation of responsibilities between them must be for him. The recommendation of an “authorita- tive” outside enquiry might simply prove an embarrassment.’81 Later, prior to a major departmental reorganisation in October 1969 (which had involved a sort of lengthy ongoing private seminar about the permutations and possible changes through a time-consuming series of meetings between Armstrong and Wilson in August-September 196982), Armstrong (in other respects often in favour of more governmental openness) also strongly advised Wilson against the idea of publishing a White Paper on the machinery of government. The PM, he pointed out, would have to secure the collective agreement of ministers for such a statement of policy and that could compromise his personal prerogatives and freedom of manoeuvre over the subject and perhaps limit options for change and reduce flexibility; in addition, it could expose changes to detailed analysis and criticism in parliament and the press.83 This advice accorded with Wilson’s views and there was no Wilson ‘MG’ White Paper, but a year HEAD OF THE HOME CIVIL SERVICE 1968–74 165 later Heath—wanting to underline his serious intent and strategic purpose—published just such a document on his Whitehall redesign without, as it were, the roof falling in and with Armstrong on record as now suggesting that the PM put out a White Paper ‘to explain the rationale behind the moves.’84 As sometimes argued in relation to economic policy (see Chap. 4), was Armstrong perhaps tailoring his advice here to what he knew his (different) masters wanted to hear? Informal discussions with his fellow permanent secretaries were always an important aspect of this work, and they often put forward strong and definite views of their own about departmental boundaries and functions, while departmental ministers were sometimes kept in the dark on orders from Number 10. In the Labour government, Armstrong dealt directly with Wilson, with Lord Shackleton, the CSD’s minister, mostly having little involvement in the major MG issues; later in the Conservative government, while the key channel was to Heath, Lord Jellicoe, in day-to-day charge of CSD (1970–73), was more heavily involved.85 Personalities, circumstances and presentational factors always loomed large in Wilson’s ‘MG’ decision-making, as Armstrong understood only too well. He and other permanent secretaries were very concerned that the many piecemeal changes of the Wilson years had a cost in terms of a disturbance factor and short-term losses of efficiency, as he warned the PM, as one upheaval followed another and changes were made and then unscrambled again.86 Along with Trend and Helsby, Armstrong strongly opposed the creation of the Department of Health and Social Security in 1968, for example, but Wilson needed to create a big job to occupy Richard Crossman. The DHSS merger was ‘hollow’ and had ‘nothing to commend it in administrative terms’ (the two sides of the new ministry having very disparate functions), Armstrong believed, trying to interest Wilson instead in the idea of a ‘Department of Social Care’ to merge social services and Home Office functions (to tackle the so-called ‘Seebohm’ agenda). Earlier, Helsby had noted the case for the creation of a hived-off board dealing with health, welfare and social security (akin to the Benefits Agency set up 20 years later).87 Wilson later (in 1977) admitted that the DHSS merger had been a mistake, but while in office he refused to ‘de- merge’ Crossman’s empire.88 A great deal of Armstrong’s time and energy was devoted to these matters throughout 1969–70. In a major round of changes in 1969, the Ministry of Technology (Otto Clarke its permanent secretary) emerged as a giant and powerful industry/production conglomerate and the Department 166 K. THEAKSTON AND P. CONNELLY of Economic Affairs was finally abolished, while Armstrong managed to dis- suade Wilson from merging the Ministries of Transport and Power (arguing that the complexity of subject-matter, span of control and the load on the minister in charge of any new merged department would be too great), making the case instead for bringing together Housing and Local Government with Transport under the regional development heading. In October of that year Tony Crosland was appointed to an ‘overlord’ position as Secretary of State for Local Government and Regional Planning, and subsequently, by the time of the 1970 election, plans had been developed, following an MG review led by Armstrong, to create an integrated department in that policy area.89 In the months leading up to the 1970 election, Armstrong and Burke Trend supervised the preparation of a series of substantial, wide-ranging and detailed papers (the so-called ‘ten paper’ MG exercise) about machinery of government reform and the trend to large ‘functional’ departments, different options for departmental changes, the structure of the Cabinet and the role of the central departments (including arguments for a ‘central analytic capability’ or planning staff to take a strategic view and look to the long-term—which fed into what became the CPRS ‘think tank’).90 Had Labour been re-elected, Wilson would have announced the creation of what became (under Heath) the Department of the Environment, though he later said that he would not have merged MinTech and the Board of Trade to form the Department of Trade and Industry.91 It goes without saying that Armstrong was centrally and intensively involved in the Heath government’s major overhaul of the Whitehall machine, set out in its ambitious White Paper of October 1970, The Reorganisation of Central Government.92 ‘All roads led to Armstrong during the summer of 1970’, as Jon Davis described the process. But again, as with Fulton, there are claims that he and the civil service ‘machine’ to some extent impeded and ‘sidelined’ the outside critics and the Tory reformers, opposed some of their key plans, and diverted the reform impulse along Whitehall-approved channels. According to David Howell (a key Conservative thinker on the machinery of government in the Opposition period and then a CSD junior minister 1970–72), Armstrong and Trend immediately ‘moved in’ round the prime minister and also moved in on him (Howell)—‘lunch at the Athenaeum on the second day of the government. They said these were interesting ideas and they had also prepared a number of papers on how Whitehall could be run more effectively. And, hey presto, it was all in their hands, not mine. And Ted [Heath] ceased to have any time to keep the momentum moving.’93 HEAD OF THE HOME CIVIL SERVICE 1968–74 167

Armstrong certainly had his own views and fought his corner in this process, but suggestions of bureaucratic conspiracy here are (as with the Fulton reforms) too black and white. There was a meeting of minds in 1970 because Heath, like Armstrong, was fascinated by the machinery, processes and structure of government (‘this was a subject that engrossed me’, he wrote in his memoirs), convinced about the need for reform, and serious-minded in his approach. Heath was scathing about what he saw as Wilson’s gimmicks, short- termism and ad hocery in this field, and presented his own plans as rational, strategic and efficiency-oriented.94 Even before becoming Conservative leader, Heath’s experience of government led him to argue (in late 1964) for a smaller and strategically-focused Cabinet, a system of larger ‘federal’ departments, more support for the prime minister, and a more dynamic and efficient civil service.95 There were several strands to the Tory rethink on Whitehall organization, management and efficiency after 1964, with ideas and plans fed in by the Young Turks (including David Howell) of the Public Sector Research Unit (PSRU), a businessmen’s team, and a group of former senior civil servants, and an important but rather uneven and impressionistic ‘Black Book’ action plan document was put together just before the 1970 election. But it wasn’t clear that shadow ministers fully understood or supported all the various proposals, the party’s advisers’ understanding of how government actually worked was sometimes rather shaky (as civil servants discovered when they met them), and on some issues Heath kept his cards close to his chest. Just as before the 1964 election, there were meetings with Opposition figures to hear about their thinking and plans for Whitehall, and Armstrong met Mark Schrieber from the PSRU and Richard Meyjes from Heath’s team of businessmen.96 Eleven days before polling, Armstrong also had a long one-to-one meeting and a detailed discussion with Heath at which the Conservative leader indicated that he wasn’t committed to some of the ideas propounded by his party’s advisers. In particular Heath appeared to agree with Armstrong that the idea (backed by some of the Tory advisers) of a ‘Ministry of Programmes’ split off from the Treasury to control public spending and government manpower and efficiency would not work, and that the proposed ‘central capability’ (envisaged as a planning, strategy and analysis unit) should be established as an extension of the Cabinet Office, to fit properly into the Whitehall machine, rather than be some sort of free-floating body. Heath also seemed to rule out creating a separate Prime Minister’s Office though, intriguingly in view of what subsequently 168 K. THEAKSTON AND P. CONNELLY happened in his government (the issue resurfaced in 1972—see Chap. 6), he expressed interest in the idea of a ‘super Permanent Secretary reporting directly to the Prime Minister’ who would be ‘the Prime Minister’s supreme Civil Service Adviser.’ Armstrong replied that he ‘could not really see a function for such a post’, saying that the Cabinet Secretary and the head of CSD were, in effect, the PM’s two permanent secretaries.97 The Heath-Armstrong relationship was, within a couple of years, to become a—perhaps the—central axis of the government, and this lengthy note of their pre-election meeting gives a fascinating and tantalising early glimpse of them working together, starting to take the measure of each other, hinting at the way in which their thinking and approaches would chime, and of the rapport they would go on to develop. There was an intense whirl of meetings and activity in the summer of 1970 as Armstrong and his CSD staff, newly-appointed ministers, Conservative advisers and the business team started to hammer out the details and practicalities and implementation of the Tory blueprint.98 The idea of reorganizing the Treasury and CSD to form a separate Ministry of Programmes (or a Bureau of the Budget) almost immediately bit the dust. Heath showed little interest in the proposal and Iain Macleod, the Chancellor of the Exchequer, opposed it (having reassured Douglas Allen before the election that the Treasury would not be split), and Jellicoe recognized that it was therefore not a runner.99 Although Otto Clarke (soon to retire from the civil service) was interested in a ‘Bureau of the Budget’, Armstrong and other senior officials thought it neither desirable nor practicable on administrative and policy grounds to divide up Treasury functions (repeating the bruising experience of the DEA split) or to separate out management controls from personnel work thus weakening the CSD. When David Howell tried to reopen this issue in early 1971, in a memo to Heath, he was decisively put in his place. Robert Armstrong, Heath’s principal private secretary, told the PM that ‘Sir William Armstrong sees no future in splitting the Treasury and having a “Ministry of Finance” and a “Ministry of Programmes”. Mr Macleod was against it; so is Mr Barber.’ Heath agreed that ‘it should be made clear to Mr Howell that this is not an idea with which you propose to proceed, at any rate during the present Parliament.’100 In March 1972 Howell was reshuffled out of his CSD junior ministerial post, but there was evidence well before then that he had only limited support from the PM for his sometimes scat- tergun reform ideas.101 HEAD OF THE HOME CIVIL SERVICE 1968–74 169

The plan for a ‘central capability’ or an ‘analytical capability’ eventually found expression in the creation of the Central Policy Review Staff (the ‘think tank’). For some time before the 1970 election Armstrong, Trend and Douglas Allen had in fact been talking over the need for strengthening policy review, analysis and advisory capabilities at the centre of the machine. The memo on the Central Departments prepared as part of the Armstrong-Trend MG review and for the prime minister’s post-election briefing, proposed building up a series of specialist staffs in the ‘neutral base’ of the Cabinet Office to advise ministers, Cabinet committees and inter-departmental groups. In contrast, the Conservative PSRU had seemed to envisage a unit with more independent executive clout, working directly to the prime minister, intervening with spending departments to query activities and reduce government expenditure, and itself putting proposals before the Cabinet.102 It fell largely to Trend rather than Armstrong to steer this through in the summer and autumn of 1970, though Armstrong did, with Trend, attend crucial meetings on it, including ones devoted to finding and appointing the head of the new unit (Lord Rothschild, though not the first choice, ending up with the job). Again, the more radical schemes of the Tory reformers were thwarted but, as Rodney Lowe notes, Armstrong and Trend ‘were pushed further than they wished to go’ on this, with the CPRS being a single and rather high- profile unit rather than a series of staffs, and with a remit (including a role in strategic reviews and in ‘PAR’ reviews of departmental programmes) that they were not entirely comfortable with.103 Although the CPRS was set up to challenge Whitehall thinking and civil service orthodoxies (‘thinking the unthinkable’), Armstrong made sure it stayed off his patch: machinery of government questions were effectively barred to it—‘Victor, if it’s the last thing I do, I’m going to do that’, he is supposed to have said to Lord Rothschild.104 In an unusual mission, Armstrong went along to see Harold Wilson—now Leader of the Opposition—to reassure him that the CPRS was not intended to undermine the authority of ministers and that it would not be packed with Conservative activists (it had a mixed staff of civil service insiders and outsiders, some with political connections and others policy experts).105 Heath gave Armstrong the job of leading the reviewing and redrawing of departmental responsibilities to create the new map of Whitehall ‘giant’ departments.106 The aim here was the elimination of duplication and over- lap, a capacity to develop a clear strategy for related functions, streamlin- ing decision-making, and the resolution of policy conflicts within a unified 170 K. THEAKSTON AND P. CONNELLY line of management rather than by inter-departmental compromise or fudging. Plans were already in hand to put together the Department of the Environment, taking in the functions of the Ministry of Housing and Local Government, Ministry of Transport and Ministry of Public Building and Works. But the complex Trade and Industry area was more difficult. Armstrong had warned Heath before the election that the Ministry of Technology was already ‘very large and near, if not beyond, the limit of manageability.’ Some of the Tory advisers and the new Minister of Technology, Geoffrey Rippon, pressed for a big new Industry ministry, rolling up together MinTech and the Board of Trade. The CSD pre- election MG exercise had certainly envisaged some rationalisation of functions and responsibilities in this area but the Whitehall thinking for some months after the Heath government took office was to retain the separate departments, and Armstrong felt obliged to warn Heath about the ‘considerable reservation’ felt by some of his permanent secretary colleagues about what was being proposed.107 In practice, the Department of Trade and Industry (DTI) proved unwieldy from the start, not because of its size (18,000 civil servants) but because of the range and heterogeneity of its functions and wide spread of policy responsibilities. At one point it had a team of nine ministers and four Second Permanent Secretaries. The new superdepartments really needed a new type of executive minister to run them, delegating effectively to a team of political colleagues while pulling the threads of policy together. John Davies (1970–72) never got a strong grip on DTI, though Peter Walker was more successful as Secretary of State at DOE (1970–72) and then DTI (1972–74). Armstrong had wanted Heath to present the changes as laying the foundations for a period of much-needed stability in departmental organisation. But political pressures meant the pattern soon started to unravel. A second Cabinet minister responsible for prices and consumer affairs was appointed to DTI in late 1972. And then, dissatisfied with DTI’s handling of the energy crisis, Heath decided to create a separate Department of Energy in January 1974—William Armstrong, along with Peter Walker, arguing instead for the appointment of an additional Cabinet minister to handle energy within DTI rather than carving out a new department and undoing the ‘big ministry’ concept.108 Wilson and Callaghan then completed the demolition of the original 1970 structure with the dismemberment of the DTI (1974) and, after Armstrong had retired from Whitehall, the removal of Transport from DOE (1976). By the mid-1970s ministerial and Whitehall opinion had rather swung against the idea of ‘giant’ departments as politicians and HEAD OF THE HOME CIVIL SERVICE 1968–74 171 top mandarins became much more cautious and sceptical about the likely benefits of structural redesign in central government. Despite Armstrong’s personal interest, expressed in his evidence to Fulton (see above), in the idea of executive boards with delegated management responsibility for running public services, only limited progress was made on this front during his time as Head of the Civil Service, in terms of ‘hiving off’ government functions to bodies outside the civil service or to agencies managed separately from the main Whitehall departments. In part the problem was that conflicting administrative and political agendas and aims were at play at different times (increasing civil service efficiency, enhancing accountability, cutting back or privatising government functions, cutting civil service numbers). Then, whenever possible ‘candidates’ came up and schemes were considered in detail, likely pitfalls and problems loomed large to the departmental ministers and officials concerned, stymying action. Armstrong was very conscious of permanent secretary opposition and defence of their departmental fiefdoms, and the Treasury was also generally unenthusiastic, concerned about fragmentation leading to loss of control over spending. While the CSD’s MG division pushed for ‘accountable management’ and departmental agencies, other officials within CSD did not want to let go of central controls over management and pay. The strong opposition of the civil service unions was a further constraint and deterrent (staff not wanting to lose their status as civil servants). Even with the impetus provided by the Heath government’s team of businessmen, brought in to Whitehall to work on ‘hiving-off’ and new management techniques, only a small number of departmental agencies were created in the early seventies: the Defence Procurement Executive in 1971, the Property Services Agency in 1972, and a number of agencies attached to the Department of Employment. Some within CSD in the early 1970s were already thinking that big operations like the DHSS benefits organisation, the prison service and the employment service could become agencies with autonomous management and their own chief executives, but Whitehall was not yet fully ready for this device in the William Armstrong era, though the dramatic Next Steps initiative of 1988 built in part on these early steps, but on a much larger scale and in a more thoroughgoing manner.109 The Conservative government’s October 1970 White Paper probably marked the high point of top-level interest in MG questions, after which Heath and Armstrong largely moved on to other issues. From Armstrong’s point of view there was some unfinished business, however, as he had 172 K. THEAKSTON AND P. CONNELLY argued to Heath in August 1970 that ‘some fundamental thinking and possibly redesign’ would be required in the social services field over the coming years, covering the departments dealing with health, benefits, welfare services, education and housing—‘I foresee this as being one of the most important tasks in the machinery of government field over the next few years.’110 It didn’t happen, of course, and what would have emerged from a big shake-up and redesign in that area and in that period to try to get a more ‘joined-up’ social policy can only be a matter of speculation, but Armstrong’s importance and influence in the ‘insider’ deliberations during these crucial years in terms of the reshaping of the government machine cannot be underestimated.

Senior Appointments As Head of the Civil Service, Armstrong was inevitably deeply engaged in the business of making senior appointments and promotions in Whitehall. He once talked of the task of

choosing people, X and not Y to be the new permanent secretary of this department, or Y and not Z to be the deputy secretary of that department … I reckoned it was my business to know these people and I would make a definite recommendation. I wouldn’t say to the Prime Minister, ‘there’s A, B, C, D and it’s up to you to choose’, because I would think I knew them better than he did.111

Formally, the position was the prime minister made appointments to the top two grades in the civil service, advised by the Head of the Civil Service, who was assisted in making his recommendations by the Senior Appointments Selection Committee (SASC), composed of a number of senior permanent secretaries, including senior professional or specialist officials, set up in 1968 after the Fulton Report. This was a business Armstrong took immensely seriously, which took a lot of time (as he later told James Callaghan), and over which he had a lot of influence and power.112 One wall of his office was dominated by a huge board with scores of tabs fitted into slots—representing the senior jobs in the civil service, with par- ticulars of the people doing each of them. In later years Whitehall ‘succession planning’ was a much more formalised process, but at this time it boiled down to Armstrong spending a lot of time thinking about the possible HEAD OF THE HOME CIVIL SERVICE 1968–74 173 moves he could make. He regularly wrote to departmental permanent secretaries asking them to submit reports on senior officials, specifying their promotion potential. He would often spend weekends at home mulling over looming vacancies—looking several years ahead—and playing around with various permutations and different ways of filling the spaces. Lunches would be arranged for newly-promoted deputy secretaries, in small groups of half a dozen, so that he could have a chance to meet them and start to form a personal impression of their capabilities.113 Staff selection seemed to weigh heavily on his mind, at any rate at one stage. In one of his radio talks in the early 1970s is the following, rather revealing, passage:

Recently I have been increasingly concerned with … work that directly concerns people. I’ve had to select people for particular jobs, decide whether to promote someone, or pass him over. In other words, to judge people. I must admit that it’s a responsibility I find enormous, too great, in fact, for human shoulders. I have to keep the greatness of God and the smallness of myself in the sharpest possible focus as I do it. I try to remind myself that everyone I talk to is a child of God, whose life and happiness are just as important as mine, whose view of life may be clearer and wiser than mine, whose understanding of and friendship with God may be much closer than mine, and who may die at any moment, even while I’m talking to him.114

It is difficult, particularly for those who may not share William Armstrong’s religious outlook, to take an objective view of this statement, delivered as it was to a general rather than a religious audience. For some, it may show a truly conscientious man wrestling with human issues of great importance to those affected. For others, it might seem hopelessly unrealistic or even self-indulgent. The job of selecting people (and disappointing others), after all, has to be done. What is certain is that the strange thought that one of Armstrong’s interlocutors might simultaneously or shortly die apparently remained with him for some years.115 The power or influence over top appointments was not untrammelled because of the need to consult with the prime minister and relevant departmental ministers. Armstrong once acknowledged that Heath gave ‘serious attention’ to Whitehall appointments. ‘When a top appointment falls vacant’, he told Cecil King, ‘Heath is offered alternatives, and told the virtues and deficiencies of each man. If the P.M. does not know the man recommended he is told which Minister would be familiar with his work.’ 174 K. THEAKSTON AND P. CONNELLY

Heath himself claimed to be ‘extremely interested’ in these top appointments and to usually have ‘very clear views.’ But Wilson and Heath did not interfere to the extent that Margaret Thatcher did later in the 1980s.116 In his time as Head of the Civil Service, he advised the prime minister on the succession to all but two of the permanent secretary posts in Whitehall. He once said, on being asked about his greatest achievement, that he had appointed 32 permanent secretaries. Armstrong claimed that only two of his recommendations were queried by the premiers he served—saying after discussing one of them the PM backed him, after the other he didn’t.117 Notably, Armstrong’s prime ministers overruled him on certain Number 10 promotions. Thus, Michael Halls, the prime minister’s principal private secretary 1966–70, was in August 1969 promoted in post to the rank of deputy secretary, on Harold Wilson’s insistence and against the advice of William Armstrong.118 And in 1972, when Armstrong went to see Heath to propose posting his principal private secretary, Robert Armstrong, back to the Treasury with a promotion to deputy secretary rank, Heath insisted that he would not let him go and that he should be promoted and stay in Number 10.119 There would sometimes be a great deal of informal to-ing and fro-ing with Cabinet ministers concerning the permanent secretary appointments in their departments, before any formal proposals were submitted to the PM, their views about these jobs being taken into account and acceptabil- ity to the minister being considered very important.120 Ministers, he admitted, might occasionally want to change their top advisers. ‘I had a number of those cases in my experience’, he once explained, ‘and they were all settled amicably in both directions. What I mean by that is that sometimes the Minister, on reflection, said, “Well, no, actually I will not insist on making a change.” On other occasions I arranged for a change to occur.’ It is known that Mrs Thatcher, when she was Secretary of State for Education (1970–74), tried to remove her permanent secretary, Sir William Pile, and appealed to the civil service minister, Lord Jellicoe, and to Ted Heath to move him, but Armstrong advised the prime minister to refuse her demand.121 Laurence Helsby and Edward Bridges, giving evidence to the Fulton Committee, had opposed the setting up of a formal board to recommend top appointments, preferring an informal and flexible approach. But some other top mandarins—such as Evelyn Sharp and Eric Roll—argued for one to try to make the system less ad hoc or haphazard. For his part, Armstrong once said that ‘under Bridges and Brook the “old boy network” had dominated HEAD OF THE HOME CIVIL SERVICE 1968–74 175 senior selection. Consequently, he himself very much favoured SASC.’122 This meant that Armstrong, as the chairman of SASC, would have to sit around the table and discuss the options with some experienced and powerful Whitehall barons. ‘Normally we would have two meetings on each Permanent Secretary appointment’, he recalled. ‘The first meeting with the retiring incumbent, who would tell us who he thought should get the job, and we would discuss it with him; the second SASC would be without him, when we would discuss it amongst ourselves.’ Armstrong would not always get his own way: ‘If two or three fairly senior permanent secretaries said, “William, we don’t think that is right”, he would find the going quite tough’, according to a senior Whitehall insider.123 It is difficult to pin down the specifics of Armstrong’s advice on top civil service appointments between 1968 and 1974. Asked, in 1974, about what he looked for, he replied:

People who can make an original contribution, people who would be missed if they were not there. The traditional chap who is terribly good at drafting, and at working out the compromise that will suit everybody, doesn’t score so heavily in my book as the chap who has got ideas of his own, a chap who, in a really difficult situation, would lie awake at night and worry away at something until he’d found an answer to it. I must also own up to having a desire to find people who are as at home with quantitative arguments as they are with less quantitative, or qualitative, evidence.124

He wanted also to ensure that, post-Fulton, scientists and engineers ‘were on the bridge, and not down in the galley’, as he put it. ‘As soon as I could I got a scientist made a Deputy Secretary’, he recalled—this being the aeronautical engineer James Hamilton, who was made a deputy secretary in the DTI in 1971 before moving to the Cabinet Office in 1973, later becoming permanent secretary at Education and Science in 1976. Armstrong was also proud of getting another scientist, Fergus Allen, appointed as First Civil Service Commissioner in 1974.125 There is, however, only fragmentary evidence publicly available in the official files showing the formal advice (classed ‘staff in confidence’) he fed in to prime ministers. Typically, this seems to have taken the form of short, two or three-page, outlines of the suggested appointee’s previous career and a few points for the record about their suitability for the post in question. Thus in March 1969, recommending the appointment of Nicholas Morrison as a deputy secretary in the CSD, to be responsible for civil 176 K. THEAKSTON AND P. CONNELLY service manpower, pay and management services, his experience and expertise in personnel management and establishment matters were emphasised but also his ‘all-round’ ability and ‘qualities of imagination and constructive thought.’126 In November 1970, he recommended that Sir Alan Marre, who was second permanent secretary at the Department of Health and Social Security (DHSS) 1968–71, be appointed as the next Parliamentary Commissioner for Administration, as he did not have the qualities required to take over as the number one permanent secretary in overall charge of a large and diverse department like DHSS. There was, said Armstrong, ‘relatively unwillingness to delegate but great sympathy and interest in dealing with detail’, something which, he argued, made Marre a good fit for the forthcoming vacancy in the Ombudsman post.127 At other times—as with the permanent secretary and second permanent appointments for the new Department of Trade and Industry and Department of the Environment in 1970—the note for the record simply goes through the names and posts concerned, recording brief details of previous careers and current posts for each person, without giving any information about the rationale for the particular appointments or promotions, though they were clearly previously discussed with prime minister Heath.128

Women in the Civil Service When Richard Crossman pressed for the appointment of Mildred Riddelsdell as his permanent secretary at DHSS in 1969, he was rebuffed by Armstrong who, after consulting his ‘friends’ (as Crossman recorded it), told him that while she might be good at policy she couldn’t run the department. Two years later, Crossman’s Conservative successor, Sir Keith Joseph, ensured her promotion to be second permanent secretary responsible for the social security side (1971–73), allowing the number one permanent secretary there, Sir Philip Rogers, to focus on managing the department and on health policy.129 Dame Mildred was the only woman promoted to permanent secretary rank in Armstrong’s time and only the third woman to become one (and there wasn’t another female permanent secretary until 1984). William Armstrong was a strong personal supporter of the equality of women (as noted in Chap. 2) but Whitehall’s record on this issue in his time was a mixed one—although better than the private sector’s. Formal discrimination in civil service recruitment and pay terms had long gone, HEAD OF THE HOME CIVIL SERVICE 1968–74 177 and the civil service prided itself on being a good employer, but the distribution of staff between grades and promotion rates were markedly skewed in gender terms. Armstrong was concerned, particularly at the top of the civil service, about women’s ‘wastage’ rates, the loss of talent and ability representing lost investment as well as affecting efficiency. He gave a speech at the National Women’s Commission in January 1970 about improving career prospects for women, and it was on his initiative that the Kemp-Jones committee was then set up to examine the position of women in the civil service. He wanted to see more opportunities for part-time work and measures to make it easier to combine careers and families, and for women to stay in or return to the civil service. And he personally advocated paternity leave as well as maternity leave, in order to share domestic burdens and so that all the interruptions to work and a career would not just fall on women.130 When Armstrong took over as Head of the Civil Service in 1968, there were only nine women out of 399 total staff in Whitehall’s top three administrative grades (2.3 per cent)—two deputy secretaries and seven under-secretaries, with none at all at the topmost permanent secretary level. When he left, in 1974, there were 24 women out of 817 staff in the Open Structure (2.9 per cent) but all of them were at the lowest, under- secretary, grade in that top group of the post-Fulton Whitehall hierarchy.131 Armstrong admitted, frankly, that he was sorry not to have appointed more women to senior posts—‘I think this is a very great lack.’ He maintained that he would like to see equal numbers of women and men in senior posts: ‘I myself won’t really be happy until in any policy meeting—and I would like to see this applied to the Cabinet, as much as to any meeting of civil servants—there are roughly half and half men and women. Until we get to that stage, I don’t think we’ve got a proper human society.’ He conceded, however, that that would take a very long time before there were more women in the top ranks: ‘It’ll be the end of the century. And a lot of other things have got to change. There’s got to be a changed attitude to … the functions of the two sexes in marriage and in bread winning.’132 If progress in this area was limited in Armstrong’s years, it can be said that seeds were planted during his time as civil service head— in later decades much more progress would be made in terms of concerted efforts to tackle the under-representation of women at senior levels and promote equal opportunities in the civil service. But the fact that only four more women became permanent secretaries in the 1980s and 1990s shows that change was slow to come. Even with the greater number of female 178 K. THEAKSTON AND P. CONNELLY permanent secretaries appointed since 2000, the top of Whitehall has not come close to resembling William Armstrong’s vision of a ‘half and half’ society. He was much less engaged with the issue of racial equality/discrimination in Whitehall, where the number of black and ethnic minority officials was at that time relatively small. He met a couple of times in 1972 with the chairman of the Race Relations Board, Sir Geoffrey Wilson, who was urging a ‘positive’ policy, but stuck to the established line of ruling out positive discrimination for ethnic minority candidates at the recruitment stage and reaffirming the Northcote-Trevelyan mantra of appointment on merit and free and open competition.133

Royal Finances Armstrong was for many years part of the small group of senior Whitehall figures dealing with Royal finances. He once told Peter Hennessy that, back in the early 1960s, even before he had become the Treasury’s permanent secretary, ‘the Queen’s income was always handled oddly and at that time [Norman] Brook and I did it together.’134 He continued to personally handle this complex and confidential business while leading the Treasury and then as Head of the Civil Service, dealing with other senior mandarins (Burke Trend, Laurence Helsby, and Douglas Allen when the latter became Treasury permanent secretary) and with the prime minister’s principal private secretary, with conservative-minded senior Palace and Royal Household officials, and with top politicians (the PM and the Chancellor) who were generally looking to avoid public and parliamentary controversy and getting their fingers burned with the issues. In memos written and exchanged in this closed network, the word ‘debate’ seemed usually to be preceded by the adjective ‘embarrassing’. Armstrong did not think that the Royal Household was particularly efficiently run (but neither could it said to be extravagant),135 but, like his Whitehall colleagues, did not relish the prospect of unwelcome public attention or parliamentary trouble-making on the subject of Royal income and expenditure, which were coming under pressure in the late 1960s with inflation and rising costs eating away at the settlement arranged when the Queen had come to the throne in 1952. At one point in 1970, he put the case for an annual vote for Royal Household expenditure, with the aim of providing for more flexibility and making parliamentary and public scrutiny part of an established routine, trying to minimise fuss, though he HEAD OF THE HOME CIVIL SERVICE 1968–74 179 acknowledged the risk of more intensive scrutiny in the short-term if any new arrangements were introduced.136 Then, with the prospect of a new select committee on the Civil List opening the lid on a wide range of issues connected with the monarchy, Armstrong, in a meeting with prime minister Heath, floated the idea of trying to come to an agreement with the Labour Opposition to instead set up a committee of Privy Counsellors sitting in private to go into the whole matter in depth, recognising that this would take considerable time and in the meantime the existing Civil List arrangements be extended, ‘with larger figures’, but this idea to fudge and defuse the issue was not taken up (the select committee eventually reported in 1971).137 In other ways, though, he stands out in this tight Whitehall-Downing Street-Palace triangular relationship as something of a radical figure. He was not, of course, a Willie Hamilton-style anti-royalist, to instance the prominent contemporary campaigner and critic of monarchy.138 As Head of the Civil Service, he advised the prime minister on honours (advised by a committee structure on the different awards and categories), and accepted honours himself (MVO in 1945, CB in 1957, KCB in 1963, GCB in 1968, sworn of the privy council in 1973, and a life peerage in 1975). But in 1967–68, when there was a secret review of the monarchy’s finances, Armstrong personally recommended a new and radical approach to the costs and spending of the monarchy, moving to what he described as a ‘Scandinavian-style monarchy’ based on a separation of the ‘private’ and ‘public’ sides, staff and activities of the Monarch and Royal Family, with Buckingham Palace becoming a royal office and historical monu- ment, open to the public and used for ceremonial occasions, and maintained by the taxpayer, while the Royal Family lived in a private residence financed entirely by the monarch’s private means. He acknowledged that this was a highly political matter, however, and not just a matter of economics, as it could well be the beginning of a fundamental change in the relationship of the Crown to other parts of the constitution. Another way of reducing the net cost to the government, he argued, would be to take for the Exchequer even more of the revenues of the Duchy of Cornwall after Prince Charles came of age in 1969 than the 40 per cent (falling to 30 per cent) that already been offered by the Queen (the Prince would still receive £115–133,000 a year, depending on the rate of voluntary surrender of revenue, noted Armstrong—‘a lot of money for a young man’).139 The idea of a ‘Scandinavian Monarchy’ was anathema to Lord Cobbald, the Lord Chamberlain and head of the Royal Household, Harold Wilson 180 K. THEAKSTON AND P. CONNELLY apparently endorsing his view that the public would not welcome such a thing. (Cobbald also vetoed the plan concerning the Duchy revenues.) Certainly Michael Halls’ briefing note for the PM for a meeting with Armstrong and other senior officials on the Civil List, on 31 July 1968, said simply: ‘If William Armstrong’s proposal for the examination of a “radical solution” of a Scandinavian-style is raised … you will presumably say that you do not favour it.’ Parts of the minutes of that meeting are still redacted and closed, but there is no recorded note of a discussion of Armstrong’s idea.140 It is in any case difficult to believe Armstrong seriously expected the Labour government to take action on his radical proposal, Wilson being such a strong and sentimental monarchist (though Heath, later, had a cooler and more business-like attitude to the monarchy as an institution) and his fellow mandarins looking pragmatically for workable ways of dealing with the pressing financial issues facing the monarchy and keeping the existing set-up on the road. Perhaps the austere outlook of his formative Salvation Army background was resurfacing—a 1968 profile talked about Armstrong’s ‘contempt for personal possessions on a large scale’ and his lack of sympathy for ‘the Toryism of great wealth’, though he was also said to be equally contemptuous of the opposite stance of ‘socialist envy’.141 Perhaps the Treasury man in him was taking a forensic, cool and hard-nosed analysis of the issues to what seemed the logical conclusion. Perhaps, too, the organisational designer in him was wondering whether, in a decade when parliament, the civil service, the machinery of government, local government and other parts of the state were being overhauled and modernised, the workings of the monarchy could not be immune from change. Whatever the case, the episode lay quietly buried in the files until the relevant documents were released over 30 years later.142

Open Government In his views on ‘open government’ William Armstrong was, within certain limits, progressive (and certainly more so than many of his senior colleagues) and prepared to see some reform while retaining necessary confidentiality and protections. The traditions of ‘closed’ government were largely unquestioned when he was a rising civil servant in the 1940s and 1950s, buttressed by the draconian and ‘catch-all’ Official Secrets Act, the veil of Cabinet secrecy, civil service discipline rules, and a Whitehall culture equating secrecy with good government. But by the time Armstrong was at the top of the civil service in the 1960s and early 1970s, official HEAD OF THE HOME CIVIL SERVICE 1968–74 181 secrecy was on the reformers’ agenda and calls for a more open style of government were starting to be made, with the pressure for freedom of information reform intensifying after he had left the scene and actual leg- islative change coming in later decades. The Fulton Committee was concerned that the administrative process was shrouded in too much secrecy and urged the government to establish an inquiry with the intention of ‘getting rid of unnecessary secrecy in this country.’143 Harold Wilson at first apparently saw some merit in an inquiry of that kind, involving ‘outsiders’, possibly Privy Councillors, but senior officials (and, it turned out, other ministers) were opposed. Armstrong thought it ‘by no means clear that an enquiry by a body of outsiders—the bulk of whom would probably be naturally biased against secrecy—would advance matters.’ He acknowledged that the Official Secrets Act was restrictive and could be seen as ‘a potentially harsh and repressive power’, going beyond the requirements which originally gave rise to it, but it was ‘extremely difficult to enforce’, and was brought into ‘disrepute’ by ministerial leaks. ‘The measures to preserve as secret what we think should be kept secret are not always effective’, he argued. He noted, however, that it was not in itself a barrier to the adoption of a more liberal policy towards the (‘authorised’) release of government information.144 Writing to him, Burke Trend agreed that the Official Secrets Act was a ‘very blunt instrument’ but warned that trying to put in place new legislation would lead to ‘endless trouble with Parliament’ and probably result in ‘something even less satisfactory than we have got now.’ He compared the Official Secrets Act with ‘the cane in the best type of orthodox school’—not used very often, but the knowledge that it was there produced a ‘remarkably stabilis- ing effect.’145 Foot-dragging and resistance were also apparent at a meeting of permanent secretaries (including the director-general of MI5) in June 1968, chaired by Armstrong: officials’ advice to ministers would have to remain confidential; releasing information about projections into the future might produce ‘embarrassment for Ministers’; ‘once more information was released, the public appetite … would no doubt grow with what it fed on’; the Official Secrets Acts ‘might be open to improvement in some respects, but it was arguable that once the Acts were brought under review by Parliament it would be difficult to maintain a number of provisions which would continue to be needed.’146 In November 1968 Wilson was reported to be ‘not in any particular hurry to reach conclusions’, but he was stirred into action in January 1969 when Edward Heath called for a review of government secrecy.147 182 K. THEAKSTON AND P. CONNELLY

Armstrong consulted with his colleagues again and in due course proposed a committee of inquiry into the release of official information.148 Various names were mooted for the chairmanship of an enquiry committee, although when Wilson suggested Lord Aylestone (the former minister, Bert Bowden), Michael Halls revealingly warned him that he ‘might well come out with a far too liberally minded report—almost Swedish.’149 Whitehall’s anticipation of the problems and dangers lurking down the ‘open government’ road is clearly indicated in an official brief prepared for the prime minister by Armstrong and Trend. Doubts were expressed about ‘how far there is a real public demand’ for the release of more background ‘factual and statistical information’, which would in any case be costly in terms of civil service staff numbers required to implement. Through ‘the Green Paper approach’ the government had already started to make more information available and extend public consultation, it was claimed. However, it was judged that greater openness about the processes of decision-taking and policy-making would not be ‘practicable or expedient’, because it would open up to the public gaze the role of ‘sub- jective judgments’ and ‘the reactions of various interests at home and abroad’. Consequently, the terms of reference of an outside inquiry, if there had to be one, should be framed in such a way as to ‘minimise … the risk of embarrassment.’150 With regard to Fulton’s proposal for progres- sively relaxing the convention of civil service anonymity—an idea which Wilson had favoured in the early days of the government but had apparently become ‘much more cautious’ about151—the catch here was that senior officials could become identified as personally responsible for the advice given on particular issues, and the corollary of that would be ‘they should be free to disclose in what respects their advice had not been accepted by Ministers.’ Labour Ministers needed little persuading, and James Callaghan later summed up their executive mentality with his comment that ‘we are not going to tell you anything more than we can about what is going to dis- credit us.’152 In March 1969 the ‘Inner Cabinet’ (the Parliamentary Committee) finally rejected an outside inquiry as likely to push the government further than it wanted to go. Instead, a rather limited and bland White Paper, Information and the Public Interest, was issued in June 1969 putting a positive gloss on the government’s record in making more information available.153 Aware of and constrained by political and Whitehall scepticism and opposition to reform, Armstrong nevertheless took the opportunity to fly HEAD OF THE HOME CIVIL SERVICE 1968–74 183 a personal kite, as it were, on the issue in a public lecture in June 1970. The tradition of civil service anonymity could be ‘carried too far’, he said, arguing that ‘there are topics on which civil servants can usefully contribute, in their own persons and under their own names, in public debate.’ It was Armstrong who was largely responsible for the system of Green Papers or consultative documents, the first of which had appeared in 1967. ‘To my mind there would be every advantage in the name of the civil servants responsible for such studies being known, and their being allowed to join in public debate on their own findings’, he said. This could not be done in every field of public policy, he admitted, noting the need for secrecy in the areas of foreign affairs, defence and financial policy. Ministerial and civil service discussions and advice would also have to remain confidential. The line between ‘the area of reticence’ and the ‘area where I think we can be seen and heard’ was ‘very difficult to draw’, and there was a danger of being pulled into political controversy, but the implication that he wanted officials to, where possible, ‘contribute more than we have in the past to public enlightenment’ was clear.154 Conservative prime minister Edward Heath did not favour the Armstrong idea of civil servants going public in this way to explain government policy and thinking.155 The 1970 Conservative manifesto included a pledge to ‘eliminate unnecessary secrecy’ and Heath set up the Franks Committee to review the operation of the Official Secrets Act. William Armstrong gave oral evidence to the committee in October 1971. Section 2 of the Official Secrets Act (which made the unauthorised release—and receipt—of any official information a criminal offence) was, he admitted, ‘confused or anachronistic’. As far as protecting against leaks of information to the press went, the virtual impossibility of securing a conviction made the Act ‘a dead letter’, he said, though there was the argument that removing the ‘generalised deterrent effect’ or the possibility of criminal sanctions (however hypothetical) might weaken the checks or restraints provided by internal civil service discipline.156 In a hard- hitting report in 1972, Franks called Section 2 ‘a mess’ and proposed that criminal sanctions should apply to narrower and defined categories of information. However, Armstrong and Philip Allen (permanent secretary at the Home Office) had given private and informal evidence to the committee expressing reservations about this approach, and putting forward some of the practical difficulties about the categories of information to be covered and the complexities of the official secrecy classification system. And permanent secretaries, in a meeting on the report in December 1972, 184 K. THEAKSTON AND P. CONNELLY stressed the ‘anomalies’ in the report and did not think it would either improve the existing law or head off outside criticism and dissatisfaction.157 Douglas Allen indeed told Armstrong that, from the Treasury, he regarded ‘much of the Franks Report as absolute nonsense; I cannot take seriously a number of recommendations which seem to regard Ambassadors’ chit chat as requiring the protection of criminal sanctions whereas Budget secrets do not.’158 The Cabinet eventually sat on the report until June 1973, when it announced it accepted Franks’ essential recommendations but no further action had been taken before the Conservative government fell. Armstrong continued to make the case for more openness after he left Whitehall in 1974. He admitted that things looked different ‘from the other side’. ‘If you are inside everything seems crystal clear’, he said in a radio talk. ‘You are sure you know exactly what the government is thinking and equally sure you have explained it perfectly to the public. If you are outside there is a thick fog between you and the government.’ ‘With the best will in the world’, he told a journalist, ‘I find it extremely difficult to discover what the government is up to and what the authorities mean by this, that and the other thing.’159 He thought that the names of officials could be printed in the margins of Green Papers, alongside the paragraphs of policy analysis for which they were responsible, and they could then be questioned by select committees and the public. It was still essential to preserve Cabinet secrecy and the confidentiality of civil service advice to ministers, he conceded, but within those limits officials could go much further than hitherto in publicly expounding and defending the work and policies of their departments, and giving background information about the considerations affecting policy. He arguably under-estimated the difficult position that officials could be placed in if they were seen to be taking sides in a political argument over policy, however. And another problem was that the political obstacles in the way of greater openness were formidable: ‘no government will do this willingly’, Armstrong admitted.160 He was frank about the obsession with secrecy of his former colleagues in Whitehall. ‘It obviously is comfortable, convenient, and one has to say it allows mistakes to be covered up’, he admitted. Inventive ways round freedom of information laws would be found, he predicted. If the public were given a right to see official ‘documents’, civil servants would create internal ‘aide memoires’ or memos that weren’t classed as documents and that the public would not be able to get at.161 ‘At the moment parties HEAD OF THE HOME CIVIL SERVICE 1968–74 185 think elections are lost through more openness’, he said in a television interview in 1978, ‘so they’re not going to do it.’ ‘Think hard’ before trying to reform the Official Secrets Act, he cautioned, because a new measure might be ‘less absurd and therefore it might be more damaging’, adding, ‘don’t expect that that suddenly makes a brave new world.’162

* * *

By 1972, the thrust to reform and modernise the civil service and the machinery of government had lost its force. William Armstrong, initially highly committed as a reforming Head of the Civil Service, had ‘lost interest’, says Rodney Lowe, and prime minister Heath’s interest in administrative reform had also waned.163 As the economic and political crises facing the Heath government mounted, Armstrong was increasingly drawn into a wider role, advising the prime minister and working on industrial and incomes policy (see Chap. 6). The achievements of 1968–72 were real and substantial but also, as momentum and focus were lost, to some extent incomplete. The limited progress with developing the idea of agencies and progressing with other managerial reforms are a case in point. Looking back (in 1975) Armstrong once admitted that ‘had he been left to himself [as Head of the Civil Service], he would have talked much more to the Permanent Secretaries, would have been much more concerned with the internal administration of Departments, would have thought more on the longer-term problems of the Service and on the “theology” of the HCS role and of professionalism.’ Head of the Civil Service ‘was in some ways an unreal title’, Armstrong later explained to James Callaghan. The holder could not give orders to other permanent secretaries running the various departments of state, who were responsible to and worked directly and primarily to their own ministers. ‘The leadership role of the HCS was very much what he could make of it’, Armstrong told Clive Priestley of the CSD, and he had been ‘prevented in his later years from discharging the role of HCS in the way he would have liked.’164 In contrast to what Edward Bridges had been able to achieve while Head of the Civil Service (1945–56) in speaking up and out for the role and character and traditions of the civil service, Armstrong himself conceded that ‘his utterances had never added up to a comprehensive ethos. The pressure of current business was always too great to allow this.’165 There was ‘a need at this stage to give some attention to the qualities 186 K. THEAKSTON AND P. CONNELLY which would have to be preserved in the Civil Service once the Fulton reforms had been implemented’, a CSD meeting chaired by Armstrong concluded in April 1970. A couple of important Armstrong speeches addressed the questions of professionalism, reform, values, and the role and responsibility of civil servants in the modern world but without taking the issues very far or developing any radical new constitutional doctrine.166 When a controversy about ‘question rigging’ blew up in early 1972 (officials in the DOE being asked by ministers to prepare a ‘bank’ of questions to be put down by friendly backbenchers to flood the House of Commons Order Paper and block out hostile PQs from Opposition MPs), Armstrong played a straight bat and stuck to the established line that ‘the overwhelming presumption is that a Civil Servant carries out the instructions of a Minister’, that the civil service is party-politically neutral but not impartial as between the Government and the Opposition, and admitted that he himself had been involved in ‘various stratagems’ to help ministers get government business through parliament.167 It would be ‘constitutionally disastrous to apologize and set a precedent’, he insisted when Peter Walker, the relevant secretary of state, wanted to shoulder the blame; ministers, Walker records him as saying, ‘had the right to ask for virtually anything to be done.’168 The CSD job tested and exposed his lack of managerial experience. He brought great prestige and personal authority and clout to the job, but was always more the ‘outstanding intellectual’ than the sort of ‘tough, mature and experienced manager’ that Frank Cooper, for one, thought was needed to successfully drive through organisational and management reform in Whitehall. Rodney Lowe has made the intriguing argument that one of Armstrong’s managerial failings was his failure to appoint ‘someone of the calibre of Otto Clarke (who had helped to drive through his plans for reorganising the Treasury in 1962)’ as his deputy at CSD, though Clarke personally may not have been the answer as he was grappling with the major challenges of the expanding MinTech in the late 1960s and was due to retire in 1970 (on reaching 60).169 Although he had wanted the job, and had approached it in an activist and dynamic way, after a while he had he started to find it frustrating and to feel the constraints and limitations. He had, for instance, expected the Head of the Civil Service to be in regular direct contact with, and have easy access to, the prime minister but was disappointed to find that that was not the case with Wilson, though it did become so with Heath, with whom he had regular meetings from early in 1971.170 And then, as a HEAD OF THE HOME CIVIL SERVICE 1968–74 187 former senior CSD official recalled, ‘He found the work of the CSD, talking to the union leaders and so on, much less intellectually stimulating than the Treasury. … The CSD had got no real clout, not much money, and although it had power over promotions, that was a very limited power at the end of the day. … It was not a job he was basically enjoying, and that is really why he gravitated over to being whatever it was in relation to Ted Heath.’171

Notes 1. Rodney Lowe, The Official History of the British Civil Service: Reforming the Civil Service, Volume 1: The Fulton Years, 1966–81 (London: Routledge, 2011), p. 6. 2. Peter Jay, ‘New man at the helm in Whitehall’, The Times, 1 May 1968; Trevor Woolston, ‘The machine’s new minder’, The Guardian, 30 April 1968; Eric Jacobs, ‘Cleaning up the corridors of power: Profile of Sir William Armstrong, the civil service chief with the job of revolutionising Whitehall’, The Sunday Times, 15 September 1968; ‘New head of home Civil Service: Sir William Armstrong plays crucial role’, The Times, 5 January 1968. 3. ‘Armstrong, bringer of civil service salvation’, The Guardian, 5 January 1968. 4. Geoffrey K. Fry, Reforming the Civil Service: The Fulton Committee on the British Home Civil Service 1966–1968 (Edinburgh: Edinburgh University Press, 1993), pp. 73–98. 5. CCS (66) 17th meeting, Oral evidence of Sir William Armstrong, 5 July 1966, NA BA 1/3. 6. Interviews with former permanent secretaries (KT). 7. Alec Cairncross, The Wilson Years: A Treasury Diary, 1964–1969 (London: The Historians’ Press, 1997), p. 86. 8. Interview with former No.10 private secretary (KT). 9. Clive Priestley, ‘Official Head of the Home Civil Service’, 23 August 1976, Annex F, Remarks by Rt Hon Lord Armstrong on 23 October 1975, NA BA 7/22. 10. Clarke to Armstrong and Helsby, 22 March 1966; Note of a meeting in Sir Laurence Helsby’s room, 31 March 1966, NA T199/992. 11. Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658. 12. ‘The case for a Civil Service Department: Note of a meeting held in Sir Laurence Helsby’s room’, 29 July 1966; ‘The Pay and Management functions of the Treasury: Note of a meeting held in Sir Laurence Helsby’s 188 K. THEAKSTON AND P. CONNELLY

room’, 10 August 1966, NA T199/992; ‘Central Management of the Civil Service’, meeting of 6 October 1966, NA T199/993; Lowe, The Official History of the British Civil Service: Reforming the Civil Service, p. 111; Cairncross, The Wilson Years, pp. 157–158. 13. Jon Davis, Prime Ministers and Whitehall 1960–74 (London: Hambledon Continuum, 2007), p. 69. 14. Interview with Lord Wilson of Dinton (PC). 15. Interview with Sir John Chilcot (PC). 16. ‘Sir William Armstrong, the new head of the Civil Service, in conversation with George Scott’, The Listener, 9 May 1968, p. 597. 17. Lowe, The Official History of the British Civil Service: Reforming the Civil Service, p. 135. 18. Interviews with former permanent secretaries (KT). 19. Clive Priestley, ‘Official Head of the Home Civil Service’, 23 August 1976, Annex F, Remarks by Rt Hon Lord Armstrong on 23 October 1975, NA BA 7/22. 20. ‘The Change Makers’, Robert McKenzie interview with Sir William Armstrong, BBC TV, 9 January 1969, transcript in Armstrong papers; see also: ‘Sir William Armstrong, head of the Civil Service, talks to Robert McKenzie about the Fulton Report’, The Listener, 30 January 1969, pp. 136–137. 21. See: NA T295/44. 22. Interview with Bill McCall (PC). 23. Sir William Armstrong, ‘Fulton and After’, Civil Service Opinion, 46 (537), June 1968, p. 178. 24. The ‘trendy topics’ remark was by Ian Bancroft; see: de Berker to Lee, 4 September 1969, NA BA 6/66. 25. ‘Would you swop your son at 15?’, Daily Mail, 2 December 1970; ‘Who’d take on my two sons?’, Daily Mail, 3 December 1970; ‘Parents urged to swop teenage sons’, Daily Telegraph, 2 December 1970; ‘Parents advised to “swap” sons’, The Guardian, 2 December 1970; ‘Church and sex education’, BBC Radio ‘Today’ programme, 13 September 1972, transcript in Armstrong papers. 26. ‘Sir William Armstrong talking with Desmond Wilcox’, The Listener, 28 March 1974, p. 391. 27. Interview with former permanent secretary (KT). 28. Interview with Sir John Chilcot (PC). 29. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). 30. Interview with Sir Alan Bailey (PC). 31. Peter Hennessy, Whitehall, (London: Secker & Warburg, 1989), p. 213. 32. Interview with former permanent secretary (KT). HEAD OF THE HOME CIVIL SERVICE 1968–74 189

33. Clive Priestley, ‘Official Head of the Home Civil Service’, 23 August 1976, Annex F, Remarks by Rt Hon Lord Armstrong on 23 October 1975, NA BA 7/22; correspondence with Lord Armstrong of Ilminster (KT). 34. Papers on Halls v Civil Service Department, 1974: statement by Sir William Armstrong, pp. 1–2 (Armstrong papers). 35. The Civil Service, Cmnd. 3638 (London: HMSO, 1968). 36. Peter Kellner and Lord Crowther-Hunt, The Civil Servants (London: Macdonald, 1980); Hugo Young, ‘Arch-mandarin who went public’, The Sunday Times, 13 July 1980; Michael Kandiah (ed), ‘Witness Seminar: The Heath government, Contemporary Record, 9 (1), 1995, pp. 211–12. 37. Interview with former permanent secretary (KT). 38. The Listener, 30 January 1969, p. 136. 39. Sixth report from the Estimates Committee, ‘Recruitment to the Civil Service’, HC 308, 1964–65, Minutes of Evidence, 3 May 1965, qs.738–797. 40. Oral evidence of Sir William Armstrong to Management Training Working Party, 17 June 1966, NA T249/242. 41. CCS (66) 17th meeting, Oral evidence of Sir William Armstrong, 5 July 1966, NA BA 1/3. 42. Davis Prime Ministers and Whitehall, p. 69. 43. Kevin Theakston, ‘Whitehall Reform’, in Peter Dorey (ed), The Labour Governments 1964–1970 (London: Routledge, 2006), p. 158. 44. Kellner and Crowther-Hunt, The Civil Servants, p. 57. 45. Armstrong to Halls, 3 April 1968; Halls to Armstrong, 6 May 1968; Armstrong to Halls, 9 May 1968, NA PREM 13/1970. 46. Fry, Reforming the Civil Service, pp. 238–239. There is no record of Armstrong/Simey correspondence on the matter in Simey’s private papers (Simey papers A202/4 and A202/5, Special Collections and Archives, Sydney Jones Library, University of Liverpool). 47. Armstrong to Halls, 9 May 1968, NA PREM 13/1970; Davis, Prime Ministers and Whitehall, p. 69. 48. Armstrong to Halls, 21 June 1968, NA PREM 13/1971. 49. Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, qs.1497–1499. 50. E.O.M. (68) 7th meeting, 18 July 1968, NA BA 19/220. 51. Trend to Wilson, 11 November 1969, NA PREM 13/3135. 52. Armstrong to Halls, 9 May 1968; Armstrong to Halls, 14 June 1968, NA PREM 13/1970. 53. Spectator, 5 December 1970, p. 729 (letter from C.H. Sisson); Donald MacDougall, Don and Mandarin: Memoirs of an Economist (London: John Murray, 1987), p. 193; Fry, Reforming the Civil Service, p. 254; BBC 2, ‘Man Alive’, 9 May 1978. 190 K. THEAKSTON AND P. CONNELLY

54. Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, q.1501. 55. John Garrett, Managing the Civil Service (London: Heinemann, 1980), p. 191. 56. Wilson to Halls, 15 February 1969, NA PREM 13/3098. 57. NA PREM 13/2692. 58. Lowe, The Official History of the British Civil Service, pp. 312–319; Fry, Reforming the Civil Service, pp. 267–272; Kellner and Crowther-Hunt, The Civil Servants, pp. 89–94. 59. The Listener, 30 January 1969, p. 137. 60. Armstrong to Halls, 9 May 1968, NA PREM 13/1970. 61. Halls to Wilson, 25 February 1968, NA PREM 13/1970. 62. Kellner and Crowther-Hunt, The Civil Servants, pp. 63–64. 63. Halls to Armstrong, 23 May 1968, NA PREM 13/1970; speech by Sir William Armstrong to the Standing Conference of University Appointments Services, 9 September 1969, NA BA 6/63. 64. Philip Ziegler, Wilson: The Authorised Life (London: HarperCollins, 1993), p. 315; Halls to Wilson, 16 January 1969, NA PREM 13/2527; Halls to Wilson, 11 May 1968, NA PREM 13/1970; Joe Haines, Glimmers of Twilight (London: Politico’s, 2003), p. 56; papers on Halls v Civil Service Department, 1974 (Armstrong papers). 65. NA PREM 13/3099, PREM 13/3100. 66. Armstrong to Halls, 19 September 1968, NA PREM 13/1972. 67. Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, q.1504. 68. Gregson to Gilmore, 23 November 1971; Gregson to Chilcot, 7 March 1972; Gregson to PM, 8 March 1972, NA PREM 15/1341. 69. ‘Lord Crowther-Hunt and Lord Armstrong discuss reorganisation of the civil service’, BBC Radio 4, The World at One, 14 May 1980 (transcript in Armstrong papers). 70. F (JC) (71) 1st meeting, Joint Committee of the National Whitley Council on the Fulton Report, 23 November 1971, NA BA 16/77. 71. ‘Lord Crowther-Hunt and Lord Armstrong discuss reorganisation of the civil service’, BBC Radio 4, The World at One, 14 May 1980 (transcript in Armstrong papers). 72. Armstrong to Halls, 9 May 1968, NA PREM 13/1970. 73. Sir William Armstrong, Professionals and Professionalism in the Civil Service (London: London School of Economics and Political Science, 1970). 74. Fry, Reforming the Civil Service, p. 261; Peter Barberis, The Elite of the Elite: Permanent Secretaries in the British Higher Civil Service (Aldershot: Dartmouth, 1996), pp. 49–50; Armstrong, Professionals and Professionalism in the Civil Service, pp. 16–17; BBC1 television, ‘Nationwide’, 15 September 1977 (transcript in Armstrong papers); Sir William Armstrong, HEAD OF THE HOME CIVIL SERVICE 1968–74 191

Personnel Management in the Civil Service (London: HMSO, 1971); Armstrong interview in Personnel Management, June 1973, p. 22, NA BA 6/87. 75. Armstrong to Lord Privy Seal, 9 May 1972; Armstrong to Lord Rothschild, 7 June 1972, NA PREM 15/923; Lowe, The Official History of the British Civil Service: Reforming the Civil Service, pp. 173–177; Davis, Prime Ministers and Whitehall, pp. 138–140. 76. Richard Chapman, ‘The Rise and Fall of the CSD’, Policy and Politics, vol. 11 (1983), pp. 50–1; Christopher Pollitt, Manipulating the Machine: Changing the Pattern of Ministerial Departments, 1960–83 (London: Allen and Unwin, 1984), p. 78; David Dillman, ‘The Paradox of Administrative Power: John Macy and William Armstrong’, Public Policy and Administration, vol. 5 (1990), p. 14. 77. Anthony Sampson, The New Anatomy of Britain (London: Hodder and Stoughton, 1971), p. 252; Sir William Armstrong, The Civil Service Department and Its Tasks (London: CSD, 1970), p. 18; Fry, Reforming the Civil Service, p. 272; Permanent Secretaries’ Conference on the Fulton Report, 7–9 June 1968, NA CAB 164/826. 78. Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, qs.1485, 1487. 79. Pollitt, Manipulating the Machine, pp. 45, 50–51. 80. Sir William Armstrong, ‘The Civil Service Department and its Tasks’, in Richard Chapman and Andrew Dunsire (eds), Style in Administration: Readings in British Public Administration (London: Royal Institute of Public Administration and Allen and Unwin, 1971), pp. 329–330. 81. ‘Supplementary points for Prime Minister’s brief for Cabinet, 25th June [1968]’; Armstrong to Halls, 18 June 1968, NA PREM 13/1971; William Armstrong speech at the Institute of Municipal Treasurers and Accountants weekend conference, 29–31 March 1968, NA BA 6/61. 82. See: NA PREM 13/2680 and PREM 13/2681. 83. Armstrong to Halls, 30 September 1969, NA PREM 13/2681. 84. Walker to Gilbraith, 28 August 1970, NA BA 17/212. 85. Pollitt, Manipulating the Machine, pp. 89, 126; C. Gilbraith note for the record, 25 June 1970, NA BA 17/210. 86. Halls to Armstrong, 12 September 1969, NA PREM 13/2680. 87. Crossman to Wilson, 23 July 1968; Armstrong to Odgers, 18 July 1968; Halls to Helsby, 2 April 1968, NA PREM 13/2690; Richard Crossman, The Diaries of a Cabinet Minister: Volume 3: Secretary of State for Social Services 1968–1970 (London: Hamish Hamilton and Jonathan Cape, 1977), pp. 153, 157. 88. Eleventh Report from the Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, q.1927; Halls to Armstrong, 6 August 1969, NA PREM 13/2680. 192 K. THEAKSTON AND P. CONNELLY

89. See: NA PREM 13/2680, 13/3241. 90. See: NA PREM 13/3241 and BA 17/225. 91. Armstrong to Isserlis, 14 May 1970; Armstrong to Issrelis 21 May 1970; Isserlis to Armstrong, 2 June 1970, NA PREM 13/3241; Expenditure Committee, The Civil Service, 1976–77: q.1946. 92. The Rorganisation of Central Government, Cmnd. 4506 (1970). 93. Davis, Prime Ministers and Whitehall, pp. 103–104; Lowe, The Official History of the British Civil Service: Reforming the Civil Service, p. 164; Lewis Baston and Anthony Seldon, ‘Number 10 under Edward Heath’, in Stuart Ball and Anthony Seldon (eds), The Heath Government 1970–74 (London: Longman, 1996), p. 69. There is a ‘note for the record’, clearly dictated by William Armstrong, of a lunch with Howell a week (rather than two days) after the election, and of their conversation about MG issues, written up by C. Gilbraith on 25 June 1970, in NA BA 17/210. 94. Edward Heath, The Course of My Life (London: Hodder and Stoughton, 1998), p. 314; Kevin Theakston, ‘The Heath Government, Whitehall and the Civil Service’, in Stuart Ball and Anthony Seldon (eds), The Heath Government 1970–74 (London: Longman, 1996), pp. 75–76. 95. ‘Talk by Mr Edward Heath at Swinton College weekend course on the machinery of government’, November 1964, Boyle papers, MS.660/23778, Brotherton Library, University of Leeds. 96. Note for the record—discussion on the central departments, 4 June 1970, NA BA 17/231; W. Armstrong, Conservative Party plans for use of businessmen, 1 June 1970, NA BA 17/982; Davis, Prime Ministers and Whitehall, p. 93. 97. William Armstrong, Note for the record, 8 June 1970, NA BA 17/231. 98. See in general: NA BA 17/210, BA 17/231, BA 17/232, BA 17/233, BA 17/982, PREM 15/79. 99. Note of a meeting in Sir William Armstrong’s room, 22 June 1970 NA BA 17/210; Note for the record, C. Gilbraith, 25 June 1970, NA BA 17/210; Note of a meeting to discuss the recommendations of Action Group One of the Conservative Party Public Sector Research Unit (The Black Book), 30 June 1970, NA BA 17/232; Note of a Further Meeting to Discuss the Black Book, 1 July 1970, NA BA 17/232; Pollitt, Manipulating the Machine, p. 92. 100. Howell to R. Armstrong, 7 February 1971, NA PREM 15/404; R. Armstrong to Prime Minister, 28 April 1971, NA PREM 15/405. 101. Lowe, The Official History of the British Civil Service: Reforming the Civil Service, p. 165. 102. Pollitt, Manipulating the Machine, p. 76; Armstrong to Isserlis with memo on ‘Machinery of Government: The Central Departments’, 10 June 1970, NA PREM 13/3241; Note for the record—Discussion on the Central Departments, 3 June 1970, NA BA 17/231. HEAD OF THE HOME CIVIL SERVICE 1968–74 193

103. Lowe, The Official History of the British Civil Service: Reforming the Civil Service, p. 170; NA PREM 15/406, CAB 184/1, CAB 184/3. 104. Hennessy, Whitehall, p. 233; Tessa Blackstone and William Plowden, Inside the Think Tank: Advising the Cabinet 1971–1983 (London: Heinemann, 1988), p. 197. 105. Pollitt, Manipulating the Machine, p. 143. 106. Gilbraith to Cooper, 24 June 1970, NA BA 17/210. 107. William Armstrong, Note for the record, 8 June 1970, NA BA 17/231; note of a meeting in Sir William Armstrong’s room, 22 June 1970 NA BA 17/210; T. Caulcott, Machinery of Government Review 1970—The Recommended Changes, 20 May 1970, NA BA 17/225; W. Armstrong to R. Armstrong, Review of Departmental Responsibilities, 28 August 1970, NA BA 17/212. 108. Walker to Heath, 15 December 1973; W. Armstrong to R. Armstrong, 17 December 1973, NA BA 17/1089. 109. Lowe, The Official History of the British Civil Service: Reforming the Civil Service, pp. 182–190; meeting in Lord Privy Seal’s room, 9 November 1971, NA BA 17/441. 110. W. Armstrong to R. Armstrong, Review of Departmental Responsibilities, 28 August 1970, NA BA 17/212. 111. Brian Connell, ‘Lord Armstrong: A hardly-noticed transition from Whitehall to the City’, The Times, 15 November 1976. 112. Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658; ‘Sir William Armstrong talking with Desmond Wilcox’, The Listener, 28 March 1974, p. 390. 113. Kellner and Crowther-Hunt, The Civil Servants, pp. 174–175. 114. ‘Does God make a difference?’, BBC World Service, 30 October 1971/ Radio 4, 30 March 1972, NA BA 6/81. 115. Interview with Lord Moser (PC). 116. The Cecil King Diary 1970–1974 (London: Jonathan Cape, 1975), p. 246; Edward Heath interviewed by Charles Wintour and Robert Carvel, My Style of Government (London: Evening Standard, 1972), p. 4; Top Jobs in Whitehall: Appointments and Promotions in the Senior Civil Service (London: Royal Institute of Public Administration, 1987). 117. Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658; ‘Lord Armstrong: A hardly- noticed transition from Whitehall to the City’, The Times, 15 November 1976. 118. Papers on Halls v Civil Service Department, 1974: statement by Sir William Armstrong, p. 11, and C. Gilbraith note for the record, 6 August 1969 (Armstrong papers). 119. Michael McManus, Edward Heath: A Singular Life (London: Elliott and Thompson, 2016), p. 105. 194 K. THEAKSTON AND P. CONNELLY

120. See for example: Barbara Castle, The Castle Diaries 1964–70 (London: Weidenfeld and Nicolson, 1984), p. 722; Crossman, The Diaries of a Cabinet Minister: Volume 3, pp. 101, 755. 121. Eleventh Report from the Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, q.1494; Hugo Young, One of Us (London: Pan, 1990), p. 72; John Campbell, Margaret Thatcher, volume one, The Grocer’s Daughter (London: Jonathan Cape, 2000), p. 216. 122. Oral evidence of Sir Laurence Helsby—The Office of Permanent Secretary and Top Appointments’, NA BA 1/6; Fry, Reforming the Civil Service, pp. 77–79; Clive Priestley, ‘Official Head of the Home Civil Service’, 23 August 1976, Annex F, Remarks by Rt Hon Lord Armstrong, NA BA 7/22. 123. Kellner and Crowther-Hunt, The Civil Servants, p. 175; interview with former permanent secretary (KT). 124. ‘Sir William Armstrong talking with Desmond Wilcox’, The Listener, 28 March 1974, p. 390. 125. Eleventh Report from the Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, q.1505. 126. Armstrong to Hall, 10 March 1969, in: Papers on Halls v Civil Service Department, 1974 (Armstrong papers). 127. Sir William Armstrong to R. Armstrong, 13 November 1970, NA PREM 16/2067. 128. R. Armstrong to PM, 29 September 1970, and W. Armstrong to R. Armstrong, 29 September 1970, NA PREM 15/72. 129. Crossman, The Diaries of a Cabinet Minister: Volume 3, p. 755; Sir William Armstrong to R. Armstrong, 13 November 1970, NA PREM 16/2067. 130. Lowe, The Official History of the British Civil Service, pp. 331, 333, 510; NA BA 19/82; House of Lords debates, 8 December 1971, cols.800, 826. 131. Lowe, The Official History of the British Civil Service, p. 330; Civil Service Statistics 1974 (London: HMSO, 1975), p. 20. 132. The Listener, 28 March 1974, pp. 390–391; ‘Man Alive—Sir William Armstrong’, BBC2 TV, 27 March 1974, transcript (pp. 11–12) in: NA BA 7/22. 133. Lowe, The Official History of the British Civil Service, pp. 337–40; NA BA 19/276. 134. Hennessy, Whitehall, p. 216. 135. ‘Civil List: Note of a meeting at 10 Downing Street’, 31 July 1970, NA BA 6/97. 136. ‘Note for the Record: Civil List’, note of a meeting on 12 May 1970, NA BA 6/96. HEAD OF THE HOME CIVIL SERVICE 1968–74 195

137. ‘Civil List: Note of a meeting at 10 Downing Street’, 31 July 1970, NA BA 6/97. 138. Willie Hamilton, My Queen and I (London: Quartet, 1975). 139. See: ‘The Civil List’, report by William Armstrong, Burke Trend and Laurence Helsby, and ‘The Cost of Monarchy’, William Armstrong, 14 September 1967, NA PREM 13/2906. 140. Lord Cobbald to PM, Civil List, 11 January 1966; Record of a meeting between the Prime Minister and the Chancellor of the Exchequer to discuss the Civil List, 31 July 1968; Halls to PM, the Civil List, 30 July 1968, NA PREM 13/2906. 141. Eric Jacobs, ‘Cleaning up the corridors of power: profile of Sir William Armstrong’, The Sunday Times, 15 September 1968. 142. Lorna Duckworth, ‘Harold Wilson tried to make Royal Family surrender land to pay their way’, The Independent, 22 July 2002. 143. Fulton Report, paras.277–280. 144. Shackleton to prime minister, 27 September 1968; ‘The Secrecy of Official Information’, 24 May 1968, NA CAB 164/640. 145. Trend to Armstrong, 21 May 1968, NA CAB 164/640. 146. The Secrecy of Official Information: Note of a meeting on 7 June 1968, NA CAB 164/640. 147. Halls to Walker, 26 November 1968, NA PREM 13/1972; ‘Secrecy of Official Information’, 24 January 1969; Halls to Walker, 23 January 1969; Armstrong to Trend 20 January 1969, NA CAB 164/640. 148. ‘Enquiry into the Release of Official Information’, 14 February 1969, NA BA 19/49. 149. Halls to Wilson, 21 February 1969, NA PREM 13/2528. 150. ‘The Release of Official Information’, 5 March 1969, NA PREM 13/2528. 151. Halls to Armstrong, 22 May 1968, NA PREM 13/1970; see also: Halls to Wilson, 25 February 1968, NA PREM 13/1970. 152. Departmental Committee on Section 2 of the Official Secrets Act (Franks Committee), Cmnd 5104 (London: HMSO, 1972), vol. 4, p. 190. 153. Information and the Public Interest, Cmnd 4089, (London: HMSO, 1969). 154. Sir William Armstrong, ‘The Role and Character of the Civil Service’, (24 June 1970), Proceedings of the British Academy, vol. 56, 1972, pp. 223–224. 155. Robert Armstrong to Maitland, 6 February 1972, NA BA 6/56. 156. Franks Committee, vol. 3, pp. 104–130. 157. Minutes of the thirty-second meeting of the Franks Committee, 16 May 1972; Note of a meeting at the Home Office, 1 December 1972, NA CAB 164/1223. 196 K. THEAKSTON AND P. CONNELLY

158. Allen to Armstrong, 12 October 1972, NA T199/1226. 159. ‘The Intrusive State: A Civil Servant’s Experience’, 28 July 1977, transcript of a talk on BBC World Service (Armstrong papers); Brian Connell, ‘Lord Armstrong: A hardly-noticed transition from Whitehall to the City’, The Times, 15 November 1976. 160. Transcript of: ‘Analysis: The Secrets of Government’, BBC Radio 4, 4 March 1976 (Armstrong papers); see also: Peter Hennessy, ‘Lord Armstrong defends open government in committee considering ministerial secrecy’, The Times, 30 June 1975. 161. Kellner and Crowther-Hunt, The Civil Servants, pp. 272, 281. 162. Transcript of BBC 2 television, ‘Man Alive’, 9 May 1978 (Armstrong papers). 163. Lowe, The Official History of the British Civil Service, p. 193. 164. Clive Priestley, ‘Official Head of the Home Civil Service’, 23 August 1976, Annex F, Remarks by Rt Hon Lord Armstrong on 23 October 1975, NA BA 7/22; Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658. 165. Clive Priestley, ‘Official Head of the Home Civil Service’, 23 August 1976, Annex F, Remarks by Rt Hon Lord Armstrong on 23 October 1975, NA BA 7/22. 166. J.W. Lloyd, note for the record, 27 April 1970, NA BA 16/58; Armstrong, Professionals and Professionalism in the Civil Service; Armstrong, ‘The Role and Character of the Civil Service’. 167. Report from the Select Committee on Parliamentary Questions, HC 393, 1971–72, Minutes of Evidence, qs.133–225; see also: Maurice Wright, ‘The Professional Conduct of Civil Servants’, Public Administration, 51(1), 1973, pp. 1–15. 168. Peter Walker, Staying Power: An Autobiography (London: Bloomsbury, 1991), p. 84. 169. Lowe, The Official History of the British Civil Service, p. 134 and p. 433, fn.21. 170. Lowe, The Official History of the British Civil Service, p. 163 and p. 432, fn.15. 171. Interview with former permanent secretary (KT). CHAPTER 6

‘Deputy Prime Minister’ Under Heath

It was during the Heath administration that William Armstrong came into his own, directly advising on crucial policy fronts a prime minister with whom he had some things in common, but also meeting his nemesis in the battle with the Trades Union Congress and the National Union of Mineworkers over wages and counter-inflation policy. Both Edward Heath and William Armstrong were able, powerful and highly- and honourably- motivated men, but both left their offices in 1974 disappointed and defeated—Heath having lost a general election and later losing the leadership of his party, Armstrong ‘having become more openly involved in the political arena than any other civil servant before him.’1 Initially, Armstrong dealt with Heath mainly on the machinery of government, civil service matters and senior Whitehall appointments (see Chap. 5). As we have seen, by late 1971/early 1972 he was feeling that he had personally put as much into the civil service reforms started after the Fulton Report as he could do. The major ‘MG’ reforms had also been implemented. The Civil Service Department (CSD) left him under- employed and under-stretched. He had set up the department but now felt that running it could largely be left to his subordinates. Frank Cooper, then a CSD deputy secretary, says that ‘William got very bored with the whole thing—genuinely bored … He was more and more diverted back into what he regarded as the mainstream of policy issues as far as the country as a whole was concerned.’ ‘He’d achieved what he wanted to

[at CSD]’, commented another senior insider. ‘There was a kind of rest- lessness about him—not wanting to go to waste, looking for new things to get his teeth into.’2 Armstrong’s role in the Heath government certainly came to extend far beyond his formal responsibilities as Head of the Civil Service—but in some ways beyond what was strictly proper for any civil servant.

Armstrong and Heath There is no question but that William Armstrong was the dominant Whitehall figure during the Heath administration. Edward Heath seemed to prefer to surround himself with senior mandarins, and to rely upon them for advice, rather than looking to Cabinet colleagues, party advisers or political cronies. William Armstrong established a very close rapport with the prime minister. ‘William Armstrong was always at Number 10’, recalled a former minister. ‘He and Heath were closeted together the whole time.’3 Theirs became in fact one of the closest and most extraordinary prime minister-civil servant partnerships of modern times; Eric Roll, who knew them both well, told Heath’s biographer, John Campbell, that he never understood the ‘inwardness’ of their relationship.4 Their fates became bound together and, in a sense, the fall of Heath in 1974 was also the story of the fall of Armstrong. Yet Heath himself seemed, in retrospect, guarded and ungenerous about William Armstrong’s role, and reluctant fully to acknowledge the support and advice he gave and his influence. He gave him only two extremely brief and unforthcoming references in his own memoirs, published in 1998. And although he penned the Dictionary of National Biography entry on Armstrong in 1986, describing him (rightly) as ‘a public servant of the highest quality and the upmost integrity’, Heath described his role during his own premiership narrowly in terms of coordinating the tripartite talks on prices and incomes policy with the TUC and CBI, said that ‘wise in judgement, he never attempted to force his views on those with whom he worked’, and insisted that ‘at no time did Armstrong exceed his functions as an official.’5 Talking privately, in 1978, to a Conservative MP he vehemently denied that Armstrong ‘had a disproportionate influence on my policies’, something he repeated on other occasions.6 But just as William Armstrong’s role and power under Heath can be exaggerated—as in the case of the union leader who told Martin Holmes he was ‘more than a deputy Prime Minister—he was a co-Prime Minister’—so it should not be overly downplayed, as ‘DEPUTY PRIME MINISTER’ UNDER HEATH 199

Heath himself subsequently appeared to do. William Armstrong became Heath’s closest adviser, playing a sort of ‘chief of staff’ role and, as a senior civil servant carefully put it to Holmes, Heath as prime minister ‘came to rely more than usually on Armstrong.’7 Heath had actually been a civil servant for a year after the war, in the Ministry of Civil Aviation, having passed equal first in the civil service entrance exams, and in many ways he would have made an outstanding top permanent secretary. At Civil Aviation he had worked for Peter Masefield, head of long term planning and projects, and did well, but was always set on a political career and fairly soon adopted as a prospective Conservative parliamentary candidate. Masefield tried to keep Heath and to that end sent him to see ‘Armstrong, in Establishments’, but there was no way round the regulations requiring him to resign from the civil service at that point. John Campbell, Heath’s biographer, commented that, remarkably, ‘this was the future Sir William Armstrong, twenty three years later Heath’s most trusted adviser.’8 This would have been an astonishing coincidence, if true. However, it is surely not. Masefield would have referred Heath to the Establishments Officer in the Ministry of Civil Aviation, in which William Armstrong never served—at the relevant time he was in the Treasury, dealing with machinery of government issues (see Chap. 3). However, there was another Armstrong in Whitehall, who was indeed in the Establishments division of the Ministry of Civil Aviation, the Civil Service List for 1948 recording that this was E.A. Armstrong. It is almost certainly this Mr Armstrong who would have dealt with Heath. William Armstrong and Heath had some features in common. They were of an age; Armstrong was but one year older. They had ‘broken through’ to the top at about the same age—the one to be Joint Permanent Secretary of the Treasury, aged 47; the other to be Leader of the Conservative Party, aged 49. They had both come from humble backgrounds and had influential mothers. They were both grammar school scholarship meritocrats. They had overlapped at Oxford, though there is no evidence that they had ever met as students. Religion was important to both, but was in Heath’s case, with much else besides, pushed down deeply from public view. Both were rational, analytical, masters of detail, great shifters of papers and dossiers, disposed to the belief that reasonable men, reasoning together, could find solutions to problems. Both had ‘a great love for the technicalities and details of administration.’9 Both, also, were driven, self-disciplined men. But where music was one of Heath’s great passions and a solace, it left Armstrong cold. One day, at home, he 200 K. THEAKSTON AND P. CONNELLY came upon his son playing Mozart on the piano and remarked ‘you know, that means nothing to me’.10 By temperament a loner, Heath found it difficult to develop personal relations, even within his own government, though he was much esteemed and respected by members of his private office, by his closest colleagues in government, and by his circle of personal friends. Eventually William Armstrong was admitted to the second tier of this hierarchy, although there was always a reserve that Heath maintained, even with his closest colleagues. William Armstrong got very close to Heath but not as close as Robert Armstrong, the PM’s principal private secretary, did—utterly trusted, he also became a close friend.11 Heath had the unnerving habit of remaining stonily silent for long periods, while his advisers or visitors discussed an issue (or presented themselves for appointment) and then, once he had heard enough to make a decision, to stop the discussion. Indeed, for all the time they spent together discussing government business and policies, Armstrong once recalled ‘the enigmatic quality of Ted Heath that we all know about. He didn’t always explain why he wanted to do things, you were left a bit to guess.’12 In January 1972, he confessed over lunch with Cecil King that he actually found it ‘difficult in his present job dealing with the P.M.’:

At the Treasury he often saw the Chancellor and knew where he stood. With the Prime Minister his relations are much less close. Wilson talked the entire time at their interviews, and [he] found it difficult to make his point. Ted listens attentively and says nothing. It is impossible to guess whether he agrees or disagrees—and whether or not he intends to do anything about it.

Heath was privately eloquent on his vision of the possibilities for Britain in the European Union, Armstrong noted, but was a poor communicator: ‘the tragedy is that Ted cannot, but cannot, get his ideas on the subject across.’13 Heath’s approach to government was managerial, rational and problem- solving. His critics accused him of being too much like a civil servant and felt that he was over-influenced by senior officials. But although he had a high regard for the civil service as an institution, he was also an impatient would-be modernizer and reformer. He disliked the standard Whitehall committee practice of searching for the lowest common denominator of inter-departmental agreement and grinding out compromises, and wanted more use of trouble-shooting ‘task forces’ of the sort put together for the ‘DEPUTY PRIME MINISTER’ UNDER HEATH 201

EEC entry negotiations he had led in the early 1960s. Under him, there were also experiments with ‘mixed’ committees of ministers and officials intermingled together, rather than usual pattern of separate ministerial and civil service groups. He wanted a more dynamic and efficient civil service, equipped to take speedy initiatives in tackling problems, getting results and saying ‘plainly what it thinks policy ought to be.’14 In this context, Heath the bureaucratically-minded politician, and Armstrong the highly politically-sensitive official seemed almost made for each other. In opposition, Heath had presided over an unprecedentedly wide policy review in the run-up to the 1970 Election. He was exceptionally well prepared to take over as prime minister. But his preparedness was perhaps more that of a bureaucrat rather than of a party politician. He never seemed to see the need to trim. He lacked political sensitivity. Where Heath and Armstrong differed, initially, was on precisely that point. Armstrong, though no slouch when it came to political appreciation of the limits to ministerial action, preferred at the start to stand back and allow ministers to conduct their mysterious rituals with the press, the party, Cabinet colleagues and political opponents. Heath, seemingly with reluctance or distaste, played that game. But so also, towards the end, did Armstrong, with poor results.

Economic and Industrial Policy For the first year or so of the Heath government, William Armstrong did not have a role as a prime-ministerial adviser on economic policy-making. Perhaps he never would have acquired one had not Heath’s government suffered a major blow on this front with the sudden death of the Chancellor of the Exchequer, Iain Macleod, in July 1970, barely a month after taking office. Macleod had had serious long-term health problems, and Armstrong had in fact privately thought his health so poor that he would not last very long at the Treasury.15 His death removed the government’s best political communicator, a major political heavyweight with independent views of his own and the only minister capable of standing up to Heath. The government was left unbalanced as a result, allowing it to become much more of a one-man band centred on the prime minister. Macleod’s replacement, Anthony Barber, was more of a lightweight who could and would not stand up to the PM (and William Armstrong seems to have thought that he was a weak Chancellor16). Moreover, Heath—who had never served in that department—appears to have distrusted the Treasury and subsequently 202 K. THEAKSTON AND P. CONNELLY interfered with it far more than he would have been able to do had Macleod not died. Heath was critical of the Treasury because of its gloomy economic growth and balance of payments forecasts, and because it did not share his enthusiasm about joining Europe and was not fully behind him in its views about the economic consequences of EEC membership. The policy consequences of Macleod’s untimely death are more conjec- tural, in terms of the way in which the Conservative government responded to the issues of unemployment, inflation and growth and the union problems it faced,17 but it seems likely that with a strong and assertive Chancellor, backed up by—and himself backing up—his Treasury officials, there may not have been the same space and opportunity that opened up for William Armstrong, as Head of the Civil Service, to move across into a position to act as an adviser and coadjutor to a prime minister who was himself dominating and directing the main thrust of economic policy. Armstrong, of course, had long and hard experience of economic policy from his time at the Treasury. He had carefully summed up his views and experience of economic management in his Stamp Memorial Lecture in November 1968. Post-war economic policy had been a success in terms of the fundamental aim of preventing a return to the heavy unemployment of the 1930s, he argued, but the record in other respects was more prob- lematic: there were still economic fluctuations, ups and downs and frequent reversals of policy; costs and prices had continued to rise; there had been frequent trouble with the balance of payments; growth rates had lagged behind other countries. The results of the NEDC plan for growth and of Labour’s 1965 National Plan had been ‘disappointing’. Action to increase the underlying rate of growth in the economy was, realistically, a long-term question involving issues about international competitiveness and supply-side factors. Government short-term economic demand management, he concluded, ‘can injure the chances of economic growth, but not do much positively to promote it … can spoil the chances of getting wage and price stability, but not make an incomes and prices policy unnecessary, and … can destroy competitiveness, but not restore it.’18 This was the counsel of someone who knew there were no easy answers and no policy shortcuts to economic miracles. In private, Armstrong appears to have been rather doubtful about the drift of events in the early stages of the Heath government. At the end of August 1970, for instance, he talked to Cecil King, who recorded in his diary: ‘DEPUTY PRIME MINISTER’ UNDER HEATH 203

He said no one anywhere knows how to maintain steady economic growth. When politicians say this is their party’s policy, the statement is meaningless. He thought that to ease up on the present restrictive policy would merely speed up the present rate of inflation—lowering taxation would have the same effect. To maintain the present policy would lead to an increasing degree of unemployment, which is, however, negligible except in certain areas. He said the Government at the moment is making no plans for a blitz on the trade unions. Have they even the determination to maintain the present rate of unemployment?19

A few months later, in November 1970, he talked to King in terms of ‘pre- cious time … being wasted’, the government not being ‘on course’, and ‘something grievously wrong in the engine-room’ of the ship of state. Pessimistically, he saw ‘large numbers of bankruptcies’ looming, ‘mounting unemployment’, and a possible ‘show-down with the unions’ for which the government had no contingency plans. In a crisis, a snap election ‘on the theme of Government by Whitehall or by the T.U.C. would get us nowhere’, Armstrong reportedly said—a view he was to hold to just over three years later in the government’s final clash with the miners.20 By April 1971, he was telling King that the government’s flagship industrial relations legislation—designed to regulate trade unions, put legal teeth into industrial relations and collective bargaining, and reduce strikes—was ‘largely irrelevant’. The outlook for inflation and the balance of payments he thought ‘pretty gloomy’.21 After another discussion with Armstrong in July 1971, King recorded: ‘He … has no confidence in the Government’s economic policy.’ And that August, he was saying that ‘inflation will go roaring ahead and create really serious difficulties next year’ and that the government was being ‘far too optimistic’ on labour relations.22 What Armstrong said about the economy, economic policy and industrial relations in lunchtime chats with a former press baron may not have mattered very much but, crucially, he started to get the chance to discuss it with the prime minister. The first key occasion appears to have been in April 1971 when Heath decided that he wanted Armstrong, Burke Trend (Cabinet Secretary) and Lord Rothschild (head of the CPRS) ‘to meet with him as a group from time to time to review the whole structure of events and Government policies … it was important to consider, and to keep on considering, whether the country was set on the right course and Government policies were working in the right direction.’ These were the 204 K. THEAKSTON AND P. CONNELLY

PM’s three top men in Whitehall, and the meetings later apparently became (at least for a while) fortnightly ones. Significantly, the permanent secretary to the Treasury was not included in the group—he was the Chancellor’s man and, in any case, while Heath respected Douglas Allen, he never really warmed to him or got on very well with him.23 The note of the No. 10 meeting on 19 April 1971 has William Armstrong saying bluntly ‘the prospect for the economy was in his view gloomy’:

Though many other developed countries were suffering from rates of increases in wages little less than our own, the increases did not seem to work through to export prices to anything like the same extent as here. With the combined problems of inflation and unemployment, we were neglecting the possibilities of growth and improving productivity. On present forecasts there was a serious risk of a balance of payments crisis in the autumn of 1972, and the Treasury would undoubtedly want to see action taken before then to fend that off. On the other hand, there would be increasing pressure on the Government to take action to relieve unemployment at home. The difficulty would be that any such action would be likely to increase imports and bring forward the risk of a balance of payments crisis. He understood that there were now some signs that it might be possible to come to an agreement with the TUC on wage increases. Presumably the TUC’s price for anything which they could deliver on this front would be more action to reduce unemployment. In these circumstances it was difficult to believe that it would be possible to get to the end of this Parliament without a further change in the exchange rate, particularly if the negotiations for entry into the EEC were successful.

Heath responded by saying that Armstrong’s analysis did not pay ‘enough regard to psychological considerations.’ If a wage freeze looked imminent, the unions would try to get as much as they could while ‘the going was good’. Meanwhile, the recent budget (which had cut corporation tax and selective employment tax) may have ‘altered the psychology of industrial management.’ We should avoid ‘the dangers of neurosis about [the] balance of payments’, he said, on which Treasury forecasts had been wrong. There were also, the PM added, problems about the balance of power in industry, industrial disputes and militant leaders in the unions, but he thought the unions might soon start to take ‘a more sensible view’.24 Armstrong knew and understood Heath well enough to know he was never a laissez-faire right-wing Conservative. That was why he later talked to Peter Hennessy about Whitehall’s ‘Butskellite’ outlook and preference ‘DEPUTY PRIME MINISTER’ UNDER HEATH 205 for a government that would have Heath as prime minister and Roy Jenkins as Chancellor.25 Heath was more in the Macmillan and Eden mould, a ‘One-Nation’ Tory, a believer in the post-war consensus policies, seeing a role for government in economic and social policy. He wanted to rework the mixed-economy Keynesian welfare-state system, modernising the state and galvanising British industry, and taking the country into the EEC (Armstrong wrongly thinking—even into 1971—that we would not get into the Common Market for another nine or ten years26). The party platform and the abrasive language of competition, free markets, less state intervention, union controls, tax and spending cuts, and the rejection of incomes policy that was to the front in the 1970 election did not add up to, and was not intended by Heath to mean, a fundamental ideological break (whatever the later Thatcherite mythology of betrayal). Essentially, Heath wanted a change of course, a different style of government, a change of attitudes and, in a sense, to make the status quo work better, not to overturn it entirely. But the Heath government was unfortunate in coming to power at a time of economic and social crisis, dislocation and disorder, domestically and internationally. The circumstances it came to face were extremely adverse, the hard facts of William Armstrong’s ‘ongoing reality’ (see Chap. 4) implacable. The immediate background to Armstrong’s closer engagement with Heath as prime minister and with economic policy was one of rising unemployment and inflation, union unrest and strikes, a move away from the ‘hands-off’ industrial policy, with the bailing out and nationalisation of Rolls Royce and then the rescue of the Upper Clyde Shipbuilders, and international currency instability, with the breakdown of the post-war Bretton Woods system, the collapse of the dollar and a move towards floating currencies.27 Unemployment had reached over 800,000 by April 1971 with the Chancellor telling the Cabinet’s Economic Strategy committee the following month that it might reach one million by the end of the year.28 (The jobless total in fact rose above one million for the first time in 25 years in January 1972.) This was politically and socially unacceptable to Heath who was also becoming convinced of the need for economic and industrial expansion prior to entering Europe and impatient with the slow response of industry to what the government had already done. The first moves to a new approach came in October 1971 with discussion about a reappraisal of regional economic strategy and regional policy and development, with the CPRS starting to study the issues and Burke Trend talking informally to William Armstrong, Antony Part (of the DTI) 206 K. THEAKSTON AND P. CONNELLY and David Serpell (DOE). Trend and Armstrong proposed to Heath the creation of ‘a new unit or task force’ (something also backed by Lord Rothschild) to bring together the different departments concerned, to undertake a speedy review, develop a coherent strategy and a new policy in the context of EEC entry, and provide some new drive and a firm direction from the centre. Unemployment, economic growth, assistance to industry, planning and infrastructure would all be on the agenda. Their initial suggestion was that William Nield (second permanent secretary at the Cabinet Office, working on the European negotiations) could be the leader of this task force.29 Then in mid-November 1971 Heath summoned Anthony Barber, Douglas Allen and Donald MacDougall (chief economic adviser) from the Treasury, together with William Armstrong and Lord Rothschild, to Chequers for a weekend discussion about the next steps. MacDougall recalled what happened:

Ted started by asking William—who was obviously delighted to be back in the economic policy game again—what he thought. He said that, coming down in the car, he had been brooding over the situation and thought we should think big, and try to build up our industry onto the Japanese scale. This would mean more public spending. We should ask companies what they needed in the way of financial and other help, and give it to them. To my surprise Ted warmed to this and said ‘fine, and of course we must give it only to the good firms, not the bad ones’.30

Events then moved rapidly as, in a dramatic ‘U-turn’, the Conservative government’s ‘hands-off’ policy was dropped, and it embraced selective intervention in industry and a major reflation of the economy. As Heath explained it to key ministers, there were two linked problems. There was the need to ‘re-establish full employment’, with unemployment at the one million mark as simply ‘not tolerable’. Then there was ‘the need for a major reconstruction of British industry’, which was not just a regional problem but related to hitherto prosperous areas, like the Midlands, too. He talked about the need for ‘the same sort of regeneration of industry that the defeated countries of Europe achieved with the help of Marshall Aid after the war.’ In fact, to meet the challenge of entry into Europe, we urgently needed to ‘modernise our whole economic structure.’ He envisaged ‘considerable government support by way of incentives … [we] must not be frightened of accusations that we are being dirigiste or discriminatory.’ ‘DEPUTY PRIME MINISTER’ UNDER HEATH 207

‘Your people’ (a revealing designation), he told the Chancellor, ‘already have their hands pretty full, with the running of general economic management and the complexities of the international monetary situation.’ Accordingly, Heath decided that William Armstrong would head the task force dealing with the new initiative.31 This was to be a prime-ministerial initiative, and Heath wanted his people running it, not the Treasury. Heath’s dissatisfaction with the Treasury and the way in which economic policy was formulated had in fact become quite evident over the preceding summer and autumn during exchanges within Whitehall about the role of the Economic Strategy Committee, the CPRS’s place in economic policy-making, and the machinery for preparing and the use made of economic forecasts and analyses. That William Armstrong and Burke Trend had discussed changes in the machinery for short and medium-term economic management with Heath at Chequers in September showed that the prime minister’s mind was starting to turn towards some new arrangement or device—the proposal for a task force was in that sense pushing at an open door.32 The whole exercise was organised through two committees, working in great secrecy: first a steering group at permanent secretary level, chaired by Armstrong, and bringing in the heads of the Treasury, CPRS, DTI, DOE, Department of Employment and the Scottish and Welsh Offices, and second a working group (sometimes called the support unit) at deputy secretary level, to work on the detailed plans—the strong team chaired by William Nield, as Armstrong’s number two. Nield was a forceful operator, regarded by some as a bruiser, who had had an atypical background for a senior civil servant (having worked as Labour Party researcher in the 1930s), had worked in the DEA, and was ‘noisy, gruff and direct’.33 At a critical stage in the development of the policy, Armstrong himself attended and spoke at meetings of the Cabinet’s Economic Strategy committee in January-February 1972.34 The code name ‘Exercise Cockaigne’ was used.35 This label may have been inspired by the title of the Elgar overture performed when Heath, for the first time, conducted the London Symphony Orchestra at the Royal Festival Hall in November 1971.36 Whitehall’s ‘need-to-know’ principle was ruthlessly applied and even the immediate staffs of the officials involved were not to be informed of the reason for their frequent disappearances from their offices as they worked hard through and beyond the Christmas period.37 Only a small number of ministers were kept in the picture and Heath decreed that the junior 208 K. THEAKSTON AND P. CONNELLY ministers at the Department of Trade and Industry—free-market men— must be told nothing. At the outset, Armstrong had told CBI leaders that the government was ‘ready to inject substantial sums into industry on a selective basis’ and as officials put together a package of measures and prepared what became the 1972 Industry Act, it became ‘difficult … to prevent excessively large numbers from being attached to every proposal through a sort of bidding- up process’, recalled Leo Pliatzky, the Treasury’s representative on the Nield working group. From his Treasury vantage point, Donald MacDougall labelled the greatly increased public spending after 1972 the ‘Armstrong spending boom’ (rather than the ‘Barber boom’), though he conceded that Armstrong was not responsible for by all means all the increase.38 When Armstrong and Nield outlined various proposals in January 1972, for instance, Heath told his Chancellor Anthony Barber that ‘he was not convinced that they were on a sufficiently large scale.’ In Douglas Allen’s view (also looking at events from the Treasury), while Armstrong ‘did not actually egg on the Prime Minister in his urgent quest for growth … he did little or nothing to restrain him.’39 Armstrong has been described at this period as ‘itching for a renewed involvement in economic policy’.40 Now he was at its centre, but lunching with Cecil King in the middle of the secret Whitehall work, he was under- standably guarded. ‘He thought Government pronouncements unduly optimistic about the future of the economy’, wrote King. ‘He sees no sign of the tide turning yet. The inflationary measures of the Government may take longer to take effect than they expect, and there will be an inevitable “stop” after the “go”.’41 He was acutely aware of the scale and nature of the challenge. At a Chequers dinner with businessmen in December 1971, at which Heath ‘expounded the case for a major reconstruction of British industry’, Armstrong chimed in to say he thought that ‘Britain now had a chance such as it had not had for twenty-five years’:

There was the need for the greatest possible understanding between Government and civil service on the one hand and industry on the other. The Civil Service tended to regard themselves too much as guardians of the national interest, whose function was the negative one of controlling industry. What was needed was a more positive contribution, which not simply controlled but assisted and encouraged. … It was going to be difficult to solve the dilemma of increasing productivity and rising unemployment. It was necessary to create confidence in industry that demand was going to ‘DEPUTY PRIME MINISTER’ UNDER HEATH 209

grow and not be cut back. The situation now was as climatic as in the Second World War; we wanted not just a policy but an enterprise, and in a complex situation we needed to balance the demands of efficiency against the requirements of democracy and humanity.42

At another Chequers meeting, in early January 1972, he pointed to the need for the policy mix to include both selective measures and incentives (including a new agency or agencies to intervene without fearing ‘the appearance of being inequitable’—what would later be called ‘picking winners’) and also general provisions (such as free depreciation or a reduction in the long-term rate of interest) to set a general climate. Underpinning this, there had to be a ‘profit-oriented government policy’, he said, with industrialists confident about ‘an adequate return on their investments’. He was struck, however, that the increase of wages and prices had not appeared to be a problem in the discussion with business leaders—they ‘appeared to have come to terms with inflation, and to have learned how to make profits in an era of continuing inflation.’ ‘The implications of this, he concluded, ‘needed considerable thought.’43 Officials were indeed aware that, once reflation and the industrial stimulus got underway, there would be pressures for higher wages and they were clear that the success of the new policy towards industry depended on improved industrial relations and on a reasonable level of wage settlements, and that the government would need plans for dealing with prices and wage pressures later that year.44 The initial plan had been to announce new measures in late January 1972, but the decision was taken to put them back to March to form part of a wider package along with a substantially reflationary budget (forced by Heath on a reluctant and cautious Chancellor and Treasury), with large tax cuts and spending increases, and an ambitious commitment by the government to achieving 10 per cent economic growth over a two-year period. The main features of the programme for industrial and regional regeneration that the Armstrong/Nield group put together were the rein- troduction of regional investment and development grants, and a nationwide scheme for free depreciation (or 100 per cent capital first-year allowances for investment in new plant and machinery). The cost of these was estimated to total around £360 million in 1973–74, rising to £750 million in 1975–76.45 Consideration of the machinery needed to administer the new schemes of industrial assistance had to take account of the strong political resistance in the Conservative Party to anything that 210 K. THEAKSTON AND P. CONNELLY looked like the resurrection of Labour’s Industrial Reorganisation Corporation, wound up by the Heath government in 1970.46 Armstrong had initially explored the idea of a private sector institution, with something like a development bank character, raising private capital in the City and channelling investment, perhaps linked to the existing Finance Corporation for Industry, but without success.47 In the event, after a Whitehall squabble between the CPRS, the DTI and the Armstrong/ Nield group over the shape of new agencies and institutions,48 ministers decided on a scheme worked out by Sir Antony Part to establish an Industrial Development Executive, under the direction of a minister, in the DTI.49 The new interventionist policy was unveiled in March 1972 in a White Paper, Industry and Regional Development and took effect through the 1972 Industry Act, giving sweeping powers to the government to provide financial assistance to industry and provoking an incredu- lous Tony Benn to describe the measure as in effect a spadework for socialism.50 Nor was this the only sensitive economic issue entrusted to William Armstrong. According to Douglas Allen, at one stage in 1971–72 the government panicked over the situation in Scotland against the background of the Communist-led workers’ sit-in at Upper Clyde Shipbuilders, protesting against plans to close loss-making shipyards.51 The local chief constable, David McNee, warned the Cabinet that Glasgow might go the way of Northern Ireland, implying the breakdown of public order in the face of continuing industrial failures in Scotland.52 Armstrong was put in charge of increasing public spending in Scotland, while Douglas Allen was kept well away, and government money was put in to save the yards. David McNee (who had some distant family relations with the Armstrongs) recalled William Armstrong visiting Glasgow and asking to be driven around, presumably to get a feel for the place and the scope for government projects.53 From 1972 onwards, Armstrong was probably at the height of his power and influence in Whitehall. The prime minister, to whom he was as close as any official could be, had the bit between his teeth and was determined to lead his country into a new European future. Heath’s strong belief—with which Armstrong went along—was that government should take the lead in economic and industrial policy: British industry by itself was too sluggish and incapable of gearing itself up to its destiny in Europe, so the government had to take an active and interventionist role. It was a bold gamble by a prime-minister-in-a-hurry. By the end of 1972 and into ‘DEPUTY PRIME MINISTER’ UNDER HEATH 211

1973 growth was accelerating and unemployment was falling. But the timing was bad, with the government embarking on a major expansionary policy at a time of increasing world inflation and an adverse shift in the terms of trade. Privately, Armstrong does not seem to have been confident about the economic fundamentals, telling Cecil King in December 1972: ‘no one has discovered the secret of steady economic growth. The Japanese had achieved this, but no one knew quite why. He thought we should have a boom extending into the second half of next year, but towards the end of next year, or the beginning of 1974, the economy would “run into the buffers” and we should be up against the stop phase of the stop-go cycle.’54 Moreover, having set its face against an incomes policy to control wage inflation in 1970, the Heath government had in effect abandoned the alternative to one: high and rising unemployment.55 One way or another, it would have to go back to incomes policy—something that would, in a sense, constitute Act 2 of Armstrong’s close involvement with Heath and economy policy-making, and the most fateful part of the drama.

A Prime Minister’s Department? Interviewed about his style of government in Number 10 in May 1972, Edward Heath perhaps protested too much when he dismissed talk of a move towards more prime–ministerial government, saying that he was simply trying to make government ‘more effective’, with the Cabinet being able to take clear strategic decisions rather than getting bogged down with day-to-day problems. Quizzed about the CPRS, he noted that it was based in the Cabinet Office ‘which serves the Cabinet as well as me.’ The Number 10 staff remained relatively small, he pointed out, and more or less the same size as under Wilson (63 or 64, including secretaries and typists). As far as the ‘structure of departments’ was concerned, he said, ‘all the major reforms have been taken.’56 In reality, however, the idea of a prime minister’s department to strengthen Heath’s grip on the government machine was very much in consideration that year, though in the end the option was not taken, and William Armstrong was centrally involved in the debate. Back in the autumn of 1970, when the Reorganisation of Central Government white paper was being unveiled, The Economist had specu- lated about a possible ‘shift of power away from the Treasury towards the Prime Minister’s office with the head of the civil service whispering in his ear’ and ‘a new sort of department’ beginning to be created around Sir 212 K. THEAKSTON AND P. CONNELLY

William Armstrong. In Opposition, Conservative advisers like David Howell had pushed for the creation of a prime minister’s department but when Armstrong met Heath just before the 1970 election (see Chap. 5), he had tried to persuade him that he did not need ‘a separate staff of his own’, and when Heath had then mentioned the idea of a ‘super Permanent Secretary’ working directly to the PM, over the Secretary of the Cabinet and the head of the CSD, and acting as the prime minister’s ‘supreme Civil Service Adviser’, Armstrong had countered that he ‘could not really see a function for such a post.’57 Two years later, Heath and Armstrong’s growing closeness, Heath’s impatience with Burke Trend’s self-effacing, carefully non-committal and detached approach as Cabinet Secretary,58 and the PM’s approval of the ‘task force’ methods used for the industrial policy U-turn, seem to have prompted a rethink. There are suggestions that the idea may have appealed not just to the topmost politician but also to the topmost mandarin. Many years later, John Hunt told Lewis Baston and Anthony Seldon that William Armstrong ‘had a dream of splitting the role of Cabinet Secretary and taking over and developing what he called “the Prime Minister’s Chief of Staff” role as the nucleus of a prime minister’s department.’59 What should we make of this? The idea was floated in the serious press in August 1972 when, first, Samuel Brittan of the Financial Times and then Peter Jay of The Times published stories about plans to create a prime minister’s department.60 (It is worth recalling that Armstrong had had dealings with Brittan since his Treasury days in the early 1960s, and that Jay had once been his private secretary but had left the Treasury in 1967 to become economics editor of The Times.) Both identified William Armstrong as the front-runner for the job of head of the new department, suggesting the change would follow on the retirement of Burke Trend in the following year (1973). Armstrong, it was said, would take over the job of Cabinet Secretary while keeping his responsibilities at the CSD and as Head of the Civil Service. The CPRS ‘think tank’ would move into the new department, which would be a powerful resource for the prime minister to formulate and push through a policy of his own. In his new role Armstrong would be supported by two second permanent secretaries, one each for the Cabinet Office and CSD sides. Samuel Brittan described the proposal as ‘the culmination of a process that is already taking place’, building on from Armstrong advising the PM ‘in a personal role’ on ‘sensitive policy issues’. If there was political opposition, he said, the new department might be introduced in gradual ‘DEPUTY PRIME MINISTER’ UNDER HEATH 213 stages rather than in one move. Jay reported that the plan was ‘very much at the formative stage’ and was being pushed by certain Conservative Party advisers who had been brought into the CSD (Donald Maitland, the PM’s press secretary, believed the source to be Mark Schreiber). Neither the prime minister nor William Armstrong was taking the idea very seriously, according to Jay, but it had been put before Heath and both had discussed it. Behind the scenes, Armstrong reported to Number 10 that, when contacted by Brittan with advance warning of the story, he had told him ‘the Prime Minister has said nothing of this to me—though ideas of this kind did sometimes circulate.’ In public, Armstrong dismissed it as ‘silly season stuff.’ ‘As far as I am concerned’, he went on, ‘there’s not much wrong with the way things are at the moment. It works pretty well.’ But he hinted that there was perhaps something to the story when he said, ‘I can tell you that the Prime Minister has not talked to me on a question that would relate to this for a long time. Certainly never on a “Let’s do something” basis.’61 Heath, however, did now ask Armstrong to consider and advise on ‘central organisation in government’, expressing a wish to ‘make the most effective disposition at the centre to enable him [as PM] to devote his attention to strategic issues of policy and operational matters of the first importance.’62 Armstrong responded a couple of weeks later, in September 1972, with a detailed and ‘meaty’63 report. Intriguingly, what he did not say in that report is that six months earlier, in February 1972, William Nield—his number two in the industrial policy exercise, who later became permanent secretary at the Northern Ireland Office when it was created that spring— had sent him a top secret and personal memo sketching out a plan for a powerful ‘Office of the Prime Minister and the Cabinet’ that looked remarkably like the schemes subsequently mentioned by Samuel Brittan and Peter Jay. In Nield’s plan a new permanent secretary to the Cabinet and the Prime Minister would have four roles: coordination of government business, supervision of policy formulation, advice to the PM, and Head of the Civil Service (top appointments and machinery of government). Under him there would be the PM’s private office, the CPRS, and four second permanent secretaries (for economic affairs, domestic affairs, overseas and defence policy, and intelligence coordination) running a beefed-up Cabinet Office function and another second permanent secretary running the CSD.64 It is not known whether Armstrong and Nield discussed this note, nor how seriously it was taken. Armstrong later admitted ‘there had always been some talk around Whitehall that a Prime 214 K. THEAKSTON AND P. CONNELLY

Ministerial Ministry [sic] might be set up one day.’65 Perhaps the Nield memo was just a part of that general discussion. But in the context of what John Hunt believed about Armstrong dreaming of a new wider role, one wonders whether Nield was pitching something to his close colleague that he knew he was interested in, and then whether a kite was being flown in the summer of 1972 not just by Conservative Party advisers but also from within Whitehall? Whatever the case, Armstrong’s now advised Heath against what he described as ‘a “Chief of Staff” arrangement’ or ‘one man acting as suzer- ain both of the Cabinet Office and the Civil Service Department supported by a deputy in each Department.’ This was, said Armstrong, akin to the role played by Norman Brook from 1956 to 1962. It had the draw- backs of the two deputies perhaps not having the standing or authority to resolve really important questions, risking appeals over their heads to the Chief of Staff, and the Chief of Staff inevitably being drawn into handling current issues for the PM and neglecting civil service management. Looking more broadly at the functions and the machinery of government at the centre, he rehearsed the arguments for and against either a ‘Department of Resources and Management’ or a ‘Cabinet and Public Services Department’, which would involve splitting up and moving functions and responsibilities around between the Treasury, CSD and the Cabinet Office, before coming down firmly in favour of the status quo— which, of course, he had helped design—as the most workable arrangement. This meant keeping the Treasury with its permanent secretary, the Cabinet Office with the Cabinet Secretary as the PM’s ‘personal adviser on current business’, and the CSD under the Head of the Civil Service. To keep it in balance, he concluded, ‘It is important both that the Permanent Secretary of the Civil Service Department is a very senior Permanent Secretary in his own person (as the weight of the CSD as a Department does not automatically confer the standing needed to deal effectively with Permanent Secretaries in Whitehall generally), and that the Secretary of the Cabinet is undisputedly the Prime Minister’s closest official adviser.’66 Tersely, Heath scribbled on Armstrong’s report ‘This solves none of the problems’. He summoned William Armstrong and Burke Trend to Chequers to talk about the central organisation of government. Heath made it clear that he did not favour transferring management back from the CSD to the Treasury and complained about the deficiencies of the Treasury: ‘one of the problems was that there was really no overall management of the economy at the moment.’ Another major issue, said Heath, ‘DEPUTY PRIME MINISTER’ UNDER HEATH 215 was ‘the “No. 10 problem”. Increasingly he had found the need to force issues to the centre. The Prime Minister’s private office as now constituted could not do this. Ad hoc arrangements had been made for dealing with European affairs and emergencies; but it might be beginning to be necessary to provide some more definite organisational arrangement.’67 The internal top-level discussion seems to have spluttered out at that point. The underlying issue of ‘strength at the centre’, and the organisation of policy coordination and overall government strategy, was a real and continuing one, however, as Armstrong and Trend had understood from the late-1960s and as both Harold Wilson and Heath had discovered. But there were no easy answers. Wilson went on to introduce the Policy Unit in 1974, and later PMs built up something very like a Prime Minister’s department-in-all-but-name, with an array of advisers, teams and units crammed into the Downing Street/Cabinet Office complex.68 The point about the early 1970s is that Heath could have created a formal Prime Minister’s Department had he wanted to do so, whatever the reservations expressed by William Armstrong (and other mandarins). He was not the sort of person to be deterred by squeals of protest about constitutional niceties or concerns about so-called ‘presidentialism’ that might have been expressed around the Cabinet table or in Parliament or Whitehall. He would surely have done it if he had thought it would work and serve his purposes.69 However, Heath seems to have decided to continue with the existing set-up while in practice increasingly relying on William Armstrong for advice and as a de facto ‘chief of staff’—a personal and pragmatic rather than an institutional solution of the sort that prime ministers are often attracted to but which, in the end, may not have been as good or as effective as a proper and organised unit or a new department at the centre, and for which Armstrong arguably paid a big personal price. The ‘non-decision’ about a Prime Minister’s Department did not weaken the Heath-Armstrong duopoly at the centre of the government. The relationship between Heath and William Armstrong was ‘extraordinarily close’, as Kenneth Baker told Hugo Young. ‘Armstrong had access to Ted. He had his ear, and he could always get in to see him when many of his ministers would be kept waiting for an interview.’ In his memoirs, Baker told the story of the appointment in late 1972 of Geoffrey Johnson- Smith, a former BBC interviewer, as a junior minister in the Civil Service Department, with a brief to improve the government’s image. Baker, a ministerial colleague, witnessed the first briefing of the new minister by William Armstrong: ‘On the morning he arrived, William arranged a 216 K. THEAKSTON AND P. CONNELLY briefing meeting which I attended. Without recourse to a single note, William recounted the history of every Minister of Communications who had been appointed since the mid-1930s and explained why each one had failed. It was a tour de force, and I could quite see how Ted had come to rely upon this man in moments of crisis.’70 Increasingly, Armstrong spent much of his time at Number 10. ‘We saw very little of him in CSD in the last year or so’, recalled a senior official there. One of his former private secretaries in CSD remembered that, ‘literally for many months, most nights I would be sitting in the office till after midnight and William would be over there with Ted Heath.’ Armstrong was, this ‘insider’ said, Heath’s ‘chief adviser. He was the man who could make the government machine work as a collective. … He was the nearest thing we’ve had yet to a prime minister’s permanent secretary.’71 As Armstrong himself later explained to James Callaghan in 1977, ‘Mr Heath had approached it on the basis that “he wanted someone whose writ runs as wide as his own”. This led him to ask Lord Armstrong to function as a Civil Service overlord …’72 John Hunt, who replaced Burke Trend in the autumn of 1973—with strong backing from William Armstrong—had a tougher, more assertive approach as Cabinet Secretary, more in keeping with Heath’s managerial style, aiming to make the Cabinet Office more of an ‘active bridge’ between the PM, ministers and departments. He and William Armstrong worked together at the top only for the last few crisis-wracked months of the Heath government, Armstrong agreeing with Hunt’s plans to stream- line the Cabinet committee system (something Heath was particularly impatient about). But the changeover only emphasised even more Armstrong’s pre-eminence, and John Campbell rightly believes Hunt could never have supplanted Armstrong as Heath’s key strategic adviser.73 Some contemporary journalists picked up on what was happening and on Armstrong’s role and influence—for instance Samuel Brittan and Peter Jay, quoted earlier. Nora Beloff also noted in October 1972 how Heath, in talks with the TUC and CBI (see below) had put ‘his own man’ (William Armstrong) in charge to coordinate matters and ‘make sure that the government departments are pulling in the same direction.’ Four months later she was writing how ‘Mr Heath has increasingly come to rely on the intellectually dominant but deliberately inconspicuous Sir William Armstrong, who today not only controls the Civil Service but also acts as the Prime Minister’s top policy adviser. Sir William is believed by his colleagues to have accumulated more authority in his own hands than any ‘DEPUTY PRIME MINISTER’ UNDER HEATH 217 official since Sir Horace Wilson, who was Neville Chamberlain’s alter ego before the war. It was certainly Sir William who, more than anyone else, supervised the massive somersaults in the Government’s policies and mas- terminded the prices and incomes strategy.’74 Then the damaging label ‘deputy prime minister’ was stuck on him—a tag resented by both Armstrong and Heath—first by Bill Kendall, CPSA union leader during the 1973 civil service union action, followed by Vic Feather, former general secretary of the TUC, in a 1974 television interview (Feather subsequently calling at the Armstrongs’ flat to apologise).75 Putting together his account of the Heath government, Martin Holmes cited two Cabinet ministers he had interviewed who felt that William Armstrong’s influence on Heath had been ‘considerably exaggerated’. But for Conservative critics and enemies of Heath, such as John Nott, ‘it became a very unhealthy relationship. Armstrong increasingly carried more weight than almost all members of the Cabinet, certainly more weight than the Treasury officials whom Ted had come to despise.’ And a senior minister quoted by Holmes recalled:

Armstrong was a political civil servant. He often went behind my back and we had several rows. It was difficult for a Minister to object to Armstrong playing such a big part. Government was carried on not by Ministers but by a small mixed group of civil servants and Ministers on an ad hoc basis. This enabled Armstrong to reduce the people on the committee to himself and Ted.76

However, Robert Armstrong, who worked with Heath across the whole range of business as the PM’s principal private secretary, cautioned that ‘I think he [Heath] relied on William [Armstrong] when considering how to proceed on incomes policy, but I do not think otherwise.’ And William Armstrong himself said, in March 1974, that ‘there’s an enormous lot of policy-making I was nowhere near.’77 ‘I was just, as it were, in one ring of a five ring circus’, was how he put it in a television interview.78 The evidence from William Armstrong’s private office papers 1970–74 and the Whitehall memos and committee papers of that period indeed shows a heavy involvement with the industrial and regional policy initiative of 1971–72 and with counter-inflation, prices and incomes policy after 1972, but not otherwise (e.g. in relation to EEC policy, Northern Ireland, foreign or defence policy, and a wide range of domestic policy areas and on other economic issues, for instance sterling and the balance of payments). 218 K. THEAKSTON AND P. CONNELLY

This circumscribed range of activity undermines the wilder ‘deputy prime minister’ allegations. One close observer believes that Armstrong ‘showed every sign of rel- ishing the part’ as Heath’s closest confidant and right-hand man.79 Some insiders explain what was happening in terms of Armstrong’s ‘highly developed nose for power’,80 but others blame Heath and believe that Armstrong was simply doing what the prime minister wanted. ‘He was very doubtful about the relationship with Heath, about whether he should do this’, says a senior CSD figure. ‘He was very frustrated. He’d seen CSD as a place where he could exercise real authority but he’d found that actually he couldn’t. And it was partly that, and partly through being a good civil servant in the real sense of the word, that he thought that he ought to help the prime minister out.’ Another very senior insider thought that ‘he did try to get himself quite deliberately into a position where he was becoming a semi-public figure. It wasn’t only Ted trying to do it, it was William also—it was from both sides. But it didn’t work—it wasn’t only his breakdown—it just didn’t work…’81 Ronald McIntosh believed Armstrong got into the position he did ‘by choice, not by chance.’82 But Armstrong subsequently developed misgivings over his close identification with Heath and, in retrospect, he himself found it impossible to judge whether it was a desire for personal power which drove him forward. He later told prime minister James Callaghan that Heath’s request that he act as his civil service ‘overlord’ was a ‘misconceived’ approach.83 Within a month of Heath’s defeat, and while still in office as Head of the Civil Service, he candidly admitted in a television interview that his relationship with the former prime minister had ‘got slightly askew’ and that he had exceeded his ‘proper role’ as Head of the Civil Service.84

Counter-Inflation: Prices and Incomes Policy In the early summer of 1972 William Armstrong had been undertaking an outside engagement to speak at a seminar in Birmingham when Edward Heath asked to see him. The prime minister told Armstrong that the government’s confrontation with the unions could not go on, that he wanted to make a pay deal with the Trades Union Congress (TUC), and asked him to put together a team of officials to do the staff work. With the government turning on the public spending taps and pushing for faster growth, loosened credit controls and a credit explosion, falling unemployment, and rising raw material and commodity prices world-wide, the issues ‘DEPUTY PRIME MINISTER’ UNDER HEATH 219 of inflation, pay restraint and an incomes policy became more urgent than ever for the success of its economic policy. Heath soon made clear inside Whitehall, in relation to the ‘next steps on prices and incomes’, that William Armstrong would ‘take charge of this exercise’. Once again, Heath was bypassing the Treasury, though one of the first things Armstrong did after seeing the PM was to ‘clear his lines with [Douglas] Allen’.85 Armstrong was on sufficiently good mutual terms with Douglas Allen to receive economic briefings from him (though it should be noted that Jon Davis says Allen privately considered that Armstrong’s extended role under Heath, as a friend and former permanent secretary to the Treasury, was ‘discourteous and wrong’86). In Opposition the Conservatives had condemned the Wilson government’s incomes policy, promising to restore free collective bargaining, subsequently abolishing the Prices and Incomes Board in 1970, and in 1971 passing the Industrial Relations Act, aiming to stabilise industrial relations and reduce union conflict and strikes but instead having the opposite effect and provoking a confrontation with the TUC and even more union strife and stoppages. Conservative ministers had soon realised that they could not escape responsibility for having a policy for public sector wages but were unwilling to interfere in wage disputes in the private sector. However, the government did put forward the expectation that, as a norm, successive settlements should each be lower than the one before (the so-called ‘n-1’ policy). Industrial action, strikes and bitter fights followed with the power-workers, post office workers, railway workers, dock- ers and others, but the most searing government defeat was at the hands of the National Union of Mineworkers (NUM), following the miners’ strike in early 1972, which led to a state of emergency, power cuts, a three- day week, and a court of inquiry awarding a huge pay increase worth around 27 per cent overall. The government was humiliated and it was clearly the end of the line for its existing policy. Armstrong had not been involved in the first miners’ strike.87 But he thought that by 1972 the government ‘had come to a dead end’ on this whole front, as he later put it. The Industrial Relations Act ‘plainly wasn’t working’—at one point he says he asked Heath to put the whole thing ‘on ice’. The ‘n-1’ policy had also failed, he thought. Both Armstrong and Douglas Allen had been voicing their disquiet with ‘the confrontational situation’ for some time, including at a private meeting with Heath and Robert Carr (Employment Secretary 1970–72) at Chequers. After the end of the miners’ strike, Heath had appeared on television saying that 220 K. THEAKSTON AND P. CONNELLY no-one had won, that the government was prepared to sit down with the unions and employers, and that, as a country, we had to find a better way of settling our differences. Armstrong later said that he was ‘very pleased’ to find the prime minister was ‘wanting to move on to what Winston [Churchill] called jaw, jaw and not war, war.’88 For all of the portrayal of Heath—at the time and later—as stubborn, insensitive and confrontational, he was in fact strongly committed to working with the unions and seeking agreement, and went to considerable personal lengths to try to persuade, negotiate and search for agreement, as union leaders themselves privately recognised. ‘He was sympathetic to working people’, recalled Jack Jones. ‘He wasn’t the typical hard-nosed Tory.’89 As Armstrong remarked to Cecil King, Heath had tried ‘a rather muted form of confrontation, which had been defeated by the miners, and he then decided con- ciliation was the only course’ and ‘showed all the enthusiasm of the convert’.90 Heath—and William Armstrong—believed that rationality and patience would work with the unions in the end.91 But they arguably over- estimated what could be delivered through the sort of process they engaged in, and did not understand the unions and the way they worked as well as they thought they did. For his part, Armstrong had had no real previous experience of them outside of dealing with the civil service unions over Fulton.92 The 19 months or so (1972–74) that Armstrong spent in advising on and running Heath’s counter-inflation policy was one of the most intense periods of his career. ‘Heath ran Armstrong off his feet, and relied on him enormously’ concluded Harold Evans after talking to William and Gwen Armstrong a couple of years later. Ronald McIntosh, who was closely involved in this period through his work in the Treasury on incomes policy and then as director-general of the National Economic Development Council, believed that Armstrong’s influence was ‘immense’ since he was the PM’s ‘principal adviser’ and government decisions on incomes policy were ‘effectively taken by Heath personally and not by his Cabinet.’93 Heath chaired a Cabinet committee on Prices and Pay (GEN 142), which included senior ministers such as the Chancellor (Barber), Employment Secretary (Maurice Macmillan), Lord President of the Council (James Prior), Home Secretary (Robert Carr) and Minister for Trade and Consumer Affairs (Geoffrey Howe). William Armstrong attended the meetings and other senior officials too, including Douglas Allen and Ronald McIntosh from the Treasury, Conrad Heron from the Department of Employment, Rothschild from the CPRS, Peter Carey ‘DEPUTY PRIME MINISTER’ UNDER HEATH 221 from DTI and the PM’s press secretary, Donald Maitland.94 Although this was formally a ministerial committee, the minutes often recorded Armstrong’s contributions by name, and at times in personal terms: ‘His own view was …’; ‘His own preference was for Option 1…’95 Initially there were two supporting official committees: GEN 145, the official group on counter-inflationary policy, chaired by Ronald McIntosh from the Treasury, and GEN 118, the steering group of officials on the tripartite talks with the CBI and TUC, which William Armstrong himself chaired.96 In June 1973 these were replaced by a new group to coordinate the work of departments and report to the ministerial committee, feeding in papers and recommendations for ministerial decision, which was chaired by William Armstrong and called GEN 180, the official steering committee on counter-inflationary policy.97 This was the sort of bureaucratic labyrinth and machinery of which Armstrong was an established master-technician. In addition, there were meetings with the business leaders and union leaders of the CBI and the TUC—either separately, or together in a tripartite context. Armstrong later thought that it might have been better if Heath had stepped back from the earlier stages of the talks, being brought in later ‘as a sort of Court of Appeal to unblock a situation of deadlock’,98 but Heath was in fact highly engaged from the start. Business leaders increasingly came to feel that Heath saw the unions as the most important partners for government, and that he personally could relate more to them.99 Heath, says Philip Ziegler, lost few opportunities to ‘lecture and berate’ CBI leaders.100 In one secret and off-the-record meeting with TUC leaders he accepted union criticisms of CBI spokesmen and said that the ‘inadequacy’ of their contributions to tripartite discussions created problems for the government too.101 For his part, William Armstrong thought that ‘both the CBI and the TUC spoke more freely when the other organisation was not present.’102 Armstrong was Heath’s right-hand man in these economic negotiations and diplomacy, often literally so, as the seating plans for meetings held round the Cabinet table at Number 10 show.103 He became, as John Campbell, puts it, ‘the inevitable William Armstrong.’104 Heath had lost confidence in the Department of Employment and its minister, Maurice Macmillan, after the 1972 miners’ strike, which further helped emphasise his reliance on Armstrong on these issues.105 At one meeting with the TUC and CBI discussion got on to the subject of civil service pay increments, which both attacked as inflationary and unjustified. Armstrong had briefed Heath with appropriate information 222 K. THEAKSTON AND P. CONNELLY and arguments but—to Armstrong’s surprise—the PM called upon him to make the case. ‘So’, recalled Armstrong, ‘I was made to open my big mouth against both of them in a meeting at No. 10.’ There was a big argument and Armstrong, it was said, ‘punched his weight’. Vic Feather of the TUC and Campbell Adamson of the CBI later made it clear that they did not think a civil servant should behave like that. Armstrong himself later admitted that he ‘felt a little frisson when I realised that a perfectly normal Civil Service arrangement was beginning to look different—when, on occasion, in talks with the TUC and CBI, the Prime Minister asked me to say something which was not normal for a civil servant.’ But as Graham Turner later reported: ‘As the months went by, Armstrong’s involvement imperceptibly increased. Every so often, in meetings, Heath would turn and ask him to say something. Little by little he got into the act, and became more than an eminence grise sitting by the Prime Minister’s side.’106 Armstrong was also a key player in the ‘backstage’ and ‘backstairs’ aspects of the politics of incomes policy. ‘He was always seeing people privately’, Mark Schreiber, a CSD political adviser, told Hugo Young. ‘They would come in through the Golden Door (sic), which lets into the Civil Service Department from Horse Guards, accessible with a private key, so no one would know they had come. He saw several union leaders in this style. He was negotiating for Heath.’107 Armstrong once apparently remarked to Lord Rothschild that government discussions with the TUC ‘would be best held in public, even perhaps with television coverage.’108 It is not clear how serious he was about that, but in practice he understood that the sort of orchestrated posturing that would lead to would not take things forward and that it was important to lubricate relationships and explore, in confidence, the scope for compromise and agreement. The Cabinet was kept rather in the dark and told little or nothing about the secret meetings Heath and Armstrong, together or separately, had with the union barons—meetings sometimes held well away from Whitehall. Thus in January 1973 Heath, William Armstrong and Robert Armstrong met Frank Chapple of the Electricians’ Union one evening at William Armstrong’s house. Chapple talked frankly about the different interests, personalities and motives on the union side of the pay talks, and warned that ‘the extremists would concentrate their main effort on the miners’ but did not think that ‘the mass of the miners’ would want a strike. Some union leaders could not necessarily deliver what they might personally like to deliver, he said—a prescient warning and something ‘DEPUTY PRIME MINISTER’ UNDER HEATH 223 arguably under-appreciated by Heath and Armstrong.109 Half a dozen union leaders (including Vic Feather, Jack Jones and Hugh Scanlon) meet the PM and Armstrong at Chequers in March 1973, with Heath saying that the government still did not exclude the possibility that if a voluntary agreement could be reached on the next phase of incomes policy then statutory powers would be kept in reserve. In separate private discussions afterwards with Armstrong, Jack Jones and Hugh Scanlon hinted at more moderate positions than they felt able to maintain in a bigger grouping or more publicly. Jones wanted to talk about ‘genuine and soundly based’ productivity and incentive schemes; Scanlon conceded that ‘he had no objection to the imposition of a general pay limit, provided it was reached in agreement with the TUC, in spite of the fact that any such limit must of its nature restrict the freedom of individual unions in collective bargaining.’110 In April 1973 Heath and Armstrong secretly met Jack Jones over dinner at Lord Aldington’s house. Jones frankly acknowledged that ‘in the last two years or so, wage claims and awards had gone out of control.’ But he said the trade union movement could never accept a statutory pay policy on a permanent basis, while Heath replied the government did not want to retain statutory limits for ‘one day longer than was necessary’ and would continue to try to get a voluntary agreement with unions and employers. When Jones complained about inefficient management in industry, Heath said he ‘strongly agreed with Mr Jones’s strictures on the general quality of management in Britain’ but also made points about the need for unions to ‘modernise themselves’.111 Armstrong kept in close touch with Vic Feather, the TUC general secretary, a frequent visitor to his office, and they had many confidential and frank exchanges about policy, tactics and the handling of government/ union discussions. ‘William Armstrong clicked with Vic Feather, and long were the evenings, late were the evenings and, quite often, deep was the bottle as they mediated, moderated and negotiated’, recalled one of Armstrong’s close aides.112 But the emphasis put on this relationship may have been a misjudgement on the part of Armstrong and Heath. For Feather, albeit publicly a well-known trade unionist, was not a figure of real power in trade union circles. He did not command the big battalions of a Jack Jones or a Hugh Scanlon, and therefore he could not deliver solid union agreement to any deal. For instance, when Heath and Armstrong had a secret meeting with Feather in July 1973, the TUC general secretary had to admit that he ‘could not answer for the position of Mr Jack Jones … he might be playing a political game for the breakdown 224 K. THEAKSTON AND P. CONNELLY of the talks [between government and the unions].’ ‘The general impression left by the discussion was depressing’, concluded the official note of the meeting. ‘It sounded … as if the counsels of the TUC were largely dominated by political considerations and the possible timing of a General Election.’113 Feather indeed told Armstrong that August that he did not think ‘there was much chance of reaching an understanding on pay and prices until after the election.’ Armstrong was not alone in understanding that the unions were wondering what a future Labour government might offer or do, and later sometimes suspected the union leaders of being ‘in league with the Labour Party.’114 Looking back, he felt the unions were ‘very alive to the political aspect of what they were doing, they were seeing that the more they co-operated with Mr Heath’s efforts, the more likely they were to confirm him in office, and make … a Labour victory at the next election more difficult.’115 Moreover, Vic Feather was on his way out, retiring from the TUC in September 1973, to be succeeded by Len Murray. Armstrong met and talked to Murray regularly but did not know him so well, and there is an argument that Murray’s relative inexperience contributed to the mishandling of some aspects of key talks during the miners’ dispute in January 1974 (see below).116 The government’s policy ran through a number of stages. The search for a voluntary agreement with both sides of industry took place through formal tripartite discussions (government/TUC/CBI) in the autumn of 1972, building on the work of a less formal NEDC steering committee of officials (‘the group of four’: Vic Feather of the TUC, Campbell Adamson from the CBI, the Treasury’s Douglas Allen and Frank Figgures, director- general of NEDO—William Armstrong joining that group in July 1972). When these talks broke down in November 1972 the government introduced a statutory incomes policy beginning with a 90-day freeze (subsequently extended) on pay, prices, rents and dividends. In Stage Two of the policy, which ran from April 1973, a Pay Board and a Prices Commission were set up, and pay rises were limited to £1 plus 4 per cent, with a maximum annual increase of £250. This succeeded in checking the rate of wage increases and inflation in 1973. Then Stage Three, beginning in November 1973, aimed to set a limit of £2.25 per week or 7 per cent, with a maximum of £350 per annum, with extra provision for special ‘thresh- old’ increases if the retail price index rose more than 7 per cent. In light of his views on more ‘open’ government (see Chap. 5), it is worth noting that Armstrong was careful to rule out publishing information about the different options considered by ministers for Stage Two of ‘DEPUTY PRIME MINISTER’ UNDER HEATH 225 the incomes policy. His GEN 118 committee judged that publication of the four alternative schemes that had been rejected and the fifth chosen would ‘provoke bitter reactions from those groups who were suffering more under the policy now decided, and in addition it would call into question the frankness of the consultations which the Government had had with the Trades Union Congress and the Confederation of British Industry, during which the various options had not been mentioned.’117 Detailed contingency planning for a statutory policy had been undertaken for months through 1972, supervised by Armstrong’s GEN 118 official group, while the talks with the TUC and CBI went on. Armstrong warned the prime minister in a ‘secret and personal’ note in July 1972 about his own ‘very serious doubts’ about the ‘practicability and desirabil- ity of statutory intervention on prices and wages … particularly in the present situation.’ He thought that Mark Schreiber’s warnings about the political aspects of planning for the introduction of a statutory policy (including the need to prepare backbenchers, the Conservative Party and public opinion) had ‘very considerable force’, though that was for the PM to judge, and that the ‘official and political components’ of government plans had to dovetail together.118 This would seem to underline his personal commitment at the start to a voluntary policy, if that was achievable and could be put together through the discussions with the TUC and CBI. When that was not possible, and the government’s genuine and strenuous efforts had been seen to run into the sands, a statutory policy was necessary and had to be made to work. By June 1973, he was advising ministers on a strategy for Stage Three on the basis of an assumption that ‘formal agreement on a voluntary policy … will not prove possible. There will be what is in form a negotiation, but in substance a process of representation and consultation in which all parties have an eye to public opinion and its impact on the other parties.’ To secure union ‘acquiescence’, or such ‘agreement and cooperation with the TUC as is possible’ for Stage Three, the government would need to ‘hold the support of public opinion.’ The greatest danger to the policy, he believed, ‘could lie in dissatisfaction leading to militancy among skilled and semi-skilled workers, who are not low paid but who command industrial strength.’119 He had earlier (May 1973) agreed privately with Cecil King that ‘the T.U.C. in the end would not agree to anything, and anyway would be unable to honour any undertaking entered into’, commenting that ‘it was hoped that while talks continued it would be easier to keep rank and file trades-union members in their present co-operative mood.’120 This was a tough but accurate 226 K. THEAKSTON AND P. CONNELLY assessment of what was really going on and at stake in the whirl of meetings and talks with the TUC and union leaders. Armstrong made what he later admitted to have been a bad mistake when he appeared sitting alongside the premier at Heath’s Lancaster House presidential-style televised press conference in January 1973 at which was announced Stage Two of the incomes policy. He had advised the prime minister to launch the policy in front of the cameras, but when they arrived at Lancaster House Armstrong noticed that three chairs had been put on the platform and, at the last minute, the question came up as to who should sit in them. Heath and the Chancellor, Barber, would obviously take two of them, and the natural candidate for the third was Employment Secretary Maurice Macmillan. But at that moment Macmillan was not available and so Heath turned to Armstrong and said, ‘Come on, you’d better sit there.’ ‘What does one do when instructed by the prime minister to sit next to him?’ Armstrong would say later. It was ‘an accident, which I regret, that I was so publicly prominent.’ Other senior civil servants and politicians were privately aghast: ‘a private secretary or a press secretary would have been OK on the platform, but not the Head of the Civil Service’, thought one senior insider.121 On the other hand, Robin Butler thinks, and has always thought, that Armstrong was unfairly criticised for the part he played at the press conference, but ‘the mud stuck and damaged him’; and Douglas Allen agreed with that view.122 Then, in February 1973 Armstrong was involved in an open row with civil service union leaders when over 200,000 staff joined in the first-ever official strike in civil service history in protest against the pay policy. Union leaders and Labour MPs were incensed when he insisted on sending a personal letter to all three-quarters of a million civil servants expounding the need to conform with the government’s counter-inflation policy in respect to their wage claims. They were angered by what they saw as his contradictory loyalties, feeling that he was confusing his role as Head of the Civil Service with his role as Heath’s key lieutenant in economic policy-making. The letter itself provoked immediate walkouts by between 40,000 and 50,000 civil servants, with copies being publicly burned outside a number of government offices. One civil service union leader, Bill Kendall (general secretary of the biggest civil service union, the CPSA), denounced it as a ‘damn silly letter’.123 Armstrong had pointed out, reasonably enough, that the control of inflation was in everyone’s interest and argued there was a risk of strike action damaging the standing of the civil service in the community. This rather glossed over the fact that the ‘DEPUTY PRIME MINISTER’ UNDER HEATH 227 unions had something of a valid point about the way in which the imposition of the incomes policy had interfered with expected pay awards and disrupted the usual Whitehall process of ‘pay research’, outside comparison, and consultation and negotiation with the ‘Staff Side’ (Heath’s pay freeze and Stage Two had, Armstrong said later, knocked all that ‘for six’). Armstrong’s personal message contained one passage that particularly provoked the unions and striking staff: ‘I know that some of our colleagues feel so bitterly … that they are looking to militant action to solve their problems. I hope that each of them will consider very carefully the likely consequences of such action not only for themselves but also for the Service as a whole.’ This was seen as a veiled threat of disciplinary action, but that was not CSD’s intention, though there would be loss of pay for the day in question for those absent on strike.124 It was a damaging episode—both for Armstrong personally and for industrial relations in the civil service—and the intervention was counter- productive. ‘When in doubt, consult’, was how one senior official had once described the civil service’s system of ‘Whitleyism’, with Armstrong himself going further in 1969 by saying ‘even when in no doubt, consult’, an approach that now seemed to have been jettisoned.125 His appeal to the standing or reputation of the civil service did not cut much ice with the increasing numbers of younger and lower-ranking staff, often far from London, who did not regard themselves or the service as very special, for whom it was just a job with earnings that were falling behind, and with staff associations becoming more militant and acting like other trade unions. Moreover, the sending of the letter was felt to be going further than a civil service permanent secretary should go in a matter which was the subject of political controversy. Perhaps any letter should have gone out in a minister’s name. Armstrong’s letter was another ‘mistake’, according to a former very senior official.126 But whose mistake? CSD junior minister Kenneth Baker said in the House of Commons, ‘it was Sir William’s idea to send the letter and it had the full support of all the Ministers concerned with the Civil Service.’ And Rodney Lowe notes that both Heath and Lord Jellicoe had approved the letter.127 But a memorandum exists showing J.M. Moore of the CSD writing to Armstrong several weeks ahead of the proposed one-day strike saying: ‘CSD and Establishment Officers had concluded that the appropriate counter-move should be a personal message from you to every member of the non-industrial Civil Service. The Prime Minister has also had the same thought, and has asked for your advice.’128 William Armstrong went along with the idea and 228 K. THEAKSTON AND P. CONNELLY caught the flak, which affected his reputation, however unfairly, but while he certainly seems not to have ducked the issue there are indications that this may not have been an entirely personal initiative after all. However, it contributed to the sense that Armstrong was being increasingly drawn into the political arena, and his complicity in government policy was growing all the greater. That the secret ‘garden meeting’ in Downing Street on 16 July 1973 to explore the lie of the land with the miners, involved just Heath, Armstrong and Joe Gormley, president of the NUM, underlined Armstrong’s central role in the high politics of incomes policy. The meeting was not revealed to the Cabinet, the Coal Board or the miners’ union executive. All three men were anxious to avoid another miners’ strike and looking for ways to deal with the situation after the NUM conference had called for an increase of 35 per cent, far in excess of what was likely to fit into Stage Three. It was a friendly talk, Gormley finding Heath ‘neither stubborn nor unap- proachable’ and a good listener, though did not know Armstrong at that point. Gormley later said that he had talked about an increase in payments for unsociable hours (including what was sometimes called ‘waiting and washing time’), in addition to the union’s wages claim, presenting it as a loophole that would allow them to pay the miners more while retaining the incomes policy. Armstrong and Heath took the hint, he thought, and, according to his account, turned to each other saying, ‘We never thought of that. We never thought of that at all.’129 Armstrong later said that ‘certainly the thought of what had come to be called unsocial hours was in our minds as something … where we could open up a bit of a window’.130 But the official note of the meeting (dictated by Armstrong the next morning)—copies sent only to Robert Armstrong at Number 10 and to Conrad Heron, permanent secretary at the Employment Department—does not actually mention that option as a possible way of handling matters. Instead, Armstrong’s note has Gormley talking frankly about the influence of the ‘militants … communists and fellow travellers’ within the NUM, and raising the possibility of some form of productivity agreement, perhaps negotiated at a pit rather than national level or involving extra payments for shift workers. Gormley also undertook to ‘keep in touch with Sir William Armstrong about the way in which his thoughts were developing so that they could be taken into account in the consideration of possible criteria for Stage 3.’131 It could be that the guileful Gormley’s nudge and wink, as it were, was too sensitive a point to be committed explicitly to paper (even one for the PM’s eyes and classed ‘DEPUTY PRIME MINISTER’ UNDER HEATH 229

‘personal and secret’), or perhaps it is alluded to in the sentence about keeping in touch about criteria for Stage Three. Establishing exactly what was actually said at the meeting will now never be possible. There was no definite deal but it is clear that both sides fatally misun- derstood or misinterpreted each other at the time. When Stage Three was unveiled in the autumn it included provisions for extra payments for unsocial hours for all shift workers and Gormley was dismayed that the miners were not, as he had thought, to be a special case in that respect. He had thought the government would keep this ‘under the table’ and use it at the last minute as a special concession in a deal with the miners, to give them more money than other workers.132 But that was to misunderstand the Heath/Armstrong approach, which was about constructing and operating a ‘rational’, fair and comprehensive policy. For their part, Heath and Armstrong seem to have believed that they had received an assurance that the miners would settle within the terms of the pay policy, and to have over-estimated Gormley’s ability to deliver on even an informal understanding like this. When Armstrong met the newspaper executive Hugh Cudlipp on 1 October 1973 he said that, in his view, the real problem over the next 12 months would be ‘to get production going … there were great opportunities for exporters’, though there were still issues about rising prices and labour costs. Armstrong judged that ‘there was no militancy, so far as the mood of the TUC was concerned, and that so long as Stage 3 provided some flexibility on the pay side, moderate opinion in the TUC would go along with it.’133 But the situation was transformed over the next month or two, first by the oil crisis, when OPEC action following the Arab-Israeli war (6–22 October) resulted in a quadrupling in the price of OPEC crude oil and cutbacks in production, and then by the miners’ decision in November to back up their 40 per cent wage claim by beginning an over- time ban which led to a state of emergency, power cuts and a three-day week, and then a full-scale miners’ strike in February 1974. The government’s growth strategy was dealt a fatal blow and, despite the fact that several million workers had claims settled under Stage Three by the end of the year, the ensuing confrontation with the miners over the incomes policy destroyed the policy and the government itself—and shipwrecked William Armstrong in the process. Looking back, Armstrong noted that the White Paper setting out the details of Stage Three had been issued on 8 October, two days after the war in the Middle East started: ‘I personally think that one of the elements 230 K. THEAKSTON AND P. CONNELLY in the failure, the tragedy, was our inability to see, to react to the fundamentally new situation that was brought about by the rise in the price of oil. … We would have done better to withdraw that White Paper and start again, because the game had so altered that it was impossible to tell really whether that White Paper was still relevant or not, and I think that is what we should have done. But it would have been enormously difficult and it would have been very damaging to the prestige of the government.’134 The point was the rise in the price of OPEC oil had transformed the value of coal since the two fuels were substitutes in some important economic sectors, especially electricity generation. Thus, it could be argued, the relative worth of miners’ work had increased and should be reflected in their pay—providing a way for the government to keep its incomes policy more or less on the road while handling the miners as a special case in the new context. On November 28 the full executive of the National Union of Mineworkers met with Heath and a small team of ministers and officials (including William Armstrong) at 10 Downing Street. The prime minister spelled out the consequences of the Middle East war and appealed for an end to industrial action for the sake of the nation. Armstrong recalled the scene:

[The meeting] hadn’t been going very long before it was obvious that Joe Gormley, to put it kindly, was going to lead from behind. He virtually said nothing at all himself, he just said he would like to leave it to the lads, and the lads more or less spoke as they felt inclined. In fact I remember very well one little man in the third row right at the very back, almost out of the window, sort of putting up his hand and eventually getting a hearing and saying, ‘Prime Minister, what I can’t understand is this: you have told us that we have no option but to pay to the Arabs the price they’re demanding for the oil. Now as far as I know the Arabs never helped us in World War One, they never helped us in World War Two. But we, the miners, we were in World War One and in World War Two and we flogged our guts out in all of that, and why can’t you pay us for coal what you’re willing to pay the Arabs for oil?’ And although that was put in that way, not put as an economist would put it, it in fact was bang on the economic nose, and the Prime Minister really had no answer to it.135

The meeting was also remembered for the ominous remarks by Mick McGahey, the NUM vice-president and a leading Communist Party member, who said he wanted to see the downfall of the government. Heath ‘DEPUTY PRIME MINISTER’ UNDER HEATH 231 bridled at the idea of the hard-left pushing for and exploiting industrial action for political ends, though Joe Gormley’s later version of the incident tallies with the official civil service note of the meeting in describing McGahey as saying he wanted an election and a change of government (i.e. through democratic means).136 Whatever the exact wording of McGahey’s actual utterances in the Cabinet room, it is undeniable that Heath and his colleagues—including, at the time, William Armstrong too—increasingly lost sight of the real economic strength of the miners’ case and the problems caused by the intricacies and rigidities of the statutory incomes policy, and more and more came to see the dispute in terms of the challenge to government, state and society, the dangers of ‘defeat’, and the threat from extremists and militants.137 From the start of his government Heath had been concerned about industrial subversion and extremist influences in the unions, frequently pressing the security service to be more active on this front. There was in fact plenty of intelligence evidence on Communist Party/ NUM links over tactics and strategy in the miners’ dispute (involving McGahey and others), fuelling the belief at the top of the government of fighting a conspiracy.138 And William Armstrong later privately admitted that ‘Ted [Heath], throughout the negotiations with the T.U.C., was very conscious of Communist influence; but very little of this strong feeling leaked out in public.’139 It did come out, however, in meetings in mid- January 1974, showing how, as the pressure mounted, Armstrong himself was now seeing the situation in highly-charged terms. In a meeting in Number 10 with the CBI on 11 January, Armstrong intervened at one stage to complain that ‘none of the TUC leaders had seen Mr McGahey and they did not seem to recognize the force of the Communists behind the NUM.’ He later added, ‘the TUC seemed to be somewhat ashamed at their weakness in face of the Communists but did not know how to cope with this problem.’ For good measure, Heath told the business leaders present that McGahey had ‘quite openly declared his interest in the Government’s scalp.’140 A few days later, at a Number 10 meeting with TUC leaders, Armstrong burst out that ‘any extra cash [for the miners] would mean a victory for militancy. It was almost a condition of a satisfactory settlement that the extremists should vote against it.’141 In early December 1973 Armstrong had discussed the situation with Len Murray who had said that the TUC might be able to help find a solution, remarking that ‘the energy situation “might be the catalyst”.’142 Then, at an NEDC meeting on 9 January 1974, chaired by Anthony 232 K. THEAKSTON AND P. CONNELLY

Barber (neither Heath nor Armstrong being present), the TUC side said if the government were to treat the NUM claim as a special case in an ‘exceptional situation’, meriting treatment outside the Stage Three limits, then other unions would undertake not to use that argument in their own wage negotiations and the TUC believed that a settlement of the miners’ dispute would not ‘open the floodgates’ to other claims.143 But Barber turned it down, and later phoned Heath, who also rejected it. Murray later claimed the offer had been sprung on the government, without prior consultation, because of fears of a leak. But ministers suspected a trap or plot to wrong-foot them, and William Armstrong later said that Heath suspected the offer ‘because it was not made in private.’144 The TUC offer was repeated at a meeting with Heath the next day (10 January) at which ministers suggested the proposal in effect gave the miners carte blanche to stand out for unacceptably high demands and were sceptical about whether the TUC could hold back other unions once the miners had breached the incomes policy limits.145 Armstrong and Conrad Heron followed up with a meeting on 11 January with Sid Greene, president of the railwaymen’s union and chairman of the TUC economic committee, at which, amid denunciations of ‘extremists’ on the NUM executive and points about the dangers of ‘another major victory for militancy in mining’, the two senior officials insisted that ‘the argument that the increase in oil prices justified a higher settlement for miners overlooked that the inevitable increase in coal prices, together with the higher oil prices, would raise the cost of living and diminish the real benefits of Stage 3 for other workers.’146 Two years later, in 1976, and by then out of Whitehall, Armstrong suggested that the government should have seen ‘the meaning of the oil price rise … [and] reacted much quicker at that time.’147 And speaking in 1978, Armstrong said it was ‘a tremendous pity’ that the TUC offer had been rejected, which he suggested was down to ‘a lack of realisation of how serious a suggestion it in fact was.’148 These were second thoughts, a personal view, with the benefit of hindsight. Arguably, though cynically, the real point may have been that the government might have accepted the TUC’s offer in the knowledge that when, inevitably, this was not honoured, since the TUC could not control its member unions, it could have gained a political advantage and gone to the electorate having demonstrated good faith. Perhaps people more practised in hard-nosed industrial negotiations, or more disposed to fudge, than were Heath or Armstrong, might have ‘DEPUTY PRIME MINISTER’ UNDER HEATH 233 exploited this situation to find a way forward. However, the offer was spurned and the moment was lost. The deepening sense of crisis was palpable in Whitehall. In December Ronald McIntosh had found Armstrong in ‘a very depressed mood’ and saying that ‘the situation was graver than anything we had faced since the war. But he didn’t offer any suggestions for getting out of it.’149 Then, in early January 1974, Armstrong called meetings of senior permanent secretaries to monitor events and consider their longer-term implications. Kenneth Berrill, the government’s chief economic adviser, had put in a note in December 1973 about various economic scenarios for 1974, the bleakest of which he called the ‘war economy’ or ‘siege economy’ situation, with ‘heavy industrial disruption’, huge cuts to output and services, rapidly mounting unemployment and ‘economic life as we know it … transformed.’150 Douglas Allen then warned, on 3 January 1974, that a continuation of the three-day week to the end of March would cause ‘permanent damage of the most serious kind to the economy’, and that it might be necessary to ‘introduce food rationing’ before the middle of the year. Alan Neale, head of the Ministry of Agriculture, meanwhile voiced fears of ‘galloping inflation’ while Armstrong himself wondered out loud whether another wage freeze or tax increases to take away excess purchas- ing power might be needed.151 Differences of opinion started to surface, with the minutes of one meeting noting a split between Antony Part at DTI and Thomas Brimelow at the Foreign Office on the one hand, and Armstrong, Douglas Allen and Conrad Heron on the other side of the argument. Discussion centred on whether Stage Three should be ‘formally abandoned and some means found in effect of giving in to the miners’ or whether the government should ‘stick to the line of attempting patiently to bring pressure (and the pressure of public opinion) to bear on the NUM executive.’152 In mid-January Armstrong was put in charge of a new Steering Committee on Economic Strategy, including senior permanent secretaries, to review the current economic situation and work on the policy options for 1974. There were five meetings in just two weeks in the second half of the month, with Armstrong giving regular updates and progress reports to Heath, as the crisis atmosphere intensified. The immediate economic prospects were horrifying. With the big rise in oil prices and the miners’ action, a balance of payments deficit for 1974 of the order of £5,500–6,500 million was predicted (suggesting a massive overseas borrowing requirement), and the combination of falling real incomes and 234 K. THEAKSTON AND P. CONNELLY rising prices could, said a CPRS/Treasury paper, lead to ‘an unmanageable wage/price spiral.’ Heavy pressure on sterling was expected. Rationing schemes for petrol, key consumer goods, and important industrial materials might be needed.153 Steel shortages would become critical by February as could company liquidity problems and, indeed, ‘the overall industrial position’, the committee judged. GDP was likely to be lower than in 1973. Unemployment would be 700,000 and rising by the end of the year (having fallen to 500,000 by the end of 1973). Armstrong told his colleagues on 15 January that ‘the seriousness of the present economic situation and the likely scale of the difficulties we were facing was not yet sufficiently appreciated.’154 The alarmism was ramped up at a Number 10 meeting on the budget, on 24 January (with the PM, Chancellor, Armstrong, Allen, Hunt and Berrill), when it was agreed that there were two possible scenarios: ‘one in which it was possible to deal with the developing economic situation in a reasonably orderly manner, and another in which there was a major collapse of confidence which called for immediate and drastic action.’155 The worsening economic situation, the final break-down of efforts to settle the miners’ dispute, and political divisions over an election produced in late January what Rosaleen Hughes has called ‘a sense of disarray and confusion in the senior civil service … the Whitehall equivalent of a collective nervous breakdown in the official machine.’ From the CPRS, Lord Rothschild minuted the PM with apocalyptic and hysterical warnings about the dire state of the economy and the need for tough measures to head-off the dangers of ‘chaos, riots and anarchy’, throwing in alarming comments about preventing the UK ‘going Communist’ and the ‘downfall of democracy’.156 Ronald McIntosh saw Douglas Allen on 25 January, who said he was persona non grata with ministers because he had been telling them that if three-day working continued for any length of time ‘the country may face collapse’. The despairing Allen thought that ministers had no plan for getting out of the situation in the event of a miners’ strike and that no ministers, except perhaps the PM, had any real understanding of economic matters. Treasury second permanent secretary Derek Mitchell was meanwhile predicting ‘economic and social disaster’. Both Allen and Mitchell were critical of Armstrong’s role, however. Allen because he thought he was ‘a tactician not a strategist’, and Mitchell felt that the Treasury was finding it difficult to get the reality of the economic situation across to ministers ‘partly because so much was filtered through ‘DEPUTY PRIME MINISTER’ UNDER HEATH 235

William Armstrong.’157 There were, clearly, huge pressures on ministers, officials and the government machine at this time—William Armstrong went over the edge, as it were, but his personal breakdown (see below) needs to be seen against this background of wider, collective stress, panic and uncertainty. By this time political arguments about calling an early general election were raging inside the Cabinet and the Conservative Party. Heath was reluctant, fearing an election fought against the miners might have short- term partisan advantages but damage the prospects of the sort of long- term settlement with the unions he still wanted. Other Tories, however, still smarting from their 1972 defeat at the NUM picket lines, as it were, wanted a showdown with the miners and pressed hard for matters to be brought to a head through an election. William Armstrong crossed an important line at this point, onto strictly political ground that civil servants, however deeply they become involved in policy and in supporting their political masters, should keep off. Back in November 1973 Hugh Cudlipp (chairman of IPC, the owners of Mirror Group Newspapers) had warned Armstrong and Robin Haydon (the Number 10 press secretary), at a private dinner, that if the government chose to have a snap election on the issue of who governed the country, the Daily Mirror would oppose it as a ‘bogus election’. This message was quickly passed onto the prime minister.158 Armstrong was, says Philip Ziegler, ‘delighted to have his views reinforced by one of the most influential shapers of public opinion.’159 Armstrong was in fact against an early election. He thought it would be ‘running away’. He said he asked ministers: ‘If you win, what will you do?’160

My main feeling was it would not alter the situation. I had no particular opinion as to who would win it at all but I couldn’t imagine that if the Government won it would make the slightest difference. The argument was that with a fresh mandate, an indication that the people were behind them, they could continue and the miners would be impressed by that and come to negotiate. Now if the victory had been absolutely overwhelming maybe, but I couldn’t see a landslide victory.161

He thought there could have been a settlement and that ‘we could win’— meaning a victory not narrowly for the Conservative government but those who desired the survival of parliamentary democracy—without a general election.162 236 K. THEAKSTON AND P. CONNELLY

Armstrong subsequently regretted giving his views on the question of an election: ‘I couldn’t refrain from giving him my opinion. I think he could have settled it without an election. He didn’t agree. He was the Prime Minister, I was not. I was stepping out of line even to mention the subject’, he admitted in an interview for a Times profile in 1976.163 In other words, he was getting in to a political debate, way above his head. Intriguingly, the publication of the Times story in 1976 angered Heath who complained strongly to the Cabinet Secretary, Sir John Hunt, saying that he ‘could not recall William [Armstrong] ever giving such advice’ and that he had been away ill at the time when the decision to have an election had been taken—in early February 1974 (the election was announced on 7 February and held on 28 February).164 When Armstrong repeated the story in a television programme in 1978, Heath again insisted to Lord Croham (the recently retired Douglas Allen, former Head of the Civil Service) that he had not consulted Armstrong about the date of the election, also saying to Tory MP Ian Stewart that Armstrong had not advised him about the date of the 1974 election.165 The puzzle of the appearance of a clash of evidence here may be resolved, however, by noting that Heath’s fulminations concerned advice (or rather the absence of advice) about the date of the election whereas Armstrong’s own accounts seem to involve him intervening on the principle of calling an election. In other words, they could both be right, though if Armstrong was right then Heath was being rather evasive in his responses. Heath’s anger was genuine, however, and he was irritated also at Armstrong breaching longstanding practice about officials not publicly disclosing advice to, and reactions of, ministers. This may have fed into the coolness towards Armstrong expressed years later in his memoirs (see above). The business of the civil service was ‘the orderly management of decline’ Armstrong is said to have commented to Downing Street insiders in 1973.166 However, by this time, it was not cynical detachment that characterised Armstrong’s analysis and advice but, increasingly, a burning conviction and a highly-charged emotional engagement with the situation. One insider at least believed that Armstrong had abandoned his previous remarkable personal detachment when he began to work directly for Heath on regional and industrial policy—before his counter-inflation work—and became ‘committed to a set of policies’.167 That commitment had become total by 1974. As the government and the miners clashed, Armstrong became ‘the hawk of hawks’, urging a tough line. ‘He became ‘DEPUTY PRIME MINISTER’ UNDER HEATH 237 more a minister than a civil servant’, Willie Whitelaw complained. ‘He was making political statements at our own meetings’, something that put him into ‘a false position’.168 Armstrong became identified not only with the efforts of the prime minister, who was after all his political chief, but with a belief that the values of the country were under attack and had to be defended. At one meeting with ministers he told them that what was at issue was the sort of society in which his grandchildren would be brought up, saying that it was imperative that the rule of law must not be flouted.169 He shared with Heath a missionary zeal to convert the miners to the right way of behaving, in the national interest. Both Heath and Armstrong were, by this time, moralists. They no longer saw the crisis as simply a problem in wage negotiations, but as a struggle between special interests and the general good of the nation (Heath); or between good and evil (Armstrong). ‘Seeing the entire credibility of government threatened and, as he believed, the survival of an orderly society in the balance’, wrote Graham Turner, ‘he stepped into the front line and became not merely an instrument of government but also its open protagonist.’170 But Armstrong’s attitude did not serve Heath and the government well at the time—he should, instead, have been coolly standing back and trying to see things more objectively. For Armstrong, additionally, there was a fundamental consideration, going back to his upbringing and the principles he absorbed at his parents’ knees. There is no way of knowing this for certain, but it does seem possible that he was personally sickened at the way matters were turning out. He felt disaster was staring the country in the face. All the great problems of the British economy, society and polity had come to a head. It did not have to be that way. Superhuman efforts were required to bring the different sides of society, the economy and industry together in the name of a rational dialogue to replace mutually destructive conflict. He could do it, and he threw himself heart and soul into that battle.171 But they—in particular the miners, the folk from whom his father had sprung—would not listen. The strain of the effort to persuade them may temporarily have unhinged him, vulnerable as he always was to the extremes of personal duty facing the harsh realities of life. At this point in time, he embodied two traditions. On the one hand was the carefully nurtured Bridges tradition of giving objective advice to ministers for their decision. On the other was the inherited personal belief that he had a personal duty before God 238 K. THEAKSTON AND P. CONNELLY to save his fellow citizens and therefore had to take part in events. The two were incompatible. He was tugged in both directions and the result was a breakdown.

The Breakdown As the crisis was reaching its denouement, William Armstrong suffered a physical and mental breakdown. Retrospectively, it was clear that the pressure had been building up for some time, and he was acting more and more strangely. ‘By the second half of January’, on one account, ‘it was clear to those who dealt with him that fatigue was getting the better of his judgment.’172 He had, in other versions of the story, become ‘visibly over- wrought as the crisis deepened’ or been ‘deteriorating for some time.’173 ‘I got a bit hot towards the end’, he admitted to Hugo Young two years later. Others put it more strongly. Armstrong ‘really did go mad’, as William Waldegrave told Hugo Young. ‘He used to talk about the phoenix rising from the ashes … He really believed in the ruination of Britain, to be followed by the resurrection. He talked about things like “I’ll move my red army this way and the blue army that way.” It was to be a total victory of good over evil.’174 Derek Mitchell, second permanent secretary at the Treasury, thought Armstrong ‘was playing an extraordinary role. He was clearly unbalanced and took a high moral line about the miners’ dispute and their challenge to the government.’175 Other accounts have him rant- ing about ‘the Communist menace and the imminent collapse of society.’176 The crack-up happened like this. On the last weekend of January 1974, he had attended an Anglo-American conference at Ditchley Park in Oxfordshire. Douglas Hurd later recalled ‘the atmosphere was Chekovian. We sat on sofas in front of great log fires and discussed first principles while the rain lashed the windows. Sir William was full of notions, ordinary and extraordinary.’177 Hurd recorded in his diary (Saturday 26 January) a highly political discussion he had with Armstrong: ‘He has a plan. EH [Edward Heath] and HW [Harold Wilson] should agree together on the date of a GE [General Election]) very soon. He [William Armstrong] would act as an intermediary. Miners? to return to normal working meanwhile. He says there is serious talk of WW [William Whitelaw] taking over—or of yielding to H … or of an immediate GE. And so on … We are interrupted and will resume. (We didn’t) He is an enigmatic but probably honourable man.’178 Other participants at the conference recalled Armstrong ‘talking wildly of coups and coalitions.’179 ‘DEPUTY PRIME MINISTER’ UNDER HEATH 239

A few days later, on the afternoon of Wednesday 30 January, there was a meeting of ministers and senior officials at No. 10 Downing Street to discuss the political and economic situation, to which Armstrong contributed more politically and more wildly about the seriousness of the situation than he previously had. On one account, he ‘virtually prevented them [ministers] from speaking and forced them to listen to his own dire warnings about the consequences of “giving in” to the miners.’180 (Another account has him warning about the serious consequences for the country of ‘surrendering’ to the miners.181) Other officials at the meeting recalled him ‘talking at considerable length and in almost visionary terms about the consequences for the very fabric of society of a “victory” by the militants.’182 On Thursday 31 January Conservative adviser Mark Schreiber came away from a talk with Armstrong thinking that he was ‘finally off his head. Talking about the “heffalump traps” he was thinking up for the unions.’183 The same day, Campbell Adamson and Michael Clapham of the CBI also met Armstrong and were ‘shocked by his condition. He seemed to be under great strain and almost mentally ill’, as Adamson told Ronald McIntosh.184 ‘The Communists were infiltrating everything’, he had supposedly claimed: ‘they might even be infiltrating the room he was in.’185 Later, about 6.30 pm that evening (31 January), William Armstrong went to No. 10 to see Robert Armstrong, the prime minister’s principal private secretary. ‘Looking very distraught’ he said they must talk in a room where they should ‘not be bugged’. Robert Armstrong took him to a small waiting room where William Armstrong took off his jacket and lay on the floor chain-smoking and talking ‘in apocalyptic terms about the severity of the crisis and the danger of total economic and social collapse.’ After about three-quarters of an hour of this the door opened and Gordon Richardson, then Governor of the Bank of England, walked in unan- nounced. The Governor was the last person Robert Armstrong would have wanted to see the future chairman of the Midland Bank in that condition, but apparently he took it calmly. In order to provide a break Robert Armstrong invited them to adjourn to one of the upstairs drawing rooms on the first floor, and provided them with drinks. William was ‘still fairly mad’, but Robert Armstrong did his best to calm him down. After William and Richardson had left, Robert Armstrong phoned the prime minister— who was out of London on a visit to the north—to tell him what had happened, saying that he thought William was ‘temporarily not in his right mind’. Heath professed not to be surprised, saying he ‘thought William 240 K. THEAKSTON AND P. CONNELLY was acting oddly the last time I saw him’, at the meeting in No. 10 the previous day.186 The next morning, Friday 1 February, William Armstrong summoned all permanent secretaries to an urgent meeting in the Cabinet Office. When they were all in the room, he instructed the messengers (office staff) to lock the doors. He initially conducted the meeting fairly normally but then harangued his stunned colleagues in apocalyptic terms about the crisis and the risk of collapse. ‘It was visionary stuff’, recalled one observer—‘the issues at stake, the state of the nation. I think he believed that if we caved in authority would disappear completely.’187 He gave them the peculiar and unrealistic advice that he wished them all to go home at lunchtime to dem- onstrate that things were normal and calm, so as to maintain confidence. He then laid down his papers. He was plainly unable to continue. In the meantime Douglas Allen was allowed to slip out of the meeting, on the plea of needing to respond to an urgent call of nature, and rushed through to No. 10 to tell Robert Armstrong what was happening. They decided that Allen should go back to the meeting and bring it to an end as quickly as possible. William Armstrong, clearly a broken man, was then led out of the room by Douglas Allen and taken back to his office by James Hamilton. One of those involved with the meeting thought that at that point William had lost touch with reality. His car was summoned to take him home and Gwen Armstrong was telephoned to tell her what was happening. She was not, by all accounts, surprised by the news and arrangements were made for William to see a doctor and be taken off to hospital.188 There is a suggestion that, in addition to stress, William Armstrong was suffering from pneumonia, something that would certainly have caused him to feel unwell and added to the strains of the situation.189 He had been in a pretty poor way, according to his son, but medication stabilized him. Accompanied by his wife, he was then spirited off to a villa in Barbados owned by Lord Rothschild (head of the CPRS) to recover, flying out on 17 February and returning ten days later, and by early March was back behind his desk at the CSD before retiring a few months later. It had been a distressing and tragic episode. The breakdown became known to a wider public two years later, when Stephen Fay and Hugo Young interviewed an array of ‘insiders’ and put together an account of ‘the fall of Heath’ for The Sunday Times.190 References to a ‘messianic’ streak in his character now became common. The supposedly ‘ice-cold’ rational adviser had ‘over-heated’ and become emotionally over-committed. Some close colleagues realised that his remarkable degree of detachment ‘DEPUTY PRIME MINISTER’ UNDER HEATH 241 was perhaps not innate, but the result of rigorous self-control. Massive overwork, exhaustion and stress had worn down the self-control and made him temporarily unbalanced in his perception of events and of his responsibilities and duties. In a highly charged situation, that he (and—to be fair—others) had come to see as a fundamental ‘crisis of the nation’ or ‘a disaster scenario of emergency’,191 something seems to have snapped. He was at the end of his tether. In the background, too, was something else— other, earlier, episodes recalled by colleagues of ‘black humours’ or odd behaviour or incidents when he seemed ‘paralysed’ by stress but had recovered quite quickly.192 There are suggestions that retaining the balance of his mind was a matter of taking medication of some kind, and certainly one aide from an earlier period, in the 1960s, recalled as part of his duties having to make sure William Armstrong, to that end, took some pills regularly.193 The underlying condition may have been basically treat- able but the extreme situation of 1974 became too much for him to handle, and the personal pressures too powerful. Consistent with this view, one very senior official recalled Gwen Armstrong saying to him in 1974, ‘oh, don’t worry, this has happened before, he’ll be all right in a few days.’194 Happily, he was indeed soon all right again, but at a climactic moment he had cracked and been suddenly removed from the scene. The loss of his closest adviser must have been a blow to Heath. But Armstrong’s advice, rooted in an emotional commitment to the existing policy, had become increasingly overheated and unreliable. In the end, Heath leaned on him too much and perhaps listened to him too much. ‘Armstrong’s advice was not always very good’, argued Mark Schreiber; he ‘gave bad advice’, thought Ronald McIntosh.195 Looking back, Douglas Allen thought that Armstrong was ‘a great man who cracked. He was under stress and probably his advice to Heath wasn’t all that good. But the real problem was that you could talk to him, get the impression that he agreed with you and suddenly realize that the advice he’d given was quite different, so William was losing our trust in him long before he actually went.’196 By March 1974 Armstrong was back at his desk, but he had already decided to leave the civil service (see Chap. 7). His early retirement, at the end of June 1974 (announced on 10 April), prevented any awkwardness with the incoming government of Harold Wilson which had won the election he had advised Heath against calling, for he had become persona non grata with Labour. He had become too closely identified with the policies and the person of Edward Heath to make the transition constitutionally 242 K. THEAKSTON AND P. CONNELLY expected of civil servants from working for a government of one party to serving its successor. ‘He could never have carried on as head of the Civil Service under Labour’, as Joes Haines, the new PM’s press secretary, put it. He was a ‘busted flush’ according to another close observer. There was no prospect—though he would scarcely have wished it—of resuming his role in counter-inflation policy and in negotiations with the unions. He was never ‘a central adviser’ to Wilson.197 He set in train the long-planned move to the Midland Bank, for which he properly sought and received permission from both the outgoing and incoming prime ministers. Civil Service rules provided that he would anyway have had to retire at the age of 60 (i.e. in 1975). To leave one year early was (and is) unexceptionable. He was on his way out. For the next few months he returned to his Civil Service Department duties—what he called ‘my proper role, my continuing role’ as Head of the Civil Service.198 As soon as Friday 8 March, for example, he was advising Tony Benn on a ministerial appointment in the Department of Industry. On 11 March, ‘charm itself’, he visited Barbara Castle, newly appointed Secretary of State for Health and Social Services, and advised her on her permanent secretary and political adviser appointments.199 He appeared on television at the end of March, a month after Heath’s defeat, confessing, in his self-reflective style, that he had got out of line: ‘When honest people can use the words “deputy Prime Minister” of one, then clearly something’s got slightly askew.’ The interview ended enigmatically:

Can I ask you, finally, what do you go home and say at moments of economic crisis? Thank God the Government’s influence is so little. Would you expand on that? I have a very strong suspicion that governments are nothing like as important as they think they are, and that the ordinary work of making things and moving things about, of transport, manufacture, farming, mining, is so much more important than what the Government does that the Government can make enormous mistakes and we can still survive. As long as we have our Civil Service. No, no. Even in spite of it.200

Various civil service management issues crossed his desk and he gave advice on the arrangements for appointing ministerial special advisers: the terms and conditions of their service, the rules governing their party- political activities, and so on.201 A tricky pay and industrial relations issue ‘DEPUTY PRIME MINISTER’ UNDER HEATH 243 with some DHSS staff working on pensions’ uprating cropped up.202 And as Whitehall was first alerted to the plans to publish the Crossman Diaries, he urged that publication be blocked on the grounds that they would shat- ter the traditions of mutual trust on which the relations between ministers and civil servants depended (‘nothing would be the same again’).203 There was also some work done on the issue of assistance to the Opposition, which in due course led to the introduction of arrangements for ‘Short money’ to pay for the provision of staff and research support for the Opposition in parliament. Armstrong had been interested in the idea of a ‘Department of the Opposition’ for some time—and had discussed it a few years earlier with Tony Benn—but he could see all the practical, political and constitutional difficulties with moving civil servants to and from such a department, and had indeed told Benn in 1971 that parliament voting sums of money to the parties to be used by them to fund staff support might be a better idea. A report was also prepared on the question of an official residence for the Leader of the Opposition, listing all the objections and problems, after which the idea was quietly buried.204 It was a diminu- endo—all pretty low-key and a far cry from the high-tempo work of the last few years, and the previous direct involvement with the PM and senior ministers on crucial issues at the top of the political and policy agenda. He embarked upon a protracted set of farewell events in Whitehall, including a Downing Street dinner hosted by the prime minister on 12 June, 1974, and there was a dinner at Sunningdale (the Civil Service College). The industrialist Lord Kearton attended, later telling Tony Benn, ‘He [Armstrong] just kept saying that all was lost, and there was no hope for the country and he couldn’t see his way forward at all. I have never seen a man so utterly defeated.’205 When Armstrong lunched with Cecil King that April he had also been gloomy: the period ahead, he thought, would be ‘very rough going’ and it was hard to see how the problems of inflation and ‘militant trade unionism’ would be solved. He did not seem to have much faith that Labour would succeed where Heath, with himself at his side, had failed.206

Notes 1. Graham Turner, ‘Make and break for a top civil servant’, Sunday Telegraph, 1 May 1977. 2. Michael David Kandiah (ed), ‘The Heath Government: Witness Seminar’, Contemporary Record, vol. 9, no. 1 (1995), p. 212; interview with former permanent secretary (KT). 244 K. THEAKSTON AND P. CONNELLY

3. Interview with former minister (KT). 4. John Campbell, Edward Heath (London: Jonathan Cape, 1993), p. 491. 5. Edward Heath, The Course of My Life (London: Hodder and Stoughton, 1998), pp. 317, 353; Edward Heath, ‘Armstrong, William’, in Lord Blake and C.S. Nicholls (eds), The Dictionary of National Biography 1971–1980 (Oxford: Oxford University Press, 1986), pp. 18–20. 6. Hunt to Bancroft, 23 May 1978, NA CAB 164/1515. 7. Martin Holmes, The Failure of the Heath Government, second edition (London: Macmillan, 1997), pp. 130–131. 8. Campbell, Edward Heath, p. 58. 9. Hugo Young, The Hugo Young Papers, (ed) Ion Trewin (London: Allen Lane, 2008), p. 87. 10. Interview with Peter Armstrong (PC). 11. William Waldegrave, quoted in The Hugo Young Papers, p. 82. 12. Transcript, ‘Who Ruled Britain in 1973—With the benefit of hindsight?’, ITV, 15 March 1978 (Armstrong papers). 13. Cecil King Diary 1970–1974, p. 165. 14. ‘Talk by Mr Edward Heath at Swinton College weekend course on the machinery of government’, November 1964, Boyle papers, MS.660/23778, Brotherton Library, University of Leeds. 15. The Cecil King Diary 1970–1974, p. 24. 16. The Cecil King Diary 1970–1974, p. 66; Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658. 17. Robert Shepherd, Iain Macleod (London: Hutchinson, 1994), pp. 537– 542; Campbell, Heath, pp. 302–303. 18. Sir William Armstrong, Some Practical Problems in Demand Management, Stamp Memorial Lecture 1968, (University of London: The Athlone Press, 1969). 19. The Cecil King Diary 1970–1974, p. 38. 20. The Cecil King Diary 1970–1974, p. 66. 21. The Cecil King Diary 1970–1974, p. 96. 22. The Cecil King Diary 1970–1974, pp. 123, 131. 23. Hennessy, Whitehall, p. 237; interview with former permanent secretary (KT). 24. Minutes of a meeting held at 10 Downing Street, 19 April 1971, NA PREM 15/611. 25. Hennessy, Whitehall, p. 219. 26. The Cecil King Diary 1970–1974, pp. 38, 96. 27. See: Sir Alec Cairncross, ‘The Heath government and the British economy’, and Robert Taylor, ‘The Heath government, industrial policy and the “new capitalism”’, in Stuart Ball and Anthony Seldon (eds), The ‘DEPUTY PRIME MINISTER’ UNDER HEATH 245

Heath Government 1970–74: A Reappraisal (London: Longman, 1996), pp. 107–159. 28. ES (71) 6th meeting, 5 May 1971, NA CAB 134/3387. 29. See: B. Trend to Prime Minister, 27 October 1971, and Lord Rothschild to Prime Minister, 21 October 1971, NA BA 6/12. 30. Donald MacDougall, Don and Mandarin: Memoirs of an Economist (London: John Murray, 1987), pp. 188–189. 31. Heath to Chancellor of Exchequer, 18 November 1971, NA BA 6/1; Ministerial Committee on Economic Strategy, ES (71) 23rd meeting, 22 November 1971, NA BA 6/2. 32. B. Trend to Prime Minister, 29 June 1971; J. Chilcot, note for the record, 9 September 1971; R. Armstrong to J. Chilcot, 13 September 1971; B. Trend draft note on economic policy, 5 October 1971, NA BA 6/55. 33. Interview with Sir John Chilcot (PA). 34. See: NA CAB 134/3495. 35. Nield to Armstrong, 7 December 1971, NA BA 6/3. 36. Heath, The Course of My Life, pp. 465–466. 37. Peter Le Cheminant, Beautiful Ambiguities: An Inside View of the Heart of Government (London: The Radcliffe Press, 2001), p. 129. 38. M.A. Cowdy, Note for the record, 26 November 1971, NA BA 6/2; Leo Pliatzky, Getting and Spending (Oxford: Basil Blackwell, 1982), p. 109; MacDougall, Don and Mandarin, p. 189. 39. Philip Ziegler, Edward Heath (London: Harper Press, 2010), pp. 347, 356. 40. Phillip Whitehead, The Writing on the Wall: Britain in the Seventies (London: Michael Joseph, 1985), p. 82. 41. The Cecil King Diary 1970–1974, p. 165. 42. Note of discussions at Chequers on Saturday 4 December 1971, NA BA 6/3. 43. Notes for the record: Notes of discussions at Chequers on the evening of 3 January 1972, NA BA 6/4. 44. Report on the Modernisation and Expansion of Industry, ES (72) 1, 14 January 1971, para 24, NA CAB 134/3495. 45. Industrial and Regional Development, Cmnd. 4942 (London: HMSO, 1972). 46. Ministerial Committee on Economic Strategy, ES (72) 1st meeting, 19 January 1972, NA CAB 134/3495. 47. J. Chilcot, Note for the record: Industrial & Regional Matters, 29 November 1971, NA BA 6/2. 48. See NA BA 6/4. 49. Cockaigne: Record of a meeting in Old Admiralty Building, 3 February 1972, NA BA 6/13; Pliatzky, Getting and Spending, pp. 110–111. 246 K. THEAKSTON AND P. CONNELLY

50. House of Commons debates, 22 May 1972, cols.1023–1037. 51. Interview with Lord Croham (PC). 52. Whitehead, The Writing on the Wall, p. 81. 53. Interview with Sir David McNee (PC). 54. The Cecil King Diary 1970–1974, p. 246. 55. Cairncross, ‘The Heath government and the British economy’, pp. 116–117. 56. Edward Heath interviewed by Charles Wintour and Robert Carvel, My Style of Government (London: Evening Standard, 1972), pp. 3–5. 57. ‘The Colossi of Whitehall’, The Economist, 17 October 1970, p. 12; William Armstrong ‘Note for the Record’, 8 June 1970, NA BA 17/231. 58. Hennessy, Whitehall, pp. 237–238; Campbell, Edward Heath, pp. 490–491. 59. Lewis Baston and Anthony Seldon, ‘Number 10 under Edward Heath’, in Stuart Ball and Anthony Seldon (eds), The Heath Government 1970– 74: A Reappraisal (London: Longman, 1996), p. 48. 60. Samuel Brittan, ‘Plan for new Department to aid PM’, Financial Times, 23 August 1972; Peter Jay, ‘Talks on a Prime Minister’s department’, The Times, 24 August 1971. 61. Armstrong to Roberts, 22 August 1972, NA PREM 15/1603; Roy Blackman, ‘Silly season stuff, says Sir William’, Daily Express, 25 August 1972. 62. W. Armstrong to R. Armstrong, 12 September 1972, NA PREM 15/1603. 63. Jon Davis, Prime Ministers and Whitehall 1960–74 (London: Hambledon Continuum, 2007), p. 148. 64. Nield to Armstrong, 17 February 1972, NA BA 6/56. 65. ‘Silly season stuff, says Sir William’, Daily Express, 25 August 1972. 66. W. Armstrong to R. Armstrong, 12 September 1972, NA PREM 15/1603. 67. R. Armstrong to W. Armstrong, 13 September 1972, NA PREM 15/1603. 68. J.M. Lee, G.W. Jones and June Burnham, At the Centre of Whitehall: Advising the Prime Minister and Cabinet (London: Macmillan, 1998); Dennis Kavanagh and Anthony Seldon, The Powers Behind the Prime Minister (London: HarperCollins, 1999); Andrew Blick and George Jones, At Power’s Elbow: Aides to the Prime Minister from Robert Walpole to David Cameron (London: Biteback Publishing, 2013). 69. Baston and Anthony Seldon, ‘Number 10 under Edward Heath’, p. 73. 70. Hugo Young Papers, pp. 86–87; Kenneth Baker, The Turbulent Years (London: Faber and Faber, 1993), p. 35. 71. Interviews with former permanent secretaries (KT). ‘DEPUTY PRIME MINISTER’ UNDER HEATH 247

72. Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658. 73. Ian Beesley, The Official History of the Cabinet Secretaries (London: Routledge, 2017), p. 317; Anthony Seldon and Jonathan Meakin, The Cabinet Office 1916–2016 (London: Biteback Publishing, 2016), pp. 180–182; Hunt to Prime Minister, 7 September 1973, 12 November 1973, and 23 November 1973, NA BA 6/56. 74. Nora Beloff, ‘The education of Mr Heath’, The Observer, 15 October 1972; Nora Beloff, ‘Make or break for Heath’, The Observer, 4 February 1973. 75. Fay and Young, The Fall of Heath, p. 10; ‘Civil Service head “acted as deputy prime minister”’, The Times, 27 March 1974; interview with Lady Armstrong (PC). 76. Holmes, The Failure of the Heath Government, pp. 114, 131; John Nott, Here Today, Gone Tomorrow (London: Politico’s, 2002), p. 157. 77. ‘The Heath Government: Witness Seminar’, p. 209; ‘Sir William Armstrong talking with Desmond Wilcox’, The Listener, 28 March 1974, p. 390. 78. ‘Man Alive: Sir William Armstrong’, BBC television, 27 March 1974, transcript in: NA BA 7/22. 79. Hugo Young, ‘Arch-mandarin who went public’, The Sunday Times, 13 July 1980. 80. Graham Turner, ‘Make and break for a top civil servant’, Sunday Telegraph, 1 May 1977. 81. Interviews with former permanent secretaries (KT). 82. The Hugo Young Papers, p. 80. 83. Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658. 84. The Listener, 28 March 1974, p. 390. 85. Graham Turner, ‘Make and break for a top civil servant’, Sunday Telegraph, 1 May 1977; note to prime minister, 11 July 1972, NA BA 6/16. 86. Jon Davis, ‘Allen, Douglas Albert Vivian, Baron Croham (1917–2011)’, Oxford Dictionary of National Biography [www.oxforddnb.com.]. 87. Authority of Government Policy Group, minutes of 12th meeting (guest: Lord Armstrong), 21 July 1976, Margaret Thatcher Foundation [http:// www.margaretthatcher.org/document/111390]. 88. Turner, ‘Make and break for a top civil servant’; transcript of ‘Who ruled Britain in 1973—with the benefit of hindsight’, ITV 15 March 1978 (Armstrong papers). 89. Interview with Jack Jones (PC). 248 K. THEAKSTON AND P. CONNELLY

90. The Cecil King Diary 1970–1974, p. 245. 91. Robert Taylor, ‘The Heath government and industrial relations: Myth and reality’, in Stuart Ball and Anthony Seldon (eds), The Heath Government 1970–74: A Reappraisal (London: Longman, 1996), pp. 162–163; Campbell, Edward Heath, p. 475. 92. The Hugo Young Papers, pp. 62–63. 93. The Hugo Young Papers, p. 75; Ronald McIntosh, Turbulent Times (London: Biteback Publishing, 2104), p. 177. 94. See: NA CAB 130/628 and CAB 130/644 for minutes of meetings of GEN 142. 95. GEN 142 (73) 26th meeting, 15 July 1973, NA CAB 130/628, minutes of the meeting, pp. 7–8. 96. See: NA CAB 130/ 601; CAB 130/603; CAB 130/634; CAB 130/654. 97. Norbury to Stuart, 15 June 1973, NA BA 6/39. 98. Authority of Government Policy Group, minutes of 12th meeting (guest: Lord Armstrong), 21 July 1976, Margaret Thatcher Foundation [http:// www.margaretthatcher.org/document/111390]. 99. Whitehead, The Writing on the Wall, p. 87. 100. Ziegler, Edward Heath, p. 404. 101. R. Armstrong, Note for the Record, 18 March 1973, NA BA 6/35. 102. GEN 142 (73) 4th meeting, 8 January 1973, NA CAB 130/628. 103. See seating plans for Downing Street meetings in: NA BA 6/17 and PREM 15/1655. 104. Campbell, Edward Heath, p. 474. 105. Rosaleen Anne Hughes, ‘Governing in Hard Times’: The Heath Government and Civil Emergencies—the 1972 and the 1974 Miners’ Strikes, PhD thesis, Queen Mary University of London, 2012, p. 171; Holmes, The Failure of the Heath Government, p. 131; Campbell, Edward Heath, p. 475. 106. Turner, ‘Make and break for a top civil servant’; The Listener, 28 March 1974, p. 390. 107. The Hugo Young Papers, p. 76. 108. Rothschild to Armstrong, 29 February 1972, NA BA 6/55. 109. R. Armstrong, Note for the Record, 29 January 1973, NA BA 6/33; Ziegler, Edward Heath, p. 403. 110. R. Armstrong, Note for the Record, 18 March 1973, NA BA 6/35. 111. W. Armstrong, Note for the Record, 3 April 1973, NA BA 6/36. 112. Interview with Sir John Chilcot (PC). 113. R. Armstrong, Note for the Record, 10 July 1973, NA BA 6/40. 114. N. Stuart to C. Roberts, 17 August 1973, NA BA 6/43; The Hugo Young Papers, p. 75. ‘DEPUTY PRIME MINISTER’ UNDER HEATH 249

115. Interview with Lord Armstrong, BBC Radio 4 ‘World at One’, 23 January 1979 (transcript in Armstrong papers). 116. Holmes, The Failure of the Heath Government, p. 110. 117. GEN 118 (73) 2nd meeting, 16 January 1973, NA CAB 130/634. 118. W. Armstrong to R. Armstrong, 27 July 1972; M. Schreiber, Inflation, 26 July 1972, NA BA 6/18. 119. GEN 142 (73) 79, Prices and Pay—The Next Phase: A Strategy for the Approach to Stage 3, memorandum by the Chairman of the Steering Group of Officials on Counter-Inflation Policy, 8 June 1973, NA BA 6/38. 120. The Cecil King Diary 1970–1974, p. 286 121. Turner, ‘Make and break for a top civil servant’; The Hugo Young Papers, p. 80; private information from interviews (KT). 122. Interviews with Lord Butler of Brockwell and Lord Croham (PC). 123. Keith Harper, ‘A “silly” letter starts mass walk-out’, The Guardian, 23 February 1973. 124. See: NA BA 22/527 and Rodney Lowe, The Official History of the British Civil Service: Reforming the Civil Service, Volume 1: The Fulton Years, 1966–81 (London: Routledge, 2011), pp. 301–304; Graham Turner, ‘Make and break for a top civil servant’, Sunday Telegraph, 1 May 1977. 125. Geoffrey K. Fry, The Changing Civil Service (London: Allen and Unwin, 1985), p. 130. 126. Interview with former permanent secretary (KT). 127. House of Commons debates, 12 March 1973, cols.880–881; Lowe, The Official History of the British Civil Service: Reforming the Civil Service, p. 497, fn.74. 128. J.M. Moore to Sir William Armstrong, 2 February 1973, NA BA 19/144. 129. Whitehead, The Writing on the Wall, p. 100; Joe Gormley, Battered Cherub (London: Hamish Hamilton, 1982), pp. 124–125. 130. Transcript, ‘Who Ruled Britain in 1973—With the benefit of hindsight?’, ITV, 15 March 1978 (Armstrong papers). 131. N. Stuart to R. Armstrong, 17 July 1973, NA BA 6/41 (also in PREM 15/1680). 132. The Hugo Young Papers, p. 90; Fay and Young, The Fall of Heath, p. 7. 133. N. Stuart to R. Armstrong, 1 October 1973, NA BA 6/45. 134. Transcript of ‘Who ruled Britain in 1973—With the benefit of hindsight’, ITV 15 March 1978 (Armstrong papers). 135. Ibid. 136. Gormley, Battered cherub, p. 131; GEN 142 (73) 175, Meeting with the National Union of Mineworkers’ National Executive Committee, 10 Downing Street on Wednesday 28 November 1973, Cabinet Office 3 December 1973, NA CAB 130/651. 250 K. THEAKSTON AND P. CONNELLY

137. Campbell, Edward Heath, p. 567; Holmes, The Failure of the Heath Government, p. 113. 138. Christopher Andrew, The Defence of the Realm: The Authorized History of MI5 (London: Allen Lane, 2009), pp. 587–599; Richard J. Aldrich and Rory Cormac, The Black Door: Spies, Secret Intelligence and British Prime Ministers (London: William Collins, 2016), pp. 301–306. 139. The Cecil King Diary 1970–1974, p. 356. 140. EPC (74) 4, Meeting with the Confederation of British Industry: 11 January 1974, Cabinet Office, 15 January 1974, NA CAB 134/3749. 141. EPC (74) 11, Meeting with the Trades Union Congress: 14 January 1974, Cabinet Office 16 January 1974, NA CAB 134/3749. 142. W. Armstrong to R. Armstrong, 4 December 1973, NA BA 6/48. 143. NEDC (74) 1st meeting, National Economic Development Council meeting, 9 January 1974, NA PREM 15/2118. 144. Whitehead, The Writing on the Wall, p. 107; Fay and Young, The Fall of Heath, p. 21; Holmes, The Failure of the Heath Government, p. 110. 145. CIO (74) 4, Meeting with the Trades Union Congress: 10 January 1974, Cabinet Office 11 January 1974, NA BA 6/49. 146. C.F. Heron, Miners’ Dispute: The TUC Initiative, 11 January 1974, NA BA 6/49. 147. The Hugo Young Papers, p. 79. 148. Transcript, ‘Who Ruled Britain in 1973—With the benefit of hindsight?’, ITV, 15 March 1978 (Armstrong papers). 149. Ronald McIntosh, Challenge to Democracy: Politics, Trade Union Power and Economic Failure in the 1970s (London: Politico’s, 2006), p. 6. 150. ‘Management of the Economy in 1974’, K. Berrill, 11 December 1973, NA BA 6/52. 151. Note of a meeting on 3 January 1974 in Sir William Armstrong’s office, R. McConnachie, 7 January 1974, NA BA 6/53. 152. Note of a meeting on 7 January 1974 in Sir William Armstrong’s office, R. McConnachie, 8 January 1974, NA BA 6/53. 153. ‘1974: The background to policy’, ESO (74) 2, 14 January 1974, NA CAB 134/3757. 154. ESO (74) 1st meeting, 15 January 1974, NA CAB 134/3757; W. Armstrong to Prime Minister, 18 January 1974, NA BA 6/53. 155. Note of a meeting held at 10 Downing Street, 24 January 1974, NA PREM 15/2043 (also in NA BA 6/53). 156. Hughes, ‘Governing in Hard Times’: The Heath Government and Civil Emergencies—The 1972 and the 1974 Miners’ Strikes, pp. 199, 216. 157. Ronald McIntosh, Challenge to Democracy, pp. 62, 68. 158. W. Armstrong to R. Armstrong, 23 November 1973; R. Hayton, Note for the Record, 23 November 1973, NA PREM 15/1452. ‘DEPUTY PRIME MINISTER’ UNDER HEATH 251

159. Ziegler, Edward Heath, p. 424. 160. The Hugo Young Papers, p. 79. 161. Transcript, ‘Who Ruled Britain in 1973—With the benefit of hindsight?’, ITV, 15 March 1978 (Armstrong papers). 162. Turner, ‘Make and break for a top civil servant’; Brian Connell, ‘Lord Armstrong: A hardly-noticed transition from Whitehall to the City’, The Times, 15 November 1976. 163. Ibid, The Times, 15 November 1976. 164. J. Hunt to D. Allen, 17 November 1976; R. Armstrong to E. Heath, 16 November 1976, NA CAB 164/1515. 165. T. Churchill, Note for the Record, 19 April 1978; J. Hunt to I. Bancroft, 23 May 1978, NA CAB 164/1515. 166. Hennessy, Whitehall, p. 76. 167. McIntosh, Challenge to Democracy, p. 103. 168. The Hugo Young Papers, pp. 68, 77; Fay and Young, The Fall of Heath, pp. 22–23. 169. James Prior, A Balance of Power (London: Hamish Hamilton, 1986), p. 90. 170. Graham Turner, ‘Make and break for a top civil servant’, Sunday Telegraph, 1 May 1977. 171. Interview with Peter Jay (KT). 172. Fay and Young, The Fall of Heath, p. 23. 173. Ziegler, Edward Heath, p. 423; The Hugo Young Papers, p. 85. 174. The Hugo Young Papers, pp. 79, 82. 175. McIntosh, Challenge to Democracy, p. 68. 176. Ziegler, Edward Heath, p. 424. 177. Hurd, An End To Promises, p. 131. 178. Correspondence with Lord Hurd (PC). 179. Whitehead, The Writing on the Wall, p. 110. 180. McIntosh, Challenge to Democracy, p. 258. 181. Draft note, E. Heath to Lord Armstrong, in NA CAB 164/1515. 182. R. Armstrong to E. Heath, 16 November 1976, NA CAB 164/1515. 183. The Hugo Young Papers, p. 78. 184. McIntosh, Challenge to Democracy, p. 70. 185. Whitehead, The Writing on the Wall, p. 110. 186. Correspondence with Lord Armstrong of Ilminster (KT); Bernard Donoughue, Downing Street Diary: Volume 2—With James Callaghan in No. 10, p. 153. 187. Graham Turner, ‘Make and break for a top civil servant’, Sunday Telegraph, 1 May 1977. 188. Correspondence with Lord Armstrong of Ilminster (KT); private information. 252 K. THEAKSTON AND P. CONNELLY

189. Private information. 190. Fay and Young, The Fall of Heath (March 1976). 191. Martin Holmes, The Fall of the Heath Government, p. 114. 192. The Hugo Young Papers, p. 90; McIntosh, Challenge to Democracy, p. 71; interviews with former senior officials (KT). 193. Interview with former civil servant (KT). 194. Interview with former permanent secretary (KT). 195. The Hugo Young Papers, pp. 77, 81. 196. Hughes, ‘Governing in Hard Times’: The Heath Government and Civil Emergencies—The 1972 and the 1974 Miners’ Strikes, pp. 216–217. 197. The Hugo Young Papers, pp. 73, 76. 198. The Listener, 28 March 1974, p. 390. 199. Tony Benn, Against the Tide: Diaries 1973–77, p. 118; Barbara Castle, The Castle Diaries 1974–76, pp. 40–41. 200. The Listener, 28 March 1974, p. 391. 201. NA PREM 16/104. 202. NA PREM 16/314. 203. William Armstrong to Robert Armstrong, 10 June 1974, NA PREM 16/465. 204. NA BA 17/985; PREM 16/109. 205. Benn, Against the Tide: Diaries 1973–77, p. 422. 206. The Cecil King Diary 1970–1974, pp. 356–7. CHAPTER 7

The Midland Bank Years

William Armstrong’s move to the Midland Bank after his retirement from the civil service in 1974 was no sort of lately-found escape hole from the controversy surrounding his role in the last, difficult days of the Heath government. Armstrong had in fact been thinking about leaving Whitehall for a couple of years, and in one initial plan he would have left by the end of 1973 had not circumstances interfered. In the end, he left at about the time he wanted, so while that may have been convenient for Wilson’s government, he was in no sense forced out against his will by Labour. Oral approaches had been made to Armstrong by Sir Archibald Forbes, then Chairman of the Midland Bank, as early as the spring of 1972, that he might succeed him in the chairmanship. Armstrong sought the advice of the Governor of the Bank of England (Leslie O’Brien), who was very strongly in favour, and then discussed it orally with the prime minister, who saw no objection. The question of timing was then still open. Archibald Forbes then wrote to William Armstrong on 22 November 1972, setting out his intention to retire in July 1974 and inviting Armstrong to succeed him at that date, having joined the board first as a director and then deputy chairman for a period before that. In a submission to the prime minister on 24 January 1973, Armstrong made it clear that he would like to leave the civil service at or about the end of 1973 and stated that the PM should consider the rules governing the acceptance of business appointments when ruling on Armstrong’s position, and that

Armstrong could not advise him on his own case (suggesting instead he seek advice from Burke Trend or, if an outsider was preferred, Lord Aldington). The rules (laid down in 1937) specified that an official could not take up a position with a business having some form of contractual, financial or special relationship with government within two years of retirement or resignation, without the permission of his minister. Relevant to this rule, Armstrong gave his own view that ‘a period of five years away from the Treasury and the lack of opportunity now or afterwards to confer an unfair competitive advantage on the Midland Bank, should ensure that there is no public criticism on that score.’ He added that he did not think the question of the succession to his own post as Head of the Civil Service would be materially altered by him going at the end of 1973 rather than at the normal retirement age in March 1975.1 Armstrong replied to Forbes in on 7 February 1973, saying that he had obtained the approval in principle of the prime minister to take up the appointment at Midland Bank, and to leave the civil service at or about the end of 1973. The prime minister, on Armstrong’s advice, commissioned a report from the Secretary of the Cabinet, Burke Trend, on who should succeed Armstrong. Trend took soundings and reported in early March 1973, naming Douglas Allen, then permanent secretary of the Treasury, as the outstanding candidate. However, the succession to Allen at the Treasury was not apparently easy to settle, and meanwhile the advent of the statutory incomes policy (which was followed by considerable unrest, including strikes, in the civil service) made Armstrong feel that he should not leave his post at the time envisaged, and that the operation should be postponed for about a year. This news was a blow to Archibald Forbes, who went himself to see Heath about the matter on 2 April 1973. Heath agreed that the precise date of Armstrong’s retirement from the public service could be left for decision nearer April 1974, but he did not at that point of time see why July 1974 need be regarded as out of the question.2 After the general election, Armstrong put the matter in front of Harold Wilson in March 1974. The news was then released on 10 April 1974 that Armstrong would be retiring as Head of the Civil Service at the end of June 1974, to be succeeded by Douglas Allen. In turn, Douglas Wass would succeed Allen at the Treasury. On the same day the Midland Bank announced that Armstrong would be joining their board on 1 October 1974, with a view to succeeding Forbes as Chairman in April 1975. It was confirmed that the arrangements had been cleared with both Heath and with Wilson.3 THE MIDLAND BANK YEARS 255

William Armstrong’s conduct in seeking approval for his move had been impeccable. But that did not prevent some criticism from Labour backbenchers and even some ministers, and also from some former Whitehall colleagues.4 In Philip Allen’s words ‘a lot of eyebrows went up’. Rab Butler was apparently unhappy about the move, and telephoned Allen to talk about it.5 Jo Grimond, the former Liberal leader, criticised the £34,000 a year he would be getting as bank chairman, on top of his index-linked civil service pension, as compared to his £17,000 permanent secretary’s salary.6 Armstrong was bemused about the reaction to his appointment—perhaps a sign of some innocence about politics and the media.7 There was no question in Armstrong’s case of an outright breach of the civil service rules applying at that time, but after his move to the Midland Bank, the rules about officials accepting business appointments were tightened up. Wilson introduced a mandatory waiting-period of three months for permanent secretaries, and an advisory committee was established in 1975 to provide an independent mechanism to vet applications and oversee the rules. William Armstrong was not the first, nor the last, senior civil servant to slip into a senior banking job (Eric Roll had joined SG Warburg in 1967 and became chairman in 1974; John Hunt became chairman of Banque Nationale de Paris in 1980; Robert Armstrong became a director of NM Rothschild in 1988; Robin Butler joined the board at HSBC in 1998). But with increasing numbers of civil servants moving into industry, finance and business directorships, his case helped to fuel concerns that later intensified about the ‘revolving door’ phenom- enon, the rules governing these appointments, and the consequences for government/business relations.8 Armstrong had long been concerned about the isolation of the civil service and the compartmentalisation of different sectors of society, including Whitehall, business and the City. He said he would have welcomed a spell in the City, or something equivalent, at some stage in his civil service career and had encouraged the Treasury to go in for short exchanges and secondments (see Chap. 5).9 He had been one of the leading Whitehall figures associated with the ‘Spring Sunningdale’ annual weekend conferences which had started in 1963, bringing together top civil servants and industrial and City leaders for private and informal discussions about government/business issues and links. Armstrong was a regular attender and closely involved in planning the sessions, as was—from the private sector side—Archibald Forbes.10 The two men obviously knew each other well 256 K. THEAKSTON AND P. CONNELLY before Forbes made his first approach about the Midland chairmanship in 1972. He had effectively had a choice between chairing the Midland Bank and chairing the Legal and General Assurance Society. To some degree at the prompting of Sir Frank MacFadzean, he chose the Midland Bank. At about the same time, he was offered a seat on the Board of ICI by the then Chairman, Jack Callard, which he declined. He was also offered and declined the Rectorship of his old Oxford College, Exeter. He did, however, add to his portfolio a non-executive directorship of Shell Transport and Trading Company and became a Trustee of the Wellcome Trust.11 Asked in an interview what he brought to the bank, Armstrong highlighted two things: first, his ‘understanding of how the governmental machine works and of the relationships between the banks, the Bank of England and the government’, and second—relevant to a big branch network—his experience of the management of the civil service and staff recruitment, training and organisation.12 ‘I fancied having a go at private enterprise’, he told one newspaper interviewer.13 One immediate difference struck him from the start, however, which was, as he put it: ‘I am now the boss. In the civil service I never was. Whatever the newspapers may have said, I always had a boss in the shape of the Chancellor or the Prime Minister or somebody and my job was to offer them advice, recommendations, which maybe they accepted, maybe they didn’t, but there was no doubt at all who was the boss.’

The other big difference [he went on] that took a little while to assimilate and to understand is the difference of being out of the public sector, out of the area where survival is not a question, where everything is going on for ever, into the area where everything you think of doing has to be mea- sured—not just can we afford it, will it contribute to profits, will it be a loss, if it’s a loss is it worth it, will it be part of what keeps the business going?

The customer focus and the customer orientation he also found a contrast with the civil service. He had thought he was going to a clearing bank and found it was, rather, a financial conglomerate—a bank with 2,000 branches and 40,000 staff that also owned a merchant bank, an insurance broking business, a credit instalment business, a leasing business, a factoring business, a travel business, and so on. It was a much more diversified business than he had originally thought.14 THE MIDLAND BANK YEARS 257

Armstrong had been assured by Archibald Forbes that the executive management of the bank was in place. There was a vice-chairman— Leonard Mather—whom he duly met before taking up his post. He then went on holiday, sailing in the Mediterranean, only to discover on his return that Mather had left. He had been persuaded to go by the Governor of the Bank of England to look after a finance house (United Dominions Trust) which had found itself in some difficulties. There was no replacement. Armstrong subsequently complained that although he had been contactable on his boat during his holiday, he had not been informed about Mather’s move. There were also two new joint chief general managers, appointed in June 1974, one handling international business, the other responsible for the clearing bank side, and whose relationship to each other was somewhat cool. The two managers concerned had lengthy experience, and the internal politics of the bank were complicated. In the short term, new to banking, he did the only thing he reasonably could, in effect forming a three man management committee with himself and the two chief general managers, seeking consensus before any major decision was taken. One of the criticisms that have been made of him concerns this management situation. If there is one task that clearly falls to a chairman, it is to ensure that a satisfactory chief executive is in place. It was only in his very last days at the Midland Bank—some five years on—that he bit the bullet and decided who had to go, and indeed tried to find alternative employment for the man he had decided should go. It is, on balance, a reasonable criticism to say that he could and should have taken less time than he did to sort out the situation.15 He received some criticism in the media for dropping into such a well- upholstered billet, but this was little more than the usual currency of the popular press. However, some of his former senior colleagues noticed that he appeared to take easily to the perquisites of his new office, for example, the big salary, top-class entertaining, deferential staff, the chauffeur-driven Rolls-Royce, the company apartment in Whitehall Court, and so on. There was perhaps a certain amount of jealousy here, combined with a vestigial and somewhat illogical consideration that somehow he had come down in the world, compared with his previous high-flying civil service career. He was, however, a conscientious bank chairman, who paid special attention to his highly scattered flock, making regular forays into the territories where the bank operated. Communications within the bank itself were felt to be not as good as they should have been and he undertook a major programme of visits to managers’ meetings up and down the 258 K. THEAKSTON AND P. CONNELLY country, as well as to branches of the bank, and its different departments and computer centres, making his influence felt and talking to the bank’s staff about the challenges ahead and the need for change. ‘Both as a speaker and a listener, he had exceptional qualities’, write the Midland Bank’s historians.16 At the other end of the spectrum, so to speak, he played a role in the bank’s lending to politically-sensitive customers, and pops up, for example in late 1977, giving both dinner and hard questions to Michael Edwardes, then chairman of the practically bust car company British Leyland. This was prior to the main clearing banks giving British Leyland major loan facilities on the basis of nothing more than government comfort letters.17 There were also strategic decisions to be taken, for example, how to make a move into the US market. The crucial decision to acquire Crocker Bank of California took place on his watch though not the difficulties encountered subsequent to its acquisition.18 He talked about a 10–15 years’ change process at the bank.19 The chairmanship was far from being a sinecure or figurehead post. The internal pressures, arising from the duumvirate of chief general managers, were considerable. Banking was becoming more technical, and its products more complex, giving more power to the banking professionals and executives. David Kynaston, the City’s historian, describes an incident in which Armstrong ‘reputedly questioned his chief general managers about whether it was sensible for Midland to be committing itself so heavily to Third World loans. The reply, polite enough, was to the effect that it was none of his business.’20 He played, however, an active part in the public promotion of the bank. The Midland Bank, though big, was lagging behind in its response to social developments. He was acutely aware of the sensitivities of the Bank’s overseas operations, particularly in relation to lending in South Africa, and the reaction of the churches and anti-apartheid groups to that, with critical motions moved at the bank’s annual meetings.21 He insisted on writing those parts of the Annual Report himself. He became deputy chairman and then chairman of the Committee of London Clearing Bankers and absorbed the lobbying and representational roles, hardly unexpectedly, with the greatest of ease. In this capacity, he played a key role in the City’s successful campaign against the proposals of the left wing of the Labour Party to nationalise the banks, at one point going to Downing Street to personally lobby the prime minister, James Callaghan—his old ministerial boss.22 THE MIDLAND BANK YEARS 259

In January 1975, he was given a life peerage as Lord Armstrong of Sanderstead, and was formally introduced into the House of Lords on 4 March 1975, the day after his sixtieth birthday. In a radio interview he said the Lords would give him a ‘platform’ and an ‘opportunity to speak publicly on the issues of the day.’23 In fact, he never spoke in the Lords and found plenty of opportunities to get his views heard over the next few years, through interviews, stories and appearances in newspaper, radio and television outlets, and also in church and other talks and lectures, on subjects including economic policy, government and industry relations,24 trade unions, the problems of the Heath government, banking, Whitehall and the civil service, and religion and society. He was in this regard a more visible and voluble former Head of the Civil Service than his predecessors—albeit in a different media and social context to them. Maintaining a healthy scepticism about the EEC, he parted company from his fellow bank chairmen in opposing the UK joining the European Monetary System.25 He also played the role of confidential adviser when asked to, for instance talking in 1976 to a Conservative Party group chaired by Lord Carrington on the ‘Authority of Government’ about government emergency organisation and the problems of dealing with the unions and strikes, including the use of intelligence reports on industrial subversion and arrangements for government publicity operations.26 With the future of the Civil Service Department becoming a live issue inside government, and the House of Commons Expenditure Committee (before which he had appeared in January 1977 to give evidence27) recommending changes to the organisation of the central departments, he defended the departmental set-up he had devised in the 1960s, and talked about the role of the Head of the Civil Service, to officials working on a CSD review in 1975 and, in person, to prime minister James Callaghan in 1977. He also discussed with Callaghan possible candidates for the succession to Douglas Allen as Head of the Civil Service (Ian Bancroft, his former colleague from the Treasury and CSD, getting the job).28 Following on from the unsuccessful government attempt to prevent publication of the first volume of the Crossman Diaries, he took on a classic ‘Good and the Great’ assignment as a member of the Committee of Privy Counsellors on Ministerial Memoirs, chaired by Lord Radcliffe, appointed in 1975 and reporting in January 1976. Something of a ‘closing-the- stable-door-after-the-horse-has-bolted’ exercise, this recommended that ministers should sign an undertaking not to publish any memoirs for 15 years.29 But the report soon became a dead letter with the rapid appearance 260 K. THEAKSTON AND P. CONNELLY of other ministerial diaries and memoirs (by Tony Benn and Barbara Castle, among others). He also chaired a committee set up in 1978 by the Institute for Fiscal Studies to inquire into the issue of reform of the budgetary process which issued a report in July 1980 (two weeks after Armstrong died). ‘His conduct of this last “Armstrong Committee”’, wrote Samuel Brittan, who was a member of the group, ‘was subtle, gentle but firm. At first, he seemed to let it go its own way. Early this year [1980], when he saw that the time was ripe for a report, he became very active, arranging a weekend meeting, going through unresolved issues, making sure that he could accept the ideas of the technicians and also trying to extend their horizons.’30 The report recommended that the government should present a provisional Budget—a ‘Green Budget’ setting out a range of options—to Parliament each December to allow more parliamentary and public scrutiny and debate before final proposals were submitted in the spring Budget. The idea was to improve decision-making, broaden public understanding, and relate public spending, taxation and the trade-offs between the two more openly and coherently so the government’s fiscal strategy could be considered as a whole and there would be a proper medium-term tax strategy as well as expenditure plans.31 This was a bold idea, expressive of Armstrong’s interests in greater openness in government and in rational and analytical decision-making. But the Treasury was unenthusiastic and resisted the idea until Norman Lamont introduced the so-called ‘Unified Budget’ in 1993, which was later dropped by Gordon Brown. He ate and drank perhaps too much at about this time, and was over- weight. He had smoked excessively throughout his career but had stopped at one stage. And yet he appeared to have had a clear company medical towards the end. He apparently intended to stay on at the Midland Bank until he was 70. But he collapsed at a dinner at Ditchley, Oxfordshire, on 11 July, and died on 12 July 1980, of a ruptured aorta, in the Radcliffe Infirmary, Oxford. He was only 65. His father had died suddenly, of a heart attack, at the same age; his brother was also to do so, at about the same age, a few years later, and of a similar complaint. Cardiology has moved on considerably since then, but still much about the heart is obscure. We will never know if other procedures and medications would have prevented or postponed his death, or if he had an inevitable inherited weakness, perhaps exacerbated by a bout of childhood rheumatic fever. Tributes to him poured in. Obituaries were deeply respectful, while not avoiding the controversies of the Heath years. Perhaps that of Hugo Young in the Sunday Times of 13 July 1980 summed up what most observers felt: THE MIDLAND BANK YEARS 261

‘Supremely gifted with all the qualities most sanctified by the British administrative tradition, Armstrong will none the less be best remembered for his atypical characteristic. He was an exceptionally open, as well as a nice, man who genuinely believed—and not only after he left Whitehall— in more open government, and in informed public discussion about how to make it work better.’32 ‘It is unlikely’, wrote The Economist, ‘that another civil servant will soon rise to his personal pre-eminence or tread so close to the precipice between official and political life.’33 Samuel Brittan’s obituary in the Financial Times was headed ‘A passion for rationality’ and picked out not just Armstrong’s ‘desire to fill logical gaps which he saw around him within the machinery of government [and] the tools of economic policy … trying to plug policy inconsistencies’—his ‘serious side’—but also his ‘passionate, human and not always predictable side.’34 The Governor of the Bank of England, Gordon Richardson, spoke at his memorial service in September 1980 of a man ‘who gave himself and his exceptional gifts unstintingly to the service of his country, who in everything he touched made a conscience of what he did in it, and, in so doing, provided us, simply and unconsciously, with a model of strenuous and serious purpose.’ He highlighted his ‘managerial curiosity, organisational flair and interest in what one can describe as “the long furrow”.’ He was, to be certain, an ‘outstanding public servant’, but ‘it would be to miss much’, Richardson fittingly said, ‘to think of him simply as the arch-mandarin.’35

Notes 1. A. Forbes to W. Armstrong, 22 November 1972; W. Armstrong to R. Armstrong, 24 January 1973 (Armstrong papers); Memorandum on the subject of the Acceptance of Business Appointments by Officers of the Crown Services, Cmnd.5517 (London: HMSO, 1937). 2. W. Armstrong to A. Forbes, 7 February 1973; R. Armstrong to W. Armstrong, 2 April 1973 (Armstrong papers). 3. W. Armstrong to R. Armstrong, 11 March 1974; 10 Downing Street Press Notice, 10 April 1974 (Armstrong papers). 4. ‘Anger over civil service head’s move to banking’, The Times, 11 April 1974; ‘Civil servant’s City job row’, The Guardian, 11 April 1974; ‘Flying in the face of political reality’, The Times, 27 April 1974; ‘The high price of Sir William’, The Observer, 2 June 1974. 5. Interview with Lord Allen of Abbeydale (PC). 6. ‘Grimond attack on big salaries for top people’, The Times, 20 May 1974; ‘Attack on “too high” salaries’, The Guardian, 21 May 1974. 262 K. THEAKSTON AND P. CONNELLY

7. ‘I fancy a try at private enterprise’, Evening Standard, 19 September 1974. 8. ‘Transfers between Whitehall and Industry: Time for a change of attitude’, Financial Times, 14 February 1980; Alan Doig, ‘A Question of Balance: Business Appointments of Former Senior Civil Servants’, Parliamentary Affairs, 39 (1), 1986, pp. 63–78. 9. ‘British Banking Survey: The thoughts of three chairmen’, The Economist, 9 August 1975, p. 14. 10. Neil Rollings, ‘The twilight world of British business politics: The Spring Sunningdale conferences since the 1960s’, Business History, 56 (6), 2014, pp. 915–935. 11. Private information (PC); Armstrong papers. 12. ‘British Banking Survey: The thoughts of three chairmen’, The Economist, 9 August 1975, p. 21. 13. ‘I fancy a try at private enterprise’, Evening Standard, 19 September 1974. 14. Brian Connell, ‘Lord Armstrong: A hardly-noticed transition from Whitehall to the City’, The Times, 15 November 1976. 15. Private information (PC). 16. A.R. Holmes and Edwin Green, Midland: 150 Years of banking business (London: Batsford, 1986), pp. 298–299. 17. Michael Edwardes, Back From The Brink (London: Collinas, 1983), p. 13. 18. Private information (PC). 19. ‘Armstrong’s legacy of change at the Midland’, Daily Mail, 15 July 1980. 20. David Kynaston, The City of London: Volume IV, A Club No More 1945– 2000 (London: Chatto & Windus, 2001), p. 567. 21. ‘Attempt to stop loans to South Africa fails’, The Times, 8 April 1976; ‘Bank chief comes under pulpit fire’,Church Times, 25 March 1977; ‘Midland Bank clarifies policy of restricted lending in S. Africa’, The Times, 23 March 1978. 22. James Reveley and John Singleton, ‘Clearing the Cupboard: The Role of Public Relations in London Clearing Banks’ Collective Legitimacy- Seeking, 1950–1980’, Enterprise and Society, 15 (3), 2014, pp. 472–498. 23. BBC Radio 4, 3 March 1975 (transcript in Armstrong papers). 24. Lord Armstrong of Sanderstead, ‘Government and Industry Relationships’, in David Lethbridge (ed), Government and Industry Relationships (Oxford: Pergamon Press, 1976), pp. 77–95. 25. Samuel Brittan, ‘A passion for rationality’, Financial Times, 14 July 1980. 26. Authority of Government Policy Group, minutes of 12th meeting (guest: Lord Armstrong), 21 July 1976, Margaret Thatcher Foundation [http:// www.margaretthatcher.org/document/111390]. 27. Expenditure Committee, The Civil Service, vol. II (Part II), Minutes of Evidence, HC 535-II, 1976–77, qs.1468–1508. THE MIDLAND BANK YEARS 263

28. Clive Priestley, ‘Official Head of the Home Civil Service’, 23 August 1976, Annex F, Remarks by Rt Hon Lord Armstrong on 23 October 1975, NA BA 7/22; Note of a conversation between the Prime Minister and Lord Armstrong, 26 October 1977, NA PREM 16/1658. 29. Report of the Committee of Privy Counsellors on Ministerial Memoirs, Cmnd.6386 (London: HMSO, 1976). 30. Samuel Brittan, ‘A passion for rationality’, Financial Times, 14 July 1980. 31. Budgetary Reform in the UK: report of a committee chaired by Lord Armstrong of Sanderstead (Oxford: Oxford University Press for the Institute of Fiscal Studies, 1980). 32. Hugo Young, ‘Arch-mandarin who went public’, The Sunday Times, 13 July 1980. 33. ‘William Armstrong’, The Economist, 19 July 1980, p. 68. 34. Samuel Brittan, ‘A passion for rationality’, Financial Times, 14 July 1980. 35. Address by Gordon Richardson, Memorial Service for William Armstrong, St. Margaret’s Church, Westminster, 16 September 1980 (Armstrong papers). CHAPTER 8

William Armstrong: An Assessment

During most of his career, William Armstrong appeared to be a classic, clever, Treasury-trained official, with a probing, inquiring, subtle, first- class mind and a remarkable gift for communication. But there was something more profound, generally hidden in the background. He had ‘a passionate, human and not always predictable side.’1 William Armstrong was influenced by both religion and politics. He had been intensely affected by the former from his most impressionable years, but sublimated it for much of his career. He was, by dint of ability, choice and good fortune, to work close to the latter for much of his adult life. The two inter- acted, and were sometimes in tension, in the conduct of his public responsibilities. It could hardly be otherwise. But he kept the lid on, mostly, until the end. He cared very deeply about the civil service, and how the country should be governed. By virtue of his role in these fields and in dealing with major over-arching policy issues, he achieved a degree of eminence denied to the more narrowly-focused and delivery-oriented type of modern public leaders and managers. It is necessary to consider what is known about his attitudes to religion and to politics. William Armstrong came from a fundamentalist and puritanical religious background (see Chap. 2). His early life was spent immersed in the intense world of the Salvation Army, a world of fervent belief, idealism and commitment. There was the experience of being brought up to a literal belief in the Bible stories. Salvation Army services included a public

© The Author(s) 2018 265 K. Theakston, P. Connelly, William Armstrong and British Policy Making, Understanding Governance, https://doi.org/10.1057/978-1-137-57159-5_8 266 K. THEAKSTON AND P. CONNELLY confession of sins by some participants, accompanied by their approaching the ‘mercy seat’ for forgiveness. There must have been an atmosphere which rejected the wicked ways of the outside world, in a fashion which nowadays might seem almost incomprehensible. In the young Armstrong’s family, there was no radio, cinema, alcohol or tobacco. Later, even his courtship, marriage and family life came under the stern scrutiny of Mama. As young adults in their twenties, William and Gwen Armstrong, who had met at a Salvationist-organised event, were regarded by William’s parents as still being subject to a strict code of behaviour. On one occasion, after they had been formally engaged to be married but before the marriage itself, the young couple were in his parents’ home, sitting on a couch in the same room as the parents, looking at a book or something of the kind. In the course of this, Gwen affectionately and briefly laid her head on William’s shoulder. At this point William Armstrong senior stood up and left the room, and Gwen was berated by Mama for showing a degree of affection inappropriate for an unmarried woman.2 In their wedding photograph his parents appear wearing their Salvation Army uniforms. Mama was known to refer to Gwen’s engagement ring as a ‘bauble’.3 Such a harsh, inflexible attitude persisted even during the five years in later life when Mama lived with the couple and their children. It must have obtained when William was a child. It can only be speculation as to what that meant in practice, but it can surely be said that William Armstrong had a very strict upbringing. The influence of that may never leave a man. It can conceivably lead to feelings of guilt in later life, perhaps when the exigencies of career clash with long-sublimated childhood verities. There can be little doubt that religious beliefs and, to a lesser degree, observances, played an important part in William Armstrong’s life, though he never wore his heart on his sleeve. He never lost his respect for the Salvation Army. After the strong simple faith of his parents left him and he had an agnostic period, he came to regard himself and describe himself as a Christian again—a ‘very deeply committed’ one, as he said in one radio interview.4 ‘For me belief in God is not a matter of intellect, but a matter of will’, he once said in a radio talk. ‘In the end he reached a faith’, commented his friend Gordon Richardson, ‘hard won, idiosyncratic and real.’5 Asked once about his faith, he said that he thought of God as ‘noise in the street’. The phrase came out of James Joyce’s Ulysses, he admitted, but he went on to say that it meant a lot to him because the Salvation Army ‘set out to bring God to the people by making a noise in the street.’ He WILLIAM ARMSTRONG: AN ASSESSMENT 267 referred also to what radio engineers call ‘noise’ and asked, ‘out of that can you get signals, I mean can you get a still, small voice? Can you get the Word? … It’s getting out of the noise of the street, the noise of the world, the Word, that means faith to me.’6 In a discussion about ‘Christian Belief Today’, at Sanderstead United Reformed Church in 1974, he articulated his personal testimony and shared his honest doubts and difficulties, while talking about his belief that religion and Christianity enabled him to be ‘happy though human’ and about selflessness and losing oneself in other people, and working for them and serving them. His rational and analytical Treasury mind, as it were, made short work of traditional notions of the Trinity, the Virgin Birth and the Resurrection, but he concluded that literal belief in those inherited doctrines was not necessary in order to be a Christian, or at least for him to be a Christian.7 Claus Moser, former head of the Central Statistical Office, later a banker at Rothschild, and a colleague and friend of Armstrong, also glimpsed something of this side of him. Sometime during the 1970s he was invited to lunch a deux with William Armstrong at the Midland Bank in its splen- did Lutyens-designed head office in the City. During their pre-lunch drinks Moser remarked that William had evidently not been born to the surrounding marble halls and wondered how he felt about his achievement, having risen to the very top of the civil service. Armstrong responded, fairly innocuously it could be said, by agreeing, but noted that he had been gifted with a good brain, had made the best of the opportunities available, and was quite happy about how things had worked out. They then went into lunch. After an interval, Moser turned to the subject of prayer and confessed that when he visited the synagogue, he often found it difficult to pray, finding his mind turning to extraneous topics. He asked William Armstrong how it was with him. To Moser’s astonishment, he replied that it was not necessary to be in a church or synagogue to pray, and that in fact he had been praying during the early part of the lunch. When asked why he had felt it necessary to do so, he replied that, on reflection, he had been too boastful about his career during their pre- lunch conversation, and had been praying for humility. Moser, and others who knew Armstrong, think that remark was genuine, being neither induced by the liberal amounts of alcohol served, nor an odd joke. Touching on Armstrong’s strange notion that an interlocutor might die while or shortly after speaking to him (see Chap. 5), Moser also recalled an incident when Armstrong left him to have a few quiet words with a dining-room servant. He subsequently apologised to Moser for this 268 K. THEAKSTON AND P. CONNELLY diversion, explaining that he had recently had occasion to upbraid the man and had subsequently reflected that the last memory the servant might have of the bank chairman was of an angry man, and he wished to make amends.8 All this indicates, at the very least, a self-reflective character or, to put it in religious terms, one who regularly examined his conscience. On this occasion, he was to find it at fault. Was this reasonable? Were his pre-lunch reflections not perfectly normal and unexceptionable? Did not his reaction betoken an over-strict attitude? In any event, whatever may be one’s views about the principle of humility, is it not remarkable that it should be addressed, apparently seriously, by an eminent man in his sixties? He it was who decided to confess his lapses to his lunch companion. He could easily have turned the conversation in other directions. Was he reverting to a childhood concern, or was this a mature examination of conscience? But why in semi-public, if not to be seen to be approaching the ‘mercy seat’? Perhaps he was indulging himself with an old friend with whom he was comfortable ruminating on such matters. His guiding light was a non-political religious moral sense. But he did not speak much of the subject to his colleagues and many would have said that they had no idea of his religious beliefs. This is scarcely surprising. The pressure of work did not admit of the sort of relaxed environment in which a colleague might discuss religion with another. And indeed such a discussion would, then as now, be somewhat alien to the ethos of the Treasury. It has always eschewed the relevance of the social and educational background of colleagues, in favour of the ability to exchange rational ideas and argument. To the extent that Treasury officials had regular social intercourse in those days, it would have revolved around music. In more recent times, this appears to have been replaced by an interest, or at least a declared one, in football. So to colleagues, even quite close colleagues over the years, William Armstrong would not have been put down as a particularly religious man. In many ways he was the epitome of the rational Treasury official, remorselessly logical in his rigorous analysis of arguments, but with a highly pragmatic and sensitive appreciation of political realities. And yet, upon reflection, some of his former colleagues have discerned a religious dimension to his character, and others detected a tension between his religious inheritance and the demands of his taxing jobs.9 This tension perhaps reached its peak during the winter of 1973–74 (see Chap. 6). ‘Although we never discussed it directly’, recalled Eric Roll, WILLIAM ARMSTRONG: AN ASSESSMENT 269

‘I always suspected that a deep religious faith—though not of a conventional kind—was at the bottom of his inner struggle. It surfaced only rarely.’10 But he was quite open about his religious upbringing and beliefs when asked about them explicitly, for example while Head of the Civil Service and afterwards. He accepted several speaking engagements to religious audiences during that time and made radio broadcasts about his beliefs (though there is no evidence that he circulated the draft texts of his speeches and talks within Whitehall). It is also the case, according to Lady Armstrong, that during his career he visited the Catholic Cathedral in Victoria, during his lunch hour.11 However, he was not a religious fanatic or, in general, a religious eccentric. He was, indeed, brought up in a particular tradition which, histori- cally, provided a home to some religious eccentrics, but he was too clever to fall prey to that temptation. He was no doubt well-versed in the history and traditions of the Salvation Army but discriminated amongst these in his search for truth. His description, in various profiles and other interviews, of his early upbringing in the Salvation Army life-style is often tinged with wryness. The main exception to this account is his repeated reference to someone dying while in conversation with him. This may be an aberration but it is eccentric. The plain fact, now obvious but perhaps not so obvious in earlier days, is that William Armstrong was a deeply religious man who had subjected his fundamentalist childhood upbringing to the remorseless scrutiny of his trained, superb intellect and had concluded, eventually, that Christianity was correct even though fundamentalism might be misjudged. He then subjected his life, career and public policy positions to Christian judgement and at times found them wanting. When he was raised to the peerage in 1975, he chose as his motto ‘Fortiter ad Verbum’ (‘hold fast to the word’). A motto will mean a lot to most people who are called upon to choose one, and more than most to Armstrong. It would express his life-long beliefs. It is true that this phrase does not have a precise meaning or reference, but there is a possible religious as well as a temporal significance. It is possible to link it with the opening verse of St John’s Gospel—‘In the beginning was the Word’—but the Greek term for ‘word’ is logos, which also carries the meaning of logical argument, evidence and reason, which would also have an obvious significance for Armstrong. It is difficult to approach closer, but the dual meaning or interpretation here perhaps speaks to these two aspects of Armstrong’s character and his inner tensions and struggles. 270 K. THEAKSTON AND P. CONNELLY

Armstrong had considerable stamina, resilience and powers of recovery but felt seriously stressed from time to time, and went out of commission. This may have happened three or four times in the Civil Service and also later.12 Rest plus occasional medication would suffice to deal with these episodes. Then time and intellect would resolve the tensions between his fundamentalist background, his personal values and the pressures, at times overwhelming, of the world he had to inhabit. His breakdown in 1974 is fairly well known, but is sometimes over-emphasised or taken out of context. It was a tragic and distressing episode in personal terms. But against the background of what was going on in politics and the economy at that time, in the middle of the Heath government’s struggle with the miners, it was an incident or a distraction from the main issues and the main current of events. And in the context of this book, covering his whole career in Whitehall, it is clearly just an episode that does not weigh against his great record of service in other respects. Armstrong was the subject of several newspaper profiles on his appointments as head of the Treasury in 1962 and Head of the Civil Service in 1968. The profile writers, respectively, in theObserver and the Sunday Times, were prescient about his future leanings. In the former case the Observer writer said:

His future role is fascinating to guess at. It seems doubtful if he will be able to maintain his detachment, even qualified, for long—now that he will be expected to advise on the most far-reaching decisions. And it’s almost unbe- lievable that in his new post he’ll be able to go on keeping the small world of personal values and the big world of national issues in watertight com- partments. If ever intuition and logic should fuse into an articulated social outlook the result could be startling.13

The Sunday Times writer Eric Jacobs said:

There is one further move a ‘permanent politician’ can make, and that is to become a temporary politician by stepping out of the Whitehall shadow into the glare of Westminster. Others have done it when they feel they have exhausted the possibilities of the Civil Service. Armstrong is not likely to follow them. But he might one day be moved to take a public stand on an issue of Government; then the logic of the black tie incident [at the time of the Suez crisis—see Chap. 3] will be complete.14 WILLIAM ARMSTRONG: AN ASSESSMENT 271

These were hard-headed journalists who were not easily taken in but were evidently impressed by this unusual public official who clearly went beyond the bureaucratic brief and had a social outlook of his own. Both were right in spotting something unusual in Armstrong’s personality and anticipating that personal values might cause him to take what was in effect a public stance on a big issue of the day. Turning to politics, Armstrong was too much the professional to reveal any party-political preferences, to the extent he had any. It is doubtful if he did. Living and working in such close proximity to politicians, from the earliest days of his career, probably inured him to their calling and would have led him to eschew party labels as a guide to political beliefs. He said once he never had any instinctive gut feeling for one party or another. At a guess, he might have been a closet Gaitskellite, though subsequently he more or less described himself as a ‘Butskellite’. Asked about what changes he would like to bring about in society in a 1970 interview, he replied in small-‘l’ liberal terms: ‘they would probably be negative in the sense of trying to remove constraints, trying to give people greater freedom, rather than positively doing things … trying to remove the things that get in the way of people doing what they want to do.’ The ‘permissive society’ changes, he said, were generally ‘totally in the right direction.’ He did not himself, he emphasised, have ‘a prescrip- tion, a set of propositions, which would guarantee a good life’ and because of that ‘I reckon the best thing is to make certain that anyone who has an idea gets a chance of letting it be known, of letting it work out, rather than as it were imposing the philosophy of today.’ He was doubtful, he said, about ‘theories and fancies’ based on supposed long-term thinking—‘if we’re talking about a generation or two generations ahead, that’s way outside our knowledge.’ With ‘our present state of knowledge’, he argued, we can have a good idea of the state of the economy over the next 18 months, and that could be extended in time. Accordingly, on the organisational level, decisions were frequently best based ‘on short-term, often expedient reasons.’15 That said, he did, however, see a strong case for the increasing use of social science research methods in policy-making and decision-taking—to help challenge and counter the ‘myths and shibboleths of the past’ and to illuminate the consequences and the range of possibilities or uncertainties associated with different economic policy options, for instance.16 He had a wide-ranging mind: imaginative, throwing-out ideas, providing intellectual stimulus, making people think. He could utter provocative 272 K. THEAKSTON AND P. CONNELLY remarks, for example to Lord Rothschild (ex-Shell) ‘Shell should have a seat at the United Nations’ or, to a Sunningdale audience of mandarins, ‘This country is too small to have local government.’17 Alec Cairncross once recalled ‘William at his best in a long piece of fantasy’ at a weekend civil service/businessmen conference at Sunningdale in March 1968. Armstrong’s ‘intervention … ranged from an analysis of the decline of the UK and the repercussions on the 23 year old who had lived all his life in peace-time, to the release from the slavery of reading offered by T.V., and the mutual hatred of parents and children. The attitude of parents to spending money on their children varied from “the mean to the down- right cruel” and it would be best to give the children the money for family allowances, or, if not, vouchers. … All this verging on flippancy and yet “thinking in depth” so that one hardly knew how seriously to take it.’18 On a different level, as it were, he made the effort and took some risks to keep in touch with political gossip. He was a regular lunch guest, over several years, of Cecil King, Chairman of the International Publishing Corporation (publishers of the Labour-supporting Daily Mirror) until his ousting by its board in 1968. For example, Armstrong’s pocket diary for 1965 records lunch engagements with King on three occasions during that year.19 King noted his various guests’ remarks and subsequently published edited accounts of them in his diaries for 1965–70 and 1970–74. In these, for example at a lunch on 18 April 1974, which fixture appears en clair in Armstrong’s pocket diary, he is described by King as ‘A.B. (a senior civil servant)’.20 King was not a man to whom discretion came naturally, if at all. He became a strong opponent of Harold Wilson, ham-fistedly plot- ted his overthrow, and was associated with arguments for a coalition or national government. A civil servant in the traditional mould would have sought alternative lunch arrangements. Armstrong broke the mould. His self-confidence, as he no doubt thought, would see him through. In addition, Cecil King’s son, Michael King, had, in early 1972, been appointed Chief Information Officer of the CBI and was a useful contact. Armstrong made it his business to have useful contacts. He was a member of several dining clubs. Before the term was invented, he was a networker. Armstrong was certainly a man of his times, accepting a large and active role for the public sector. Belief in the mixed economy and the welfare state, in the legitimate role of trade unions as an estate of the realm, in a broadly Keynesian analysis of national economic policy options, would all then have seemed unexceptionable. Over the years he spent at the centre and top of Whitehall, from the 1940s to the 1970s, the civil service grew WILLIAM ARMSTRONG: AN ASSESSMENT 273 greatly in size and took on expanded responsibilities and functions. But he was at the same time acutely aware of the limitations and constraints on state action—‘government can do very little’, he once said to a Treasury colleague, Peter Baldwin.21 The 1945 Labour government, with a good deal of wartime planning behind it, had launched the country into ‘a social revolution on a vast scale’, as he once described it, in a speech in 1972. The main planks of this were the management of the economy to guarantee full employment, public ownership of the basic industries, and the introduction of the welfare state. Though there had been ‘some alteration of the boundaries’, he said, ‘subsequent Governments of either side have done very little to alter the pattern laid down in those first post-war years.’ Within this framework, public servants and public organisations had operated and ‘been learning, by the customary British method of trial and error, how to do the tasks they were given.’22 He admitted, in a lecture in 1970, that it was ‘possible that a government, or series of governments, might reverse the post-war trend’, that ‘large areas of what is now the public sector might return to the private one’, that government intervention might decrease, and ‘that more of our affairs might be left to the market, to individual inclination, to chance, God, or what you will’—but he seemed at that point rather doubtful that the political will existed to do that or that it was likely to ‘happen overnight’.23 The reforms of the 1980s were still a long way in the future. Thatcherites were later wont to see him as epitomising the ‘management of decline’ tendency, failing to see the need for fundamental reform. But in fact Armstrong—certainly by the 1970s—was well aware of mounting problems and difficulties in the established policy framework, and of a growing malaise in the British economy, the polity and the wider society. He was not alone in that, as the climate of ideas began to change in that crisis- ridden decade and the foundations of the old political-economic order began to decay before the shape of a new one had become apparent. Peter Hennessy has suggested that Armstrong’s (in)famous ‘orderly management of decline’ remark may well have been misinterpreted, noting that Mrs Thatcher seized on it to portray the civil service as a ‘defeat- ist’ organisation and culture when it was actually related to Armstrong’s sense of ‘the financial overhang of empire’ and the need to deal with the problem of the sterling balances and the country’s huge defence spending—issues that he had first had to grapple with in the 1950s. Armstrong was, on that view, recognising that the huge adjustments of the 274 K. THEAKSTON AND P. CONNELLY consequences of two total wars were taking a long time to run through.24 He was certainly conscious of the profound consequences of the end of the British Empire. ‘From a psychological point of view’, he said in a 1972 lecture, ‘this particular revolution has, I think, had an enormous effect.’ Britain was now ‘no longer at the centre of the world … the real world decisions take place elsewhere and like the rest of the smaller countries we have to wait for the communiqués.’ ‘An enormous natural complacency has been shattered’, he argued. ‘I have seen nostalgia and chagrin in the old, bewilderment in the middle aged, and impatient incomprehension in the young.’ Then there were the economic, trade and financial consequences, including the loss of ‘an enormous source of cheap materials and foodstuffs and a market for our goods.’ ‘We depended on it, just as much as it depended on us, for our material prosperity’, he went on, linking to the domestic scene and challenges at home:

We had come to find it easy, so that by the 1940s we were more preoccupied with our social consciences, with the problems of distributing our wealth more fairly, than with the need to maintain our wealth, and to earn our living in a rapidly changing and much more difficult world. I do not think we were wrong to pay so much attention to social justice; I do not think we were wrong to heed the desires of colonial peoples for independence: but I cannot help regretting the slowness to which we woke up to the implications, and the opportunities we lost—in the development of cheap and efficient transport on land, sea and air, the new communications, radio, television, computers; the new materials, the new sources of energy. In all of these we seemed at one time or another since the war to have a world lead in our hands—but we let it slip.25

In speeches, interviews and other comments through the 1970s—both while he was at the top of the civil service and after he had left Whitehall— one can see Armstrong identifying and thinking about issues and problems that political scientists have labelled as crises of ‘overload’ or ‘governability’, or the ‘hollowing-out’ of the state. He could see the problems and challenges well enough but often tended to end up saying that he had ‘no ready-made solution to offer.’26 One theme he brought up, for instance, was the ‘erosion of the authority of government which was noticeable over the period in which he had been in public service.’ More critical journalists and broadcasters were part of the problem here, he seemed to suggest, but on the other side of the equation ‘governments used to but seemed now more reluctant to accept WILLIAM ARMSTRONG: AN ASSESSMENT 275 that they should not enact laws which they could not enforce.’27 Ministers were increasingly pushing through measures which were unenforceable or could not be properly implemented.28 Governments were not able to live up to their promises or deliver policy success, and that was giving rise to ‘a disbelief in the power of governments.’29 This echoed the argument of contemporary ‘overload’ theorists that government’s reach was exceeding its grasp, that the number of ‘dependency relationships’ in which government was involved had increased (e.g. with unions or businesses), with problems of ‘non-compliance’ or ‘intractability’ stymying policy and making the country harder to govern.30 Armstrong had, of course, direct and painful experience of this from the Heath years (see Chap. 6). The tools of government—what he called ‘the weapons’ of politicians and their attitudes to the people—that had been ‘forged, framed and built’ during the war, and relied upon since then, now seemed not to work in the old way, and the state was losing some of its self-confidence.31 The business of government had become more difficult and there was, Armstrong thought, a big task to be faced in ‘restoring credibility and authority to government as a whole’32—but he did not offer much by way of answers. At the same time he believed that ‘the state, as we know it, is quietly dissolving before our eyes.’ This might take a very long time, he thought, but ‘a dissolving process is beginning.’ One aspect of it was the challenge to the territorial integrity of the state—the possibility of an independent Scotland was being discussed and starting to build a political force, and was in his mind ‘more probable than not’, and that would ‘carry Wales with it’ and lead to Ulster being ‘tipped over the edge’, meaning the end of the United Kingdom. Then Britain was also ‘dissolving from the top as well’ by passing more law-making power to the European Community. The centralised Whitehall and Westminster-dominated state Armstrong had understood and served so long was, he felt, starting to show ‘a fair amount of decay.’33 Armstrong thought our politics were slowly moving to the Right34— but public attitudes were still confused and contradictory. The public were, for instance, demanding ‘more and more benefits’ but there was ‘an increasing reluctance to pay taxes’.35 There was a widespread feeling that taxes were too high—with people indeed trying to ‘dodge’ them, he said— but they were ‘not quite ready to say that … government expenditure is too high.’36 People were ‘beginning to realise that Government is not a universal provider with a bottomless purse.’37 ‘In time’, he said, ‘national- ized industries will have to pay their way, and Government expenditure will 276 K. THEAKSTON AND P. CONNELLY have to be met by methods other than the printing press.’38 The sense of personal responsibility for oneself and one’s family, and the notion that ‘you can only improve your standard of living by working for it’, were, he said, ‘being seriously eroded.’ ‘The foundation of it all is becoming dan- gerously thin’, he argued. ‘The work we do, the wealth we create, is not increasing anything like as fast as it would have to do if we are all going to go on living as we do, let alone any better.’ ‘Hard times’ were coming again and ways had to be found of ‘putting the emphasis back on production and productivity.’39 In a newspaper interview soon after leaving Whitehall, in September 1974, Armstrong’s prescriptions for tackling what he called the ‘top priority’ of inflation involved ‘closer control of the budget deficit, realistic nationalised industry prices and a voluntary incomes policy, set against the background of a more restrained growth of the money supply.’ He did not support full-blooded monetarism. ‘I do not think that restriction of the money supply by itself is sensible’, he said. ‘It causes unemployment and it is extremely crude.’ In that respect he was in line with thinking at the top of the Treasury and the civil service at that time. He put the main emphasis on incomes policy, giving his personal view that the Conservative government of Edward Heath was wrong to try to enforce an incomes policy by law. ‘It may take years, but a voluntary system is the only way’, he argued, one based on a ‘dialogue’ with the unions of the sort he had tried to make work after 1972 (see Chap. 6). Perhaps the underlying problem was one of national complacency, he suggested: ‘It is quite on the cards that the British people are not interested in doing the things that would produce [economic] growth. After all, we are a relatively easy-going lot, aren’t we?’40 In a lecture in 1976 he argued that a tough French or Japanese-style state, putting industry, exports, investment and economic development first would not be workable or desirable in Britain. It would involve neglecting other matters which the electorate cared about, and would entail ‘far more powerful and pervasive forms of intervention and direction by central government than I think we here would tolerate.’ But when the crunch came, what then should be the balance between private enterprise, the market and competition, on the one hand, and government activity and intervention in business and industry on the other? ‘As a former civil servant’, he said, ‘I find it quite impossible to discover in myself any conviction one way or the other in this matter’: WILLIAM ARMSTRONG: AN ASSESSMENT 277

I merely observe that the process of interfering with the market and with free competition has been going on for a very long time, for a variety of political and social reasons, and I see no chance whatever of this process being reversed. So I find myself having little patience with those who want to put the clock back; at the same time I very readily concede that to go to the other extreme and think that social ends can be pursued without reference to economic forces is a dangerous fallacy, and that it is a good discipline for all engaged in publicly financed activity to be brought up against economic realities as sharply and as frequently as possible.

The issues were best approached not as questions of ideology or ‘inner conviction’, he argued, but by detailed examination of problems and practicalities.41 For all his appreciation of the growing problems with the country’s political and economic order in the 1970s, he remained, in other words, the non-political, rational and analytical public servant in approach and outlook. But it took, as Peter Jay commented, ‘larger and cruder political and economic forces’ in the years after 1979 to tackle the issues Armstrong had identified and himself grappled with under Heath and earlier governments.42 That process included a determined assault by Mrs Thatcher and her allies on the power, size and presumptions of the civil service machine and on Whitehall’s orthodoxies and assumptions. She rejected the style and the substance of the ‘failed’ post-war consensus institutionalised by the civil service and, in a sense, embodied in and by a senior mandarin like William Armstrong. Robert Armstrong (Lord Armstrong of Ilminster) sums up well William Armstrong’s attitude and motivations:

I am in no doubt that William saw as one of the main responsibilities of the Government, and therefore of the civil service, at the time, the orderly management of decline. I heard him say as much. I do not know if he had a clear vision of the ‘steady state’ to be reached. I do not know how far he shared Heath’s belief that joining the European Community would halt and reverse the decline, though I do not believe that he was a Eurosceptic. I am sure that he saw the loss of the empire and the disaster of Suez, as well as the revival of economic competition from the recovering countries of Western Europe and the emergence of the ‘superpowers’ (the United States and the Soviet Union), as major contributors to relative British decline. He believed that the process of decline needed to be recognized, understood and controlled. I have often wondered what caused him to accept his emergence 278 K. THEAKSTON AND P. CONNELLY

from civil service anonymity in 1972–74, and I believe that one factor in that was his sense in the last months of 1973 and the early weeks of 1974 that the process of decline was going out of control, to the point that the cohesion and the very fabric of society were gravely threatened. This was the theme for his apocalyptic utterances in January 1974.

He believed profoundly in order and good governance. He was not against change and reform, but he believed that change should be evolutionary and progressive, not violent and revolutionary. I believe that his sense of the dangers which the country faced grew on him in those last months of 1973, until they came to dominate his thoughts and his actions. I suggest that it was this deep-seated concern that led him to believe that it was his duty to break (uncharacteristically) his civil service anonymity and to accept the responsibility of being seen to work with others to remain in control of the process.43

A majority of those ‘insiders’ interviewed for this book say that William Armstrong was a great man. But a significant minority declined to bestow the term. The range of views may be summarised in two quotes from men who worked very closely with him:

A man who showed himself to have had the fibre, personality and intellectual gifts to be capable of working at the highest level of human events, and in the highest company, with the greatest dedication and skill. (Sir John Chilcot)44

He was an enigma. There were aspects of his personality which were not compatible with others. He was a kind man, he worked hard, he believed in his country and his family, and in helping ministers. But he thought he had a mission, and he had greater confidence in his own judgement than was fully justified. (Douglas Allen, Lord Croham)45

What is the final summing-up? Top civil servants, William Armstrong once said, had to ‘operate on the edge of politics without being political’. It was as ‘a mandarin drawn into politics’, however, or as the Whitehall chief who ‘went public’ that he was mostly remembered after he left the civil service in 1974, largely because of his controversial role and unusual political visibility in the last embattled year or two of Heath’s Conservative government. In a 1971 radio interview Armstrong had acknowledged the risks involved in civil servants ‘crossing the line’ and becoming public WILLIAM ARMSTRONG: AN ASSESSMENT 279 figures, but said that he felt that officials had to be ‘prepared to take the risk of putting our foot through the ice’.46 The 1972–74 period was probably the apogee of Armstrong’s influence but also the period when, over- stepping the boundary between civil service and political roles, he notoriously crashed through the ‘ice’. However unfairly, his reputation was damaged by the events of 1972–4 when, as Phillip Whitehead put it, he became ‘a political civil servant not so much in the ideological sense as in his ambitious desire to embrace a policy without the civil servant’s ultimate detachment.’47 He had decided in the national interest (as he saw it) to take a high-risk course which went wrong because he became ill and because Heath failed. ‘He’d stepped out of line—it was almost as if he’d betrayed his caste’, was how a senior insider described it. He himself despaired that he would be seen as ‘another Horace Wilson.’48 A newly-arrived Conservative minister in 1970 is reported to have said: ‘the wonderful thing about William is that he’s a real democrat; he really believes that his job is to serve his political masters.’49 Fatally, Armstrong went beyond the role of a neutral, loyal civil servant, faithfully carrying out the policies of the party in power—as one account of the 1973–4 crisis put it, ‘he stepped into the front line and became not merely an instrument of government but also its open protagonist.’50 It would be a mistake, however, to allow the controversy around William Armstrong’s role in the Heath years to overshadow his other achievements as one of the great outstanding figures of post-war Whitehall. ‘I think a lot of the newer and in many cases the better strands of natural development and evolution in Whitehall as recreated after the war came together very naturally in William, and by the time he came to the top of the service he was their natural embodiment’, was the judgment of a former close aide.51 ‘If Carnaby Street represented the decorative side of the 1960s, Armstrong exemplified the serious side’, is how Samuel Brittan put it.52 ‘His own candour has helped to open up the [civil] service’, wrote Anthony Sampson in 1971. ‘He combines a penetrating intellect with real imagination—a rare mixture; he tries to visualise how situations might be, and is not stuck in that deadly bureaucratic assumption: “Things being as they are.”’53 Himself trained by the old-school mandarins such as Edward Bridges, the reforms he introduced in civil service recruitment and training in the late 1960s and early 1970s opened the way to the rise of a new generation of managerially-minded civil servants in the 1980s and 1990s. One of the great reforming Heads of the Civil Service, his own thinking 280 K. THEAKSTON AND P. CONNELLY about the problems and needs of Whitehall management anticipated some of the key reforms and developments of the Thatcher/Major years and beyond. He was, according to Peter Jay, ‘a figure of extraordinary size and maj- esty and fascination for those who knew and worked with him.’ In the Treasury in the 1960s, he was ‘the overwhelmingly dominant figure of that era’—the indispensable figure at the right hand of successive Chancellors. Ministers would hang on his words and depend on him to a remarkable degree. He would always, says Peter Hennessy, ‘be able to explain complications’ to his ministerial masters, but—crucially—he would also ‘give them the impression that there really was a way out if you thought long and hard enough about it.’ He would ‘spin possibilities’, as Hennessy put it—but ‘not spin in the modern way at all; in the old- fashioned sense.’ He could deal both with politicians and with the processes and machinery of government with unique skill and subtlety. He was the great Whitehall operator, the brilliant draftsman, the great master of the committee labyrinth. To Peter Jay he was the supreme model of the non-political civil servant—schooled in that role by Edward Bridges—but was also a great idealist in his outlook and thinking rather than a pragma- tist or cynic. In the end, William Armstrong stands out as one of the great British civil servants of the twentieth century and as a complex and compelling, if elusive, human being—as Peter Hennessy once described him, ‘a man apart’.54

Notes 1. Samuel Brittan, ‘A passion for rationality’, Financial Times, 14 July 1980. 2. Interview with Lady Armstrong (PC). 3. Interview with Peter Armstrong (PC). 4. ‘A Chance to Meet: Sir William Armstrong’, BBC television, 17 October 1971 (transcript in Armstrong papers). 5. ‘Apologia’: extract from BBC World Service talk by William Armstrong, 1972, and Address by Gordon Richardson, Memorial Service for William Armstrong, St. Margaret’s Church, Westminster, 16 September 1980 (Armstrong papers). 6. ‘A Chance to Meet: Sir William Armstrong’, BBC television, 17 October 1971 (transcript in Armstrong papers). 7. ‘Christian Belief Today’—dialogue between Sir William Armstrong and Canon David Edwards, Sanderstead United Reformed Church, 24 March 1974 (transcript in Armstrong papers). 8. Interview and correspondence with Lord (Claus) Moser (PC). WILLIAM ARMSTRONG: AN ASSESSMENT 281

9. Private information (PC). 10. ‘Lord Armstrong, controversial but “a great public servant”’, The Guardian, 14 July 1980. 11. Interview with Lady Armstrong (PC). 12. Private information. 13. ‘The Chancellor’s right-hand man’, The Observer, 30 September 1962. 14. Eric Jacobs, ‘Cleaning up the corridors of power’, The Sunday Times, 15 September 1968. 15. W.B. Nicholson to Sir William Armstrong, 22 September 1970, with transcript of interview held on 25 February 1970 (Armstrong papers). 16. Open University broadcast, ‘Understanding Society’, 3 June 1970 (transcript in Armstrong papers). 17. Kenneth Rose, Elusive Rothschild (London: Weidenfeld and Nicolson, 2003), p. 163; interview with Richard Wilding (PC). 18. Alec Cairncross, The Wilson Years: A Treasury Diary, 1964–1969 (London: The Historians’ Press, 1997), pp. 290, 292. Some of Armstrong’s remarks at that Sunningdale event were also reported in Eric Jacobs, ‘Cleaning up the corridors of power’, The Sunday Times, 15 September 1968. 19. Armstrong papers. 20. The Cecil King Diary 1970–1974 (London: Jonathan Cape, 1975), p. 356. Internal evidence in the King diaries makes the identification of ‘A.B.’ as William Armstrong incontrovertible. The journalists Anthony Howard and Hugo Young soon unmasked ‘A.B.’ and Cecil King’s other civil service lunch guest ‘C.D’—naming the latter as Burke Trend, the Cabinet Secretary. See: Anthony Howard, ‘Down-Stage’, New Statesman, 17 October 1975, p. 476; Hugo Young, ‘News from nowhere: review of Cecil King Diary 1970–74’, The Sunday Times, 19 October 1975, p. 30; ‘London Diary’, New Statesman, 21 November 1975, p. 640. 21. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). 22. Sir William Armstrong, ‘A Layman Looks at the Church’, lecture to Church Leaders Conference, 12 September 1972 (Armstrong papers). 23. Sir William Armstrong, ‘The Role and Character of the Civil Service’, Proceedings of the British Academy, vol. 56 (London, 1970), p. 214. 24. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). 25. Armstrong, ‘A Layman Looks at the Church’ (Armstrong papers). 26. Lord Armstrong of Sanderstead, ‘Government and Industry Relationships’, in David Lethbridge (ed), Government and Industry Relationships (Oxford: Pergamon Press, 1976), p. 93. 27. Authority of Government Policy Group, minutes of 12th meeting (guest: Lord Armstrong), 21 July 1976, Margaret Thatcher Foundation [http:// www.margaretthatcher.org/document/111390]. 282 K. THEAKSTON AND P. CONNELLY

28. The Cecil King Diary 1970–1974 (London: Jonathan Cape, 1975), pp. 66–67. 29. Armstrong, ‘A Layman Looks at the Church’ (Armstrong papers). 30. Anthony King, ‘The problem of overload’, in Anthony King (ed), Why is Britain becoming harder to govern? (London: BBC, 1976). 31. Lord Armstrong, ‘A personal view’, in R. Tricker (ed), The Individual, the Enterprise and the State (London: Halstead Press, 1977), pp. 28–29. 32. Authority of Government Policy Group, minutes of 12th meeting (guest: Lord Armstrong), 21 July 1976, Margaret Thatcher Foundation [http:// www.margaretthatcher.org/document/111390]. 33. Armstrong, ‘A personal view’, pp. 29–30. 34. The Cecil King Diary 1970–1974 (London: Jonathan Cape, 1975), p. 38. 35. The Cecil King Diary 1970–1974, p. 246. 36. Armstrong, ‘A personal view’, p. 27. 37. Armstrong, ‘A Layman Looks at the Church’ (Armstrong papers). 38. The Cecil King Diary 1970–1974, p. 246. 39. Armstrong, ‘A Layman Looks at the Church’ (Armstrong papers). 40. Sir William Armstrong, ‘Whatever happens, it will be painful’, Evening Standard, 17 September 1974. 41. Armstrong, ‘Government and Industry Relationships’, pp. 91–93. 42. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). 43. Correspondence with Lord Armstrong of Ilminster (PC). 44. Interview with Sir John Chilcot (PC). 45. Interview with Lord Croham (PC). 46. Financial Times, 29 May 1968; Sunday Telegraph, 1 May 1977; Sunday Times,13 July 1980; BBC radio, ‘Talking Politics’, 9 January 1971, transcript in National Archives BA 6/75. 47. Phillip Whitehead, The Writing on the Wall: Britain in the Seventies (London: Michael Joseph, 1985), p. 89. 48. Peter Hennessy, Whitehall (London: Secker and Warburg, 1989), p. 241. 49. Anthony Sampson, New Anatomy of Britain (London: Hodder and Stoughton, 1971), p. 250. 50. Graham Turner, ‘Make and break for a top civil servant’, Sunday Telegraph, 1 May 1977. 51. Interview with former permanent secretary (KT). 52. Samuel Brittan, ‘A passion for rationality’, Financial Times, 14 July 1980. 53. Sampson, New Anatomy of Britain, p. 252. 54. ‘Memories of William Armstrong’, MEG 45, Mile End Group, Queen Mary University of London (2008). Index1

A Armstrong, Peter (son), vi, vii, 13, 16, Adamson, Campbell, 222, 224, 239 17, 22, 30, 60, 74 Agriculture, Ministry of, 49, 50, 233 Armstrong, Priscilla (mother), 14, Air Ministry, 53 18–20, 22, 23, 28, 90n67 Aldington, Lord, 223, 254 Armstrong, Sir Robert (Lord Allen, Douglas (Lord Croham), vi, Armstrong of Ilminster), vi, vii, 2, 105, 106, 114, 125, 130, 133, 11n15, 37, 102, 112, 124, 149, 145, 149, 153, 157, 163, 168, 168, 174, 188n19, 189n33, 169, 178, 184, 196n158, 204, 193n112, 193n117, 194n122, 206, 208, 210, 219, 220, 224, 195n155, 196n160, 196n164, 226, 233, 234, 236, 240, 241, 196n165, 200, 216, 217, 222, 249n122, 251n164, 254, 259, 228, 239, 240, 244n16, 247n72, 278, 282n45 247n83, 251n181, 251n186, Allen, Fergus, 175 251n188, 252n203, 255, 259, Allen, Philip, 144, 153, 183, 255 262n24, 263n28, 277, 282n43 Armstrong, E. A., 199 Armstrong, Sir William Armstrong, Gwen (wife) (Lady childhood, 14, 17, 20–22, 30, 36, Armstrong), vi, 22, 31, 37, 60, 39, 101, 260, 266, 268, 269 100, 220, 240, 241, 266, 269 civil service reform, v, 143, 144, 197 Armstrong, Jane Fergus civil service strike, 226, 227, 254 (grandmother), 16, 17 communication skills, 39 Armstrong, Janet (daughter), vi, 60 death, 260

1Note: Page numbers followed by “n” refer to note.

Armstrong, Sir William (cont.) recruitment to civil service, 45–49 ‘deputy Prime Minister’, 2, religion, 36–40, 265, 267, 268 197–243 Royal finances, 178–180 devaluation (1949), 69–71 Salvation Army, 2, 7, 8, 13–16, devaluation (1967), 106, 119–126 18–21, 23–28, 36–39, 49, 60, economic policy, 69, 97, 114–127, 100, 101, 109, 113, 180, 265, 130, 134, 165, 202, 203, 205, 266, 269 206, 208, 261 school education, 5 Education, Board of, 33, 49, 54, 55, Security Executive, v, 54–60, 85, 85 86, 89n52 EEC, 204–206 senior Whitehall appointments, 197 family background, 5, 13–40, 143 Suez crisis, 33, 79, 270 Fulton Committee, 145, 152, 153 trade unions, 7, 203, 223, 227, 259, general election (1974), 254 272 Head of Civil Service, 7, 13, 37, 39, Treasury Home Finance division 52, 55, 56, 98, 125, 143–187, (HF), 82 202, 254, 270 Treasury Overseas Finance division health, 100, 101, 238–241, 260, (OF), 76 270 Treasury permanent secretary, 78, heath government, v, 166, 198, 201, 80, 84, 101, 178 202, 210, 211, 216, 253, 270 Treasury reorganisation, 102–105, incomes policy, 7, 104, 117, 205, 128, 129, 168, 186 211, 217–238, 276 university education, 5, 31 knighthood, 100 womens’ equality, 14, 176 machinery of government, v, 1, 66, Armstrong, Stewart (brother), 14, 180, 197, 199, 261 21–23, 260 Midland Bank chairman, 5, 23, 239, Armstrong, William (father), 13–18, 253–263, 267 20, 21, 27, 37, 260 ministers and civil servants, 243 Astley, Joan Bright, 63, 90n67 ‘orderly management of decline,’, Attlee, Clement, 64, 65, 71, 72, 78, 236, 273, 277 92n88, 127 peerage, 179, 259, 269 Aviation, Ministry of, 77 personality, 3, 13, 74, 144, 271 Ayer, A. J., 28, 34 planned autobiography, 38, 46, 55, Ayleston, Lord, 182 67 political views, 32, 33, 109, 110, 271–278 B prime minister’s department, Bailey, Sir Alan, vi, 15, 80 211–218 Baker, Kenneth, 215, 227, 246n70 private secretary to Chancellor of Baldwin, Peter, 124, 273 the Exchequer, 67–77 Balogh, Thomas, 102, 127, 128, 134, private secretary to Secretary of the 136n21 Cabinet, 212, 214, 254 Balsdon, Dacre, 35, 48, 49 INDEX 285

Bancroft, Ian, 104, 139n78, C 139–184n81, 139n86, 139n87, Cabinet Office, v, 3, 5, 61, 62, 64, 66, 140n92, 141n114, 142n133, 68, 85, 86, 131, 167, 169, 175, 148, 163, 188n24, 244n6, 206, 211–216 251n165, 259 Cabinet Secretary, 3, 37, 50, 60–62, Bank of England, 78, 82, 98, 123, 256 64, 77, 78, 80, 98, 100, 103, Barber, Anthony, 201, 206, 208, 220, 104, 144, 148, 149, 163, 168, 226, 231, 232 203, 212, 214, 216, 236 Bec School, vi, 24–27, 30, 31 Cairncross, Sir Alec, 4, 11n13, 42n57, Beloff, Nora, 216, 247n74 84, 92n91, 92n92, 92n97, Benn, Tony, 38, 44n91, 140n97, 210, 92n98, 93n99, 93n100, 93n104, 242, 243, 252n199, 252n205, 260 94n118, 94n122, 94n123, 111, Berrill, Kenneth, 233, 234, 250n150 112, 115, 119, 121–126, 128, Bevin, Ernest, 64, 69, 70 130, 133, 135, 136n22, 138n54, Biography, v, 2, 3, 121 138n56, 138n71, 138n72, Booth, Catherine, 14, 24 139n76, 139n77, 139n86, Booth, Mary, 14 139n90, 140n93, 140n94, Booth, William, 14, 38 140n96, 140n99, 140n105, Bridges, Sir Edward, 3, 5, 59–67, 71, 140n109, 140n111, 140n113, 74, 76, 77, 80, 82, 85, 86, 141n114, 141n119, 141n131, 90n64, 92n88, 92n98, 93n99, 142n137, 144, 187n7, 188n12, 93n100, 103, 106, 148, 174, 244n27, 246n55, 272, 281n18 185, 237, 279, 280 Callaghan, James, 106, 107, 114, 115, Brimelow, Thomas, 233 117, 120–129, 133–135, British Leyland, 258 139n73, 140n92, 142n136, 144, British Petroleum, 78 145, 170, 172, 182, 185, 216, British Union of Fascists, 56, 58 218, 258, 259 Brittan, Samuel, 1, 9n2, 73, 97, 98, Callard, Jack, 256 105, 106, 114, 115, 135n1, Capel-Dunn, Denis, 59, 62 135n4, 137n32, 137n33, Carey, Peter, 220 138n66, 212, 213, 216, 246n60, Carr, Robert, 219, 220 260, 261, 262n25, 263n30, Carrington, Lord, 259 263n34, 279, 280n1, 282n52 Castle, Barbara, 109, 137n47, 140n97, Brook, Sir Norman, 90n70, 50, 59, 194n120, 242, 252n199, 260 64, 65, 77, 98–100, 103, 104, Caulcott, Tom, vi, 148, 193n107 144, 148, 163, 174, 178, 214 Central Policy Review Staff (CPRS), Brown, George, 122, 126–128, 166, 169, 203, 205, 207, 131–135, 140n112, 141n126, 260 210–213, 220, 234, 240 Budget, Bureau of the, 104, 168 Central Statistical Office, 267 Butler, Richard Austen (Rab), 67, Chamberlain, Neville, 217 74–78, 82, 92n92, 92n98, 93n99, Chancellor of the Exchequer, 1, 107, 93n100, 102, 107, 109, 255 130, 139n81, 153, 168, 201 Butler, Sir Robin, 3, 112, 226, 255 Chapple, Frank, 222 286 INDEX

Charles, Prince, 179 171, 175, 186, 187, 197, 198, Cherwell, Lord, 76 212–216, 218, 222, 227, 240, Chilcot, Sir John, vi, 145, 148, 242, 259 190n68, 245n32, 245n47, 278 Clarke, Otto, 76, 82, 103–105, 116, Churchill, Winston, 55, 56, 58, 59, 130, 134, 139n76, 142n135, 61, 62, 64, 71, 75, 78, 220 163, 165, 168, 186, 187n10 Civil and Public Servants Association Cobbald, Lord, 179, 180, 195n140 (CPSA), 217, 226 Colonial Office, 46, 49 Civil Aviation, Ministry of, 199 Committee of London Clearing Civil service, 1–5, 7, 9, 14, 28, 30, 35, Bankers, 258 36, 39, 45–49, 52, 54, 55, 60, Committee of Privy Counsellors on 62, 64, 65, 67, 71, 72, 77, 78, Ministerial Memoirs, 259 85, 86, 98, 101, 110, 112, 113, Common Market, see European 124, 128, 143–197, 199–201, Economic Community (EEC, 208, 211, 214, 216–218, Common Market) 220–222, 227, 231, 234, 236, Communist Party, 58, 230, 231 241, 253–257, 259, 265, 267, Compton, Edmund, 82, 83 270, 272–274, 276–279 Concorde, 120 agencies, 171, 185 Confederation of British Industry business appointments, 253, 255 (CBI), 198, 208, 216, 221, 222, civil servants and ministers, 107–109 224, 225, 231, 239, 272 ethics, 186 Cooper, Sir Frank, 148, 186, 197 generalists, 151, 155, 160 Creedy, Sir Herbert, 57 grading structure, 157–160 Cripps, Sir Stafford, 67, 69–72, 107, hiving-off, 165, 171 109, 122, 127 management, 103, 104, 145, 146, Crocker Bank of California, 258 153, 214, 242 Croham, Lord, see Allen, Douglas and ministers, 103, 107–109 (Lord Croham) open government, 180–187, 224 Crosland, Susan, vi, 121, 124, recruitment, 46–48, 158 139n90, 140n100, 141n116 senior appointments, 172–176 Crosland, Tony, 33, 121, 134, 166 strike, 226, 227, 254 Crosskey, Graham, vi, 26 training, 50, 150, 151, 157 Crossman Diaries, 243, 259 unions, 144, 146, 147, 154, 157, Crossman, Richard, 140n97, 165, 159, 162, 171, 217, 220, 226 176, 191n87, 194n120, 194n129 women in, 176–178 Cudlipp, Hugh, 229, 235 Civil Service College, 148, 156, 157, Cunningham, Sir Charles, 124 243 Civil Service Commission, 35, 36, 48, 49 D Civil Service Department (CSD), v, Dale, H. E., 6, 11n23, 50, 53, 54, 68, 38, 144–150, 154, 156, 159, 88n20, 88n26, 91n80, 91n82 161–163, 165, 166, 168, 170, Davies, John, 170 INDEX 287

Defence Procurement Executive, 171 F Dell, Edmund, 82, 93n102, 94n117, Feather, Vic, 217, 222–224 103, 114, 120, 121, 123, 125, Figgures, Frank, 224 133, 136n26, 138n70, 139n85, Fisher, Sir Warren, 3, 5, 54, 97, 149 139n89, 139n90, 140n94, Foot, Isaac, 57 140n97, 140n106, 140n109, Forbes, Sir Archibald, 253–257, 141n129 261n1, 261n2 Department of Energy, 170 Foreign Office, 3, 4, 56, 79–81, 99, 233 Department of Trade and Industry Franks Committee, 183 (DTI), 166, 170, 175, 176, Franks, Oliver, 34, 77, 183, 184 206–208, 210, 221, 233 Fulton Committee, 144, 148, 151, Devaluation (1949), 69–71 153, 156, 158, 164, 174, 181 Devaluation (1967), 106, 119–126 Diplock, Kenneth, 57 Douglas-Home, Alec, 131 G Dowler, David, 124, 125 Gaitskell, Hugh, 67, 72–74, 107, 109, Dulles, John Foster, 79 127 Dunbar, James, 15 Galsworthy, A. N., 46, 48 Dunnett, Sir James, 126, 131 Galsworthy, John, 48 Duthy, Reginald, 57 Garrett, John, 156, 190n55 Gibson, S. R., 26, 31 Gilbert, Sir Bernard, 77 E Gilbraith, Colin, vi, 38, 191n84, Ecole Nationale d’Administration, 151 192n93, 192n99, 193n106, Economic Affairs, Department of 193n118 (DEA), 105, 122, 127, 128, Goldman, Sir Samuel, vi, 101 131–135, 165, 168, 207 Gore-Booth, Paul, 10n11, 81, 94n113 Economic Affairs, Minister of, 72, Gormley, Joe, 228–231, 249n129, 129–131, 133 249n136 Education, Board of, 33, 49–55, 85, Grebenik, Eugene, 157 86, 88n21 Greene, Graham C., 4, 11n14 Education, Department for, 3 Greene, Sid, 232 Edwardes, Michael, 258, 262n17 Grimond, Jo, 255 Employment, Department of, 161, 171, 207, 220, 221 Environment, Department of (DOE), H 170, 186, 206, 207 Haines, Joe, 190n64, 242 European Economic Community Haldane Committee, 164 (EEC, Common Market), 201, Hall, Robert, 4, 30, 73, 74, 76, 77, 202, 204–206, 217, 259 79, 82, 84, 92n98, 102, 116, Evans, Harold, 4, 5, 11n15, 136n10, 194n126 220 Halls, Michael, 153, 154, 158, 159, Export Credit Guarantee Department, 174, 180, 182, 189n34, 189n45, 159 189n47, 189n48, 189n52, 288 INDEX

190n56, 190n60, 190n61, 137n30, 137n35, 137n45, 190n63, 190n64, 190n66, 138n51, 141n116, 178, 188n31, 190n72, 191n81, 191n83, 193n104, 194n134, 196n160, 191n86, 191n87, 191n88, 204, 244n23, 244n25, 246n58, 195n140, 195n147, 195n149, 251n166, 273, 280, 282n48 195n151 Heron, Sir Conrad, vi, 46, 220, 228, Hamilton, Sir James, vi, 10n10, 175, 232, 233, 250n146 240 Holmes, Sir Maurice, 51, 53 Hamilton, Willie, 179, 195n138 Home Office, 50, 56, 57, 59, 124, Hankey, Sir Maurice, 3, 149 144, 152, 165, 183 Harris, John, 124, 125 Hopkin, Bryan, 46 Harris, Ronald, 60, 62, 90n59, 90n60, Hopkins, Elizabeth Lax, 14, 18, 19 90n61, 90n65 Hopkins, Henry, 18, 19 Harrod, Roy, 99 House of Commons Estimates Haydon, Robin, 235 Committee, 150 Head of the Civil Service, 2, 3, 7, 13, House of Commons Expenditure 34, 36, 37, 39, 45, 52, 54–56, Committee, 259 59, 62, 65, 66, 76, 77, 98, 100, Howe, Geoffrey, 220 103, 104, 125, 143–196, 198, Howell, David, 166–168, 192n93, 202, 211–214, 218, 226, 236, 192n100, 212 242, 254, 259, 269, 270 Hubback, David, 84 Healey, Denis, 31–33, 43n70, 126 Hunt, Norman, 149, 153, 157–160 Health and Social Security, Hunt, Sir John, 148, 212, 214, 216, Department of (DHSS), 165, 234, 236, 244n6, 247n73, 171, 176, 243 251n164, 251n165, 255 Health, Ministry of, 49, 50 Hurd, Douglas, 238, 251n177 Heath, Edward, vi, 2, 29, 38, 39, 42n54, 150, 159, 161, 163, 165–174, 176, 179–181, 183, I 185, 186, 192n94, 193n108, Incomes policy, 2, 7, 104, 117, 130, 193n116, 197–254, 259, 260, 185, 198, 205, 211, 217–238, 270, 275–279 254, 276 Helsby, Sir Laurence, 100, 125, Industrial Development Executive, 129–134, 135n6, 141n17, 210 141n121, 141n122, 141n124, Industrial Relations Act, 219 141n125, 141n127, 141n128, Industrial Reorganisation Corporation, 141n130, 142n135, 144, 145, 210 149, 151, 152, 158, 163, 165, Industry, Department of, 242 174, 178, 187n10, 187n12, Institute for Fiscal Studies, 260 191n87, 194n122, 195n139 Institute of Professional Civil Servants Hennessy, Peter, vii, 85, 87n1, (IPCS), 147 90–91n70, 92n84, 92n85, 105, International Monetary Fund (IMF), 106, 109, 136n11, 136n13, 112 INDEX 289

J Lax, John, 19 Jacobs, Eric, 5, 9n1, 11n19, 11n20, Lee, Sir Frank, 84, 97–99, 104–106, 33, 35, 37, 40n7, 42n44, 74, 116 89n35, 92n93, 93n110, 137n35, Leslie, Clem, 73 138n69, 187n2, 195n141, 270, Lloyd, Selwyn, 84, 100 281n14, 281n18 Lloyd George, David, 65 Jay, Douglas, 69, 91n83, 127, 129, London School of Economics, 53 140n97, 141n116 Lowe, Rodney, vii, 3, 6, 9n8, 11n24, Jay, Peter, vi, 38, 113, 133, 134, 87n7, 88n24, 136n25, 137n28, 138n64, 142n135, 187n2, 212, 146, 157, 161, 169, 185, 186, 213, 216, 246n60, 277, 280 187n1, 188n12, 188n17, Jellicoe, Lord, 159, 165, 168, 174, 190n58, 191n75, 192n93, 227 192n101, 193n103, 193n109, Jenkins, Roy, 31, 33, 106, 114, 194n130, 194n131, 194n133, 124–127, 138n70, 140n101, 196n163, 196n169, 196n170, 140n108, 153, 154, 205 227, 249n124, 249n127 Johnson, Lyndon, 122, 140n93 Johnson-Smith, Geoffrey, 215 Joint Intelligence Committee, 59 M Jones, Jack, vi, 38, 44n94, 220, 223 MacDougall, Donald, 76, 122, 131, Joseph, Sir Keith, 176 134, 189n53, 206, 208, 245n30, 245n38 MacFadzean, Sir Frank, 256 K Machinery of government (MG), v, 1, Kaldor, Nicholas, 127, 128 51, 60, 65, 66, 86, 129, 131, Kearton, Lord, 243 156, 162–172, 180, 185, 197, Keeling, Desmond, 86, 87, 95n130, 199, 213, 214, 261, 280 95n132 Macleod, Iain, 168, 201, 202 Kellner, Peter, 149, 158, 189n36, Macmillan, Harold, 75, 79, 84, 99, 189n44, 190n58, 190n62, 100, 115, 116, 119, 205 193n113, 194n123, 196n161 Macmillan, Maurice, 220, 221, 226 Kelsall, R. K., 47, 48, 87n7, 88n11 Maitland, Donald, 195n155, 213, Kendall, Bill, 217, 226 221 Keynes, John Maynard, 34 Makins, Sir Roger, 80, 83, 99, 103 King, Cecil, 173, 200, 202, 203, 208, Manchester Grammar School, 53 211, 220, 225, 243, 272, 281n20 Marre, Sir Alan, 176 King, Michael, 272 Marsh, Shirley, 83, 94n121 Masefield, Peter, 199 Mather, Leonard, 257 L Maudling, Reginald, 34, 43n73, 100, Labour, Ministry of, 49 106, 114–121, 131, 132 Lascelles, Sir Alan, 63 Maxwell, Sir Alexander, 59 290 INDEX

McCall, Bill, vi, 147 O McGahey, Mick, 230, 231 O’Brien, Leslie, 124, 127, 253 McIntosh, Sir Ronald, vi, 10n12, 218, Official Secrets Act, 180, 181, 183, 185 220, 221, 233, 234, 239, 241, Open government, 180–187, 224, 261 248n93, 250n149, 250n157, Opposition, support for, 243 251n167, 251n175, 251n180, Organisation of Petroleum Exporting 251n184, 252n192 Countries (OPEC), 229, 230 McKenzie, Robert, 90n57, 146 Osmond Working Party on McNee, Sir David, vi, 210 Management Training in the Civil Meiklejohn, Sir Roderick, 47 Service, 151 Melluish, Tom, 25, 26, 28, 31 Oxford University, 31 Meyjes, Richard, 167 MI5, 55–59, 181 MI6, 56 P Midland Bank, 5, 23, 239, 242, Padmore, Sir Thomas, 71, 83, 84, 253–263, 267 91n73, 94n119, 99, 100 Ministry of Housing and Local Part, Sir Antony, 10n12, 50, 88n18, Government, 170 88n25, 163, 205, 210, 233 Ministry of Transport, 170 Pay Board, 224 Mitchell, Sir Derek, 139n74, 234, Peterson, Arthur, 46 238 Petrie, Sir David, 59, 89n54 Moore, J. M., 227, 249n128 Pile, Sir William, 174 Morrison, Nicholas, 175 Pitblado, David, 148 Morton, Desmond, 59 Pliatzky, Leo, 44n96, 78, 93n102, Moser, Claus, vi, 267, 268 111, 138n52, 208, 245n38, Mosley, Oswald, 33, 56 245n49 Mountfield, Peter, 148 Plowden, Edwin (Lord), 76, 92n84, Murray, Len, 224, 231, 232 92n91, 98, 99, 104, 131–133, 141n128 Plowden Committee on Control of N Public Expenditure, 103 National Economic Development Potsdam Peace Conference, 62–63 Council (NEDC), 116, 129, 202, Powell, Anthony, 59 220, 224, 231, 250n143 Power, Ministry of, 166 National Union of Mineworkers Price, H. H., 35 (NUM), 197, 219, 228, Prices Commission, 224 230–233, 235 Priestley, Clive, 8, 185, 187n9, National Whitley Council, 162 188n19, 189n33, 194n122, Neale, Alan, 233 196n164, 196n165, 263n28 Newsom, Frank, 59 Prime Minister’s Department, Nield, Sir William, 206–210, 213, 211–218 214, 245n35, 246n64 Prime Minister’s Policy Unit, 215 Northern Ireland Office, 213 Prior, James, 220, 251n169 Nott, John, 217, 247n76 Programmes, Ministry of, 167, 168 INDEX 291

Property Services Agency, 171 Scottish Office, 207 Public Accounts Committee (PAC), Security Executive, v, 54–60, 85, 86, 84, 85 89n52 Public Building and Works, Ministry Selective Employment Tax (SET), of, 170 128, 204 Public Sector Research Unit (PSRU), Senior Appointments Selection 167, 169, 192n99 Committee (SASC), 172, 175 Serpell, David, 163, 206 Shackleton, Lord, 156, 162, 165, R 195n144 Radcliffe Committee on the Working Sharp, Dame Evelyn, 50, 174 of the Monetary System, 84 Shuckburgh, Evelyn, 67, 74, 75, Radford, Ronald, 46 91n80, 92n95 Ramsbotham, Herwald, 54 Simey, Lord, 153, 189n46 Rayner, Derek, 161 Sisson, C. H., 155 Reading, Lord, 79 Special advisers, 4, 5, 152, 153, 242 Richardson, Gordon, 6, 11n22, 239, Stalin, Joseph, 62–64 261, 263n35, 266, 280n5 Stewart, Ian, 236 Rickett, Denis, 78, 82, 84, 99, 130 Stewart, Kate, 19 Riddelsdell, Dame Mildred, 176 Strath, William, 77 Rippon, Geoffrey, 170 Suez crisis, 33, 79 Robinson, Bishop John, 37 Supply, Ministry of, 50, 77 ROBOT, Operation, 75, 77, 78 Swinton, Lord, 56–59, 85 Rogers, Sir Philip, 148, 176 Roll, Eric, 106, 122, 123, 131–133, 135, 141n126, 142n132, T 142n136, 174, 198, 255, 268 Technology, Ministry of, 165, 170 Rolls Royce, 205, 257 Thatcher, Margaret, 110, 160, 162, Rothschild, Lord, 169, 191n75, 203, 174, 280 206, 220, 222, 234, 240, Thorneycroft, Peter, 107 245n29, 248n108, 272 Trade unions, 7, 203, 223, 227, 259, Rowan, Sir Leslie, 76, 78, 80–82, 272 93n108, 94n114 Trade, Board of, 49, 97, 115, 131, Royal finances, 178–180 158, 166, 170 Royal Mint, 120, 139n88 Trades Union Congress (TUC), 38, Russell, Bertrand, 34 197, 198, 204, 216–219, 221–226, 229, 231, 232 Transport and General Workers S Union, 38 Salvation Army, 2, 7, 8, 13–16, 18–21, Treasury, v, 4, 5, 7, 9, 20, 23, 30, 54, 23–28, 36–39, 49, 60, 100, 101, 69, 71–87, 97–142, 144, 109, 113, 180, 265, 266, 269 148–151, 153, 163, 167, 171, Scanlon, Hugh, 223 174, 201, 202, 204, 207, 208, Schrieber, Mark, 167 214, 234, 255, 260, 268, 280 292 INDEX

Budget Committee, 73, 82, 83, Walker, Peter, 170, 186, 191n84, 112, 115–117 193n108, 196n168 Economic Section, 76, 77, 82, 128 Warr, Earl de la, 54 Home Finance division (HF), 78, Wass, Sir Douglas, 136n27, 254 82, 83, 98, 104 Waterfield, Sir Percival, 47 Overseas Finance division (OF), Weidenfeld, George, 4, 11n16, 11n17 76–78, 80, 82, 98, 104, 151 Wells, Ronald, 57 reorganisation of, 102–105, 128, Welsh Offices, 207 129, 168, 186 Wilding, Richard, vi, 10n12, 148, 156 Trend, Sir Burke, 50, 67, 69, 71, 77, Wilson, Harold, 30, 31, 33, 84, 100, 144, 148, 149, 154, 159, 121–123, 126–128, 131, 132, 163–166, 169, 178, 181, 182, 140n93, 146, 153, 154, 156, 189n51, 195n139, 195n145, 158–160, 163–167, 169, 170, 195n147, 203, 205–207, 212, 174, 179–182, 186, 189n51, 214–216, 245n29, 245n32, 254, 190n56, 190n61, 190n64, 281n20 191n87, 195n49, 195n142, Truman, Harry S., 62, 64 195n151, 211, 215, 219, 238, 241, 242, 253–255, 272, 279 Wilson, Sir Geoffrey, 178 U Wilson, Sir Horace, 3, 5, 59, 217 Upper Clyde Shipbuilders, 205, 210 Wilson, Sir Richard, 80, 81, 98, 136n27

V Vinter, Peter, 116 Y Voy, James, 17, 18 Young, Hugo, 114, 138n67, 141n126, 149, 189n36, 194n121, 215, 222, 238, 240, W 244n9, 247n79, 249n132, Waldegrave, William, 238, 244n11 250n144, 251n168, 251n172, Walker, David, vi, 113 252n190, 260, 263n32, 281n20