6 February 1986 Marxism Today

TARZAN TAKES THE HIGH GROUND ANDREW GAMBLE

he political storm over the finan­ claimed repeatedly that he resigned on an claims this was the first time such a thing cial rescue of a small bankrupt issue of constitutional principle rather had ever happened in his experience as a private sector defence contrac­ than on the substantive issue of whether cabinet minister. Like Leon Brittan de­ tor has developed into one of the there should be a European or an Amer­ nying the existence of a letter from BAe, Tgreatest political crises of the Thatcher ican rescue for Westland. Many of his this may be technically correct, but it is government. Media attention has focused former colleagues and many commenta­ seriously misleading. Mrs Thatcher's on the extraordinary events surrounding tors on Fleet Street regard this as a pretext. treatment of cabinet as an obstacle to be Michael Heseltine's resignation. No-one They believe that what really motivated surmounted rather than as an aid to good has previously resigned from the cabinet in him was political ambition. government is well known and there are such spectacular fashion or produced such embarrassing and detailed disclosures ab­ out the manner in which government is conducted. The Thatcher government has always been plagued by leaks, but it has never had to suffer such a flood as this. Most observers judge that the Westland affair has inflicted lasting damage on the reputation of the prime minister among her backbenchers and among Tory voters. The prime minister failed to display her usual political skill and from the evidence both of press comment and public opinion polls was generally perceived as less honest and less principled than Heseltine. Yet the affair is hardly the constitutional outrage which Heseltine claims, nor is it a very convincing illustration of Thatcher's authoritarian style and presidential ten­ dencies. It was the indecision of the prime minister which allowed the internal de­ partmental wrangling to continue for so long and to build up to the point of explosion. The immediate cause of the political crisis was plainly the clash be­ A constitutional outrage? tween Heseltine and Thatcher. But under­ Heseltine insists that he would have lying this is a deeper and unresolved accepted a cabinet decision to back the incoherence in the objectives and commit­ American rescue package for Westland if ments of the Thatcher government. only it had been arrived at in a 'constitu­ Why did Heseltine resign? The prime tional' manner. His objection, he claims, is minister at a meeting of one of those not primarily to the decision but to the way cabinet committees which officially and in which it was taken which deprived him constitutionally do not exist, is supposed of a chance to win the support of his to have remarked impatiently: 'Do you cabinet colleagues, and to the subsequent realise we have just spent three hours use of the government machine against discussing a company with a capitalisation him in an increasingly desperate bid to of only £60m?' Like many other people the ensure he was defeated. prime minister seems surprised that the Heseltine's main charge is that the Westland affair should have blown up into prime minister cut short proper discussion such a crisis. There are two main versions of the Westland issue to prevent the option as to why it did. Heseltine himself has which she favoured being rejected. He February 1986 Marxism Today 7

Michael Heseltine's extraordinary assault on his cabinet colleagues in the Westland affair marks a turning-point for Thatcherism. Now Mrs Thatcher faces a challenge from within Conservative ranks more deadly than any she has dealt with from the wets.

numerous occasions on which she has overruled by Thatcher. What then made it Conservative party, or be easily communi­ railroaded her cabinet into accepting deci­ a resigning issue? cated to a wider national audience. 'A sions without proper discussion; the The tabloids at least had no doubts. European Defence Sector' hardly rivals budget proposals in 1981, which almost From the outset they treated the affair as 'Free Trade', 'Tariff Reform', 'Re­ caused the resignation of several ministers an extension of Dynasty, a political power armament', 'Empire', or other great poli­ on the spot, is well-remembered. struggle between Maggie and Tarzan. tical causes of the past. The prime minister is not known for her Other papers speculated that his resigna­ But although the issue must have consensual approach to policy-making or tion was the first blow in the struggle to seemed to him at first of minor import­ for her enjoyment of 'internal arguments'. secure the post-Thatcher succession. ance, the way events unfolded crystallised Since she plainly regarded the Westland Heseltine is known as an exceptionally all his long-standing misgivings about key issue as a very minor matter she probably saw nothing wrong in peremptorily halting discussion. She is used to imposing deci­ TARZAN TAKES THE Andrew Gamble HIGH GROUND ambitious politician, and no sense can be policies of the Thatcher government. His sions on her ministers and forcing them to made of his actions if this is left out. Yet real complaint is not with Thatcher's con­ implement the government line as she the risks of such a flamboyant resignation stitutional improprieties or her authorita­ determines it. far outweigh the advantages. Few politi­ rian style of government, but with her cians who resign and attack their col­ brand of Conservatism and specifically The Tory succession? leagues have ever reaped the reward for with her economic strategy. There is nothing very new in this. The themselves. British political history is full Heseltine has never been within Thatch­ drift towards ever greater authority and of self-appointed men of destiny who were er's inner circle, never 'one of us', and has influence for the prime minister and her never called. Heseltine's position is made displayed disturbing 'wet' tendencies on inner circle of ministers at the expense of more difficult because the substantive occasion. His report to the cabinet on the the cabinet as a whole has been a feature of issue on which he resigned is not a great riots in Liverpool in 1981 linked the every government since 1945. This was not issue of principle that could either rally breakdown of public order with unem­ the first time that Heseltine had been substantial support to him within the ployment. The offending passages had to 8 February 1986 Marxism Today

the Westland affair has made the government look exhausted and lacking coherent direction

be removed by the prime minister. He has giving it orders for helicopters that were thousand firms. A further 600,000 civil never subscribed to the tenets of the new not needed. The use of MoD procurement and military personnel are employed by conservative economics, and at the Minis­ policies to subsidise particular contractors the Ministry of Defence. The defence try of Defence he became firmly commit­ is an inefficient and illegitimate use of lobby is powerful and well organised. ted to the integration and development of defence funds. The government is a major Many Conservatives regard defence as the the European defence industry. This be­ customer of Westland but its only interest first call on public expenditure. The ap­ came the new expression of his long-held as a customer is to get helicopters of the plication of free market principles to de­ belief in the necessity for an interventionist right quality and at the right price. Who fence procurement and arms manufacture industrial policy. owns or controls or participates in West- is bound to make many Conservatives land is a matter of indifference. uneasy. Most agree that national and Free market or protected market? It would be a bonus, so this argument strategic considerations mean that this For Heseltine the Westland affair epito­ runs, were there British firms able to industry should be treated differently from mised his dislike for the style and direction supply the government's defence require­ other industries. There is a tension be­ of the Thatcher government, and provided ments, but this does not justify subsidising tween the requirements of the national as good an issue as any on which to leave the British armaments industry. Such sub­ interest and the logic of the market. No the government and stake his claim to the sidies raise the costs of defence procure­ Conservative prime minister can afford to succession. But the government's role in ment. If other countries are foolish enough be seen selling out the national interest and the affair remains obscure. Since the gov­ to subsidise their defence industries that is weakening Britain's defences. ernment was committed to co-operation in up to them. The interest of the taxpayer is the defence field with other EEC member best served by buying in the cheapest Europe versus America states, and since it was acknowledged as market. Why bother to get involved in the This conflict of objectives may explain the late as October 1985, that the government complexities and costs of production when devious way the government proceeded in favoured a European rescue bid for West- what you want is already available and the Westland affair. It has persistently land, why did Downing Street go to such more cheaply? shirked making hard choices in the de­ lengths subsequently to block the Euro­ Such arguments express the traditional fence field. So far it has maintained all the pean option that Michael Heseltine put commercial perspective of British policy. defence commitments inherited from pre­ together? For economic liberals in the government vious governments and it has even added a The answer lies in the contradictions they are reinforced by the urgent need to new one: Fortress Falklands. It has not that have always existed between key com­ reduce defence spending so that the gov­ been willing to apply its economic princi­ mitments of the Thatcher government, in ernment's ambition to contain inflation ples to defence or to that other major particular the conflict between the govern­ and reduce taxes can be fulfilled. Heseltine protected sector in the British economy - ment's defence policy and its industrial was originally appointed to the MoD part­ agriculture. policy, and the unresolved tension be­ ly as a strong minister who could be relied But while it has been slow to cut back tween Britain's 'special relationship' with on to get a grip on defence spending. He defence spending it has also been reluctant the United States and its role as a leading launched a major drive to cut the cost of to deepen state involvement in the defence member of the European Community. defence procurement. This meant tackling sector. This is the second dilemma facing The adherents of the free market in the the problem of non-competitive contracts, the government in this affair. As a member Conservative party believe that the same the practice of guaranteeing a specified of the European Community the govern­ principles should be applied to defence as rate of profit to defence contractors. If all ment is committed in principle to favour­ to any other industry. Westland is a private protection were removed many contrac­ ing European solutions and an integrated sector company which got into deep finan­ tors might go to the wall, but the costs of European defence sector. In practice there cial trouble. When it approached the De­ defence procurement could be reduced is considerable resistance. Many ministers partment of Trade and Industry for assist­ significantly. including the prime minster are at best ance it was told (properly) that there was The difficulty for the government is that lukewarm towards Europe. The Euro­ none available. The company was in­ defence is not an industry like coal or steel. peans are regarded as unreliable partners. structed instead to find its own route to It is a vital Conservative interest. The It is feared that a viable European defence survival by attracting new private funds communities that depend on it are Con­ sector would require a large increase in into the business. The Ministry of Defence servative communities. Four hundred state funding of basic research and product similarly indicated at this time that it was thousand jobs in industry are supported by development. Two of the three European not prepared to bail out Westland by military spending, spread among some ten firms in the consortium to rescue Westland February 1986 Marxism Today 9

no Conservative prime minister can afford to be seen selling out the national interest

are state companies. A European defence between the rival American and European strand within the Conservative party after sector could only succeed if the Americans options. That was for shareholders to 10 years of Thatcherism had almost were frozen out of the European market. decide. The government accordingly de­ obliterated it. In the months ahead he can Success in this field would breed pressure clined to support the recommendation of be expected to broaden his attack onto for the same approach to be applied more the European National Armament other aspects of the Thatcher record which generally throughout European industry. Directors1 at the end of November that a he deplores. Unemployment, the inner A return to a major programme of state European rescue should be organised for cities, and privatisation are all likely to intervention in industry is a policy the Westland. What lay behind this refusal draw his fire. His aim will be to make a present government is determined to was rejection of the case for a strong and state-led modernising programme credible avoid. But there are other factors at work integrated European defence sector. By again within the Conservative party. as well. The European option for Westland refusing to declare for the European option Heseltine may never become prime represents in miniature the European op­ the government was ensuring that the minister. Kicking the Conservative party tion for Britain as a whole. If it is to American option would win. Heseltine's in the teeth has never been a very reliable succeed Europe must become much more complaint was that a policy of genuine route to its summit. But by his resignation independent of the United States. Busi­ even-handedness was impossible, and that and his tireless advocacy of the European ness and political leaders in Britain were under cover of it the government was option he has claimed the high ground of slow to be converted to the advantages of a ignoring the national and strategic argu­ national principle for his own. Heseltine's European community at all; most remain ments that made a European solution so message is an uncomfortable one for his reluctant to see policy options in terms of a desirable. party and could prove very divisive. It is choice between Europe and America. But music to the ears of the Alliance, except for if forced to choose, a significant number A watershed for Thatcherism the two unfortunate Liberal MPs whose still prefer the preserving of close ties with The Westland affair is a watershed in the constituencies contain Westland plants. It the United States to promoting European history of the Thatcher government. It finds the Labour party uncertain of its co-operation. marks the first serious challenge to the response, both because of the strong anti- For all these reasons the government priorities of the Thatcherite economic European sentiment still within its ranks was very reluctant to get involved in the programme from within the government. and because of the dislike of an integrated European option. It gave verbal backing at 'There is no alternative' will never have European arms industry. first to a European solution in line with its quite the same ring again. The wets' The Westland affair has made the gov­ commitments to its European partners. dislike of the deflationary policies associ­ ernment look exhausted and lacking cohe­ But by refusing assistance in July, it had ated with monetarism and their harsh and rent direction. Relying on an economic already indicated that whatever solution divisive effects was brushed aside. Their recovery whose foundations look shakier the company itself proposed the govern­ plea for more government spending by the week, the government finds it has ment would support. The interests of appeared as a palliative rather than an not achieved the economic turnaround managers and shareholders were to be alternative to the tough policies Thatcher­ which could have helped it avoid further paramount. The chairman of Westland, ism declared were necessary to reverse hard choices in its major spending prog­ Sir John Cuckney, the nominee of the national decline. rammes. The sense of drift and stalemate banks, took the government at their word. Heseltine raises a different banner. He may mean that the urge for positive action If there was to be no government assistance proclaims the need for the regeneration of to tackle unemployment and economic then the best rescue option for Westland the British economy through European decline may start to become irresistible. was a deal with Sikorsky, the American co-operation. He sets out the vision of The Thatcher government, after six years firm with which Westland had had co­ Britain's future as a member of an inde­ in office, appears to lack the will and the operative ventures for many years. The pendent Europe instead of a dependent confidence to launch any further major board and the workforce at Westland were client state of the United States. His stand initiatives. It has become the prisoner of convinced that the Sikorsky option offered chimes with the concern expressed about events. This is not unusual in a govern­ much the best prospect of preserving jobs Britain's receding industrial future in the ment. But then the Thatcher government and keeping the company from liquida­ recent House of Lords report and the Save had promised its admirers so much more. tion. The government backed the board. British Science campaign. Heseltine is the new voice of political principle and nation­ The new government attitude was pre­ 1 al idealism within the Conservative party. These are the civil servants in charge of defence sented as a policy of even-handedness. The procurement in West Germany, France, Italy and government declared it had no preference He has revived the old interventionist Britain.