Saturday 21 March 2009

IDS: Thatcher would have lost in 1983 without Healey

That is the surprising claim made by Iain Duncan Smith in a very lively Fabian Review interview with Mary Riddell, which is previewed in today's Daily Telegraph.

The former Tory leader seems an unusual source for a fascinating piece of alternative "what if?" history as we approach the 30th anniversary of 1979. It sounds, to Labour ears as if IDS has an uncannily similar reading to the Bennite account of our recent political history. I don't think I am convinced. sent the interview to Denis Healey - among the great Fabians, having contributed to New Fabian Essays back in 1951 - a couple of weeks ago, but I don't know if he will have any response to it.

The former Conservative leader also believes his own party must take greater responsibility for the impact of the 1980s on the social problems he now studies at the Centre for Social Justice.

Once, IDS seemed the creature of Margaret Thatcher, who endorsed his leadership bid. With the 30th anniversary of Thatcher’s accession imminent, does he now regret the brutal edge of Thatcherism or acknowledge the harm caused by rampant individualism? “Britain’s position by 1978/9 was appalling – we were just disappearing as a nation. It simply was not possible to go on any longer.

“You have to remember it was Denis Healey who did most of the serious hard work, the heavy lifting, before Mrs Thatcher came in. Had she come in without Healey’s work in the IMF, I don’t think she’d have lasted two years. She would have been out in 1983. Getting the economy back to a point where it was profitable and we had some sort of enterprise was [vital].

“But yes, what happened next was in some ways [unfortunate]. We forgot that, while the economy was moving on, society itself was not really ready for this. Swathes of the population got left behind in the process...The gap between the bottom socio-economic group and the rest started to grow, and it’s grown ever since. Under Labour it’s grown almost faster in some senses.

“While I’m not going to point the finger and say the changes made in the Eighties were wrong, we didn’t have any real sense of where this might go go and what needed to happen. Big social reforms should have taken place then, and they never did.” This partial denunciation of Thatcherism by her protege and heir will strike some Tories as a heresy. But few leading politicians are as familiar as IDS with the sink estates that symbolise the price of inequality.

Thatcher’s policy of selling council houses and failing to invest the profits in social housing added up, as he admits, to a disaster. “Nobody really thought about what happens if you allow only the most broken families to exist on housing estates. You create a sort of ghetto in which the children who grow up there repeat what they see around them.”

This critique reflects IDS' increasing emphasis on the need for a cross-party and sustained approach to problems which are inter-generational in nature. Riddell writes that he has become the "antithesis of a party tribalist", while IDS says he believes that Gordon Brown can win the next election.

“I think there must be an outside chance. What would be required?” he wonders. “The public turns round and says maybe things are picking up, maybe he was right.”

Riddell comments that "While such musings are unlikely to warm the heart of David Cameron, the Conservative leader owes much to Mr Duncan Smith. If caring Conservatism has any credibility, then it is rooted in the IDS project".

* The Spring issue of Fabian Review, focusing on the politics of the family, will be published in April.

* UPDATE: Many Fabian members (as well as Next Left readers) may recall IDS' similar comments on Council House sales at the very well attended Saturday night fringe in Manchester last September, hosted by the Fabians and the Centre for Social Justice, with the End Child Poverty coalition and the Webb Memorial Trust; he made the point at the follow-up Conservative fringe the following week, being concerned to show that he was willing to make similar arguments to the different party audiences in the search for a cross-party consensus on social questions.


Craig Rimmer said...

Isn't he just saying that the country would have been in an even bigger mess if it weren't for Healey? All Governments have to use the building blocks of past Governments to some extent and they also inherit the problems too.

None of this negates the fact that Margaret Thatcher's government did most of the work in turning this country around. Plus I feel IDS is being overly generous in saying that Mrs T would have lost in 1983 otherwise. I think the whole project would have just taken a bit longer, but with a larger majority (as without Healey sure the Labour Govt would have collapsed to a landslide in 1979?).

With a larger majority and still likely fighting Michael Foot in a General Election she would have one just as easily. But the beauty of Counterfactuals is that we will never know.

Unknown said...

Craig, I think what he's saying is that going cap in hand to the IMF is politically disastrous. If Thatcher had had to do it, with the country in recession for much of her first term, it would have been incredibly difficult for her to win the 1983 election.

Thankfully the combination of the Falklands War (which was a major boost for her in the polls) and Labour's suicide note manifesto meant she stayed in office with a mandate to begin to reform the country.

George CA Talbot said...
This comment has been removed by the author.
George CA Talbot said...

Thatcher’s won in 1983 because Britain won the Falklands war, because UK inflation was curbed and because of Michael Foot’s manifesto. So why does Sunder Katwala accept Tory propaganda that Thatcher fixed the economy? With deflationary fiscal and monetary policy, she brought inflation down but destroyed 2 million jobs. Nothing new there! Then she tried to get unemployment down with an expansionary monetary policy. But as it came down, inflation took off! John Major restored low inflation and falling unemployment by combining another monetary deflation with an expansionary monetary policy that doubled the national debt, as Reagan had done. But unemployment touched 3 million. Hardly a success for Thatcherism!
None of this fixed the economy. But Thatcher did break the unions. This helped managers manage but destroyed the power needed to hold real wages up. Callaghan tried to tame the unions but was broken by them. The current global crisis results from believing borrowing could sustainably restore the demand lost through low real wages.
Fixing this is especially hard because of free trade and free capital. No UK Party has advanced realistic proposals for a global economic system for the 21st century. Hence the enthusiasm for massive borrowing! Obama’s rhetoric implies he will but borrowing foreign money to pay people to work on social programs does not create a sustainable economy.

Sunder Katwala said...


Thanks for your message and for joining the discussion. However, I didn't say any such thing: I was merely reporting on IDS' comments. My passing comment was simply to say that I was unconvinced that the 1976 IMF crisis decided the result of the 1983 election. I wasn't commenting (positively or otherwise) on Thacher's economic record or legacy, which was your reading.

I have just recently writing a long essay about the consequences of Thatcherism for a journal issue on the 30th anniversary of 1979 which the ippr are to publish next month, at which point you will be welcome to debate and indeed take issue with my own views on her economic and political legacy.

Gregg said...

IDS is absolutely right that much of the credit for Thatcherism should go to Healey - but not because of the IMF loan itself, rather because Healey (and Callaghan) kept on enforcing wage restraint long after the loan had been repaid. That lead both to the Winter of Discontent and to many of Labour's traditional supporters voting Tory in 1979 out of spite against the government. Without that, Thatcher wouldn't have won in 1979 (and wouldn't have been leading the Tories by 1983).

George CA Talbot said...

The Tories were elected after the Winter of Discontent that followed Callaghan's wage restraint. But why do you blame Callaghan for this rather than the unions? Surely Callaghan was right to try to prevent inflation from taking off again? Or do you prefer Thatcher's method of controlling inflation that destroyed 2 million jobs and other problems noted above?

Nor can I understand why Healey and the IMF are blamed. I thought Labour was rejected because it could not control the unions and few expected the Tories to create so much grief.

By the way, the current account deficit was 5% of GDP when Thatcher left; bigger than now. Funding it privately avoided hated IMF strings but I expect this to end badly when international financiers stop funding it and try to withdraw their funds. In autumn of 2005 the IMF called the US economy an accident waiting to happen for this reason!