LITMIR.BIZ

       CHAPTER FIVE Into Cabinet

      THE DAY AFTER the 1987 election came the startling news that Norman Tebbit was stepping down as party chairman. Although our campaign had been criticised as inept, and rumours abounded that Norman’s relationship with the Prime Minister had deteriorated, this was still a shock. We had just won an election – albeit against an unelectable opposition – and Norman was popular in the party for his robust Conservatism and for the courage with which he had returned to front-line politics after the dreadful injuries he and his wife Margaret had suffered in the bombing of the Grand Hotel in Brighton. He and I were to have our differences in later years, but he was a loss to the government, and I was sorry to see him go. So, despite their reported disagreements, was the Prime Minister, who tried in vain to persuade him to stay.

      I was asked to call on Margaret at Downing Street on the Saturday afternoon following the election. My days at Social Security were at an end. Another year, another job. But where next? A sideways move as a minister of state seemed unlikely, since a telephone call from Number 10 would have sufficed to tell me that. I considered the possibilities. I was sure that John Wakeham would be promoted to the Cabinet, leaving a vacancy as chief whip. John MacGregor, too, the Chief Secretary to the Treasury, was bound to be offered his own department. Either of those two vacancies seemed possible for me. As I drove to London, the lunchtime news listed the ministers believed to be leaving the Cabinet. It seemed the reshuffle was going to be a big one.

      When I arrived at Number 10 I was shown into the small waiting room on the ground floor near the Cabinet Room. To my surprise the Transport Secretary John Moore was already waiting there, and within a few minutes we were joined by Norman Fowler, the Paymaster General Kenneth Clarke and John MacGregor. Then the Industry Secretary Paul Channon arrived.

      One by one we were summoned to learn our fates. As John MacGregor preceded me, I guessed that I was to join the Cabinet as Chief Secretary to the Treasury. This proved to be right. When I was called in to see her the Prime Minister was warm and friendly. She spoke of the importance of the job, adding almost as an afterthought, ‘The Queen is expecting you at the Palace this afternoon so you can join the Privy Council.’ Although membership of the Privy Council is automatic upon joining the Cabinet it is a preferment of some significance. It is coveted more than any other recognition in the Commons, and I was delighted. As I left Number 10 with Norman Fowler (the new Employment Secretary) for the Privy Council the skies opened and the rain pelted down as we huddled under an umbrella. But nothing could have dampened our spirits that day, and the meeting of the Privy Council was a very jolly affair.

      Later I learned that I had been right in my guesses about the two jobs that might have been offered to me. The Prime Minister’s original intention, backed by William Whitelaw, was for me to become chief whip; but Nigel Lawson asked for me as chief secretary, and after a tussle he gained Willie’s support and had his way. This meant that I would now join the Cabinet, whereas the chief whip attends Cabinet but is not a member of it.

      It is tempting to reflect on how events might have turned out if I had become chief whip. An appointment to that post usually lasts for a whole Parliament. If that had been so in my case, I might never have been foreign secretary, chancellor or prime minister. Instead I would have been chief whip during Margaret’s leadership contest against Michael Heseltine in 1990. I have often wondered if I would have been able to obtain for her the few extra votes that would have enabled her to win on the first ballot. She would then have remained prime minister until the next general election, when the electorate as a whole would have had the chance to judge the government. I believe we would probably have lost that election – but it would have been a more fitting end for a long-serving prime minister than removal by her own colleagues. Moreover, it would never have given rise to the bitterness that has scarred the Conservative Party ever since. Nor would Europe have become such a divisive issue.

      But all that lay far ahead, and I was pleased at the job I had been given. The Treasury is the most powerful department in the government, since it not only determines macro-economic policy but controls the purse strings. Macro-economic policy was the prerogative of the Chancellor, Nigel Lawson, but public spending was to be my responsibility as chief secretary.

      The chief secretary has one of the lowest profiles of any Cabinet minister, but this is deceptive. For he is the most influential minister in determining the division of the total of public spending – who gets what. This gives him the power, if he wishes, to facilitate new policies or to hold them back. Thus, although the most junior member of the Cabinet, the chief secretary has an authority far greater than the casual observer ever realises. As prime minister I was always very careful who I appointed to the role, and watched very carefully what they did with it.

      The Treasury had many of the best officials in Whitehall. My Private Secretary, which in Whitehall parlance means the head of my Private Office, was Jill Rutter, a Treasury high-flyer. She had an extremely sharp brain and an acid sense of humour that spared no one. She had a proper respect for ability at all levels – but none for seniority alone. Jill was fearless, and had a healthy disregard for conventional wisdom. She was a fierce protector of her turf and her minister. An added bonus for me was her love of cricket, for she was a long-standing member of Surrey County Cricket Club. Sometimes we would relax between meetings by catching up with a Test match on television or, since long hours were normal, watching the late-night highlights with other members of my Private Office before leaving the Treasury building.

      The most important part of the chief secretary’s year is the public expenditure survey, which begins in the summer when each secretary of state puts in a ‘bid’ for his department’s financing for the next three years. These bids set out the ambitions of the department for the years ahead. Rather as the black widow spider dances an odd quadrille with its partner before finally mating, the public spending round has its own rituals. The bids often contain an unrealistic wish list, and are invariably padded so that the minister can be seen to make ‘concessions’ in head-to-head negotiation with the Treasury.

      I arrived at the Treasury to find that the bids for the forthcoming years were very high: for the first year alone they amounted to £6 billion more than the sum previously allocated, which was quite unaffordable. In response – the first part of the ritual – I prepared a paper for Cabinet in late July that set maximum spending levels for the next three years. For the first year, over which the greatest battles are always fought, I recommended that we should hold spending to the level agreed by Cabinet the year before – although I proposed spending increases after that. The paper had three purposes: to gain the collective approval of the Cabinet for the sum total of expenditure that was affordable; to convince the markets that we had a sensible policy; and to emphasise that the Treasury was not an Aladdin’s cave to be ransacked. I was firmly backed by the Prime Minister and the Chancellor, and – as I had done some private canvassing – I received support from other ministers.

      More surprising was that some of the ministers who had asked me for the largest increases for their departments were strongly supportive of restricting total expenditure: that stern monetarist Nick Ridley, for one, clearly saw scope for cuts elsewhere, whilst being confident that his own budget at Environment required a great deal more money. Nick was not alone; he was merely the colleague whose bid was most obviously at odds with his own philosophy.

      Throughout August, the Treasury raked through each department’s bid, enabling me to identify the weak points to attack when I wrote to ministers challenging their assumptions and costings. All this is ritual foreplay to prepare the ground for the detailed one-to-one negotiations between the chief secretary and the spending ministers at which the expenditure levels are agreed. Every subheading of expenditure is pored over at these bilateral meetings, which drag on for many hours. Several meetings are usually necessary before a conclusion is reached. The bilaterals are revealing. They expose vividly the ability of ministers and their personal commitment to their programmes.

      The process represents a sharp learning curve for the chief secretary, who has to be able

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