Editing Geoffrey Howe (section)

== Thatcher government ==
{{Thatcherism|people}}

=== Chancellor of the Exchequer ===
With the Conservative victory in the [[1979 United Kingdom general election|1979 general election]], Howe became [[Chancellor of the Exchequer]].<ref>{{cite tweet |user=CrownOffFOIDs |number=1516766799391604742 |author=Crown Office |author-link=Crown Office in Chancery |accessdate=17 August 2022 |title=Letters patent appointing Geoffrey Howe as Chancellor of the Exchequer }}</ref> His tenure was characterised by an ambitious programme of radical policies intended to restore the public finances, reduce inflation and liberalise the economy. The shift from direct to indirect taxation, the development of a medium-term financial strategy, the abolition of [[exchange controls]] and the creation of tax-free enterprise zones were among the most important decisions of his chancellorship.

The first of five budgets, [[June 1979 United Kingdom budget|in 1979]], promised to honour Professor [[Hugh Clegg (industrial relations)|Hugh Clegg]]'s report that recommended a return to pre-1975 pay levels in real terms, conceding Howe's point about "concerted action".{{efn|Clegg was chairman for the Pay Comparability Commission.}} Rampant inflation had, however, eroded competitiveness, and devalued pensions, investments, and wages. Thatcher reminded him: "On your own head be it, Geoffrey, if anything goes wrong," commencing an often tense and querulous working relationship.<ref name="Telegraph obit" />   Thatcher's point was that the vast increase in (indirect) taxation and government spending (notably in public sector pay) in 1979 would lead to terrible consequences&nbsp;– which it did, as unemployment doubled. The financial policy tightened the money supply and restricted public sector pay, ultimately driving up inflation, at least in the short term, and unemployment in the medium term.

{{quote|Fundamentally we do believe in German principles of economic management and should be able to get ourselves alongside them&nbsp;... pronounce in favour of&nbsp;... providing greater stability as encouraging convergence on economic policies.<ref>Howe, "Sir Geoffrey Howe to Margaret Thatcher, 31 Oct. 1978, THCR 2/1/1/32", in {{harvnb|Moore|2013|p=405}}.</ref>}}

During Thatcher's first term, the government's poll ratings plummeted until the "[[Falklands Factor]]". Howe's [[1981 United Kingdom budget|1981 Budget]] defied conventional economic wisdom by slowing the inflation rate during a recession. At the time, his decision was fiercely criticised by 364 academic economists in a letter to ''[[The Times]]'', who contended that there was no place for de-stimulatory policies in the economic climate of the time, remarking the budget had "no basis in economic theory or supporting evidence". Many signatories were prominent members of the academic sphere, including [[Mervyn King, Baron King of Lothbury|Mervyn King]] who later became the [[Governor of the Bank of England]].<ref>{{cite press release |url=http://www.iea.org.uk/in-the-media/press-release/can-364-economists-all-be-wrong |title=Were 364 Economists All Wrong? |publisher=Institute of Economic Affairs |date=13 March 2006 |access-date=12 October 2015 |archive-date=25 October 2015 |archive-url=https://web.archive.org/web/20151025012656/http://www.iea.org.uk/in-the-media/press-release/can-364-economists-all-be-wrong |url-status=live }}</ref>

The logic in his proposals was that by reducing the deficit, which at the time was £9.3&nbsp;billion (3.6% GDP), and controlling inflation, long-term interest rates would be able to decline, thus re-stimulating the economy. The budget did reduce inflation from 11.9% in early 1981 to 3.8% in February 1983. Long-term interest rates declined from 14% in 1981 to 10% in 1983.<ref>{{cite web|first=Lawrence H.|last=Officer|title=What Was the Interest Rate Then?|work=MeasuringWorth|year=2008|url=http://www.measuringworth.org/interestrates|access-date=11 March 2019|archive-date=4 September 2010|archive-url=https://web.archive.org/web/20100904024944/http://www.measuringworth.org/interestrates/|url-status=live}}</ref> The economy slowly climbed out of recession.  However, already extremely high unemployment was pushed to a 50-year high of 12% by 1984, narrowly avoiding the figure reached during the [[Great Depression]] of 13.5%. Some have argued that the budget, although ultimately successful, was nevertheless over the top.<ref>{{cite news|url=http://news.bbc.co.uk/1/hi/programmes/newsnight/4803858.stm|title=Were all 364 economists wrong?|first=Stephanie|last=Flanders|work=BBC News|date=14 March 2006|access-date=11 March 2019|archive-date=29 September 2021|archive-url=https://web.archive.org/web/20210929054132/http://news.bbc.co.uk/2/hi/programmes/newsnight/4803858.stm|url-status=live}}</ref> Specialist opinions on the question, expressed with 25 years' hindsight, are collected in an [[Institute of Economic Affairs]] report.<ref name="IEA_364allWrong">{{cite report|url=http://www.iea.org.uk/sites/default/files/publications/files/upldbook310pdf.pdf|title=Were 364 Economists All Wrong?|publisher=Institute for Economic Affairs|access-date=11 March 2019|archive-date=17 December 2019|archive-url=https://web.archive.org/web/20191217133805/http://www.iea.org.uk/sites/default/files/publications/files/upldbook310pdf.pdf|url-status=live}}</ref>

Unlike [[Reaganomics]], his [[Macroeconomics|macro-economic policy]] emphasised the need to narrow the budget deficit rather than engage in unilateral tax cuts – "I never succumbed&nbsp;... to the mistaken interpretations of [[Laffer curve|Lafferism]], which have led some US policymakers  so far astray";{{sfn|Howe|1994|p=128}} despite these measures the budget deficit remained on average 3% of GDP during Howe's tenure. His macroeconomic policy was designed to liberalise the economy and promote supply-side reform. This combination of policies became one of the defining features of Thatcherism in power.{{efn|As noted, for example, by {{harvtxt|Lawson|2006|p=123}} and preceding.}}  However, by the time of his last budget, shortly before a general election, there were early signs of a recovery, which Howe used to justify a tax cut.<ref name="Telegraph obit" />

Documents released under the British government's 30-year rule in 2011 revealed that in the wake of the [[Toxteth riots]] in Liverpool in 1981, Howe had warned Thatcher "not to overcommit scarce resources to Liverpool", writing that "It would be even more regrettable if some of the brighter ideas for renewing economic activity were to be sown only on relatively stony ground on the banks of the Mersey. I cannot help feeling that the option of managed decline is one which we should not forget altogether. We must not expend all our limited resources in trying to make water flow uphill".<ref name="liverpool">{{cite news|url=https://www.bbc.co.uk/news/uk-england-merseyside-16355281|title=Toxteth riots: Howe proposed 'managed decline' for city|work=BBC News|date=30 December 2011|access-date=2021-04-26|archive-date=28 December 2018|archive-url=https://web.archive.org/web/20181228202618/https://www.bbc.co.uk/news/uk-england-merseyside-16355281|url-status=live}}</ref> Howe later stated that he had not advocated the "managed decline" policy and that he had merely been warning of the danger of concentrating excessive resources on one area of need.<ref name="liverpool" />

=== Foreign Secretary ===
[[File:De Duitse minister Genscher (l) in gesprek met de Engelse minister Howe, Bestanddeelnr 933-6243 (cropped).jpg|thumb|Howe (left) in conversation with [[West German]] counterpart [[Hans-Dietrich Genscher]], 1986]]
[[File:Reagan Contact Sheet C36201 (cropped).jpg|thumb|right|Howe with US president [[Ronald Reagan]] in 1986]]
[[File:Bush Contact Sheet P02176 (cropped).jpg|thumb|right|Howe with US president [[George H. W. Bush]] in 1989]]
After the [[1983 United Kingdom general election|1983 general election]], Thatcher reluctantly appointed Howe Foreign Secretary, a post he held for six years, the longest tenure since [[Sir Edward Grey]] in 1905–1916.{{sfn|Campbell|2003|p=226}} With "the quiet determination" applied in the Treasury, he set off on a tour of Warsaw Pact countries, interviewing communist leaders and sounding out opponents.{{sfn|Campbell|2003|p=276}} The trip opened the way to further discussions with Mikhail Gorbachev, with whom he believed Thatcher shared "extraordinary chemistry."{{sfn|Campbell|2003|p=380}} He later looked back on this period (1983–1985) as his happiest and most fruitful and productive, engaging with world leaders across the summit table, sharing decisions with Thatcher, including a notable encounter with [[Caspar Weinberger]] on 6 September 1982. Success with the Americans proved decisive in bringing about the [[end of Communism in Europe]].{{sfn|Campbell|2003|p=270}}

Howe was closely involved in the negotiations leading up to the 1984 [[Sino-British Joint Declaration]] on the future of [[British Hong Kong|Hong Kong]], and developed a good working relationship with the [[United States Secretary of State]], [[George Shultz]], mirroring the close connection between Thatcher and President [[Ronald Reagan]].<ref>{{cite news |last=Langdon |first=Julia |author-link=Julia Langdon |url=https://www.theguardian.com/politics/2015/oct/10/lord-howe-of-aberavon |title=Lord Howe of Aberavon obituary |newspaper=The Guardian |date=10 October 2015 |access-date=11 March 2019 |archive-date=26 November 2018 |archive-url=https://web.archive.org/web/20181126173441/https://www.theguardian.com/politics/2015/oct/10/lord-howe-of-aberavon |url-status=live }}</ref> However, Howe's tenure was made difficult by growing behind-the-scenes tensions with the Prime Minister on a number of issues, first on South Africa, next on Britain's relations with the [[European Community]], and then in 1985 the [[Anglo-Irish Agreement]]. For his staff, Howe was a respected boss; mild-mannered, polite and courteous, he was assiduous in his attention to detail. However, the human rights questions over [[South African sanctions]] and trade embargo, coupled with his deep concern over Thatcher's strident style in Europe, increasingly drove a stressful wedge between Nos. 10 and 11. They began to drift apart on policy objectives with fatal consequences for the Prime Minister's ambitions. Thatcher's dominant style contrasted with his emollience, patience and capacity for negotiation. Their differences were dated to the Westland Affair in 1986, when senior ministers almost forced her to resign, according to [[Douglas Hurd]]'s memoirs.{{sfn|Hurd|2003}}{{page needed|date=June 2018}}

In June 1989, Howe and his successor as chancellor, [[Nigel Lawson]], both secretly threatened to resign over Thatcher's opposition to proposed British membership of the exchange rate mechanism of the [[European Monetary System]]. Howe supported the ERM because of his general support of European integration and because he had become convinced as chancellor of the need for more exchange rate stability.<ref name="IndObit" />{{sfn|Howe|1994|p=448}} She turned increasingly for advice to her No.10 private secretary Charles Powell, a career diplomat who contrasted to Howe's mandarin-style. Howe remarked: "She was often exasperated by my tenaciously quiet brand of advocacy."{{sfn|Howe|1994|p=570}} His friends often wondered why he put up with her style for so long, but many considered him her successor. One historian has suggested that the government would have survived even the ructions over Europe had Howe remained her ally.{{sfn|Dell|1997|pages=449–89}}

=== Deputy prime minister ===
In July 1989, the then little-known [[John Major]] was unexpectedly appointed to replace Howe as Foreign Secretary. Howe became [[Leader of the House of Commons]], [[Lord President of the Council]] and [[Deputy Prime Minister of the United Kingdom|Deputy Prime Minister]]. In the reshuffle, Howe was also offered, but turned down, the post of Home Secretary.<ref>{{cite news|url=https://www.bbc.co.uk/news/uk-politics-14016127|title=Obituary: Geoffrey Howe|work=BBC News|date=10 October 2015|access-date=11 March 2019|archive-date=22 March 2017|archive-url=https://web.archive.org/web/20170322210130/http://www.bbc.co.uk/news/uk-politics-14016127|url-status=live}}</ref> Although attempts were made to belittle this aspect, Howe's move back to domestic politics was generally seen as a demotion, especially after Thatcher's press secretary [[Bernard Ingham]] belittled the significance of the deputy prime minister appointment, saying that the title had no constitutional significance, at his lobby briefing the following morning.<ref>{{cite news|url=https://www.independent.co.uk/news/uk/politics/yes-prime-minister-why-we-will-never-be-without-spin-doctors-2202522.html|title=Yes, Prime Minister: Why we will never be without spin doctors|last=McSmith|first=Andy|author-link=Andy McSmith|date=3 February 2011|newspaper=The Independent|location=London|access-date=11 March 2019|archive-date=8 January 2020|archive-url=https://web.archive.org/web/20200108072658/https://www.independent.co.uk/news/uk/politics/yes-prime-minister-why-we-will-never-be-without-spin-doctors-2202522.html|url-status=live}}</ref>

Howe then had to give up the Foreign Secretary's country residence [[Chevening]]. The sceptical attitude towards Howe in Number 10 weakened him politically&nbsp;– even if it might have been driven to some degree by fear of him as a possible successor, a problem compounded by the resignation from the Treasury of his principal ally Nigel Lawson later in the same year. During his time as deputy prime minister, Howe made a series of coded calls on Thatcher to realign her administration, which was suffering rising unpopularity following its introduction of the [[Poll tax (Great Britain)|poll tax]], as a "listening government".<ref name="IndObit" />

=== Relationship with Thatcher ===
Tensions began to emerge in 1982 during the [[Falklands War]] when Thatcher, on the advice of Harold Macmillan (who warned against including the Treasury), refused to appoint him to the [[war cabinet]].{{sfn|Vinen|2009|p=148}} During his first budget, Thatcher wrote to [[Adam Ridley]]: "The trouble with people like Geoffrey&nbsp;– lawyers&nbsp;– they are too timid."<ref>Ridley, "Interview with Sir Adam Ridley", in {{harvnb|Moore|2013|p=407}}.</ref> On the occasion of the general election victory of 1983, there were heated exchanges of views in No. 10 on her decision to move him to the Foreign Office. Howe was one of those who persuaded [[Michael Heseltine]] that on balance, it was probably better that he, rather than she, resign during the [[Westland affair]] in 1986. At the Scottish Party Conference in [[Perth, Scotland|Perth]] in 1987, Howe spelt out his position for the [[European single market]] and the proposed Delors Plan (Thatcher having accepted the [[Single European Act]] in 1986<ref>{{cite news|url=https://www.bbc.co.uk/news/uk-politics-11598879|title=Thatcher and her tussles with Europe|date=8 April 2013|work=BBC News|access-date=11 March 2019|archive-date=26 March 2019|archive-url=https://web.archive.org/web/20190326075038/https://www.bbc.co.uk/news/uk-politics-11598879|url-status=live}}</ref>). In the following year, Thatcher made her [[Bruges speech|speech at Bruges]] declining the offer to deepen the bureaucratic state towards a "[[Federalisation of the European Union|Federalist Superstate]]".

At the [[Intergovernmental Conference|Madrid inter-governmental conference]], the tensions were ratcheted higher as Thatcher emphatically renounced any advance in British policy over the European agenda for "[[European integration|ever closer union]]" of political and economic forces. Howe forced her to give conditions for entering the proposal for [[European Exchange Rate Mechanism|entry to the ERM]] in June 1989. Howe and Nigel Lawson threatened to resign, but she called his bluff by appointing John Major over his head. Howe resented having to give up the state residence of Chevening in Kent on being effectively demoted to Lord President of the Council. He deeply resented leaving the Foreign and Commonwealth Office, a job he had always coveted. When Lawson resigned, it looked like a natural reshuffle, but Howe was frozen out of the inner circle. When Howe attended a meeting with the Queen, he found that Britain had joined the ERM before he had been informed about it&nbsp;– the ERM had been Howe's policy. The pound sterling was thus pegged to the [[Deutsche Mark]] instead of the US dollar. The consequence was that Britain's currency was pummelled into devaluation by a much stronger German economy&nbsp;– the option to leave cost Britain billions in 1992. But at the [[Rome Summit]] in October 1990, Thatcher was said to have exclaimed, in a fit of pique, "no, no, no" to the [[Delors Plan]] and repeated the government's policy at Paris summit on 18–20 November.<ref>{{cite web|url=https://www.theatlantic.com/business/archive/2013/04/watch-margaret-thatcher-explain-why-the-euro-is-a-terrible-idea-in-1990/274768/|title=Watch Margaret Thatcher Explain Why the Euro Is a Terrible Idea in 1990|first=Jordan|last=Weissmann|date=8 April 2013|magazine=The Atlantic|access-date=11 March 2019|archive-date=29 September 2021|archive-url=https://web.archive.org/web/20210929054123/https://www.theatlantic.com/business/archive/2013/04/watch-margaret-thatcher-explain-why-the-euro-is-a-terrible-idea-in-1990/274768/|url-status=live}}</ref> She also repeated [[No. No. No. (Margaret Thatcher)|the "no, no, no" message]] in the House of Commons on her return to Westminster. Howe had told [[Brian Walden]] (a former Labour MP) on ITV's ''[[Weekend World]]'' that the "government did not oppose the principle of a single currency", which was factually accurate – as its policy was that the "hard ECU" could evolve into a single currency, but that a single currency should not be imposed – but contrary to Thatcher's emerging view.

=== Resignation ===
Howe tendered his resignation on 1 November 1990. Sometimes mocked as "[[Mogadon]] man"&nbsp;– Mogadon being a well-known sleeping medication&nbsp;– Howe delivered a blow to Thatcher's government in full view of [[Prime Minister's Questions]] and a packed House of Commons on 13 November. Howe later contended that the [[Community Charge]] was incompetently implemented, but it was the direction of European policy rather than domestic rioting that tipped the balance. His dispute with Thatcher was over matters of substance more than ones of style; he advocated a move back towards a more centrist position on constitutional and administrative issues, such as taxation and European integration. Howe represented a moderate position in the party, being educated, lawyerly, and diligent; while direct, he was conciliatory and collegial in style.<ref name="Telegraph obit" />

Howe wrote a cautiously worded letter of resignation in which he criticised the Prime Minister's overall handling of UK relations with the European Community. After largely successful attempts by [[10 Downing Street]] to claim that there were differences only in style, rather than substance, in Howe's disagreement with Thatcher on Europe, Howe chose to send a powerful message of dissent. In his resignation speech in the Commons on 13 November 1990, he attacked Thatcher for running increasingly serious risks for the country's future. He criticised her for undermining the policies on EMU proposed by her chancellor and governor of the Bank of England.<ref>{{cite Hansard |house=House of Commons |url=https://publications.parliament.uk/pa/cm199091/cmhansrd/1990-11-13/Debate-1.html#Debate-1_head1 |access-date=2021-04-26 |title=Personal Statement |date=13 November 1990 |column=461}}</ref>

Howe offered a cricket simile for British negotiations on EMU in Europe: "It's rather like sending our opening batsmen to the crease only for them to find that before the first ball is bowled, their bats have been broken by the team captain."<ref name=cricket>{{cite news |title=Geoffrey Howe's most celebrated quotes |url=https://www.theguardian.com/uk-news/2015/oct/10/geoffrey-howe-most-celebrated-quotes |access-date=1 March 2024 |work=The Guardian |agency=Press Association |date=10 October 2015}}</ref> The simile was written by his wife, Elspeth, who was an avid cricket fan and had watched Thatcher use a cricket metaphor on the news the night before Howe gave his speech.<ref>{{Cite AV media |url=https://www.youtube.com/watch?v=vwrQ4txIX-Q |title=The Speech That Brought Down Margaret Thatcher & Kick-Started Brexit |date=2024-08-30 |publisher=The i Paper |access-date=2025-02-01 |via=YouTube}}</ref> He ended his speech with an appeal to cabinet colleagues: "The time has come for others to consider their own response to the tragic conflict of loyalties, with which I have myself wrestled for perhaps too long."<ref name="Observer">{{cite news |last=Rawnsley |first=Andrew |author-link=Andrew Rawnsley |url=https://www.theguardian.com/politics/2015/oct/10/geoffrey-how-the-cabinet-ally-who-became-thatchers-assassin |title=Geoffrey Howe, the close cabinet ally who became Thatcher's assassin |newspaper=The Observer |date=10 October 2015 |access-date=11 March 2019 |archive-date=30 March 2019 |archive-url=https://web.archive.org/web/20190330121820/https://www.theguardian.com/politics/2015/oct/10/geoffrey-how-the-cabinet-ally-who-became-thatchers-assassin |url-status=live }}</ref> A few days later, [[Cledwyn Hughes]], the Labour leader in the Lords, said: "I much regretted the departure of Sir Geoffrey Howe from his office and from the Government. Sir Geoffrey was an outstanding member of the Prime Minister's Administration since 1979 and his decision to leave reveals a fatal flaw in the management of our affairs."<ref>{{cite Hansard |speaker=Lord Cledwyn of Penrhos |house=House of Commons |url=https://api.parliament.uk/historic-hansard/lords/1990/nov/07/address-in-reply-to-her-majestys-most#column_12 |access-date=2021-04-26 |title=Address in reply to Her Majesty's most gracious Speech |date=7 November 1990 |column=12}}</ref>

Although Howe subsequently wrote in his memoir {{citeref|Howe|1994|''Conflict of Loyalty''|style=plain}} that his intention was only to constrain any shift in European policy by the Cabinet under the existing prime minister, his speech is widely seen as the key catalyst for the leadership challenge mounted by Michael Heseltine a few days later.<ref name="Observer" /> Although Thatcher won the most votes in the [[1990 Conservative Party leadership election|leadership election]], she did not win by a large enough margin to win outright. Subsequently, she withdrew from the contest on 22 November.<ref name="1992 elex" /> Five days later, Chancellor of the Exchequer John Major was elected party leader and thus became prime minister.<ref name="1992 elex" /> The change proved to be a positive one for the Tories, who had trailed Labour in most opinion polls by a double-digit margin throughout 1990 but soon returned to the top of the polls and won the [[1992 United Kingdom general election|general election in April 1992]].<ref name="1992 elex">{{cite news|url=http://news.bbc.co.uk/1/hi/uk_politics/vote_2005/basics/4393317.stm|title=1992: Tories win again against odds|work=BBC News|date=5 April 2005|access-date=11 October 2015|archive-date=22 April 2009|archive-url=https://web.archive.org/web/20090422045259/http://news.bbc.co.uk/1/hi/uk_politics/vote_2005/basics/4393317.stm|url-status=live}}</ref>