The Chancellors (22): Reginald Maudling

Reginald-Maudling-196_466Reginald Maudling, 1962-64

Conservative, under Macmillan and Home

Reginald Maudling came from a solidly upper middle class background. He won a scholarship to Merchant Taylor’s school and then won a first in Greats at Merton College, Oxford. Having served in intelligence in the war, he became prominent in the new Conservative Research Department, playing a part in framing the Industrial Charter that repositioned the Conservatives after the landslide defat of 1945 and kick started the career of a number of the new generation of Tories. It fitted his political temperament: he was a natural Keynesian and adherent of Macmillan’s Middle Way; he was a member of the One Nation group; once again, the launchpad of many a career of the new generation. He entered parliament in 1950, and made an immediate mark. By 1952, he was a junior minister and was rapidly promoted later that year to be economic secretary to the Treasury: he had supported ROBOT (see the article on Butler as chancellor, here). In his case it was for different reasons to the Treasury mandarins: he believed it would take away the brake on economic growth that the balance of payments acted as under the Bretton Woods system. He then held went to the ministry of supply (which he helped abolish) and then served as paymaster general. As such, he entered the cabinet when he was put in charge of Macmillan’s Plan G, the negotiations to create a European Free Trade Area, which would include the members of the EEC.

Maudling was deeply skeptical about the EEC. Unfortunately, the EEC were even more skeptical about EFTA. Significantly, given what was to come, de Gaulle who vetoed EEC involvement in EFTA, seeing it as an American Trojan Horse. Maudling was left to build the EFTA of the seven from the ashes. It was not a success. Indeed, its failure would help explain Macmillan’s decision to apply for EEC membership later on. Its failure was hardly Maudling’s fault, though. Nonetheless, it might be argued that he had failed to see what many would come to see as the only viable alternative: to wit, that EEC membership was in Britain’s economic and geopolitical interest.

EFTA’s failure did not interfere with Maudling’s career. Macmillan sent him to the Board of Trade in 1959, and then made him colonial secretary. As a rising star, and a progressive, he seemed ideally suited to put forward as a fresh new face of a refreshed cabinet: thus, Macmillan made him chancellor in the Night of the Long Knives.

As Chancellor, Maudling is remembered for his ‘dash for growth’. In fact, he arrived at it in stages. At the Board of Trade, he had inevitably remained involved in economic policy, nor had his brief time at the Colonial Office dulled that interest. Maudling faced two related sets of problems. One was long term: the underlying underperformance of the British economy. The extent of the British disease, as it would come to be known, was perhaps overdone at all times. Certainly, it could be greatly over-exaggerated in the early ‘sixties. Nonetheless, Maudling recognised, just as his predecessors had done, that Britain did have long-term problems.

Britain’s growth rates were sluggish, its productivity weak, its industrial relations poor and the feeling that Britain was living beyond its means was now commonplace. Inflation was a threat, and sterling was vulnerable. None of this was new, however, and at first Maudling was cautious. What changed everything was a more short-term economic issue, and politics. Unemployment was rising sharply: it would peak at 873,000, in 1963. The government’s political position was worse. The game changer was meant to be entry to the EEC, but de Gaulle vetoed that in early 1963 (you can read about that here). Meanwhile, the famous Orpington by-election of 1962 was followed by six by-elections in which Labour took formerly Conservative seats. Meanwhile, a single-digit Labour lead in the polls in 1962 became a double-digit lead in 1963. The other hoped for game changer, the cabinet reshuffle that saw Maudling become chancellor had clearly failed: the ultimate victim of the Night of the Long Knives was Macmillan himself. Thus, by October 1963, Maudling was serving a new prime minister of a government staring defeat in the face the following year.

The Dash for Growth was, naturally, deeply political. But it also had some economic logic to at least parts of it. Maudling cut purchase tax on motor cars.  Car production was the engine of economic growth in the western world: to stimulate care sales in the UK made economic sense. There were measures to encourage industrial investment and training. Most of all though, there was a simple injection of cash: tax cuts and spending increases. By the time of the April budget of 1963, Maudling had reflated the economy to the value of something like £460m, leaving a borrowing requirement of £700m.

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Politically, it almost worked: Labour only had a majority of four in 1964. In many ways, it stole Labour’s ground form under them. Harold Wilson’s famous pitch for the ‘white heat of technology’ and a National Plan were in part an acknowledgement that Maudling had stolen Labour’s expansionist Keynesian clothes. Even the growth target of 4% came from the would-be planning of the NEDC (a body Maudling had little time for).

If it was economically reckless, it could have been worse. Macmillan had wanted more, not less. It was still reckless, though. By April 1963, the unemployment rate had just begun to fall. Maudling was injecting demand into an already recovering economy. It was inflationary, and the income tax cuts were directly so, even more so in the absence of an incomes policy. Most of all, though, Maudling was playing with fire when it came to the balance of payments. By July 1964, a deficit of £600m forced an increase in the Bank Rate. But, with an election looming, nothing else was done.

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Maudling had gambled, and nearly won. But his party lost, and so did he. He had often been spoken of as Home’s successor, but the Conservative party was not to be placated: he expected to win, but lost to Heath by 150-133, in 1965. He would then serve on Heath’s front bench, before being home secretary under Heath until a financial scandal saw his downfall (you can read about it here, to come). Maudling was one of ten chancellors to also be home secretary (seven of them, like Maudling, never got the top job). He was certainly not the only post-war Conservative chancellor to have played fast and loose with the fiscal strings and leave a Labour chancellor with a fiscal mess to clear up. The temptations of Stop-Go and the looming noose of a general election proved a temptation too far, once more. Arguably, he was the most irresponsible of the six Conservative chancellors of this era, though Anthony Barber (1970-74) would, arguably, be worse. Labour may have exaggerated the black hole he left them, claiming an £800m balance of payments deficit: incoming chancellors tend to. The economic and financial problems that would bedevil the Wilson governments were undoubtedly made worse by their own failings, but they had their origins in Maudling’s roll of the fiscal dice. Famously.   whilst still clearing his desk, he said to his successor and friend, Jim Callaghan, ‘sorry, old cock, to leave it in this shape’: he was, in fact, summing up his record as chancellor pretty well.

You can read about Maudling’s career after 1965, here (to come).

 

 

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The Home Secretaries (21): Sir Henry Brooke

NPG x86502; Henry Brooke, Baron Brooke of Cumnor by Elliott & FrySir Henry Brooke, 1962-64

Conservative, under Macmillan and Home

After being educated at Marlborough, like his predecessor Rab Butler, Sir Henry Brooke took a first in classics from Balliol College, Oxford. Shortly after, he joined the Conservative Research Department upon its foundation in 1929; he was elected to London County Council before winning a by-election in 1938. In the Norway debate, he made a strident plea in defence of Chamberlain. He lost his seat in 1945, and served as leader of the Conservative group on the LCC until 1951. Even after winning Hampstead and returning to the Commons in 1951, he remained active in London politics.

In 1954, he was made financial secretary to the Treasury and then, in 1957, minister of housing and local government. As such, he was responsible for implementing the Clean Air Act, which ended the notorious London smog. The Rent Act, which abolished rent controls, was more contentious. On the one hand, it brought many homes onto the private rental market. On the other, it allowed rents to rise sharply and opened up the way for landlords to try to force out traditional working class tenants and rent houses by the room. This was exploited by slum landlords to rent out rooms at higher rents in cities, often to new immigrants. The worst of these were the likes of Peter Rachman: Rachmanism became the shorthand for the worst of the slum landlords.

In 1961, Brooke returned to the Treasury, in the new post of chief secretary. He was not there for long. When Macmillan demoted Butler in the Night of the Long Knives, he turned to Brooke as a safe pair of hands at the Home Office. It was not a good choice. As recent events have shown, home secretaries can easily be undone by events, and Brooke turned out to be accident-prone. A series of bizarre stories engulfed him: he deported the controversial American comedian Lenny Bruce twice in three days, for example. Others were tragic: in the wake of the Profumo affair, he pushed through the prosecution of Stephen Ward, who then took his own life. He mishandled the Carmen Bryan case. Bryan was a young Jamaican woman who was convicted for shoplifting goods to the value of £2 and under the terms of newly passed Commonwealth Immigrants Act, she was to be deported. Having imprisoned her for six weeks, he backed down. The visit of the politically controversial king and queen of Greece saw street protests in London. Brooke blamed the protests on ‘a handful of communists, anarchists, beatniks, and members of the Campaign for Nuclear Disarmament.’ Some protestors were imprisoned after they were attacked with a half brick by a half-mad police officer; in the subsequent trial, he and several of his colleagues committed perjury to ensure convictions. Brooke delayed the prisoners’ release for a whole year.

Brooke rejected any notions of reform in the law on prostitution and homosexuality. He also fell prey to the other besetting danger of the Home Office: Dangerous Dogs Act syndrome (see the article on Kenneth Baker to come). The popular press pontificates, then the home secretary legislates, and legislates in haste: something must be done, whether badly or not. The Drugs (Prevention of Misuse) Act and the Dangerous Drugs Act were both conceived in haste, and misconceived. The Malicious Damage Act reacted to the furore over mods and rockers, gangs of youths fighting in British cities and seaside resorts, to a singular lack of effect. He became one of the favourite targets of the satire boom.

Brooke was the last home secretary to send men to the gallows. Whilst at the Home Office, he concluded that the 1957 Homicide Act was unworkable, and likely to provide anomalous and unfair sentences. Being home secretary turned him into an abolitionist. By the time Sidney Silverman’s 1965 bill to abolish the death penalty came before the Commons, Brooke spoke in support of abolition. In doing so, he also warned of the difficulties that larger numbers of prisoners serving very long sentences would cause.

He was a decent man who found himself in a job that often consumes its office holders, and leading a department that requires a degree of detachment from what are often blinkered officials. If he struggled to rise above those limitations, he would hardly be the last home secretary of whom that might be said.

And here was Brooke being lampooned on That Was the Week that Was:

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The Chancellors (21): Selwyn Lloyd

selwyn lloydSelwyn Lloyd, 1960-62

Conservative, under Macmillan

You can read about Lloyd’s career up until 1962, and as foreign secretary, here.

As Macmillan’s third chancellor, Lloyd was being handed a poisoned chalice, after Derick Heathcoat –Amory’s pre-election splurge in 1959, and he knew it. One of his first questions to his permanent secretary was ‘how soon are we going bust?’ Lloyd had told Macmillan that he intended to be an orthodox chancellor. For him, Macmillan’s belief that unemployment was the greater evil than inflation was mistaken. The question would be, how could the two men square the circle?

The problems were hardly new: inflation, the fear of rising unemployment and pressure on Sterling. Lloyd’s approaches were often innovatory. Like all the post-war chancellors (bar Butler’s brief dalliance with floating the pound), Lloyd was implacably opposed to devaluing Sterling. The crunch came in July 1961, when fears of a run on Sterling led the government to draw $1.5bn in loans from the International Monetary Fund. As the IMF do in such circumstances, they extracted their pound of flesh in the form of deflation. There were £300m worth of spending cuts, some tax hikes and interest rates went up to 7%.

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Lloyd also sought to innovate. The National Economic Development Council (Neddy) sought to gain tripartite agreement between government, industry and the trade unions about growth rates and within that, it was hoped, improvements in productivity and realism in wage demands. Lloyd also took the first steps towards a national incomes policy, through his National Incomes Council. Nicky never really got off the ground, and Neddy never amounted to much.

As far as wage restraint went, the nearest the government got to it was Lloyd’s pay-pause, a freeze on public sector incomes. The problem with that was its unpopularity, as public sector employees saw prices go up, private sector wages go up and their wages frozen. At this time, many public sector employees, such as teachers, were natural Conservatives. At the same time, deflation had its effect: unemployment was rising. The government felt the political chill. In March 1962, the Liberals had a sensational by-election victory in Orpington; on 6th June, Labour took Middlesbrough West. Labour were ahead in the polls. The likes of Rab Butler, Iain Macleod, Lord Home and cabinet secretary Sir Norman Brook thought Lloyd’s time had come.

Lloyd didn’t see it coming. When he was still foreign secretary, Macmillan had given him the use of Chequers. Lloyd saw himself as Macmillan’s trusted friend and confidant: Macmillan had even assure him that his position was secure. As Macmillan would say, there are no friends in politics. Thus, Macmillan decided to sack his chancellor; that became the sacking of seven of his cabinet in the Night of the Long Knives.

In 1951, Lloyd had married a young woman half his age, a friend of the family: they divorced in 1957. As such, he was deeply lonely man, who guarded his private life. Macmillan’s betrayal meant he lost his homes, his career and even his much-loved dog.

Ironically, the betrayal did Macmillan at least as much harm in the end. Lloyd was hurt, but not bitter. He knew that Macmillan had privately referred to him as the ‘middle class lawyer from Liverpool, and even suggested that as a title for his memoirs. He led an inquiry into Conservative Party organisation, which would help the party win in 1970, and played a key role in helping Home succeed Macmillan. He returned to cabinet as lord privy seal and leader of the House of Commons, in which role he won universal respect. He returned to the backbenches in 1966, and in 1971 was elected speaker.

As chancellor, Lloyd had something close to an impossible job. For all that, Lloyd was a more responsible chancellor than either Amory or Maudling. His tenure may have seen the greatest economic difficulties of the Macmillan years, but much worse was to come by the time Wilson and Heath took office. Undoubtedly, Macmillan treated him shabbily: for Edmund Dell, ‘a chancellor betrayed’. Still, Lloyd remains one of eight men to have been both chancellor and foreign secretary, albeit with the misfortune to hold both in uncertain times.

This documentary on The Night of the Long Knives tells Lloyd’s story well.

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