Margaret Thatcher vented her fury at the governor of the Bank of England after he raised interest rates in 1983 while she was contemplating calling elections, newly released papers reveal.
The documents, published today by the Thatcher archive at Churchill College, Cambridge, also show that she wanted to appoint then Conservative Party chairman Cecil Parkinson as her foreign secretary, until he confessed to having an affair. Another file shows she had drinks with a British mole inside the Soviet KGB.
Thatcher had a tense relationship with Gordon Richardson, who was in charge of the central bank when she came to office in 1979, believing him to be an obstacle to her economic policy. In January 1983, the Bank of England interest rate was raised to 11 percent from 10 percent while she was visiting the Falkland Islands.
“If I had been here, you would not have put up rates,” Thatcher told Richardson on her return, according to the diary of her economic adviser Alan Walters, one of the documents released. In the margin, he wrote: “Governor got a bollocking.”
Days later she was still angry. “I’ll never be able to go away again,” she told Walters. According to his diary, a major factor in the decision was pressure from Barclays Bank, which wanted to raise its own mortgage rate by 2 percentage points. Thatcher saw this as profiteering.
She was especially concerned about rates because she was considering calling an election that year, capitalizing on her popularity following Britain’s victory over Argentina in the Falklands War in 1982. When she took the decision, Walters recorded husband Denis as saying “the critical thing in calling the election early was the City and sterling,” which had been depreciating sharply against the dollar.
Richardson, who died in 2010, didn’t get a third period as governor when his term expired in 1983. He was replaced by Robin Leigh-Pemberton.
While the outcome of the June 9 election was in little doubt, Thatcher, asked by her press adviser Bernard Ingham to discuss the media plan for the day afterwards, replied, “Let’s not count our chickens.”
Still, she was privately planning what her new government would look like. On a scrap of paper, she jotted the initials of the men she wanted to promote, and the jobs she planned to give them. Top of the list was Cecil Parkinson, then aged 52. Next to his name, she wrote the initials: “F.S.”
A promotion to foreign secretary, one of the top three jobs in the British government, would have left Parkinson with only two ways to advance: becoming chancellor of the exchequer or succeeding her as prime minister. She seems to have kept this plan secret from her advisers, whose notes to her contain no mention of it.
“She knew that by promoting him in this way she was going to create an atmosphere around him,” said Chris Collins, a historian at the Margaret Thatcher Foundation and the only person to have studied the papers. “It’s possible she thought she was designating her successor.”
The night of her election victory, according to the then chancellor, Geoffrey Howe, Thatcher offered Parkinson the job. He then confessed to a long-running affair with his former secretary, Sara Keays. The next day, the prime minister received a letter from Keays’s father, saying that his daughter was pregnant. Thatcher burned the letter in the fireplace at Chequers, her country residence outside London.
‘Fire Them All’
She instead gave Parkinson the less prominent role of trade and industry secretary, with an expanded brief from that of his predecessor. He resigned in October of that year after the affair became public. He returned to the cabinet in 1987 as energy secretary.
Thatcher’s attack on Richardson is not the only example of her temper in the diaries. At one stage in February, frustrated by negotiations with Geoffrey Howe about his impending budget, she told Walters “she would do the Budget Speech herself - ‘fire them all.’”
The files also cover relations with the Soviet Union. Contrary to her reputation as “The Iron Lady” -- a nickname given her by Russia -- she was making overtures even before the arrival of Mikhail Gorbachev.
One reason for her change of stance was the intelligence she was receiving from a KGB double agent, Oleg Gordievsky. He had told his British handlers that the Russians had genuine fears of a Western “first strike” nuclear war.
Among the diplomatic observers listed as present when she addressed a Young Conservatives event in February was “Mr O.Gordievski from the Soviet Embassy.” He was writing a profile of her for the KGB.
“I was fascinated that she might have met him,” said Collins. “She probably didn’t know his name, and there he was in the room swapping stories over cheap champagne.”
Thatcher died in London in April, aged 87. The 1983 papers are available online at the Margaret Thatcher Foundation.