Page last updated at 04:28 GMT, Wednesday, 30 December 2009

Margaret Thatcher's spending cuts 'upset her ministers'

Margaret Thatcher in 1989
Mrs Thatcher wanted to cut department budgets by at least 10%

Margaret Thatcher faced considerable opposition from her own ministers to her plans to slash public sector spending, documents from 1979 reveal.

Records from the National Archives lay bare the new prime minister's devotion to her "operation" - and show that no department was safe.

Those most upset at cutting jobs, money and services were chancellor Geoffrey Howe and defence secretary Francis Pym.

The PM also rejected an idea to send a Christmas message to civil servants.

'Go no further'

The National Archive records show that shortly after taking power in 1979, Mrs Thatcher asked all government departments to come up with ideas to cut at least 10% - and up to 20% - from their budgets.

In reply, Mr Pym wrote to her several times, pleading with her to exempt the Ministry of Defence.

He said: "If we are to contribute properly to our own defence we must provide the services with improved equipment at the earliest possible date given that the quality of the Soviet threat is improving all the time."

What are we doing with 566,000 that cant be done with 500,000?
Margaret Thatcher, in 1979

He also insisted the MoD "has been very deliberately and successfully squeezing itself for years in a very large way".

"I hope that on reflection you will accept that I can go no further at this stage," he added.

Mr Howe was also unhappy, arguing that while "I totally agree about the importance of the exercise", the Treasury should also get special treatment.

He wrote: "The departments [of mine] you have mentioned collect money while others spend it; and in the present very tight budgetary situation, it is certainly not easy or sensible for me to make huge bites in our capacity to raise money."

But Mrs Thatcher's axe-wielder in chief, Lord Soames - then Lord President and leader of the the House of Lords - was unimpressed.

In no uncertain terms, he insisted the new Thatcher government was "in the business of slimming down the [civil] service by cutting out functions".

He told Mr Howe he did not see "how we can have one law for departments concerned with raising money and a different one for those who disburse money".

Margaret Thatcher's handwritten notes on a 1989 document (Pic: National Archives)
Mrs Thatcher wondered why 566,000 civil service staff were needed

In another letter to both ministers, Lord Soames wrote: "I must tell you frankly that I find this [your objections] disappointing." He warned that unless they did more, "I can see no prospect of even a barely respectable result for this operation."

The Tories introduced a complete freeze on civil service recruitment after taking power, but this also divided the Cabinet.

But Mrs Thatcher was adamant the freeze should continue, and a handwritten note from her insisted it was "a valuable way of keeping within the cash limits".

In a memo from Cabinet secretary Sir John Hunt, he said the PM "does not accept the apparent premise that virtually no cuts in manpower can be made unless services are to be reduced".

And indeed Mrs Thatcher herself wrote by hand: "What are we doing with 566,000 [staff] that can't be done with 500,000?"

Where a suggestion was made in one document to cut staff costs by 2%, she added in the margin: "Too small".


The "disappointment and dismay" with which the civil service reacted to Mrs Thatcher's plans is revealed in another archive document.

Former defence secretary Francis Pym and former chancellor Geoffrey Howe
Francis Pym and Geoffrey Howe were especially unhappy with the cuts

In a letter to the prime minister a staff representative, Ian Cutler, wrote: "It seems quite clear to us that even the 10% option is in parts illogical and short-sighted and will lead to the converse of economies."

Other newly-released documents about a proposed Christmas message to staff - similar to that given each year to the Armed Forces - reinforce the hard line Mrs Thatcher took with the civil service.

The official who suggested it said it would be beneficial because "morale in the service has become depressed".

However the PM disagreed.

In a handwritten response, Mrs Thatcher said: "I just don't think this is a very good idea. Of course we wish everyone a happy Christmas, but an 'official' message doesn't seem quite right. MT."

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