The mood in the ‘no’ camp was quite different. Although the government of the day had given equal funding to both sides, the ‘yes’ campaign could count on the support of big business – the ‘no’ campaign was a humble pile of pea-shooters beside the cannon of their rivals. Like their opponents, they came from seemingly incompatible positions; unlike them, these positions appeared to be those of the radical fringe. The National Front and the British Communist party, for example, were Eurosceptic. And so, as Enoch Powell and Tony Benn hectored the people from the same platform, many wavering voters saw only division and demagoguery. How could a nation that so obviously looked askance at Europe listen so warmly to the Europhiles? Across the Channel lay the Continent, where an ordinary family could now take its holidays; there was the Common Market, which made those holidays possible; and then the EEC, which surely had nothing to do with either holidays or the Common Market, was not regarded as having designs on English liberty.
The prime minister’s attitude to the EEC was informed by cheerful ignorance. Wilson knew little of Europe and cared even less. The Scilly Isles were his preferred holiday destination and he considered champagne a poor substitute for beer. For Wilson, the referendum represented little more than an opportunity to steer the nation’s attention away from more proximate concerns. For his part, Callaghan was unconvinced. His apathy was apparent in a television interview where he refused to say whether the people should vote for or against remaining in the Common Market, even though his own government theoretically supported it. Yet even the government’s indifference counted in favour of the vote for ‘yes’. When the votes were counted, the referendum showed a majority of over 60 per cent in favour of remaining. The matter, for the moment, was closed. Now remained the question of failing exports, and other commitments which extended beyond the power of any single government to address, let alone resolve.
Harold Wilson had planned to resign at sixty, yet there was little to suggest that he would give up what power he had. However, there were no policies that were likely to come to fruition, and no garlands left to win. One civil servant recalled that Wilson seemed to be ‘living through one day to the next’, and there were more disturbing tokens of decline. His paranoia grew more acute as the Seventies progressed, and he saw spies everywhere. So fearful was he of the supposed influence of BOSS, South Africa’s infamous Bureau of State Security, that when rumours were brought to him about a dark conspiracy to murder Jeremy Thorpe, his friend and rival, he contrived to assure even parliament that BOSS was behind it. He was convinced that Number Ten was being bugged.
In the course of one remarkable interview he went further yet, to the brink of sanity itself. ‘I see myself as the big fat spider in the corner of the room,’ he informed two journalists. ‘Sometimes I speak when I’m asleep. You should both listen. Occasionally when we meet, I might tell you to go to the Charing Cross Road and kick a blind man standing in the corner. That blind man might tell you something, lead you somewhere.’ He began to delegate, and to drink, more and more. His once unassailable memory had begun to totter. The cabinet had not known of his plans to resign and, when the announcement came, it took everyone, even Callaghan, by surprise, and shock overwhelmed feelings of relief or regret. In March 1976, at a farewell party at Chequers, a photograph of the outgoing prime minister showed a little old man with wandering eyes and a vacant smile.
49
Let us bring harmony
After the surprise of his departure, Wilson was largely forgotten. But he had deserved better. In terms of his electoral record, he was the most successful prime minister in history. He had united a party whose constituent elements were never at ease with each other; he had presided over the golden age of the welfare state; and he had shown himself an unsurpassed political tactician. But he had outstayed his day.
In previous years, Roy Jenkins had been the favourite to succeed him, at least among members of the press. But as a passionate Europhile with tastes to match, he could never command the allegiance of the Left, while Michael Foot would never woo the Right. And Denis Healey, for all his brilliance, was simply too rebarbative. In any case, Wilson had picked his successor. In the event, ‘Big Jim’ Callaghan won the leadership by 176 votes to Michael Foot’s 137. The result was a clear endorsement, yet, for those on the right, an unsettling augury; Foot’s hour would come. Callaghan had long dreamed of the moment when he would kiss the sovereign’s hand. ‘Prime Minister,’ he was heard to murmur, ‘and never even went to university.’ The queen herself had been puzzled and disturbed by Wilson’s decision, but she acquiesced with her habitual grace.
During the Sixties, the Labour government had tried desperately to ensure full employment while keeping down inflation. Wilson had attempted a six-month price and pay freeze, but it had not answered. Between 1964 and 1979 there had been no fewer than eight incomes policies, and all had run aground. The centre could not hold when the periphery was under assault. Healey’s attempted rescue of the economy was testament to his remarkable agility and persistence. Thanks to his efforts to curb public spending, deeply unpopular though they were, inflation fell from 29 per cent to 13 per cent in under nine months. The fragility of sterling, however, was a matter that none could ignore. The government employed every resource to prevent its collapse, but the world was unconvinced. Appearances were still against the pound. The Bank of England spent almost all its reserves in propping it up, but it seemed set to equal the dollar. What could be done? There was the eccentric proposal offered by Tony Benn that Britain become a ‘siege economy’, placing tariffs on imports yet somehow still able to export freely. Other members of the cabinet knew that there was no recourse left but an appeal to the highest financial authority in the world, the International Monetary Fund. The crisis came when Denis Healey, arriving at Heathrow to fly to the United States, was told of the pound’s collapse. His place, he saw, was at home. He drove back to Westminster. And so the United Kingdom, once the world’s banker, had to doff its pride and beg money of its allies.
For that is what it amounted to. The IMF was funded largely by the United States and Germany, which made absurd the suggestion of Anthony Crosland that it could be blackmailed by threats of Britain withdrawing its foreign military commitments. Britain was in no place to make demands. The IMF team, when it arrived on 1 November 1976, was composed of several nationalities, but there could be no disguising the fact that the spirit informing their mission was American. It was clear to the IMF that Britain would not only need a thorough spring clean; it would have to throw out many objects of sentimental value. It had been usual for such loans to be renewed indefinitely, but no such latitude was extended to the feckless British. A December date was fixed and a rigorous programme of spending cuts demanded. For a loan of almost £4 billion, it seemed to the IMF scarcely unreasonable. And yet the British proved to have some fire in their bellies still. At a moment of seeming impasse, Callaghan picked up the telephone in front of the chief negotiator, and threatened to call the president if no leeway was offered. Was it pure bravado? Perhaps, but it had the desired effect and the loan was agreed.
Despite the fact that matters turned out remarkably well, it was a sombre prime minister who addressed the Labour party conference in 1976. He had begun to undergo a change of heart, one too subtle and incremental to be called a conversion, but it must have seemed a shift of tectonic proportions to the delegates in Blackpool. After paying tribute to Harold Wilson, who perked up from a somnolent doze when he heard his name, Callaghan began to dismantle the post-war consensus. ‘Mr Chairman and comrades,’ he said. ‘No one owes Britain a living, and … we are still not earning the standard of living we are enjoying. We are only keeping up our standards by borrowing and this cannot go on indefinitely.’