It was at the committee stage in parliament that the treaty’s labour pains began. Beside the Labour party, which wanted the opt-outs removed, the government had to reckon with dissent in its own ranks. At the treaty’s second reading, twenty-two ‘Maastricht rebels’ either voted against the government or abstained. Having lost the whip for their integrity, or audacity, few among them were surprised when it was returned to them. Major had intended this as an act of magnanimity but it was interpreted as weakness. On and on the negotiations trudged, with the rebels tabling amendment after amendment. With defeat looming again, it seemed that only another election could resolve the matter, but rather than take the issue to the country, he took it to the House. A confidence motion was proposed, and Major obtained his mandate. And so, after almost two years of prevarication and obstruction, the Maastricht Treaty was passed, by forty votes, on 20 July 1993.
It is easy now to forget the comparative youth of the movement known as Euroscepticism. Unlike Enoch Powell or Tony Benn, whose shared hostility to the European project was radical and immovable, the Eurosceptics were simply Thatcherite: they wished Britain to remain in the European Community, but in a free trade association rather than as part of a single polity. Any desire to ‘liberate’ Britain from Europe was confined to the fringes of the Right and the Left. But the fringe was now wider and its voice far louder. The treaty had been passed in a sullen, angry mood. Only months after Maastricht, the tycoon James Goldsmith set up the Referendum party. Its stated aim was to have a referendum on the subject of Britain’s continued membership of the EU, but many saw in this only resurgent nationalism. Similarly, the United Kingdom Independence Party, or UKIP, appeared in 1994 with a stated aim of withdrawing from the EU altogether. These two were regarded for a time as follies rather than parties, but they were at least ‘respectable’, disavowing the far right, its beliefs and all its works.
But in the early Nineties new groups were seen. Flyers began to appear on street corners and in telephone booths, depicting a skull with a Nazi helmet and urging violence against ‘the Enemy’. Names never before heard began to enter the lexicon. There was ‘Combat 18’, whose aims were openly terrorist. The British National Party, their first patron, was too soft for them. ‘Race – not nation,’ they proclaimed. There were also the mysterious ‘White Wolves’, who eagerly claimed every murder of a minority member as their own doing. The placatory but insidious voice of extreme nationalism, the League of St George, once excused James Goldsmith for being Jewish, however, conceding that ‘none of this is his fault’. Xenophobia has rarely been militant in Britain, and most of these groups soon choked on their own bile.
The election of 1992 had been preceded by a long and only intermittently optimistic Conservative campaign. The land was still in recession, and perhaps many missed in Major the ferocity and certitude of Thatcher. Neil Kinnock was the object of much affection and, being naturally flamboyant, he often had the best of Major in the House. Moreover, the Conservatives had been in power for thirteen years. On polling day, the prevalent mood was subdued. Only Major seemed buoyant as he returned to his Huntingdon seat. It was not until the early hours that the miracle became apparent: the Conservatives had won, and with the greatest polling majority ever known. Yet the 14 million votes translated into only twenty-one extra seats. The Tories had been confirmed in government, but their majority was too small to allow them to exercise power as they sought.
Neil Kinnock, so often decried as ‘the Welsh Windbag’, resigned with dignity – for all his achievements, he had led the party to its second defeat. Like Thatcher, he had a weakness for the soundbite. His advice to those living in a Conservative world had been stark. ‘Don’t be old, don’t be sick, don’t be ordinary, don’t be poor, don’t be unemployed.’ For Labour, the defeat of 1992 represented a watershed. Kinnock had been both firebrand and conciliator, a leftist bruiser and a cunning statesman, but his journey was not one he could share with his party.
John Smith, his successor, was by conviction a modernizer, though in an age where cosmetic considerations were paramount, he did not look like one. With his bullet head, his spectacles and thinning hair, he recalled a dour trade union leader of the old school. But his uninspiring exterior concealed a quick intelligence, a sharp sense of humour, and a deep sense of social justice. His judgement, however, was not always sound. While the country and the City were still reeling after Black Wednesday, he launched an attack that would have been more credible had he not himself supported the move into the ERM.
Britain had entered the ERM in the last days of Margaret Thatcher’s premiership. Since then, nothing had occurred to make the move seem anything but benign. Nigel Lawson had insisted that British interest rates be tied to those of Germany. Thatcher was unconvinced but when Major professed himself in agreement with Lawson, there was little that the Iron Lady felt she could do but accept. The pound, she ordained, was to be ‘pegged’ to the Deutschmark at 2.95. When Major, then chancellor, told his opposite number in Germany of the decision, he was told that such a matter was not one for the prime minister to decide. The rules of the EC dictated that the matter be discussed and agreed upon. That was not Thatcher’s style, of course, and the rate remained. It was not a propitious start, nor, as events were to prove, a wise decision.
Entry into the ERM, touted by Major among others as a cure for inflation, had by 1992 done nothing to ease the recession of the late Eighties. If anything, it seemed to have accelerated it. One million lost their jobs. A new and virulent strain of poverty appeared, one which struck the previously affluent, and with it arrived a new term, ‘negative equity’, with houses suddenly worth less than the mortgages taken out to pay for them. Moreover, the high interest rate that Britain was forced to adopt brought the country back to the unhappy days of the Seventies; British exports became once more uncompetitive. Still, inflation appeared again to be shackled, as Major had prophesied. But even here, an objection could be raised. At a dinner hosted by Andrew Neil, the editor of the Sunday Times, Major crowed his triumph as the prime minister who had ended the threat of inflation. At this, one of the journalists present asked, ‘What’s the point of having low inflation if the economy is not just on its knees, but on its back?’ In one form or another, the question would be repeated in the months to come.
On the Continent, within the quiet confines of the Bundesbank, troubling events had also begun to unfold. East Germany was now within the capitalist pale of the West, but the cost of its inclusion was climbing ever higher. The Bundesbank was independent of the German state and could take decisions as it saw fit. In the summer of 1992, it raised interest rates. Helmut Schlesinger, the Bundesbank president, felt bound to act according to ‘what is necessary at home’. In Britain, the effect was instant. High interest rates hit the housing market, and ‘For Sale’ boards sprang up like nettles. By late summer, currency traders began to sell pounds and buy Deutschmarks, with the result that sterling sank to the lowest level permitted within the ERM. Once again, a British chancellor was caught in a web of irreconcilable priorities, but despite his private misgivings, Norman Lamont publicly rejected the possibility either of devaluation or of exit.