The Chancellors (19): Peter Thorneycroft

peter-thorneycroftPeter Thorneycroft, 1957-58

Conservative, under Harold Macmillan

The son of a soldier and landowner, Peter Thorneycroft went to Eton, where he singularly failed to distinguish himself and went into the Royal Artillery. Later, though, he studied law. He won a by-election in Stafford in 1938, he returned to the Royal Artillery and had a role in the initial planning of D-day. By 1942, he had returned to the Commons and played a role in the process of reforming Tory policy that would take place after the war. After serving in Churchill’s caretaker government, he lost his seat in 1945, before being given a safe seat in Monmouth. He was then able to make his mark in the Commons, as one of the new generation of Tories willing to embrace a new industrial strategy and reformulate Conservatism. When the Conservatives won in 1951, Thorneycroft was promoted to the Board of Trade, as the youngest member of Churchill’s cabinet.  He was close to Macmillan over Europe, and seemed a logical choice for the Treasury when Macmillan became prime minister in 1957.

As Edmund Dell wrote, Macmillan got through chancellors faster than Henry VIII got through wives, and ‘with even less satisfaction’.  Thorneycroft is chiefly remembered now for his resignation a year later. He inherited the post-Suez mess, notably the continuing pressure on sterling. He introduced sharp cuts in spending that had been set in train by Macmillan. He made tax cuts in his only budget, but in the face of sterling’s problems and inflation, he knew policy had to be tightened, and won cabinet support for a hike in interest rates.


Thorneycroft came to believe that the weakness of sterling was caused by inflation, which in turn came from an overly lax approach to the money supply. September 1957 saw him have to fight off another run on the pound. In doing so, he spoke publicly of the need to suppress inflation by controlling the money supply. He was, in one sense, an early convert to monetarism. By this time, his officials were broadly Keynesian; instead, Thorneycroft took advice from his juniors, the brilliant Enoch Powell and Nigel Birch, and the academic Lionel Robbins.  Meanwhile, the Keynesian Roy Harrod advised Macmillan.

If there were disagreements over theory, what mattered more were disagreements over spending. As ever, the Treasury supported restraint in expenditure. Instead, the problem was political. Spending ministers always fight their own corner, and Thorneycroft found himself under attack from his own colleagues, notably the rising health secretary, Iain Macleod. In that situation, to get their way, chancellors need the support of their prime minister.

And therein lay the rub. The two men’s personal relationship had deteriorated. With Macmillan, always, there was politics in it too. At the root of Thorneycroft’s view was that Britain’s attempt to remain a great military power and maintain a welfare state meant that it was living beyond its means. Thus, something needed to be done about it, and that thing was cuts in welfare. When he was considering resignation, he was advised that to do so over the mere £50m worth of cuts he was proposing in 1958 would be absurd. For Thorneycroft, Powell and Birch, those cuts were but an instalment in a greater reconfiguration of fiscal policy to come.

For Macmillan, they were bad politics. In January 1958, the government were behind in the polls. Faced with that fact, and with an underlying fear of the return of unemployment, and with a cabinet determined to fight off cuts, Macmillan refused to support a chancellor who had, in his view, become overly confrontational. Spurred on by his juniors, at war with his win officials, and let down by his colleagues, Thorneycroft resigned: Powell and Birch went with him.

His resignation speech served as a foundational text for the monetarist, right of centre critique of Keynesianism that would triumph under Callaghan and Thatcher:

For twelve years, we have been attempting to do more than our resources could manage, and in the process we have been gravely weakening ourselves… I believe that there is an England which would prefer to face these facts and make the necessary decisions now. I believe that living within our resources is neither unfair nor unjust, nor, perhaps, in the long run even unpopular. There are millions of men and women in this country, in the Commonwealth, and in many other countries of the world who depend for the whole of their future on sustaining the value of our money… The simple truth is that we have been spending more money than we should.

Macmillan, heading off on a tour of the Commonwealth, famously dismissed the resignations as ‘a little local difficulty’. It was not, but in simple political terms Macmillan had won. His government survived for the simple reason that Macmillan offered his party their best chance of retaining office: quasi-Keynesian short-termism, and rising real wages and the consumer boom duly delivered them a 100 seat majority the following year.

If Thorneycroft’s resignation failed to topple Supermac,  Thorneycroft refused to subside into embittered backbench sniping. He had always been a keen amateur artist. At the Board of Trade he had quipped that ‘all ministers had their vices, and mine was to draw in the Life Class at the Chelsea School of Art between 6pm and 9pm on Tuesdays and Thursdays.’ Art was a constant pleasure throughout his life. Now, he travelled, and painted.

The two watercolours below were painted in 1957-58. The first is Venice harbour, the second a town centre. The third, Chinese Vessel, was painted in 1960.


Looking back, he wondered if he should have stayed on and fought another day. He returned to Aviation in 1960, and then Defence. If anything, it was the other man who carried the grudge: years later, a still bruised Macmillan affected not to remember Thorneycroft’s name. Margaret Thatcher did, and in 1975 made the supposed father of monetarism party chairman, a task he undertook with some aplomb (he hired Saatchi and Saatchi, for example). Ironically, he then found Thatcher’s policies too severe.


In the end, he was not an ideologue; nor was he a wrecker, like Enoch Powell. Instead, he had correctly surmised a fundamental problem that no government was willing to tackle until the crises of the 1970s. Perhaps it took those crises to make difficult remedies politically and electorally acceptable. For Macmillanite Conservatism, it was a step too far by a long way. As such, we might say that Thorneycroft was the premature monetarist rather than its prophet.

Thorneycroft remains one of only two chancellors to have resigned over policy, (and to have jumped, not be pushed): the other was Nigel Lawson. Whereas Lawson’s departure damaged Thatcher, Macmillan escaped seemingly unharmed. There always remained something attractive about the man’s lack of bitterness, and his level-headedness. It is worth quoting his last interview, with the Guardian in 1985 (quoted in Simon Heffer’s excellent DNB entry):

I am one of the most contented men you can imagine. I happened to be the right age just at the moment my party was going to be in power for about 13 years. I held one high office after another. I met men like Lloyd George and Winston [Churchill], and Margaret [Thatcher]. And chairman of my party. No doubt I was spoken of as a prime minister in earlier days, as a future prime minister. I never attained the highest office, but you don’t go round the world disappointed if you’re a vicar and haven’t been made archbishop of Canterbury. It would be absolutely bloody ridiculous.


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