The Chancellors (20): Derick Heathcoat Amory

Derick Heathcoat-Amory, 1958-60

Conservative, under Macmillan

As the son of a baronet, educated at Eton and Christchurch, Oxford, Conservative politics might seem Derick Heathcoat Amory’s natural home. In fact, his background was more interesting than that. His grandfather had been a Liberal MP. The family were textile manufacturers, and non-conformist: he, and his wealthier older brother, had put aside much of the family firm’s capital to provide for their workers, His early political sympathies were Liberal, but like many, he became a Conservative in the ‘thirties. He was strongly influenced by Macmillan’s The Middle Way. Up until the war, he was a purely local figure: industrialist, Devon county councillor, territorial army and county commissioner for the boy scouts.

The war changed that. He became a lieutenant colonel in the Royal Artillery, saw action at Salerno and insisted on joining with his men at Arnhem, where he was injured and taken prisoner. He entered the Commons in 1945 as the MP for the Devon seat of Tiverton, taking the place of his cousin who had been killed in action.

Amory was another new MP who found himself able to make a name for himself in an opposition party looking to renew itself. He was yet another to play a significant role in the formation of the Industrial Charter that would reformulate Tory policy. He became a junior minister when the Conservatives returned to power in 1951, before being promoted to the ministry of agriculture, fisheries and food in 1954. As such, he managed the end of rationing, piloted the Agriculture Act, 1957, which ended wartime controls, and introduced minimum prices (with government support) for farmers.

Amory was perhaps one of the least party political of politicians. It may have been that fact, and the high regard in which he was held in the Commons, that saw Macmillan turn to him after the ‘little local difficulty’ of January 1958.  Inevitably, Peter Thorneycroft’s resignation was destabilising; the fact his juniors, Enoch Powell and Nigel Birch, went too made it even more so. Heathcoat-Amory was a safe pair of hands. Politically, and in economic outlook, his views were more closely aligned to Macmillan’s too; he was also more pliable, perhaps. Given that the last thing Macmillan could afford was another confrontation with his chancellor, it was good politics.

His first budget came just a few weeks later, and was cautious. He could not be seen to be doing what Thorneycroft had advocated, but neither could he be seen to be inflating the economy and giving Thorneycroft et al wind in their critical sails. That was not the case a year later. Any good intentions he may have had to restrain inflation gave way to political imperatives, and Macmillan’s need to deliver an election victory. Even before his first budget, the Conservatives had lost two by-elections: Rochdale to Labour (with the Tories third), and Torrington to the Liberals. By 1959, the Conservatives were recovering in the polls, but unemployment was rising. A nervous Macmillan had piled pressure on Amory in the autumn of 1958 and the 1959 budget duly did his master’s bidding.

The budget cut income tax, purchase tax and excise duties on beer, putting £300m in voter’s pockets. Enough voters returned the compliment to give the Conservatives a majority of 100. Amory had done his job.

If Butler had been cynical in 1955, there is a pretty good argument for saying Heathcoat-Amory was downright irresponsible. Even before budget day, unemployment was falling again (and was, in any case, the lowest in Europe). Even the Treasury projected that the budget would leave a deficit of £750m, the highest since the war. The 1960 budget was deflationary, but only thanks to a rise in tax on company profits. The ink was hardly dry on that when Heathcoat-Amory was forced to deflate further, raising interest rates to 6%, and introducing restrictions on hire purchase and controls on bank loans.

Even then, he warned Macmillan that worst would have to come, in the form of rising unemployment or an incomes policy. In the end, his successor would have to grapple with both. Meanwhile, Amory had said he would retire at 60; unusually among senior politicians, he meant it. Perhaps he wanted to go before the economic chickens came home to roost; more likely, he wanted out. Rumour sometimes had it that the ‘confirmed bachelor’ had a double life.

Most likely, though, if he had a double life at the time, it was one in which he pretended to be a cautious and prudent chancellor, whilst presiding over another pre-election Go, so beloved of Macmillanite Conservatism. Edmund Dell nicknames Amory ‘His Master’s Voice’: perhaps his primary virtues were that Macmillan (paranoid about right-wing plots around Thorneycroft, and ever concerned about Butler) didn’t see him as a rival, and that he did his master’s bidding. Even then, one might suppose that, as he would later claim, had Amory stayed on there would have been tensions between him and Macmillan soon enough. The buck stopped at number ten and pre-election booms were addictive. As for Macmillan, rather like Lady Bracknell, one might feel that to lose one chancellor might be deemed unfortunate; to lose two looked remarkably like carelessness: more were to come, and be gone.