Spies at Work, Chapter 8: The Wilson Years

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==Introduction==
Harold Wilson led the Labour Party to a slender victory in the 1964 General Election, and established a healthier majority after another election two years later. For the previous eighteen years, first under Clement Atlee's Labour governments and then under subsequent Tory administrations, the Economic League had been operating in a political climate which was sympathetic to its own rabid anti-communism and anti-socialism but increasingly unsympathetic to its Diehard politics. Indeed Atlee's successor as Labour leader, Hugh Gaitskell was responsible for a concerted attempt to rid the Labour Party not only of its handful of generally ineffective secret Communist Party members, but also of a much greater number of genuine Labour Party members who had remained faithful to the Party's original constitution, in particular "clause four" which advocated the socialist principle of common ownership of the means of production and distribution. When he died in 1963 Gaitskell had still not accomplished this. He had managed to split the Party thoroughly, yet failed to project any clear convincing vision of what the Party stood for under his leadership. Not surprisingly he was the only Labour leader to be genuinely popular with Conservative interests in the City and industry. He was in fact the only Labour Party leader that the British Establishment could really regard as "one of us". As Hugh Dalton's secretary during the Second World War he had been a familiar and important figure in the intelligence community, and had been particularly close to the Political Warfare Executive during the time when it was a part of Dalton's responsibilities. He had also been a pupil at one of the country's leading public schools, Winchester, where he had been a classmate of another future Labour minister, Dick Crossman. Crossman himself was head of the Political Warfare Executive's German section from the Executive's formation in 1941 until may 1943 when he was transferred to Anglo-American political warfare work in North Africa. Before he became leader of the Labour Party, Harold Wilson had gained a reputation for being "left of centre". A grammar school boy from Huddersfield, his natural intelligence and hard work earned him a place at Oxford where, in the thirties, he was a Young Liberal. When he entered Parliament in 1945 he was quickly recognised as one of the ablest and cleverest new Labour MPs and soon became a junior minister. By 1947 he was President of the Board of Trade but in 1951 Wilson and the Health Minister, Aneurin Bevan, resigned from the cabinet, disgusted at the introduction of prescription charges by the Chancellor of the Exchequer, Hugh Gaitskell. Bevan quickly gathered around him a group of left-wing Labour MPs who became known as the "Bevanites" and acted as the main focus for those in the Parliamentary Labour Party who opposed Gaitskell's attempts to de-socialise the Party after he became its leader. Wilson was frequently associated with the Bevanites, but was not in fact one of them. He was far too committed to the idea of a mixed economy and the need for a thriving and adventurous private sector, and frequently argued that as President of the Board of Trade he had to force "free enterprise" to be free and enterprising. During the fifties the rift between Gaitskell and Wilson had largely healed, but the scars and disagreements, sometimes public, remained. When Gaitskell unexpectedly died in 1963, Wilson was one of the few candidates for the Party leadership who could command support on both sides of the riven party. He was an undeniably able politician, with a clearly worked out and articulate democratic socialist vision. Though he berated and railed against privilege and the idea of, and uninspired actions of, an hereditary ruling class, his administrations were firmly in the mould of the mixed-economy consensus politics associated with Hugh Gaitskell. But whereas his economic ideas were not so far removed from Gaitskell's, just more robust and more intelligent, his ideas on foreign policy were far more radical. His 1953 book The War on World Poverty: An Appeal to the Conscience of Mankind was a genuinely radical anti-imperialist manifesto and blueprint for first world aid to developing countries. "The days of imperialism are over," he declared:
:"The gunboat has given place to the tractor, the pro-consul to the irrigation engineer. This does not mean the end of Britain's influence in world affairs: rather it means that influence will be used, as never before, for the welfare of the human race, and in partnership with it - not in overlordship over it." 
This was more than mere anti-imperialist tub-thumping. The closely and brilliant argued thesis of the War on World Poverty laid out the moral and political case for world development and a practical strategy for its achievement. Central to this was the idea of drawing Russia back into the international financial community:
:"For co-operation between East and West in world development, supplemented by the expansion of trade between East and West, would not only lead to an immeasurably higher standard of living for hundreds of millions over wide areas of the earth's surface; it would more than any other single factor, help to create the confidence needed, on both sides, to convert "peaceful co-existence" into peace." 
Wilson was convinced that Britain had to break away from its growing economic and political dependence on the United States, and saw the unfreezing of economic relations with the East as the most effective way of doing this. It was an attitude that ran contrary to Gaitskell's slavish pro-Americanism and roused the utmost suspicion of the British secret state, and naturally enough their American colleagues.
Wilson had made it perfectly clear that not only did he intend to cajole, bribe and if necessary force private enterprise in the direction he wanted it to take, but he also intended to break down political and trade barriers with the Eastern Bloc and end the "special relationship" with the USA. When, therefore, in 1964 the Labour government took office it did so under the leadership of a man who, though committed to capitalism, had made an enemy of the British industrial and financial establishment and the British and American secret services. From the outset these powerful influences within the British establishment and civil service began an unprecedented subversive campaign against a democratically elected government. The aim of this campaign was to make it impossible for Wilson and his governments to achieve what they had been elected to do, not merely to make life difficult for Wilson and his governments or fight a rearguard action slowing down the pace of political, social and economic change. Over the course of the six years of Wilson's first two administrations there emerged an increasingly a complicated web of variously inter-linked and independent anti-Wilson conspiracies. Each had a common theme - Wilson's continuance in power was a threat to the national interest and that if he couldn't be unseated by democratic means he must be unseated by extra-parliamentary activity. The conspirators must have realised that they were making preparations or laying the ground work for a coup d'etat or more properly a "pronunciamento". Their tactics and strategy were almost straight from "Coup d'Etat", the 1967 textbook by Edward Luttwak which was issued as a Penguin paperback the following year. According to Luttwak's useful catalogue of different forms of coup, a Pronunciamento was "an originally Spanish/South American version of the military coup in which the military intervene in Government in the name of the 'National Will'."
Influential figures from Industry, the military and Intelligence were recruited to the cause. A central, and vital figure, would be the proprietor of a popular newspaper. The overall strategy was to destabilise the Wilson government, then with military support, (undercover of a manufactured or exaggerated crisis) to impose on Britain a government of "national unity". This imposed government - led by Mountbatten - would adopt the sort of policies which could not be hoped for from either a Labour or Tory government, which under the leadership of Edward Heath was felt to have moved too far from traditional Conservative thinking.
=="A Pretty Loony Crew" - The Coup of '68==
The existence of a conspiracy was confirmed by Sir Martin Furnival Jones (by then head of MI5) who told the Sunday Times in 1981 (29th March) that an:
:". . . alleged plot to remove the Wilson government was the subject of a secret service investigation."
Furnival Jones described the conspirators as "a pretty loony crew" but admitted that it had involved a Major General and "civil servants and military". In the absence of answers to many of the questions raised by what we know about the Coup of '68 it is tempting to speculate about who might have been involved.
The Economic League, which since its inception seems to have borne the seeds of just such a plot, must fall under suspicion. But it is not, however, simply conjecture. In 1968 The Times carried a short piece by a staff reporter in which the Economic League claimed that a copy of their bulletin had been forged. This "forgery" suggested that the Armed Forces might "have to step in to unseat the present government". It is not clear from the article how many of the "forgeries" were printed or whether they were distributed through the League's usual channels. One person I spoke to claims to remember just such a leaflet being handed out by the usual League leafleter. The extracts reprinted in the Times also convincingly capture the League's style of writing and approach to issues an they themselves admitted at the time that "The forgers . . . have gone to great lengths to make the bulletin look convincing". Of course it might be just an uncanny coincidence that this "very left-wing" practical joke coincided with a real right-wing plot to overthrow the government. However the League's denial of the authenticity of the leaflet is practically worthless. For years they had been lying to the press about their blacklisting operation.
Serious or not, the plot of '68 came to nothing after Wilson's government published its White Paper on trade union reform "In Place of Strife". Ironically Wilson had also had to deal with increasingly powerful opposition from within the trade union movement and the radical left. By the time he had come into office the post-war economic boom was over, but his plans to regenerate the manufacturing economy would take time to take effect, that is if they did take effect. Throughout his years in government Wilson needed a period of economic stability, and since he couldn't expect co-operation from the City or industry this meant wage restraint. He did not get it. He offered nothing concrete immediately, and while most trade union leaders at the top were prepared to play ball with Wilson many of their members were not. The result was an increase in unofficial strikes. Wilson, and the trade unions, were trapped. Neither the Labour leader nor the union hierarchy could transform the short sighted materialism of the unions' rank and file. Brilliant and innovative politician that he was, Wilson had nothing to offer other than what looked and sounded like the "jam tomorrow" formula that had been offered by Conservative politicians and managements from time immemorial. Trade union leaders' attempts to support him had merely exposed the fragile nature of their power and influence over the membership.
In the end Wilson tried to reinforce the influence of the trade union hierarchy through union legislation. The White Paper "In Place of Strife" led to a damaging show down with the trade unions. The Trade Union movement mobilised its full weight against the White Paper. The cabinet split with James Callaghan, its most right-wing, uninspired and ambitious member leading the rebellion. "In Place of Strife" was dropped and the trade union movement had won a great victory. But it was an entirely pyhrric victory, the battle that lost the war. For while "In Place of Strife" had attempted to trade off traditional union rights in return for new ones, it would also have secured negotiating rights at all levels of industry. It would also have forestalled the Tory legislation which ultimately left the trade union movement isolated and considerably weaker.
In terms of the anti-Wilson conspiracies however the attempted introduction of "In Place of Strife" and the consequent confrontation with the Trade unions had undermined one of their key lines of argument - that Wilson could not or would not restrict "union power". While the debate about the White Paper raged, there was no chance of portraying Wilson as the willing partner of, and front man for, militant trade unionism. The coup of '68 was postponed.
Soon afterwards the military men themselves were given something to do when the RUC & B Specials went on the rampage against civil rights campaigners and catholic communities in Northern Ireland. By May 1969 the British Army were beginning to replace the civilian authorities on northern Irish streets. But although the conspiracy may have been put on ice, a taboo had now been broken, and a network of powerful contacts remained. A whispering campaign against Wilson and Heath and other enemies of the radical right continued, often at the hands of British Intelligence officers.
==The League in 1968==
In 1969, on the eve of the Economic League's fiftieth birthday, the "Labour Research Department" published a pamphlet about it called "A Subversive Guide to the Economic League". Labour Research had been keeping track of the Economic League for most of its life, without being able to convince the Trade Union Movement to mount a serious challenge to its activities. The 1969 pamphlet presents a comprehensive picture of the League operations towards the end of its "Training Era", and at the beginning of a period of intense political activity which would result in not only a remarkable reverse in the fortunes of the Diehard Tories but also another thoroughgoing overhaul of the Economic League's structure, priorities and activities.
The League's income in 1968 was £266,000. Labour Research managed to identify 154 firms contributing £61,000 of this income. Of these, 47 were engineering companies. But their sample shows that by 1968 the League was receiving support from across the spectrum of manufacturing and financial interests. Although prior to the Second World War the League's support came predominantly from the manufacturing sector, as early as 1935 Barclays and the Westminster Bank had subscribed to the League. By 1968 the 21 banks, discount houses, investment Trusts and insurance companies identified in the 1968 survey together contributed as much as the 47 engineering companies named as subscribers.
In addition to covering administrative overheads, the League spent this money on 22 million leaflets and the wages of 71 leaflet distributors, 39 speakers/trainers and 9 part-time lecturers. In 1968 this corps of speakers, trainers and lecturers organised 24,250 Group talks and outdoor meetings, 6,340 courses for apprentices and 3,750 for supervisors.
==The End of an Era==
The seventies were as turbulent a decade for British domestic politics as either the twenties or thirties. Growing disillusion with Wilson and the Labour Party's performance in the sixties had led to a rapid growth in the "revolutionary left" (the International Socialists were so excited by their success they decided to become a political party calling themselves the "Socialist Workers Party"), while shopfloor disillusion with Trade Union leaders (who seemed to be giving away more than they got from the consensus politics) led to a measurable increase in unofficial or "wildcat" strikes. But disillusion was not confined to the left. Latterday Tory diehards were gaining support for their opposition to Ted Heath and Conservative consensus politics. Diehardism was still a more vital force in the board room than in Parliament, but a growing number of MPs were drawn into the self-consciously Diehard Monday Club, which had been founded in 1963 as a reaction to Macmillan's "Winds of Change" speech which had signalled the Tory leaderships' final retreat from imperialism. 
Although it is possible to exaggerate the similarity, the domestic political situation in 1973/4 was not unlike that which prevailed in the early twenties and the early thirties. The informal, but increasingly rigid, consensus acting as a coalition which excluded the diehard, radical right, as well as the Labour Party's socialists from power. But, whereas in the late fifties and early sixties Macmillan had given Tory diehards some token positions to keep them quiet, Heath was ruthless in his determination to keep the Tory radical right out of power. In their political isolation, and in an atmosphere of economic gloom and increasingly independent trade union militancy, the radical right continued to lay plans for some form of a military coup d'etat.
In the end that military coup never happened because in 1973 two figures from Heath's cabinet emerged as leaders of an anti-Consensus movement that was, against all odds, successful in wresting the Tory Party Leadership from Heath and then converting the Party to the Diehard cause. They were Keith Joseph and Margaret Thatcher. In his influential book "Coup d'Etat", Edward Luttwak defines a coup as consisting "of the infiltration of a small but critical segment of the state apparatus, which is then used to displace the government from its control of the remainder". In his preface he explains:
:"The coup d'etat . . . uses . . . the armed forces, the police and the security agencies. The technique of the coup is the technique of judo: the planners of the coup infiltrate and subvert a small but critical part of the security apparatus, which they then use with surgical precision to displace the political leadership from its control of the state bureaucracy."
Two of the essential characteristics of a coup are that it is insidious, and that it originates and is executed within the state. Thatcher, Joseph and their allies on the Radical Right accomplished an almost textbook bloodless coup. But as with all victorious conspiracies their success was the result of much good luck, and extremely serious misjudgments by their opponents.
==The Army==
Support from within the Army was crucial to the credibility of any plot to overthrow the government. The earlier 1968 conspiracy had already attracted the support of some senior and junior officers. There was now, however, a more fundamental constitutional problem regarding the Army as a whole, rather than a few officers with dangerous ideas getting mixed up with "a fairly loony crew". In the late 1960s and early 1970s the Army began a process of political and sociological education and re-adjustment from which it had emerged a much more dangerously political force. One of its tutors was the Economic League. Between 1945 and 1969 the British Army had been involved in no less than 53 separate areas of active service, generally policing the fragments of the Empire while politicians negotiated the terms of independence. But as the Empire contracted so too did the excuse for a large standing army. Unlike the RAF or the Royal Navy, the infantry and "conventional" artillery had only a peripheral part to play in a nuclear-based defence strategy. This made the Army the armed force most vulnerable to the defence cuts, which as the economic recession deepened, became inevitable.
The British Army had to act quickly to redefine its role in an empireless peacetime. A large and well equipped standing army needed an enemy. Civil unrest and insurrection were, by the late sixties, the Army's speciality. Although their anti-insurrectionary expertise had been acquired overseas, the British Army had historically and regularly been deployed against demonstrators and strikers in the British Isles. At some stages of the Napoleonic Wars there were more troops stationed in the north of England, to discourage rebellion, than there were fighting the French. Throughout the nineteenth century the Army and militia was used against civil unrest. In the twentieth century even Labour Governments had used it as a strike breaking force. There was a considerable debate in the early days of the of the Supply and Transport Committee about the role of the Army in any civil or industrial emergency with the Army resisting pressure, from civilians like Eric Geddes, for it to become more closely involved. The Army's role was finally laid down in a War Office memorandum, circulated to members of the Army Council immediately after Baldwin replaced MacDonald as Prime Minister in 1925. The Army was to have a frontline role in intelligence gathering of two sorts; Intelligence (A) from service sources, and Intelligence (B) from "well informed civilians of all classes". The Army would only in the event of violence, and "only as a second line to the police". 
This has remained the official position ever since. However by the seventies, with a diminishing number of actual and potential enemies, the Army discovered a renewed interest in "the enemy within". Wilson's decision to use troops in Northern Ireland to protect Catholic communities from marauding loyalists, presented the Army with a liferaft in which to survive drastic cuts in manpower and resources. It also gave it an immediate bridgehead to its new role; since, at least constitutionally if not culturally, Northern Ireland was a part of the United Kingdom. It hardly mattered that the Army failed miserably to achieve its original mission; that it had so quickly alienated the communities it was supposed to protect and transformed significant numbers of civil rights protesters into urban guerrillas or apologists for armed struggle. Once again the Army had something to do. It was some time before it became clear the Army's role in Ireland would be quite different that it had played in other colonial conflicts, it was an immediate chance to demonstrate, and to practice, its counter-revolutionary role within the United Kingdom.
At first the British Government sought to formulate a "political solution" that might eventually mean British military withdrawal, with honour, from Ireland. But the Army itself had little reason to encourage the sort of political solution it had supervised in Malaya or Aden and by the mid-1970s was prepared to help strangle the "Sunningdale" power-sharing agreement at birth.
At exactly the same time as troops were being sent to Northern Ireland the Army was beginning the wide-ranging process of self-education in political and social theory. If Governments were to be persuaded that an army was needed to keep the revolutionary wolf from their door then the Army urgently had to do two things: formulate a plausible argument that insurrection was a real danger, and then to demonstrate that a large and well equipped and trained standing Army was crucial to preventing the impending revolution's success.
==The Army's Revolutionary England==
Thus the Army set about constructing a plausible "model" of a revolution in Britain, and more specifically in the heart of the Union - England. Although it had first-hand experience of colonial insurrection, and had added in 1969 a new section to the Army Land Operations Manual (ALOM) describing tactics for dealing with insurrection, the Army realised it lacked the political or sociological knowledge to adapt the model persuasively to Britain. 
In order to overcome these limitations, the Army dispatched a senior officer, Major General Frank Kitson, to Oxford University. Kitson was one of the Army's most experienced counter-insurrectionary experts who had served with distinction in Kenya, Malaya and Cyprus. At Oxford he researched and tried to produce a coherent counter-subversive theory. While ALOM volume III remained classified as a "restricted" document, at least some of Kitson's research was published, in 1971, as "Low Intensity Operations". Its publication was itself a very successful low intensity counter-subversive operation. Kitson's work helped to make talk of "revolution" respectable, and no longer the preserve of left or right-wing eccentrics.
While on one level it was a powerful warning of the degree of military sophistication that any left-wing revolutionary activities might expect to meet, it also gave boost to a new and growing academic specialism: Counter-subversion. ALOM volume III was rewritten in the light of both Kitson's work and the Army's recent experiences in Ireland. After Oxford, Kitson himself was given the opportunity to test his theories by taking command of the 39th Infantry Brigade in Belfast.
==Outside Help==
The CIA were as keen as the British Army to see counter-subversion given academic respectability. While Kitson was still at Oxford the CIA, through its main British front - Forum World Features (FWF) - established the Institute for the Study of Conflict (ISC). Brian Crozier, the British CIA agent running FWF, enlisted the help of Sir Peter Wilkinson who was, at the time, the administrative head of the Foreign Office and a former chief of the Information Research Department and would later become coordinator of intelligence and security in the cabinet office. Wilkinson, because of his position in the Civil Service, did not join the board of the ISC. He did, however, recommend to Crozier the man who would become the ISC's fundraiser - a retired Major General called Fergus Ling. The ISC began publishing pamphlets and a series of "Conflict Studies". But like the Economic League it did not restrict its activities to publishing and was more than willing to run training sessions and courses. By the early 1970's the Army were bringing in outside experts in "subversion" to extend their programme of political education. The ISC was one, the Economic League another. In 1973 the Economic League reported to its members that:
:". . . the greater demand for detailed knowledge about subversion received by the League's director of information and research to speak at formal and informal meetings and courses held at Ministry of Defence establishments."
The following year the ISC ran sessions at the National Defence College, the Royal Military College of Science, the Army Staff College and for the 23rd SAS Battalion.
The Labour Party and the Trade Unions played an important part in the model of an English revolution devised by the Army (with the help of its friends on the Radical Right). Of course there were plenty on the radical left who also believed that the Labour Party would be the midwife to a revolution. But it was more disturbing to find it being made a cornerstone of the British Army's forward planning. It undermined the loyalty that a constitutional Labour government ought to have been able to expect to command from all ranks in the services.
The Army emerged from its process of self-education thoroughly suspicious of the Labour Party. It was the most damaging, dangerous and massive subversion of the British democratic process this century.
==Mutiny In Ireland==
Ted Heath became Prime Minister with a comfortable 31 seat majority, after the 1970 election. It was an administration notable for its industrial conflicts and slow but real progress on reaching a solution to the crisis in Ireland. When Heath called an election, a year early, hoping to demonstrate public support for his firm line against the Trade Unions he failed to get either a working majority or the support of the Liberal Party. Consequently, in February 1974, Wilson returned to power although at the head of a minority Labour government but after another election in October of the same year Wilson obtained a tiny overall majority of just 5.
The Labour Government had inherited Heath's northern Irish policy in the form of the "Sunningdale" power-sharing agreement. It was a complicated agreement concluded between the London and Dublin governments the main points of which had been negotiated at Sunningdale, in England, in December 1973. The Irish republican historian, Michael Farrell, said of it:
:"Sunningdale was the high point of British Strategy in Ireland. It was a masterpiece of balance and ambiguity." 
It was a compromise which the hard-line loyalists in Ireland refused to accept and troubled the diehard "Unionists" on Heath's own backbenches, especially those associated with the Monday Club which admitted Ulster Unionists as members. On 14th May 1974 the loyalist Ulster Workers Council (UWC) called a general strike against the agreement. Loyalist paramilitaries were sent into action to make sure the strike was effective. At its height the UWC declared their intention to pull out the (almost exclusively Protestant) power workers, bringing the province to a halt. Merlyn Rees, Northern Ireland Secretary, announced that the government would stand firm and troops would be sent in to keep the power supplies going. When on May 24th Rees instructed the army to go in, it refused.
Later that summer a British Officer writing in the Monday Club's magazine "Monday World" explained what had happened:
:"For the first time, the Army decided that it was right and that it knew best and the politicians had better toe the line."
==The Army Flexes Its Muscles At Home==
This autonomous attitude was not confined to the Army's activities in Ireland. Kitson and other counter-subversive writers emphasised that the Army needed to establish close links with the civil authorities, industry and especially the police. With this in mind, in 1971 the Royal United Services Institute organised a series of "joint seminars" attracting participants from each of these areas. Also invited to the meetings were representatives of the ISC and Economic League. One of the fruits of this new collaboration was a series of joint police/army exercises at Heathrow Airport in 1974. The first of these was held in January, while Heath was still in power but the remaining three were held in June, July and September. The initiative for these unprecedented exercises did not come from either Heath's or Wilson's government. The responsibility for them lay with the metropolitan Commissioner of Police, then Sir Robert Mark. For the first two exercises spurious "anti-terrorist" excuses were given. For the last two none were even offered. Unable to stop the exercises, Harold Wilson, who was an obsessive constitutionalist, understood better than anyone the significance of the police/military collaboration. Particularly as he was still smarting from both the mutiny in Ireland and MI5's veto of able colleagues he had wanted to promote into the cabinet. It is hardly surprising that he must have felt that things were getting out of hand and out of control particularly as, when one of the exercises began, he had finally found out about the 1968 coup plot. His personal assistant, Marcia Williams, told the Sunday Times in March 1981:
:". . . Harold was worried about the business when troops did an anti-terrorist exercise at London Airport. He said to me: 'Have you ever thought that they could be used in a different way? They could turn that lot against the government totally.'"
Wilson's apparent paranoia was well founded. In 1974 there were widely circulating rumours that once again Army Officers were discussing the possibility of a military coup. The rumours were, of course, deniable and there were few people prepared to treat them seriously. Perhaps the only tangible evidence was the creation of a handful of "private armies" by military men such as Major General Walter Walker (former commander of the Rhine Army) or David Stirling (founder of the SAS) and figures from the far right such as Ross and Norris MacWhirter and Michael Ivens. The first admission that the rumours were true came eventually from Field Marshall Lord Carver, six years later, during a Cambridge Union debate on pacifism. When questioned, he denied that either he or "senior" officers had been involved:
:". . . It was exactly the opposite in that a certain interview took place by a young journalist at the Army HQ near Salisbury, Wiltshire, in which not very senior, but fairly senior, officers were ill advised enough to make suggestions that perhaps if things got terribly bad, the Army would have to do something about it." 
==MI5 Changes Direction==
The British Army's own changing role was echoed in British Intelligence. It was a change recalled by Peter Wright in Spycatcher:
:"The Irish situation was only part of a decisive shift inside MI5 towards domestic concerns. The growth of student militancy in the sixties gave way to industrial militancy in the early 1970s. The miners' strike of 1972, and a succession of stoppages in the motor industry had a profound effect on the thinking of the Heath government. Intelligence on domestic subversion became the overriding priority." 
One of the immediate effects was the concentration of MI5's attentions on some of the fringe groups such as the Workers Revolutionary Party and the International Socialists, then about to become the Socialist Workers Party. The old guard in MI5, like Wright, felt that groups like IS or the WRP were not as great a threat to "national security" as some figures in the Labour Party or Trade Unions. Certainly the Trotskyists' contempt for Stalin and Stalinism excluded their groups from any direct contact with the Russians. They also, with the exception of Militant, stood apart from the Labour Party and had few supporters at the top of the trade union hierarchies. But whereas membership of the CPGB was in a rapid decline, membership of the Trotskyist groups was growing rapidly. MI5's "F Branch" (Domestic Surveillance) had for decades been largely concerned with tracking the Communist Party. This had made it subordinate to the cold warriors of "D Branch" (counter-espionage), which until the seventies had been MI5's elite. Although it should have been contracting, "E Branch" (the colonial branch of the service), which had masterminded counter-insurgency in Malaya and Kenya also began to eclipse counter-espionage.
This change of emphasis in MI5 must have cemented its relationship with the Economic League which had a well developed intelligence gathering mechanism including friends in the Trade Unions, and at least one agent (Ned Walsh) working exclusively undercover in the unions. Ted Heath had appointed an Intelligence mandarin - Lord Victor Rothschild - as head of his prime ministerial "think tank" in 1971. Rothschild wasted little time in using his Intelligence contacts. In 1972 he approached Wright, who was an old friend, and asked for some "no punches pulled" intelligence on the Trade Unions and Labour Party. Wright cleared the request with his boss Furnival Jones and delivered the goods. Wright is coy about what information was passed on, through Rothschild, to Heath. But it created such a storm among those Whitehall chiefs who found out about it that we may assume it included some of the highly dubious American material long held in a file codenamed "Oatsheaf". Rothschild, in addition to his government job, ran the family firm of N M Rothschild in the city. He was also on the boards of other companies including Shell (whose chairman Sir David Barran was president of the Economic League) and Slater Walker (a speculation company run by financial wizard Jim Slater and the Tory MP Peter Walker). In 1975 it was the fourth largest, known, donor to the Economic League. Only Natwest, Rank Hovis McDougall and Shell gave more while Barclays gave the same amount - £5,400.
==Peter Wright's Pension and the Revolution==
In 1972 Wright discovered that he would not be receiving a full pension from MI5. He therefore considered setting up some "security" work to supplement his £2,000 a year pension. With this in mind he approached his old patron Rothschild to see if he could help. Rothschild offered Wright a "security job" with N M Rothschild but Sir Michael Hanley, who had taken over from Furnival Jones, for some reason vetoed this. Rothschild then put Wright in contact with an unnamed businessman looking for someone to do security work. Wright claims to have taken an instant dislike to this man but still agreed to meet his colleagues:
:"His colleagues were a ramshackle bunch. They were retired people from various branches of intelligence and security organisations whose best years were behind them. There were others too, mainly businessmen . . ."
Rothschild's contact came straight to the point:
:"'We represent a group of people who are worried about the future of the country,' he intoned. He had something of the look of Angleton on a bad night about him. He said they were interested in working to prevent the return of a Labour government to power." 
It was made clear to Wright that what was wanted was any information that could be used against the Labour Party, and its leaders in particular. Wright claims to have been unimpressed by the set up, and to have reported the meeting to Hanley and offered to continue monitoring it for MI5. Hanley's response was a strange one, coming from the head of an organisation that was putting considerable effort into monitoring, bugging, tapping and infiltrating even the most obscure left-wing, one-horse shows:
:"Hanley thought discretion was the better policy. 'Leave it alone Peter,' he said, 'it's a dirty game and you're well out of it.'"
Wright's account of the meeting with the conspirators is brief, incomplete and unreliable (as David Leigh points out in his book The Wilson Plot). In an earlier unpublished version of Spycatcher, the businessman is identified as James Goldsmith and the group is identified as the Unison Committee. Unison, previously "Civil Assistance", was a private army organised by General Walter Walker, George Kennedy Young, Colonel Robert Butler, Michael Ivens, the MacWhirters and MI6 man Anthony Cavendish. Unison was funded for three years by a £25,000 donation from Lord (Nicholas) Cayzer, the head of British and Commonwealth shipping and a vice president of the Economic League. Ironically Goldsmith was knighted by Wilson, it has been alleged because of his one man campaign against Private Eye, which Wilson also despised. Goldsmith's connections with the League and intelligence were more tenuous than Cayzer's, though he helped his nephew, Antonio von Marx, set up a security company called Zeus Security. Zeus recruited mainly from the security services and was in turn employed by them. According to Gary Murray, a former private detective who worked freelance for MI5, there were close connections between Zeus and the League. 
=="A Bloody Menace"==
But yet again the anti-Wilson conspiracy was stillborn. Heath called a General Election a year early to seek a mandate for his "tough line" with the unions. The conspirators had no time to act. By the February following the meeting between Wright and "Unison", Wilson was back in Downing Street. American concern at the continuing electoral success of the Labour Party led James Angleton, at the CIA, to successfully put pressure on Michael Hanley to reopen the "Oatsheaf" file on Wilson. Sir Michael Hanley put Wright in charge of it. Soon afterwards, Wright claims, he was approached by five MI5 colleagues who had found out that the file had been reopened. They wanted to use it as the basis for an anti-Wilson campaign:
:"'Wilson's a bloody menace,' said one of the younger officers, 'and it's about time the public knew the truth.'"
Wright admits being tempted by their proposal and claims to have only been persuaded out of it by Victor Rothschild. Rothschild's concern however was not that it was dangerously unconstitutional, but that it would endanger Wright's pension.
But this time Wright held his counsel and did not alert Hanley to what was going on. David Leigh, in The Wilson Plot, convincingly suggests that Wright was in fact the prime mover behind the anti-Wilson campaign in MI5. With Wright's help some of this plot seems to have been enacted:
*Confidential files were leaked to sympathetic journalists, including of course Chapman Pincher. 
*A smear campaign, including a forged Swiss Bank account, was launched against Ted Short, the Labour Party's deputy leader. Short was one of the politician's implicated in the Poulson/T Dan Smith Scandal. 
=="Clockwork Orange 2"==
Fortunately Wright's is not the only first-hand inside account of MI5's covert activities during 1973-4. Colin Wallace, an Army Information Officer in Northern Ireland, then working for the psychological operations unit "Information Policy" has revealed details of an anti-government operation codenamed "Clockwork Orange 2". Shortly after the first election of 1974 Wallace was asked to produce a faked Republican document implicating a number of named Labour MPs. He was given access to MI5's files on the MPs and a thorough briefing on the reasons for and objectives of the inquiry. The notes which Wallace made at the time included a extraordinarily unlikely list of MPs to be "targeted":
Harold Wilson, Anthony Benn, Ian Mikado, David Owen, Eric Heffer, Judith Hart, Tom Driberg, Barbara Castle, Michael Foot, and John Stonehouse were claimed to be "secret communist party members" although the only one for whom the claim has been shown to hold any water is Tom Driberg, who was at least also acting as a double agent for MI5.
Brian Walden, Reg Prentice, Bob Mellish, John Cunningham, Frank Allaun, Stan Orme and Fenner Brockway were named as "Labour's New Left in Northern Ireland."
The evidence given to Wallace about Wilson comes from "Oatsheaf", but his notes also show that Edward Heath was to be the target of Intelligence's operations. Heath, claimed MI5, "can be shown to be under Soviet control through Lord Rothschild." The key words here are "can be shown". In this kind of "psychological operation" truth takes a back seat, and so does loyalty. The only evidence against Rothschild was his friendship with Burgess, Maclean and Blunt. He had been convincingly cleared of any suspicion. But there was enough circumstantial evidence to use the connection to smear Heath if necessary.
Heath was certainly discussed, as Wallace's notes show:
:"The key issue is, therefore, whether there should be cosmetic surgery to help elect a weak government under Heath, or major surgery to bring about a change of leadership before the next election." 
When Wilson called a second election barely six months after the first it hardly left MI5 any time for any kind of "surgery" whatsoever. The specific object of Wallace's contribution to MI5's psychological operations was however to undermine the Ulster Worker's Strike. Soon after he began work on "Clockwork Orange 2" the operation was closed down. He was told that "London had had a change of mind and now wanted the strike to succeed".
==An Elaborate Scheme, A Bloodless Coup==
Increasingly unpopular within the Party, and having lost two unnecessary elections in the same year, Ted Heath's days as Tory leader were drawing to an end. Covert operations by MI5 where hardly needed to now accomplish his downfall. The Radical Right won control of the Conservative Party on Tuesday, February 11th 1975. Margaret Thatcher had romped home in the second ballot for the leadership with 146 votes. Willie Whitelaw had managed to get just 79 votes. Geoffrey Howe and James Prior obtained 19 votes each and someone called John Petryl had got eleven.
It was a stunning victory for the diehard tradition, which had been carefully isolated by the Tory leadership since Macmillan's day. The social democrats in the Party had been brilliantly out-manoeuvred.
The first stage in what John Nott called an "elaborate scheme, a bloodless coup" had been to force Heath out. Although as we have seen this was being discussed in British Intelligence in early 1974 the Party then had no constitutional means of ditching a leader who didn't want to go.
Heath's dismal performance in a series of confrontations with Trade Unions had dismayed industry's diehards. The Economic League had been one of the most organised elements of Conservative diehard opposition to Heath. Their propaganda and monthly newsheets distributed to middle managers argued that the government had to stand firm and to mobilise the state and volunteers to undermine the strikers in a replay of 1926. Heath's decision to seek a mandate from the electorate, before seeing the job out, was regarded as weak and potentially disastrous.
The unexpected breakthrough for the long-beleaguered diehards came with the recruitment of Keith Joseph to their cause. Immediately after the Conservative's first electoral defeat of 1974 Joseph, a senior shadow cabinet minister, had broken ranks and started to openly criticise the social democratic consensus. Over the following year Joseph and Margaret Thatcher, a junior shadow cabinet colleague, became increasingly vocal supporters of the Economic League's old fashioned, and radical, brand of unrepentant laissez-faire capitalism. For Joseph it was a political gamble of enormous proportions; in the leadership race he had broken early and was setting a hell-for-leather pace. For Thatcher, a junior spokesperson with no prospect of the party leadership, there was less to lose.
For the radical right it was instant rehabilitation. Their supposedly obsolete economic theories were once again at the top of the political agenda. When Heath lost the October 1974 election it was inevitable that Joseph should become a main focus for those who wanted a new leader. But while Joseph's growing caucus represented the chief threat to Heath there was no way for Joseph to actually challenge him, if he didn't want to go.
==The Milk Street Mafia==
In the end it was the "1922 Committee", the mouthpiece of Conservative backbench MPs that was the key to deposing Heath. Its chairperson was Edward du Cann, an old enemy of Heath's. Under du Cann the 1922 committee began to exert increasing pressure on Heath, if not to stand down to at least stand for re-election. Even his supporters began to realise that Heath needed a vote of confidence to re-establish control of the mutinous party and undermine Joseph and Thatcher. The press were aware of the pressure being put on the Tory leader but could find no one prepared to talk about it openly. The 1922 Committee had taken to meeting in secret to discuss the leadership issue. Its meeting place - du Cann's merchant bank, Keyser Ullman in Milk Street - was eventually leaked to the press who turned up in force to greet what was dubbed the "Milk Street Mafia" leaving a meeting. With everything out in the open Heath finally felt more or less forced to stand for re-election. The rules for the contest were to be laid down by Heath's predecessor and ally Alec Douglas Home: there would be two ballots; a 15% majority on the first ballot would secure victory and new Candidates would be able to stand in the second ballot. The whole point of this rigmarole was to allow Heath to stand down if he didn't win the first ballot and to allow another moderate candidate to replace him in the second ballot and hopefully win back some of the anti-Heath rather than pro-Joseph votes. The right had two serious candidates lined up for the contest. Joseph was, obviously, one. The other was du Cann himself. But both men had made enemies in the house and it was that a "stalking horse" was needed. That is a candidate who would attract the anti-Heath-but-anti-du Cann/Joseph vote without being in danger of winning the ballot. But before the candidates were declared both Joseph and du Cann had backed out. Joseph had marital problems and had made an extremely intemperate "keynote speech" advocating a birth control programme for social classes C and D, after which even friends realised that Joseph would be a gigantic electoral liability. Edward du Cann was under pressure from his family to not stand, and there were unproven suggestions of financial problems at Keyser Ullman. Margaret Thatcher, Joseph's closest political ally, and the likeliest candidate for stalking horse, suddenly became the Radical Right's only runner.
Airey Neave found himself masterminding Thatcher's campaign. In the first ballot Thatcher beat Heath by 130 votes to 119. Hugh Fraser, the only other candidate, was moved to tears by the fact that he had helped depose Heath. It is said that even Lord Hailsham cried. In the second ballot the bumbling, jovial and hopeless Tory patriarch Willie Whitelaw carried the colours of Tory social democracy. They were taken to the cleaners. Writing seven years later two journalists from The Times, Nicholas Whapshot and George Brock, summed up Thatcher's remarkable victory:
:"Thatcher became leader of the Conservative Party through a succession of accidents . . . Her success in the election against Edward Heath was a surprise to her supporters, even to herself. Many of those that voted for her did not want her to become leader and discovered that their tactical votes, designed merely to dislodge an isolated and electorally unattractive leader were part of an elaborate scheme to do something more. The rightwards shift which her election as leader announced was supported by neither the large majority of Conservative MPs, the Conservative Party nor the Conservative Party Workers." 
Perhaps like all successful conspiracies the Joseph/Thatcher campaign had more than its fair share of good luck. For the Diehards it was only the beginning. Heath and Whitelaw had lost the leadership contest but Thatcher had made few converts to Diehardism in winning it. Over the course of four years of opposition politics a host of radical right-wing "think tanks" and intellectuals emerged into prominence. Circumventing the Conservative's traditional organisation they mapped out a radical diehard manifesto for the eighties and mobilised the sort of support for Thatcher for which Ted Heath must have fruitlessly prayed every night of his Party leadership.
Though much later Thatcher's personal control of the direction of party policy was more or less absolute, during the vital four years before her first election victory she was more a willing and enthusiastic figurehead. She was, that is to say, not so much the architect as the site manager for the construction of the economic and political ideology that would come to be called "Thatcherism". By 1979 the manifesto was complete, and neatly laid out in a volume of essays by its designers called "The Case for Private Enterprise". 
Its contributors were:
*Chris Tame: head of research at the National Association for Freedom (NAFF) until 1977, and by 1979 running a Conservative bookshop in Covent Garden and on the executive of the Libertarian Alliance. He is still today involved with the Libertarian Alliance but also Director of the tobacco industry funded pro-Smoking lobby, FOREST.
*Lord De L'isle: Founder member and Chairman of NAFF.
*Michael Ivens: Director of Aims of Industry and a Council Member of NAFF amongst other things.
*Lord Harris of High Cross: General Director of the Institute for Economic Affairs.
*Harry Welton: The recently retired Director of Information and Research for the Economic League, retained by them in a "consultative capacity".
In his foreword Sir Keith Joseph reinforced the revolutionary nature of the change in thinking at the top of the Party by criticising it for its inability to mount a robust defence of free enterprise either because "Conservatives went on behaving very much as they did in the 18th and 19th centuries" or "because of the comfortable backgrounds of many, though not all, Conservative MPs, there were considerable feelings of guilt which led the Party to accept and even champion measures which appeared beneficial but which proved destructive and which, perhaps, should not have been accepted at all." Every Conservative leader this century had got it wrong, in fact were traitors to Conservatism:
:"We did not recognise that between pluralists and collectivists there can be no middle ground in ideas and no possibility of stealing one's opponents' electoral clothes without betraying the principles of a pluralistic society and our own intellectual tradition."
==The Economic League During The Wilson Years==
The Conservative Party coup d'etat spearheaded by Keith Joseph was the turning point in a broader, and ultimately successful, struggle by the right-wing establishment to effect a major redirection of British political life. The pressure for that realignment had not come from Joseph and his allies in the party, but from a constellation of self-appointed committees in and on the fringes of the establishment, operating outside democratic institutions. The comparatively late recruitment of Joseph and Thatcher, and their subsequent victory over Ted Heath enabled the hotch-potch of conspirators and fellow travellers to make the transition from the essentially negative role of destabilising government and democratic institutions, to the more positive one of influencing directly political policy-making.
Throughout this period the Economic League was ever present. But it would not seem to have been prime mover in any of the conspiracies. Its importance lay with its role as one of a very few guardians of the dissident Conservative Diehard tradition, and as a intelligence gathering organisation also capable of reinforcing the propaganda efforts - with a direct line to supervisory, middle and senior shopfloor management. Ironically, however, the very success of those who had come to share its political ideas and prejudices brought major problems for the League. It had thrived on opposition - to trade union activism, to the Labour Party (except when it was haranguing the Communist Party) and to social democratic ideas in the Conservative Party. But it could not compete with the Conservative Party leadership's, and eventually government institutions', own work in these areas.
Just as problematic was the fact that although it received substantial support from the financial sector, the bulk of its activity was directed towards the manufacturing sector and as soon as Thatcher became Prime Minister the manufacturing sector, and with it industrial trade union militancy, collapsed spectacularly.
If the Economic League was to thrive under Thatcherism, it would need to radically reorganise and to try to carve out a new role for itself.
==Notes and References==
(see Bibliography for full details)
# See Ellic Howe
# Harold Wilson, "The War on World Poverty - An appeal to the Conscience of Mankind", Gollanz, 1953
# Final words of the epilogue to the second edition, June 1953
# The Monday Club's first pamphlet, by John Biggs-Davidson explicit stated its connections and commitment to Diehardism
# According to Edward Luttwak, "Coup D'Etat, Penguin, 1968, The third essential characteristic of the cout d'etat is that it is illegal or unconstitutional, although given the incomplete and ambiguous and flexible nature of both the British Constitution and that of the Conservative Party it is doubtful if the notion of illegality is meaningful in relation to either state or party"
# Jeffrey and Hennesey, p88
# Volume III of the Army Land Operations Manual, see Johnathan Bloch and Patrick Fitzgerald, "British Intelligence and Covert action", Dublin, 1983
# Michael Farrell, "Northern Ireland The Orange State", Pluto Press, 1980.
# Lord Carver, reported in the Guardian, 5/3/80
# Peter Wright, p359
# "Spycatcher", p367
# Mark Hollingsworth and Richard Norton-Taylor, "Blacklist: The Inside Story of Political Vetting", Hogarth, 1988
# Having reviewed the case there is little doubt that there was some sort of conspiracy against the architect John Poulson, and his downfall cannot simply be put down to investigative journalism nailing municipal corruption. But it is still open to question whether it was a concerted attempt to discredit the social democrats who had held power at a local and national level since the 1950s. The original bankruptcy was precipitated by Poulson's sister-in-law's husband - Lord King - who has since become a key figure in the Radical Right. If anything the scandal was more damaging to Heath than to Wilson. Interestingly, though no one has yet taken it seriously, quixotic T Dan Smith himself has always maintained that MI5 were covertly involved in engineering the scandal. John Poulson's unpublished autiobiography, The Price, was particularly interesting.
# Colin Wallace's notes for "Clockwork Orange 2", Paul Foot, "Who Framed Colin Wallace", Macmillan, 1989, and Lobster #13
# John Nott, former Thatcher minister, interviewed on BBC TV's "Panorama", celebrating Thatcher as the longest reigning British premier of the 20th century.
# Nicholas Whapshot and George Brock, "Thatcher", Macdonald, 1983
# Cecil Turner (editor), "The Case for Free Enterprise", Bachman & Turner 1979.
Category:Spies at WorkCategory:Economic League