WITH THE Heseltine crisis scarcely behind her, Thatcher this week series of economic and political problems.
On Monday the price of North Sea Oil for the first time ever fell below $20 a barrel. The result was the rapid slide of the pound on the foreign exchange markets. On Tuesday the Bank of England was acting to prevent interest safeguard the pound. The reason was obvious: any new rise in interest rates, the second within a month, would certainly have meant an incease in mortgage rates and a new political crisis for Thatcher. Whether such a rise can still be averted remains to be seen - it will certainly be difficult.
On Monday evening Thatcher was hit with a new row: a Tory backbench rebellion over rates. Thirty-two Tory MPs voted against the government and about another 20 abstained.
Thatcher's credibility continued to be struck by the Westland-Heseltine affair. The first opinion poll after Heseltine's resignation and row between home secretary British Aerospace's chief executive Sir Raymond Lygo carried out for ITN by Harris polls showed that 70 per cent believed Heseltine had been 'more honest' than Thatcher.
Fifty eight per cent believed Lygo's initial version of events rather than Brittan's, 49 per cent thought Brittan should resign, 64 per cent backed the European bid for Westland, and 54 per cent thought Thatcher should retire before the next election.
The first poll on the state of the parties after Heseltine's resignation showed the third place with only 29.5 per cent support.
A number of these blows are interrelated. It is clear that a series of Thatcher's economic policies are now being blown substantially off course.
For seven years since its election Thatcher's government has been riding high on the flood of black gold from the North Sea.
British manufacturing industry could shrink when high priced oil was there to plug the gap in the balance of payments. on public spending could be avoided as long as the tax revenues from the North Sea continued to pour in. A high exchange rate of the pound kept down prices for the imported videos, puters, and cars that fed the consumer boom. Tax cuts cold be made - financed by oil and privatisation — to buy electoral popularity.
But a decline in the price of oil undermines it all. Inflation edged up over the last two months. Another rise in interest rates would hit the house buyers vote cultivated. A fall in North Sea tax revenue wil force more harsh choices as with that taken on rates. Half Nigel Lawson's room for manoeuvre for a tax cutting budget in March has already gone.
No one should have any illusions but that the Thatcher government is very strong. Labour's opposition under Kinnock is pathetically weak -which is why the Alliance have been big gainers. But more political storms are on the way for Thatcher's government. A government which since the end of the miners strike has seemed overwhelmingly powerful has encountered real problems.
The left must begin to write that clearly into its perpectives and tactics in weeks to come.
Editor: ALAN FREEMAN Published weekly except two weeks in August and the last week of December.
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