The economy was in crisis. Unemployment had peaked. The threat of public-sector strikes was perpetual, and riots exposed the myth of social cohesion in British cities. The Arab world was in flux, relations with our European partners at rock bottom, and there was even trouble brewing in the South Atlantic. At least the royal wedding warmed the cockles: 1981 sounds remarkably familiar.
Cabinet battles over the nation's finances were as forceful as they are today, and the Government's power to curb expenditure appears to have been equally compromised, as revealed in official papers released today by the National Archives in Kew, west London, under the 30-year rule.
On 9 January, Geoffrey Howe, the Chancellor, wrote to Prime Minister Margaret Thatcher promising "more bad news" in the run-up to his March Budget. Thatcher, exasperated, wrote to her economic adviser, Tim Lankester, in the margin of another gloomy Howe memo: "Tim – I cannot just do nothing about this. We appear to have no control over expenditure."
The Prime Minister was making pains to limit her own expenditure. When sent a breakdown of the costs for the refurbishment of her Downing Street flat, her officials found the total of £1,836 "impossible to believe". "So do I!" Thatcher responded, especially as she and Dennis "use only one bedroom". She insisted, in notes scrawled on three separate documents, that she would pay for a new ironing board personally. "I have an excellent ironing board, which is not in use at home..."
The Government had begun a campaign of public economic education. A list of talking points issued to ministers during the 1980 Summer recess was introduced as "in a sense... a counter-unemployment campaign, designed to show union members and officials that excessive wage claims can only lead to a loss of jobs".
No union was more powerful than the National Union of Mineworkers. A report from the period details several strategies for depleting the influence of the NUM, by isolating it from other unions and sowing dissent within the ranks. Thatcher was warned about the union's likely next leader, Arthur Scargill, who was expected to win a leadership election at the end of the year. "There is not a well-planned, subversive strategy on the part of the NUM's present or future leadership," wrote her policy adviser, John Hoskyns. "However, the lack of such a plan gives no grounds for comfort. Scargill will look for ways to confront the Government."
That year also brought a less-expected form of unrest. Between 10 and 12 April, riots broke out in Brixton, caused by a collision of grievances: recession, racial tensions, and aggravation by the police and other authorities. In July, further riots rocked London, Moss Side in Manchester and the Toxteth area of Liverpool. "July is always the most dangerous month politically," wrote Thatcher's press secretary, Bernard Ingham, in an official memo. "This time the dangers are compounded by... the riots in Southall, Toxteth, Wood Green, Moss Side (and where next?)."
According to Cabinet minutes from 9 July, Willie Whitelaw, the Home Secretary, reported that civic and church leaders in Liverpool had "ascribed the root cause of the present unrest to a feeling of alienation among the young".
Just as Labour leader Ed Miliband and David Cameron clashed over the causes of and the Government's response to this summer's riots, Whitelaw drew a contrast between how Conservatives and Labour would react to the 1981 riots. He suggested the Opposition "would almost certainly seek to blame high unemployment for the unrest, and to demand major changes in the Government's economic policies". Government supporters, by contrast, would "suggest a response concentrated on law and order issues".
To bolster the law and order response to the riots, Thatcher visited Scotland Yard and Merseyside, where the chief constable told her he wanted a water cannon. He had already used CS gas, for the first time in mainland Britain, on rioters in Toxteth. "The chief constable argued strongly," says one document, "that it was essential that those charged with offences arising from the disturbances should be dealt with quickly by the courts. Short, sharp sentences would have a considerable deterrent effect."
The Home Office asked the Ministry of Defence to furnish the police with 50 riot guns and 5,000 baton rounds, but the Defence Secretary, John Nott, said he had "considerable reservations about whether we should... be issuing army weapons to police forces." The move would, he claimed, weaken the RUC in Northern Ireland, which was also in need of replacement riot guns. In the end, Whitelaw settled for 50 guns and 4,000 rounds. As for water cannon, Nott wrote that there were "only four of the special water dispenser vehicles (which fire a slug of water capable of knocking over a rioter) and these are all in Northern Ireland where I think it would be prudent to assume they should remain."
Ingham, looking back on the "dangerous month" reflected in another official memo, of 31 July, that the Government had emerged "in far better shape than we might have reasonably expected". The collective mood had been lifted by one event in particular: "The triumph of the Royal Wedding," Ingham claimed, "has been a national tonic."
As in 2011, the Arab world was tense in 1981, with Libya and Egypt, and their respective leaders Muammar Gaddafi and Hosni Mubarak, featuring in the documents released yesterday.
Libyan diplomats were expelled from Washington in May, and in August Gaddafi clashed with the US over the Gulf of Sirte incident: two Libyan jets were shot down by American fighters after first firing on them in international airspace. Jeremy Greenstock, later UK Ambassador to the UN, was then in the Near East and North Africa Department of the Foreign and Commionwealth Office. He outlined the incident in a letter to Downing Street.
"Given the vulnerability of our own community in Libya and the delicate state of our political and commercial relations with the Libyans, which we have recently been trying to improve," Greenstock wrote, "we do not wish to turn Libyan anger against ourselves on an issue which does not directly involve us. But the Libyan action appears to have been unjustified and the Americans will expect our support."
Gaddafi, according to a subsequent diplomatic telegram from Tripoli, claimed the US had been attempting to invade Libya and that his aircraft had shot down a US fighter. "American boisterousness," Gaddafi said, "will only end with a new Vietnam."
In October, President Sadat of Egypt was assassinated by Islamist army officers. He was succeeded by his Vice- President, Hosni Mubarak, who had visited the UK in June. An FCO official, writing to advise that Thatcher meet him, suggested Mubarak was "not personally very impressive". A further briefing note about his character, issued before his arrival, said Mubarak lacked political flair, was "no intellectual but is always friendly and cheerful... His affable exterior evidently conceals a degree of ruthlessness."
Mubarak's wife was half-Welsh, the Prime Minister's office was told, and her mother still lived in Cardiff. But the British were advised not to bring the subject up with the Mubaraks, as "it is thought they may wish to play the connection down".
Closer to home, relations with the French were fractious. When President Valéry Giscard D'Estaing had visited in 1979, newly released papers reveal a dispute over chairs in the Cabinet room. A government press officer writes that "In all seriousness the Elysée party pointed out that they would consider it essential for the President to have a chair equal in status – ie, with arms – to the Prime Minister." Lord Carrington, the Foreign Secretary, responded that "It would frankly be rather difficult to introduce some quite different chair for the President." The French were reluctantly persuaded not to press the matter further.
Soon the British would find themselves occupied with a more aggressive rival. Francis Pym, the Defence Secretary until the January 1981 reshuffle, had already written to Thatcher warning that the scale of the defence cuts was "without precedent" and "clear contrary to the military need".
In June Lord Carrington, wrote to Pym's replacement at the MoD, John Nott, insisting the Navy's presence be maintained in the Falkland Islands. "Any reduction," he warned, "would be interpreted by both the Islanders and the Argentines as a reduction in our commitment to the Islands and in our willingness to defend them..." His fears would prove well-founded, but not until 1982.
Declassified: The hunger-strike go-between
Mrs Thatcher trod a narrow line over her government's stance on the IRA hunger strikers being held in the notorious Maze Prison, the newly released documents show.
Publicly, the PM was unbending, drawing international criticism for her apparent unwillingness to make concessions while hunger strikers died over their demands for "special status" in jail. But it can now be revealed the Government was by July 1981 sending messages to the IRA through an intermediary named in the files only as "Soon", but now known to be Brendan Duddy, a Londonderry businessman who acted as a secret go-between for more than 20 years and played a key role in ending the conflict.
The British Government set out concessions it was willing to make in return for the immediate end of the hunger strikes. They included allowing prisoners to wear their own clothes and receive normal visits. The hunger strikes triggered one of the worst crises of the Troubles, galvanising support for republicans and turning Mrs Thatcher into a hate figure for much of Northern Ireland's nationalist community.
By July, four had died, and before his death their leader, 27-year-old Bobby Sands, secured a propaganda coup, winning the Fermanagh and South Tyrone by-election. Handwritten annotations to the files in Mrs Thatcher's writing show she took a close interest in the process. But despite the exchange of proposals, the offer was rebuffed and the "channel" of communication through Mr Duddy declared "closed".
Declassified: Thatcher vs the BBC
The PM's documentary veto
Margaret Thatcher privately indicated she was willing to deploy an unprecedented veto against the BBC and ban it from broadcasting a documentary on the activities of MI5 and MI6, according to previously undisclosed official papers.
When news reached Downing Street in the summer of 1980 that a Panorama documentary was to air allegations about illegal phone taps and disinformation campaigns by the security services, there was a flurry of activity in Whitehall aimed at stopping the programme.
In a handwritten annotation to a memo laying out the options available to the government – from an informal approach to BBC managers seeking changes to the documentary to the use of a little-known power of veto – Mrs Thatcher wrote: "I would be prepared to use the veto."
The programme was aired but only after extensive editing ordered by the Corporation's then director general, Sir Ian Trethowan.
The BBC insisted at the time that no one in government was shown the documentary prior to broadcast. But the documents show that Mrs Thatcher asked for Sir Ian to be lobbied to drop the programme and that he ordered the changes after allowing MI5's legal adviser to view it.
Two-thirds of Mrs Thatcher's Cabinet opposed her decision to buy the Trident nuclear deterrent, according to the newly released documents.
The Prime Minister was warned in 1981 by her Defence Secretary, John Nott, that she faced opposition from within her own party to the decision to spend £10 billion on the Trident II submarine system and would have to "deal with all the issues" surrounding the purchase.
In a memo to Mrs Thatcher, Mr Nott wrote: "It was essential to do so since two-thirds of the party and two-thirds of the Cabinet were opposed to the procurement of Trident. Even the chiefs of staff were not unanimous."
Despite Mr Nott's warning that the cost of the programme looked set to double to £10bn, the decision to press ahead received strong backing from the Foreign Secretary, Lord Carrington.
1981: Story of the year
20 January Ronald Reagan is sworn in as US President. Iran releases 52 American hostages from US Embassy in Tehran.
21 January The first DeLorean sports car comes off the production line in Dunmurry, Northern Ireland.
26 March Four moderate Labour MPs – the Gang of Four – break away to form the Social Democratic Party.
29 March The first London Marathon is completed by 6,255 runners.
30 March Reagan is shot in an assassination attempt in Washington, DC.
4 April Bucks Fizz win the Eurovision Song Contest with "Making Your Mind Up".
11 April The Brixton riots reach their peak, causing extensive damage to property and injuring more than 200 police officers
23 April Unemployment passes 2.5 million.
5 May IRA hunger striker Bobby Sands dies in the Maze Prison, Northern Ireland, after 66 days, and a month after his election as MP for Fermanagh and South Tyrone in a by-election.
13 May Pope John Paul II is shot in an assassination attempt in Vatican City.
21 May François Mitterand is elected President of France.
22 May Peter Sutcliffe is convicted of the Yorkshire Ripper murders and sentenced to life imprisonment.
5 June The Centre for Disease Control and Prevention notes the first recorded incidence of Aids: five men in Los Angeles with a rare form of pneumonia.
5 July Riots break out in the Toxteth area of Liverpool.
21 July England's cricketers beat Australia by 18 runs in the Third Test of the Ashes series at Headingley – only the second team in Test history to win after being made to follow on.
29 July Prince Charles marries Lady Diana Spencer at St Paul's Cathedral.
1 August The MTV channel is launched in the US.
19 August US planes shoot down two Libyan fighters in the Gulf of Sidra.
3 October The hunger strikes at the Maze end after seven months and 10 deaths.
6 October Anwar Sadat, president of Egypt, is assassinated in Cairo.
10 October Two killed as Chelsea Barracks is bombed by the provisional IRA.
12 October British Leyland closes three factories, with the loss of almost 3,000 jobs.
12 November The Church of England General Synod votes to admit women to holy orders.
8 December Arthur Scargill is elected leader of the NUM.
11 December Muhammad Ali loses to Trevor Berbick in his last bout.