Political Commentary: Major's nod is as good as his wink

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WHEN he stood as Conservative candidate for the old Cities of London and Westminster seat in the 1970 general election, Sir Christopher Tugendhat, as he now is, used to carry a card listing various homely commodities, such as butter, eggs, milk, bacon, and detailing how their prices had risen during the Wilson years.

Covering his campaign as a young reporter for a local London weekly paper, I asked him, after a morning's canvassing in Belgravia, how he dealt with voters who wanted to know how Edward Heath would stop prices going up. 'They don't ask,' he replied, with a seraphic smile.

Last week Sir Christopher, now chairman of Abbey National, did not have it so easy. His proposal that people buying a new house should be given up to pounds 10,000 tax credit to compensate for the loss in value of their old one made lots of big headlines. The Treasury said with condescending politeness that the Chancellor would consider the suggestion 'with interest'. John Townend, the chairman of the Tory backbench finance committee, who is as worried about the state of the housing market as anyone, described the plan as a 'non-starter'. And one of the City's leading housing finance experts said the cost would be nearer pounds 2bn a year than the pounds 250m Sir Christopher was estimating. In short, Sir Christopher's idea was seen as a bit of a lemon.

What Sir Christopher did achieve, however, was to shift attention away from the level of interest rates to the question of whether help can be found for the housing market without the Government jettisoning its central monetary policy.

He was operating on fertile ground. First, because millions of Tory voters, encouraged by a decade of Thatcherism, regard their own home as their most precious asset, and the fall in property values has been the most immediate and shocking impact of high interest rates. Second, because of the quite exceptional force with which the Prime Minister has demonstrated his commitment to maintaining sterling's level within the European exchange rate mechanism.

The most recent manifestation of this was the main story in last weekend's Sunday Times, which followed an off-the-record dinner at which Mr Major transmitted two unmistakable messages. The first was that his eventual goal was to see the pound replace the German mark as the strong currency of Europe. The second was that those who want interest rates to fall would do better not to keep calling for them to be brought down, since it only encouraged the perception in the markets that the Government might be deflected from its policy. Which it was not going to be.

John Major is more comfortable with the off-record occasion than was Mrs Thatcher. In the early 1980s, the story goes, she gave an 'unattributable' briefing to the so-called quality papers, which resulted in a prominent (though long-forgotten) story in all of them. But the then political editor of the Times, Fred Emery, broke the spirit, though not the letter, of the arcane conventions governing such occasions by ingeniously sourcing the story to 'the highest possible authority'. Mrs Thatcher is said to have been furious, and never again repeated the occasion. That is not to say that she did not dine or lunch informally with editors and their staff. But she rarely said anything very different on such occasions from what she would say on the record.

Mr Major, by contrast, has sent out some of his most important signals without actually uttering words in public. For instance, he indicated that he set personal store on Britain standing by the Maastricht treaty, should it survive the Danish defeat and the French referendum. Another example was the message he gave to the Sunday Times. Yet there is no evidence whatever that he was surprised or discomfited by the Sunday Times's front page, even though the paper's editor, Andrew Neil, made it pretty clear in an editorial that the paper had spoken to the Prime Minister. The next day, William Rees- Mogg referred in the Independent to an 'off-the-record interview' with Mr Major; and Downing Street lost no time in confirming that Mr Major did indeed want the pound eventually to take on the role of the mark. The point of all this is not whether such a goal is really attainable, but only to stress that Mr Major sent out a message in a highly effective way.

John Langsham Austin, once a rather fashionable philosopher, wrote a book published in 1962 called How to Do Things with Words. One of his most enduring legacies was the concept of 'performative statements', which do something more than merely describe or predict. Two examples that Austin gave of this kind of statement were promises and threats. Mr Major's remarks about the future of the pound were neither a promise nor a threat, but they were performatives in a sense that Austin would have understood. To see that, you only have to imagine what the impact would been if Mr Major had told the Sunday Times that he might have to devalue if things got tougher in the autumn.

At least part of Mr Major's current purpose is to convince the markets, as well as his political opponents, that he is serious about defeating inflation through the maintenance of government policy on the ERM.

Harold Wilson was reviled for the number of statements he made - 20 in 37 months, according to Ted Heath - denying that he would devalue, before doing so in 1967. But Lord Wilson made all those statements partly in an attempt, eventually vain, to convince the exchange markets in a way that would mean he would not have to devalue.

There the comparison probably ends: first, because Mr Major almost certainly has more chance of success than Lord Wilson did; second, because of his known determination on inflation.

Mr Major is not a Thatcher-style, ideas-driven politician; he has real convictions, some of them - for example, on race and some social issues - probably more liberal than those held by most Tory MPs. However, the notion of the classless society was revived mainly as an expedient means of wrong-footing Douglas Hurd in the Tory leadership contest, rather than as an ideological touchstone. On inflation, all those close to him insist that he is deadly serious, more serious, some dare to claim than Baroness Thatcher; some cite the childhood experience of the collapse of the family business and the move from Worcester Park to Brixton as the fundamental motive.

This is not to say that Mr Major has not embarked on a gamble. His troops' restiveness over Europe at the forthcoming Conservative conference may have increased in proportion to fears about the economy; nearly every conversation with a senior minister on the economy comes back to the Maastricht Bill. Action on the housing market has conspicuously not been ruled out. There will be further bad figures on unemployment, including this week's. A success for the Treasury on spending could, in theory at least, so cheer the markets that an autumn interest rate cut could be possible without damaging the pound; but no minister is counting on that.

Norman Lamont is taking most of the flak at present, while Mr Major's personal popularity ratings are high. Indeed, Mr Major has never known unpopularity during his political career, much less since becoming Prime Minister. But those close to him insist he is ready to find out what it is like if he has to.

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