Sir John Hoskyns: Plain-speaking, self-made millionaire who headed Margaret Thatcher's Policy Unit but fell out with her

John Hoskyns was a man of many parts – career soldier, successful entrepreneur, head of Margaret Thatcher's Policy Unit, and then a businessman. A self-made millionaire, he was able to sell his computer software business (Hoskyns Group) at the age of 47 and devote himself to public service. To all his enterprises he brought energy, courage and clear thinking.

Hoskyns was educated at Winchester and Sandhurst. He followed his father (a Lieutenant-Colonel who died in the defence of Calais in 1940, when John was 13) into the Rifle Brigade and became a Captain. Until middle age he was rather apolitical. He voted Labour in 1970 but grew increasingly concerned about the state of the nation in the early 1970s – strikes, the three-day week, double-digit inflation and speculation about whether Britain was governable.

There seemed no obvious party for him until he joined a number of disillusioned radicals around the Centre for Policy Studies (CPS), co-founded by Thatcher and Sir Keith Joseph in October 1974. This provided a ready home for Hoskyns, David Young, Norman Strauss, Alfred Sherman and Alan Walters, who rallied round Thatcher and Joseph rather than the Conservative Party. They attacked the Establishment's seeming willingness to preside over an orderly management of Britain's decline.

Hoskyns impressed Alfred Sherman – no easy task – who arranged for meetings with Joseph and Thatcher. He proved to be her kind of man – military background, successful businessman, handsome, charming, fearless and to the point. At the CPS he and Norman Strauss agreed on the need for a total change in Whitehall and Westminster if national decline was to be reversed. They talked of strategy and coherent policy making. Some Shadow Ministers, like civil servants a few years later, switched off when the two propounded their ideas, finding them too analytical and remote and unaware of the political and administrative constraints.

His obsessiveness about concentrating on priorities, taking decisions, however unpopular, and use of flow diagrams and critical path analysis, grated with many mandarins. He did not think it was a clash between the thinking systems of Whitehall and business but between Whitehall and the real world. Ministers with no proper training were supported by officials trained to support untrained ministers.

This was exemplified in his Stepping Stones strategy, starting in July 1977. It planned to tackle decline step by step, beginning by reducing the powers of the unions and restoring financial stability. Chris Patten, Jim Prior, Ian Gilmour and other "wets", nearly killed off the project, even though it had the support of Thatcher and Joseph. It was saved by the winter of discontent in 1978 and the resulting end of social contracts and incomes policies.

Shortly before the 1979 election Thatcher invited Hoskyns to head the Policy Unit set up by Harold Wilson in 1974. His staff was tiny – Strauss and a civil servant. He felt he was battling all the time with Cabinet Secretary Sir Robert Armstrong and other officials to see papers and get his memos to Thatcher. He concentrated on what he called "first order problems" – ending civil service pay comparability, de-indexing a range of benefits and cutting out over-manning in nationalised industries.

Above all he wanted to curb the powers of the trade unions, saying, "Unless that fire is put out all else is irrelevant". He clashed repeatedly with the Employment Minister Jim Prior, whose policy he condemned as "minimalist". Together with Sir Alan Walters, David Wolfson and some Treasury advisers he argued successfully for Howe to introduce a tighter budget than planned in 1981. Given the high levels of unemployment the budget was widely regarded as a political and economic disaster.

By 1982 Hoskyns thought he could do little more within the existing framework. He sensed, correctly, that Thatcher was finding him a handful and wearying of the downside of his candour, determination and inclination to divide people into supporters and enemies. He had sent her a memo entitled "Your Personal Survival", in which he roundly criticised her: "You lack management competence… you break every rule of good man–management… you bully your weaker colleagues…"

Apart from what he regarded as the obstruction of Downing Street officials he was frustrated by Thatcher's refusal to work more strategically. One exchange reflected their wary relationship. JH: "Prime Minister, we really are in desperate need of a strategy." MT: "We know what our objectives are." JH: "That is not a strategy."

Joseph and Thatcher appreciated the symbolic significance of his departure – the first of her supporters to leave her government of his own accord – and begged him to stay. There were abortive negotiations to offer him the headship of a combined Central Policy Review Staff (the "Think-Tank" established in 1971 by Ted Heath) and the Policy Unit. Thatcher offered him a larger Unit, but it was too late.

Out of Downing Street, Hoskyns made headlines by calling for the replacement of the top echelon of mandarins and allowing the Prime Minister to appoint his own staff, he said. They had been associated with 40 years of decline and were defeatist. He dismissed the Commons as "a talent pool which could not sustain a single multi-national corporation"; many ministers, who he thought hated hard decisions, regarded a speech as a policy and were too interested in the "game" of politics.

As Director General at the Institute of Directors (1984-89) he spoke out in defence of free enterprise, lower taxes and less government. He chaired a Reskilling Government Group which proposed an experimental "cabinet" system for ministers. He chaired the Burton Group (1990-98), presiding over its revitalisation, and held a number of other directorships. Businessmen appreciated his ability to simplify complex issues and identify central questions.

In retirement he was a strong supporter of campaigns to stop Britain from entering the single currency. He published a well-reviewed memoir, Just in Time (2000), of his years working with Thatcher. He enjoyed opera and followed country pursuits in Suffolk. He married Miranda Mott in 1956; she was strikingly attractive, a painter and printmaker, and a keen supporter of all his activities.

DENNIS KAVANAGH

John Austin Hungerford Leigh Hoskyns, businessman and policy adviser: born 23 August 1927; Kt 1982; married 1956 Miranda Mott (one daughter, two sons); died 20 October 2014.