In his single year as Britain's Chancellor of the Exchequer, persuasive, even-tempered Peter Thorneycroft, 48, had established himself as a prospective Tory Prime Minister. His sponsorship of the British plan for a free trade area embracing all Western Europe (TIME, Jan. 28) earned him a reputation for vision; he won the admiration of Britain's business community by his unflinching fight against the domestic inflation that lies at the root of Britain's economic difficulties. Early last week the Times of London gave Prime Minister Harold Macmillan high marks for "coolly and firmly backing a courageous Chancellor of the Exchequer." But even as subscribers were reading these flattering words over their morning tea, Peter Thorneycroft had ceased to be Chancellor of the Exchequer.
The cause of Thorneycroft's abrupt departure from the Cabinet was his insistence that government expenditures must be maintained at exactly the same level as last year's. But in the new estimates, expenditures came out almost £50 million ($140,000,000) higher. This was not because of new extravagances but because standard welfare-state services would cost more. To cut the last £50 million would mean cutting into such programs as free milk for children and expectant mothers, reducing the family allowances that pay parents $1.12 a week for their second child, $1.40 for each subsequent child. To cut such payments, argued Thorneycroft's opponents, would cause deep resentment, might provoke the unions into demands for wage increases.
Thorneycroft was adamant. In his fight to choke off the inflationary spiral he had drastically limited private bank loans, upped the Bank of England interest rate to its highest level in 37 years, asked industry to reduce investment. Now, he argued, the government must do its part by refusing to increase its spending by so much as a penny. His opponents, keenly aware of the votes that could be lost by cutting family allowances, retorted that the amount involved was trifling—less than 1% of the projected budget. The showdown came at a late-night Cabinet meeting at 10 Downing Street. Peter Thorneycroft found all 17 of the other ministers present arrayed against him. Taut and white-faced, he announced that the Prime Minister would have his resignation forthwith.
"Little Local Difficulties." Next day, in a stiff letter to Macmillan, Thorneycroft wrote: "My reason can be shortly stated . . . The government itself must, in my view, accept the same measure of financial discipline as it seeks to impose on others." No less curtly, Macmillan replied: "You say that the [budget] for the next year must be the exact equivalent of the sum spent this year. The rigid application of this formula would do more harm than good . . . This is not a matter of popularity . . . This is a matter of good judgment ... I particularly regret that you should think it necessary to take this step when the difference between you and the rest of the Cabinet is such a narrow one."