Keith went on to sketch out in imagination how it would all be accomplished—a new institution of research and debate, pamphlets, study groups, university tours, encounters with the cleverest socialists he could find, a televised national debate between himself and Michael Foot in the Albert Hall on the relative merits of Swedish socialism and West German capitalism, all leading to a gradual change of public sentiment, a recognition of policy alternatives, an election campaign fought on principle, a bold reforming Tory government that would actually cut inflation and revive enterprise, and, and, and . . . the rebirth of Britain! It seemed to be a magnificently impractical dream. Most dreams live and die as dreams. But this dream actually happened—and at a terrific gallop.  The Centre for Policy Studies was established under Keith and Margaret Thatcher a week or two after our Ritz lunch. Keith gave the first of several great speeches on policy reform at Preston a few weeks after that. The Times, under the monetarist influence of Peter Jay, reprinted it in full, launching what became known as monetarism. There began to be a small buzz around the CPS, but it was an op-ed buzz, a salon reputation.  In the world of headline politics a divided and directionless Tory party lost the October election. Sir Keith’s initial bid—yes, he wasn’t entirely without ambition—for the Tory leadership fizzled. Most observers assumed that the CPS no longer had a role. Even as the Labour government was re-elected with a narrow majority, however, it was plainly a ramshackle jalopy that would shortly run out of steam. All the energy seemed to be on the Right, and in particular on the Tory Right. Margaret Thatcher duly defeated Ted Heath and became Tory leader a few months later. She met Ronald Reagan in her Westminster office; they agreed to keep in touch. And the CPS became the ideological secretariat of the Thatcherite faction in the Tory leadership.  The CPS was crucial to the success of Thatcherism, even to its survival, in those four years of opposition. Even though Mrs. Thatcher was leader, she and her supporters were a minority in the Shadow Cabinet and wider leadership cadres. Her position would have been untenable, rather than merely uncomfortable, if she had had only the Conservative Research Department for policy advice and support. Under its director Chris Patten, who had nicknamed Keith Joseph “the Mad Monk,” the CRD was a stronghold of Heatho-Macmillanite orthodoxy, fond of corporatism, indicative planning, and incomes policy. The Thatcherites needed a more sympathetic organization for research, analysis, speech-writing, ideas. The CPS was their research department, rallying place, lunch club, and rolling philosophy seminar.  This may make it sound a somewhat forbidding place. Not in the least. Like Sir Keith at the Ritz, it fizzed with excitement. Over a succession of lunches cooked by a series of dazzling debs, groups of economists, entrepreneurs, politicians, journalists, shop floor managers, and not infrequently plain and outright eccentrics with whizz-bang ideas argued out their various disputes over the cheese and claret. (The Seventies had not yet discovered health fascism.) A favorite cabaret for many was to watch Alfred Sherman—“the eminence grise to the eminence grise” as Keith’s main advisor was known—tormenting some more conventional economist with the brand of savage polemical questioning he had learned as a teenage Marxist in the Spanish civil war. Occasionally even Mrs. Thatcher—who loved debate and the clash of ideas—could be heard saying reprovingly: “Really, Alfred, this time you have gone too far.”  But serious, well-researched, and persuasive reports emerged from this mayhem because there were also solid citizens such as Nigel Vinson, Martin Wassell, Simon Webley, and Gerald Frost (now my colleague at the Danube Institute) on the premises and ensuring the CPS’s productivity. This stream of pamphlets argued for limited government, reduced public spending, control of the money supply as a means controlling inflation, an end to prices and incomes control, the abolition of exchange controls, the privatization of industry, the scrapping industrial subsidies and the wider dispersal of wealth. Study groups, at one time numbering more than twenty, were set up. One of them, the Trade Union Reform Group under the chairmanship of Sir Len Neal, a former trade union leader, laid the foundation of the legislation later introduced to reform trade union law. Another pamphlet was inspired by Keith’s vision of the wider ownership of wealth; it led to PEPS (later restructured to become ISAs).  Keith took these arguments on the road, giving speeches to large student audiences. The audiences were not always friendly, but Keith usually won them over by his combination of sincerity and argument. Over time the CPS and fraternal institutions such as the Adam Smith Institute became the center of a growing Thatcherite student movement. Keith had achieved the aim he revealed over lunch. By taking the arguments of the IEA more directly into the political arena he changed the political agenda and brought about a remarkable sea change in the direction of British politics.  His task was easier because although the CPS flew a Tory flag, it was independent of the Party ideologically and organizationally. It could engage with relative safety in kite-flying, and if its kites attracted too much flak, they could be disavowed as “independent” of the Party (though this very rarely happened in practice.) Nor was this independent pose entirely a pose—at least in Keith’s case. One of his speeches began: “I thought I was a conservative. In fact I have only recently become a conservative. I now realize that I was in fact a socialist...” Such speeches did not endear him to most of his Conservative colleagues. But Keith, Mrs. Thatcher herself, Geoffrey Howe, Nigel Lawson, John Nott, Norman Tebbitt, and Cecil Parkinson were in fact shaping the new, sharper, more critical conservatism that we later learned to call Thatcherism.  When we consider Thatcherism in retrospect, we generally focus on events such as the miners’ strike, the Falklands War, the 1981 budget, the lifting of exchange controls, the privatization of British Airways, and other acts of government. Most of these crucial victories in reviving Britain were the children of two forces: the courage of Thatcherite ministers and the intellectual preparation on policy in the days of opposition. As Henry Kissinger points out, senior people in modern government are simply too busy and too tired to think creatively about the problems facing them. If they haven’t used opposition to do some fresh thinking, they have to fall back on the ideas of their opponents.  The CPS did the great bulk of Tory re-thinking in the 1970s; the CRD of those days was essentially a damage-control operation for the old Tory establishment. That indeed may always be the fate of a formal party research outfit. If so, there are lessons for conservatives and classical liberals today in the history of the CPS.  When we look at the ever-rising trend of government spending and borrowing; the remorseless advance of the regulatory state; the simultaneous rise and spread of taxation; the steady drain of power from democratic to non-democratic institutions, mainly in the European Union but elsewhere too; the growing restraints on free expression; the gathering storms in foreign policy; the running-down of our national defenses; and a much else, it would be unrealistic to deny that we have slipped back very far from the high-water mark of Thatcherite success. Many of our current problems are little better, sometimes worse, than under Harold Wilson or Jim Callaghan. Yet they continue under a largely Tory government because in Opposition it forgot the need for intellectual investment in new policy thinking or squandered it on modish fantasies. Worst of all, the fatalistic sense of inevitable national decline that we thought had been banished is creeping back. So there is a backlog of serious Tory re-thinking to be done and some uncertainty as to whether the current crop of Tories is either energetic or creative enough for the task.  As the program of this conference demonstrates, however, the current CPS is both of those things. It had better be. Sir Keith was an amiable lunch companion. Disappointed enthusiasm might make him a troublesome ghost.  John O'Sullivan is director of the Danube Institute in Budapest and a fellow of the National Review Institute.  The Centre for Policy Studies Margaret Thatcher Conference on Liberty takes place on Wednesday June 18. Join the conversation on Twitter: @CPSThinkTank #Liberty201
By founding the CPS, Margaret Thatcher and Keith Joseph transformed Britain   into a lively, free society