第2章 Optimism

1

Champagne and Rust

In British politics the seventies began as they would go on: with a shallow feeling of optimism followed by a jolt. The general election of 18 June 1970 seemed a predictable contest when campaigning started that spring. On one side was the Labour prime minister Harold Wilson, winner of the last two general elections, in this area of politics, if not all, famously shrewd and charming. On the other side was the Conservative leader Edward Heath, the loser of the last general election, a largely uninspiring head of the Opposition who was considered by his many critics to be naive and charmless. Heath had never won a general election. Wilson had never lost one. For most of the 1970 campaign, this did not appear likely to change.

The sun shone almost every day. Wilson dominated the Labour campaign with even less effort than usual. He smoked his pipe at press conferences. He sauntered through crowds in his raincoat. He mocked hecklers in his small, seductive voice. He carried himself like an American president with good ratings, like a much-loved northern entertainer of a certain age, like the personification of what was left of the confidence of the sixties. Wilson was fifty-four and had been an MP since the Second World War; he knew how to deploy his trademarks. And they were affectionately received: during the walkabouts he conducted all over Britain, so many women wanted to brush his raincoat that his wife Mary called them 'touchers'.

Heath campaigned less fluently. His morning press conferences, wrote his then aide Douglas Hurd in a candid account published much later, were 'uneasy and defensive'. In private, among 'serious people', Hurd continued, Heath was an excellent communicator. '[But] introduce a rostrum, a microphone, an interviewer … and the result could be disastrously different. The voice might change its quality. The vocabulary might become stilted … The thread of theargument might be lost in a mass of detail. Instead of trying to speak to people, Mr Heath would too often speak at them.'

His infrequent walkabouts had something of the same quality. His stride was a little too fast, his smile a little too fixed, his handshake a little too brisk. For a politician with a liking for consensus he had a striking ability to enrage. On the night of the election result, a Labour supporter infiltrated the crowd outside Conservative Central Office in London and stubbed out a cigarette on Heath's thick, tanned neck.

For much of the campaign Heath was protected from such gestures. After his morning press conference and his daily television engagements he would take off each lunchtime in a private plane with staff and journalists to travel to a rally outside London with a selected audience. Electioneering by air was intended to be efficient and to look modern – key Heath preoccupations. Wilson campaigned by train; Heath did not like trains. But his faith in technology, not for the last time, proved over-optimistic. 'The weather was hot,' recalled Heath's then parliamentary private secretary Jim Prior. 'The plane journey generally bumpy, the whole affair was extraordinarily tiring and likely to make anyone tense.' Hurd recalls: 'On 8 June we sat miserable in fierce sunshine on the tarmac at Heathrow [waiting] for the appearance from the airline's catering department of the packed lunches on which we and all the accompanying journalists had relied. Those cross, hot and hungry moments were a low point of the campaign.'

Electioneering always has its frictions, yet even the Conservatives' tiniest ones were taken as significant this time, because almost everyone thought Heath was losing badly. In Britain, the opinion polls had correctly predicted the outcome of every general election since the Second World War. For most of the Wilson government between 1966 and 1970, which had been punctuated by crises, the Conservatives had been comfortably in the lead despite Heath's shortcomings. In July 1969, with a general election due in less than two years, the Conservatives were ahead by an average of over 19 per cent: a crushing victory at the next election looked possible, a comfortable one better than probable. But then the government's difficulties started to abate, and the Conservative lead disappeared. By April 1970, Labour were ahead – the strongest sustained surge in the polls that had ever been recorded. In early May, the party gained hundreds of seats in local elections, a rare feat for a government in its latter stages. A few days later, Wilson announced the date of the general election, which was almost a year earlier than it needed to be – the sign of a confident prime minister. The same month, the pollsters Gallup put Wilson's personal ratings lead over Heath at 21 per cent.

Labour's advantage over the Conservatives was actually much slimmer – an average of 3 per cent in mid-May – but the momentum seemed to be with them. During the campaign, their lead in the polls held, and in some surveys grew. The bookmakers Ladbrokes lengthened their odds on a Conservative win from 11/10 in early June to 6/1 in mid-June. Then they stopped taking bets on a Labour victory altogether. The mood of the press was similar. 'It was unnerving', wrote Hurd, 'to travel through this campaign in the company of highly intelligent journalists who were convinced that we had already lost. They were polite, even sympathetic, but they knew the answer, and it was not ours. Two of them were already writing a book during the campaign to explain how we had lost.'

On 13 June, for its final issue before the election The Economist put a photograph of the prime minister and his chancellor Roy Jenkins on the cover. The accompanying headline – 'In Harold Wilson's Britain' – avoided direct predictions, but it suggested that the Labour leader was the British politician who mattered, not least by making no mention of Heath at all. And the photograph underlined the message. Wilson and Jenkins were pictured walking side by side in the sunshine along a spotless pavement, by the look of it somewhere in Whitehall, with elegant iron railings to their right and solid old buildings in the distance. Wilson was grey-haired and watchful, his head like a great silver cannonball; Jenkins, four years younger, a little less solid around the waist, had a hint of a smile playing across his broad, amused mouth. The two of them were walking perfectly in step, shoes gleaming, official papers in their hands, gaits unflustered but purposeful. With their matching dark suits and old-fashioned parted haircuts they still had a strong air – as did much of Britain in 1970 – of the fifties or even the thirties. And they looked like members of a ruling establishment with quite a few years to run.

This sense of the government's impregnability infected many Conservatives. 'Most of us – including myself – thought that we would lose,' wrote Margaret Thatcher, then the shadow education secretary. 'The gloom steadily deepened during the campaign.' Hurd remembers: 'The opinion polls were hypnotic.' Six days before the election, he helplessly watched a journalist inform Heath of a new poll giving Labour a lead of 12.4 per cent and then ask the Conservative leader for his reaction. 'I cannot remember his reply, but I can remember the blank look on his face.'

In the run-up to the campaign and throughout it, there were murmurs in Conservative circles that Heath was about to be ousted. Even for the Conservatives, with their famous lack of squeamishness about replacing unsatisfactory leaders, this was a sign of panic. The coup never materialized, but on election day itself Heath was left in no doubt about how the party's feelings towards him were running. 'At lunchtime,' he remembers in his autobiography, 'there was an unexpected visit from Peter Carrington [the influential shadow defence secretary]. After congratulating me on the fight, he told me that, should we lose, I would be expected immediately to stand down.'

On 18 June, the polling stations closed as usual at 10 p.m. Wilson went with journalists and his retinue to the place he customarily received good news on general election night: the grand old Adelphi Hotel in Liverpool, a few miles from his constituency. The day before, the minister for technology Tony Benn, at this stage a Wilson ally and protégé, reflected the prevailing Labour view of the coming result in his diary: 'We should win by a large majority, certainly with a working majority.'

Heath was not even sure of getting a majority in his own constituency. At the last general election, his victory margin in Bexley in Kent, a semi-detached south London suburb with a Labour-voting past, had fallen to a vulnerable 2,333. This time, to make things worse, Heath faced a potentially damaging additional rival candidate: a campaigner against the European Common Market, which Heath wanted Britain to join, who had changed his name by deed poll to Edward Heath. On election day in Bexley, Conservative activists had to stand outside polling stations with placards warning people against voting for the wrong Heath. That evening, the Conservative leader waited in the constituency for news of his local and national fate. 'I always remained confident,' he insists in his autobiography. But the star Guardian writer Terry Coleman, who spent the last two days of the campaign with him, gained a different impression:

He believed, even to the end, that he had lost. It was late at night [on 17 June] in the headmaster's study of a grammar school at Bexley … Mr Heath was alone, without his aides, and without his Central Office girls, who had all gone home. He poured himself half a tumbler full of whisky … and for the first time that day forgot to sit up straight, and for the first time let his suit sag around him … I asked some question about a biographer who had attributed to him … a belief that he was a man of destiny. Was he? … He mumbled something I couldn't catch, said after a while that the man who had talked about his feeling for destiny hadn't seen him for thirty-five years …

At the Adelphi, Wilson chatted happily to the reporters for half an hour or so after the polling stations closed. The usual election-day survey conducted by Labour Party headquarters in London of how the voting had gone had found nothing to disturb his confidence. But then came the first puzzling tremor. News arrived of a more independent and concrete survey, of people coming out of the polling booths in Gravesend in Kent, traditionally a revealing constituency. There appeared to have been a swing from Labour to the Conservatives of over 4 per cent. If this exit-poll figure proved correct and was repeated across Britain, all the pre-election polls may as well have been conducted on Mars. The Conservatives would win.

A few minutes later, at around 11 p. m., the first actual result came in. In Guildford there had been a swing to the Conservatives of 6 per cent. Wilson, who had retreated to his suite to see the results on television, like almost 20 million other Britons, reportedly said: 'I don't like the look of that swing.' Benn's reaction, as he watched in his Bristol constituency, was less understated: 'In a fraction of a second, one went from a pretty confident belief in victory to absolute certainty of defeat.'

His sudden pessimism was justified. By the time all the results were in, the Conservatives had a majority of thirty. In the early hours of 19 June, Heath was driven into London from Bexley, the results flowing like his favourite champagne from the car radio. He struggled deliciously through the cheering crowd of supporters and party workers outside Conservative Central Office, retired temporarily to his smart bachelor flat in Albany, an exclusive nineteenth-century enclave off Piccadilly, and there received a congratulatory phone call from the Conservative chief whip, his close ally Willie Whitelaw. Whitelaw told the London Evening Standard that Heath, who never usually showed his deeper feelings, was so emotional he could not speak. Later that day, after sleeping and accepting more calls, Heath set off from his flat for Central Office again. In his autobiography, published twenty-eight years later, he recalls what followed as if he still cannot quite believe it:

The [Albany] porter told me that there was a vast crowd waiting for me in Piccadilly. As soon as I appeared, the crowd surged across the road, stopping traffic and requiring a great deal of police activity to clear it away. Everyone looked remarkably pleased, cheerfully shouting congratulations and waving, without any sign of a hostile protester.

That evening, he was welcomed for the first time by the staff of 10 Downing Street. A photograph of the scene appears in the book. Heath's small eyes are tiny with delight. His big white smile looks genuine for once, almost sharkish with triumph. 'The experts, the know-alls, and the trend-setters had been confounded,' Hurd wrote of Heath's victory. Now Heath just had to confound them again – by reviving the country.

The notion of British decline had been around for over a century. In 1835, the British economic reformer Richard Cobden wrote after visiting the United States: 'Our only chance of national prosperity lies in the timely remodelling of our system, so as to put it as nearly as possible upon an equality with the improved management of the Americans.' At the time, Britain was the dominant economic, military and imperial power in the world – and would remain so for almost another fifty years. Cobden's worries could be dismissed as the sort you heard in any country with a degree of national self-consciousness and a past against which the present could be anxiously measured.

Yet his alarmism did contain an insight: the prospect of decline was built into Britain's nineteenth-century pre-eminence like the rust-prone metal on a battleship. Firstly, all superpowers lost their supremacy eventually; secondly, Britain had a modest population and resources; and thirdly, as the first country to have an industrial revolution, Britain was always going to see its lead slip economically when other countries enjoyed their own transformations. In the last three decades of the nineteenth century, America, Germany and other close competitors emerged, just as Cobden had feared. In the first five decades of the twentieth, Britain's position was further eroded by two costly world wars and too many overseas commitments. From 1945 onwards, the issue of Britain's decline changed from a matter for intermittent public debate into a major and growing preoccupation of political life.

The decline was seen as having diverse symptoms – not just military and territorial but moral, cultural, spiritual and physical. The centuries-old British empire was dismantled in a couple of decades. In the late forties, the 'brain drain' began, as promising scientists emigrated in search of better prospects. The national birth rate peaked in 1964 and then fell every year for the rest of the decade. Britain's cities, overcrowded to bursting in the Victorian boom years, emptied out. The population of Greater London dropped by 600,000 between 1961 and 1971. Many of the urban Britons who remained lived in landscapes spotted with decay: prematurely aged post-war housing estates, emptying docksides, bombsites unrepaired and lost to weeds, decades after the German air raids. The energy and colour of British popular culture during the sixties and early seventies – the peacock rock stars, the outrageous boutiques – could not disguise the fact that much of everyday life took place on streets of worn-out brown and grey.

Some of these symptoms of decline were deceptive, the products of social change – suburbanization, contraception – not social entropy. Other portents favoured by newspaper columnists and other professional declinists were ambiguous. Did the drug experiments of the Beatles or the unashamed randiness of On the Buses represent decadence or progress? It depended on your morals. There was one set of national symptoms, however, that seemed less subjective and more measurable, and which, as a result, was watched with a near-continuous intensity in post-war Britain. This was the state of the economy.

Between 1950 and 1970, the country's share of the world's manufacturing exports shrank from over a quarter to barely a tenth. Between 1950 and 1964, the British gross domestic product grew at an annual average of 3 per cent, while in Germany, France, Italy and Japan it grew at an average of at least 5 per cent. Between 1950 and 1976, British productivity grew at an annual average of 2.8 per cent, while in Germany it grew at 5.8 per cent and in Japan it grew at 7.5 per cent. There were other economic totems during these years: the value of the pound against the American dollar; the inflation and unemployment rates; the balance of payments. Such figures, in fact, can both distort and be distorted. Dates can be chosen to give a particular impression. Different national contexts – the contrasting economic positions of Britain and continental Europe at the end of the Second World War, for example – can be omitted from international comparisons. The precise definition of productivity, unemployment or inflation can be debated indefinitely. All economics is, to some degree, a construct, and the economic indicators given prominence in a particular era reflect that era's assumptions. Yet, despite these drawbacks, it is hard for such indicators to lie completely when considered together.

So it proved in Britain between the election of Clement Attlee in 1945 and the election of Heath in 1970. Over that period, Labour and Conservative governments were responsible for the economy to an almost equal degree, with Labour in office for twelve years, and the Conservatives for thirteen. Both parties had their successes. Labour rescued the economy from the damage and exhaustion of the Second World War. The Conservatives facilitated Britain's first mass consumer boom in the fifties. Both parties kept unemployment and poverty very low compared to the era between the First and Second World Wars – and compared to now. Britain in 1970, for all its economic anxieties, remained a rich country that was getting richer. The British Household in the Seventies, an authoritative marketing survey published in 1975, found 'a rising standard of living throughout the [post-war] period and, until 1973, no slowing down [in the rate of improvement] in spite of economic difficulties'.

But a country's material well-being, like a country's sense of its more cosmic trajectory, is partly relative. Between 1945 and 1970, many Britons were not doing as well economically as their counterparts in comparable countries, and neither of the main parties seemed able to do much about it. Booms lasting a year or two, often just before general elections, were followed by lingering recessions. At least once a decade, the pound fell disastrously on the international currency markets as foreign investors lost faith in Britain's prospects. Chancellors came and went, leaving office after a few years either having obviously failed or having deftly handed on their difficulties to their successor. With each stage of the whole jittery cycle, the more ominous indicators – inflation, unemployment – edged a little higher.

Changes in the structure of the British economy made it seem more vulnerable. The post-war nationalization of large areas of heavy industry, itself partly an attempt to transform British business, made the success or failure of enterprises such as British Leyland a matter of patriotic importance. Meanwhile, the fashion in the private sector for joining companies together into large conglomerates created other economic virility symbols. In the protracted run-up to the 1964 general election, books such as Michael Shanks's The Stagnant Society and Arthur Koestler's Suicide of a Nation? caught the declinist mood. Wilson exploited it expertly. At the 1963 Labour conference, he described Britain as 'a nation of Gentlemen in a world of Players', with an economy enfeebled by 'restrictive practices' and 'outdated methods' that only a 'revolution' in government economic policy could sweep away. He won the election narrowly. In 1966, he called another and increased his majority to ninety-seven, big enough to be truly radical.

Over its two terms, the Wilson government of the sixties treated the economy as its central priority, creating a new Department of Economic Affairs to augment the Treasury. In 1965, a national plan was devised, 'covering all aspects of the country's development for the next five years'. The plan set a target for Britain's economic growth: an increase of almost a third. Wilson himself was a trained economist; as his chancellor he had first Callaghan, a revered political operator, and then Jenkins, one of the ablest economic ministers since the war. The government had an unusual number of other significant talents, including the intense young Roundhead Tony Benn, Barbara Castle, the country's first potent female minister, and Tony Crosland, the leading British philosopher-politician of the post-war period.

Yet all this promise and initiative led not to economic salvation but to a succession of economic crises, climaxing in November 1967 with Callaghan's resignation and a forced devaluation of the pound, shocks from which the government never quite recovered. Over the next two and a half years, Jenkins restored a degree of calm and coherence to the Treasury. Some of the key economic statistics improved, and Labour revived in the polls. But when the general election came, for all Jenkins' and Wilson's reassurances, the state of the economy remained a potentially lethal issue for the government.

On 15 June, three days before the vote, the trade figures for the previous month were announced. Instead of an expected surplus, there was a small deficit of ￡31 million. More than half of the sum was something of a fluke: the one-off purchase of two jumbo jets from the US. Yet for the Conservatives, who had been trying, with mixed results, to make the weaknesses of the economy the focus of the election, the trade figures were just what they needed. 'On Monday 15 June the atmosphere began to lift,' Hurd writes. 'We handed [Heath] the unexpectedly bad trade figures in time for him to use them for the rest of the afternoon. There seemed then … a fleeting chance of success.' On the morning of polling day, a small-scale but thorough survey of voters by the Opinion Research Centre, conducted as the trade figures were being debated, gave the Conservatives an advantage of 1 per cent, their first lead for weeks. The poll was barely noticed or else dismissed as a freak. By the following evening, Heath was picking his Cabinet.

2

The Great White Ghost

In background and character, Heath was both the best and the worst kind of person to be a reforming prime minister. He had been born in 1916 in Broadstairs, a slightly prim clifftop resort in coastal Kent. His parents were like those of no previous Conservative leader. His mother Edith was in domestic service as a lady's maid until she had children. His father William was a carpenter who later became a small employer of other craftsmen. The Heaths lived in cramped, spotless houses, took in lodgers and looked to improve themselves. Edward, the eldest of two sons, serious, self-contained, precociously interested in adults, was quickly seen to have the most potential. At eleven, he won a scholarship to the local grammar school, where he lobbied successfully to take the School Certificate exam a year early, and passed. In his final years, he became a school prefect with a reputation for strictness, and secretary of the debating society, making firm moralistic speeches. 'During the school holidays,' he remembered later, 'I particularly enjoyed sitting outside an ice-cream parlour in Broadstairs talking earnestly with my friends about the major issues of the day.'

Heath's upbringing was not overtly political. There were few family discussions about public affairs. But Broadstairs was a strongly Conservative seaside town, and the Heaths' modest upward mobility, typical of the place, exerted an influence. William switched from the Liberals to the Conservatives, while maintaining a fierce small businessman's dislike of the other alternative: 'I was never Labour,' he told the writer Anthony Sampson later. 'I had too much to do with labour to vote Labour.' In 1935, with a Conservative-dominated National Government in power in Westminster, Edward Heath stood as the National Government candidate in a mock school election. He won with the help of an endorsement he had solicited from the local Conservative MP.

As well as politics, Heath had a consuming interest in classical music. In 1934, he tried to win an organ scholarship to Cambridge. He failed, so he tried for an organ scholarship at Oxford. He failed, so he sought a scholarship to study politics, philosophy and economics there – and failed again. In the end, he had to accept an unfunded place at Oxford to take the combined degree. Kent County Council gave him a loan, and his parents, with difficulty and after some persuasion by his schoolteachers, paid the rest.

Heath arrived at Oxford in the autumn of 1935. Then, as now, it was a university made up of very different, semi-independent colleges. The one he had finally settled on was highly significant: Balliol. In the thirties, much of Oxford undergraduate life was flavoured, as it had long been, by smart social networks and a tendency not to take things too seriously. Yet, since the mid-nineteenth century, Balliol had self-consciously stood apart from such escapism and privilege. The college pioneered competitive entrance exams rather than entrance by wealth and connections; it actively sought students from less grand backgrounds and, with seemingly relentless efficiency, turned them into successful public men. Balliol produced senior civil servants and top colonial administrators, famous social reformers and chancellors, bishops and prime ministers, all in greater numbers than any comparable British institution. These 'Balliol men', as they sometimes called themselves with a degree of self-congratulation, were loyal members of the British Establishment, but also a distinct tribe within it: a little more driven and restless, more impatient with the traditional way of doing things, more liberal – in fact, often left-wing. Denis Healey, then a communist, was in the year below Heath at Balliol. Jenkins, whose father was a miner, was in the year below Healey. The master of the college was a Scottish socialist, A. D. Lindsay, who publicly supported the General Strike in 1926 and had Mahatma Gandhi to stay in his official lodgings for a fortnight during the Indian anti-imperialist's visit to Britain in 1931.

Broadstairs it was not. But Heath had chosen Balliol fully aware of its reputation. He quickly took to the college: 'No idea was too outrageous for examination,' he remembered. 'I revelled in the arguments.' At the end of his first term, he finally won a scholarship, which enabled him to be there for an extra year: 'This', he wrote, 'was a real privilege.'

Seven decades later, after studying at the college myself, I went to a reunion at Balliol for former undergraduates. It was the summer of 2000. Before dinner, we had drinks in the slow dusk in the main quadrangle. At the edge of the crowd, mostly casually dressed people in their twenties and thirties, I suddenly noticed Heath. He was then well into his eighties and was standing on his own, hugely stout, in a suit so pale it was almost luminous. There was an air of immense contentment about him. He came every year, someone told me afterwards, like a great white ghost.

At Oxford, Heath's politics matured. He joined the Oxford Union debating society and the Oxford University Conservative Association, both traditional training grounds for a young Tory with ambitions. But he was open to broader political experiences. He also joined Labour and Liberal undergraduate organizations, 'so that I could hear their main speakers', he wrote later. At Balliol, he listened attentively to Lindsay and the college's other socialists, and busily read books by a rising generation of left-wing or left-leaning authors. It was the mid-thirties, with the Depression dragging on and unemployment in Britain and elsewhere rising to unprecedented levels; it was hard for anyone political to avoid pondering the problems of contemporary capitalism. Even before Oxford, in Broadstairs, which like much of the south-east of England had escaped the worst, Heath's world view had been affected by the slump. 'I saw my father working hard in very difficult circumstances,' he told an interviewer later. Now, at Oxford, two books in particular further crystallized his thinking:

The first was John Maynard Keynes's General Theory of Employment, Interest and Money, published in 1936. Inspired by a world depression which had been caused by laissez-faire [free-market] policies, it put forward a wholly new view of economics … that full and stable levels of employment could be maintained if governments intervened counter-cyclically [subsidized economic growth during recessions] … Although his ideas were not put into practice in Britain until after the Second World War, they provided some intellectual basis for Roosevelt's 'New Deal', which was already successfully pulling America out of depression.

Heath was barely twenty when he read the General Theory, but it helped convince him 'once and for all' that 'neither socialism nor the pure free market could provide the answer'. What was needed was a kind of fusion of the two. Two years after the General Theory, another influential book offered a formula. The Middle Way, by Harold Macmillan, then a young Conservative MP, was the other work to have a decisive impact on Heath. It argued that capitalism needed to be reformed. To make it fairer, more efficient and more stable, capitalism should be rationalized through planning. And this planning was best done by the state. Yet unlike in the Soviet Union, in Macmillan's version of a planned economy free enterprise and the freedom of the individual would not be abolished but strengthened. Businessmen would be helped by government to think more about the long term. Wealth would be redistributed by government to the millions of Britons with little, who would live more comfortable and happier lives as a result. The country's 'latent productive possibilities' would be released.

If, however, British capitalism was not reformed, Macmillan warned, 'Anxious days … lie ahead': there would be increased 'class antagonism', revolutionary stirrings from the far left, authoritarian ones from the far right. Macmillan was writing about the thirties, yet he was unintentionally prophetic about the anxieties political moderates would feel in Britain in the seventies. The Middle Way also foresaw much of what the Heath government would do to try to remove these fears. What the book could not do was predict the consequences.

Apart from the Depression, there was another feature of the thirties that profoundly shaped Heath's ideas: the ominous political events on the Continent. He had been fascinated by Europe from boyhood, Broadstairs being one of the places in Britain closest to France. 'Every time I walked along the cliffs,' Heath wrote in his 1977 memoir Travels, 'I looked across the Channel … Sometimes [the coast of France] stood out white and clear … at others it was just a dark grey smudge.' In 1931, partly as a reward for passing his School Certificate early, his parents scraped together the money for him to cross the Channel for the first time, on a school trip to Paris. The experience, he judged later, was 'the most exciting event of my life so far'. He walked and watched, sat outside cafes, deciphered menus, bought gateaux, wondered at landmarks and persuaded car-showroom staff to let him look at their catalogues. He was fourteen; for the next six years, he had too little money and too much studying to do to visit the Continent again. Then, in the summer of 1937, during his university holidays, his parents fixed up an exchange with a German student from Düsseldorf.

Heath spoke no German – his French accent was also atrocious – but he was undeterred: he loved the German composers and he wanted to learn about Hitler. At Oxford, Heath had already made a noted speech at the Union criticizing the National Government's appeasement of the dictator. So, in 1937, after a few days in Düsseldorf, he set off alone on a political exploration of Germany. In Munich, he found the beer cellar where the Nazi party had first met. In the Bavarian Alps, he watched children march in formation to school every morning beneath his bedroom window. And in Nuremberg, he attended a Nazi rally:

An intense silence spread over the whole auditorium. I suddenly realized that Hitler himself was entering from the back of the hall and striding up the centre gangway to the stage … My seat was on the inside [of the] gangway and I remember thinking at the time how narrow the aisle was … Sure enough, Hitler came alongside me, almost brushing my shoulder … His face had little colour … When he mounted the platform the response became hysterical.

Heath returned to England, 'utterly convinced now that a conflict was inevitable'. The following year, he went to the part of Europe where the war with fascism had already started. In Spain, the elected Republican government, an undisciplined coalition of left-wing and liberal parties, had been struggling since 1936 against a right-wing insurrection led by General Franco and supported by Hitler and Mussolini. In Britain, the National Government and many Conservatives, following the logic of appeasement and disliking the Republicans' politics, refused to take sides. Yet Heath took a different view: 'I was rather fond of quoting Gladstone's dictum', he writes in Travels, 'that when in doubt about foreign policy England should always lean towards those supporting the cause of liberty.' In the early summer of 1938, still at Oxford but now chairman of the Federation of University Conservative Associations, another shrewd move up the party ladder, Heath was invited by the Republicans to join a delegation of British students and see what was happening in Spain for himself.

As in France and Germany, Heath was seduced by the good things of Continental living that he glimpsed. Even a civil war could not dull, in his description, 'the deep ultramarine of the Mediterranean'. But his ten days in Spain were raw as well as inspiring. By this stage, the Republicans were losing the war. Heath found their Barcelona stronghold blacked-out and short of food, yet impressively functional. 'Law and order are very well maintained,' he wrote afterwards in an article for the Broadstairs Advertiser & Echo. 'At night … it is perfectly safe to go anywhere … All the cinemas and theatres are open.'

Heath and the rest of the student delegation were driven out to the battlefront west of the city. On a small stony plateau they were introduced to some Britons who were making a more profound contribution to the Republican cause: the British members of the International Brigade. 'They were tough, hardened soldiers, burned by the Spanish sun to a dark tan,' Heath wrote. 'One could not but admire these men, civilians at heart, who had to learn everything of a military nature as they went along.' The student delegation, in tweed jackets and with hair still neat enough for a debate at the Union, addressed the soldiers in their sweaty vests and open-necked shirts. Heath's speech was stiff and cautious: 'I confined myself to telling them that in Britain we closely followed their activities … and wanted to see them safely back.'

One of the soldiers was a young trade unionist from Liverpool called Jack Jones. He was small, slight and quietly spoken, but three years older than Heath; before Spain, he had already been a veteran of left-wing activism in the Mersey docks. Heath did not impress him. 'I was there to fight,' Jones said when I asked him about the encounter, 'and he was from Oxford.' Jones was almost as dismissive in his autobiography: 'Heath … was to the right of the five-man [student] delegation. I suppose he reflected a strand of Conservative thinking which had some sympathy with the Republic.' Yet a bond had been formed with significance for the future. By the time Heath became prime minister, Jones would be Britain's most powerful trade unionist.

After visiting the battlefront, Heath and the other students were driven south. On a main road near his intoxicating Mediterranean, their convoy was spotted by an enemy aircraft, which was flying low up and down the coast machine-gunning passing vehicles. The students had to hide in a ditch until the plane departed.

Within two years, Heath was a fighting soldier himself. At first, in 1940 and 1941, he had a relatively quiet war as an anti-aircraft gunner in the north of England. With the German bombers concentrating on the south, he had time, he writes, 'to arrive at a considered view of the prevailing social and environmental conditions of the north', which he had never visited before. 'I was astonished, indeed horrified, to see … the rows of tiny houses back to back … the litter and the dirt … the decaying remnants of industrial activity. I realised then how much needed to be done.' But such musings about national renewal had to be put on hold in 1944, when Heath's unit was sent to France. He fought there and in Belgium, Holland and Germany. He saw a recently liberated concentration camp and commanded a firing squad that executed a soldier for rape and murder.

The Heath who returned to civilian life in Britain in 1946 at the age of thirty was still a Conservative. But he had his doubts. The previous year, he had watched from Germany as the party fought a general-election campaign which claimed, tastelessly and exaggeratedly, that Labour plans to nationalize industries and decisively expand the welfare state would require 'some form of Gestapo'. Heath considered the claim 'objectionable' and, after Labour under Attlee went on to win the election by a huge majority, completely out of step with public attitudes which, like his, had been shifted leftwards by the Depression and the war against fascism. 'It was only if the [Conservative] party decided to acclimatise itself to the new Britain of the late 1940s', he writes in his autobiography, 'that I could foresee a political career for myself.'

The party moved in the direction he wanted. Between the late forties and the mid-sixties, first in opposition and then in government, the Conservatives accepted the main ideas of what became known as the post-war consensus: a larger welfare state funded by higher taxation; a Keynesian approach to the economy as set out in the General Theory; and an acceptance of strong trade unions. Heath rose through this new Conservative Party doggedly. In 1947, he put himself forward for four parliamentary constituencies, failed to be selected for three, and finally got Bexley. In 1950, he squeezed into the House of Commons with a majority of 133. In 1951, with promising speed, he was made an assistant whip, one of the Commons' junior prefects, helping to discipline his fellow Conservative MPs. In 1955, he was promoted to chief whip, holding the parliamentary party together during the Suez crisis. In 1959, he became minister of labour and defused a threatened strike by the National Union of Railwaymen. In 1960, he was put in charge of negotiating Britain's entry into the Common Market, failing with honour and for the first time becoming a national figure. In 1963, he became president of the Board of Trade and boldly abolished Resale Price Maintenance, the system regulating retail prices, in favour of a more market-driven free-for-all. In 1964, he became shadow chancellor and, finally, a Commons star, attacking the new Wilson government with contempt and fluency. In 1965, he was elected Conservative leader by a small margin.

The Heath who emerged in the sixties and became prime minister in 1970 was not an outstanding politician. The cool response to him during his five years as Opposition leader, from his party and more widely, reflected his obvious limitations. He was energetic and conscientious, but sometimes gratingly relentless; stubborn and a loner, but with a contradictory belief in consensus; inquisitive, but not a great communicator of new ideas; impatient with post-war Britain, but also full of its assumptions. Above all, he was famously difficult to get on with – a quality, unfortunate in a democratic politician, that did not diminish as he got older. In the summer of 2004, a few days after his eighty-eighth birthday, I arranged to see him.

Someone who knew Heath briefed me beforehand. Heath, he warned, would be 'brusque'. In retirement as during his political career, Heath was 'extraordinarily insular as a person'. He was 'still furious' at how his time as Conservative leader had culminated. And there was one more thing to be wary of: 'He falls asleep after lunch.' My interview was scheduled for straight after his nap.

It was a perfect July morning when I left London, but the clouds had closed over by the time the train reached Salisbury. The city where Heath had lived since 1985 was all traffic and tea rooms; with three hours to fill before the interview, I found a special issue of a music magazine on early seventies British glam rock in WHSmith and looked at the pictures of Heath-era male pop stars in their makeup and silver trousers. They seemed almost as ancient and alien as medieval jesters. Then I went to look at his house.

It was right next to the cathedral in a great, hushed half-square of old mansions. The three-storey house was broad, built of faded gold stone, with high gates and long windows like a French presidential residence. A single upstairs window was slightly open; otherwise, the house was symmetrical, immaculate, inscrutable. Heath's autobiography included a four-page section on the house, of which one detail was perhaps especially significant: 'Arundells is one of the few houses in the [Cathedral] Close which is well set back.'

When the time for my appointment came, a middle-aged policeman with a weary moustache and a machine gun materialized at the gates from somewhere in the depths of the garden. He put a single key in the lock, which was spotted with lichen, and at the other end of the long drive one of Heath's staff opened the front door. Inside the house there was silence. In the hallway and the rooms that led off it, the floors gleamed like a museum's and models of sailing vessels sat in glass cases – after music, sailing was Heath's other famous off-duty interest. On the walls, closely but very neatly hung, were hundreds of political cartoons. Above the cistern in the downstairs loo, perfectly positioned at eye level for visitors, was one showing Heath dragging Margaret Thatcher along the ground by the hair.

I was shown into a small sitting room. There were bookshelves ostentatiously free of serious political volumes, and a tabletop of bottles of whisky and other spirits in the corner. Heath, I was told, would be 'a few minutes'. I sat and waited. There was a thud from somewhere upstairs. Then an audible groan and a series of heavy steps across the ceiling. 'I think he's on his way downstairs,' said one of the housekeepers.

Heath came slowly into the room, supported by a walking stick and another of his staff. His clothes – a baggy cream short-sleeved shirt with half the buttons undone, and casual grey chinos – came as a small shock after watching hours of his pinstriped and uncomfortable early seventies political broadcasts. But his face was much the same: small determined eyes, the proud dagger nose, big plump cheeks barely lined despite his lingering yachtsman's tan – a usefully aspirational political signal back in the pre-easyJet Britain of his premiership. He acknowledged me fleetingly and sat down.

Then he realized that our chairs were side by side and that we could not face each other comfortably. He looked up at the housekeeper: 'Can we turn this around,' he said, a note of impatient command in his plummy, slightly studied voice, 'so we can talk properly?' She bent down and took one of his arms, and gestured that I should do the same. We lifted Heath a few inches towards the vertical, but then his weight told. The former prime minister landed back in his chair with a thump. We hauled him up again. This time our grip held. As we adjusted the furniture and then sat him down, Heath's glacial blue eyes showed not a trace of embarrassment. When I sat down, he looked at me properly for the first time. 'Right. What can I help you with?'

I asked him what he had wanted to do to Britain in 1970. 'Speak up,' he said, unsmiling. I asked the question again. His gaze warmed a fraction: 'Well, we thought the country was in a bad state. Particularly in its basic framework and structure. We set out a list of policies in 1970, and it covered a great field. And all too many commentators have never bothered to find out what that list was. And we moved on all of them. We moved on all of them. In housing we got tremendous movement … We got into Europe … And we freed large areas of the economy from being tied to the arrangements of twenty or thirty years before.' Heath looked at the bookshelves. 'Of course, we had struggles in some areas … we gave way to a certain extent. But not very much actually.'

The memories of retired politicians, even more than their memoirs, should be regarded with a degree of caution, yet an undeniable air of confidence and momentum did accompany the Heath government in the beginning. Anthony Sampson, a self-taught expert on British power structures, picked it up in his 1971 book The New Anatomy of Britain:

Power has already begun to change [Heath] … He is more relaxed, rather fatter; he wears very good and quite trendy clothes … His hair is much longer, coming down thickly at the back, and his sideburns are more evident; he might even be mistaken for a musician.

Peter York, the veteran observer of British fashions, remembered the vogue for Heath too: 'Among the bien pensant, among modernizers of all kinds,' he told me, 'the idea of Heath was quite a thing. Cleverer people than me were telling me that Heath was the new middle way.'

Heath had won power partly because Labour had underestimated him. He had won power after many on his own side and most commentators had written him off. The credit for victory went to him personally – and further Heath miracles were not considered out of the question. 'Mr Heath', commented The Times, '[is] in a position of great strength. He has no personal obligations to anybody … [His] commitments to policy … are of his own choosing … He will be a considerably more powerful Prime Minister … because he made his victory in such difficult circumstances.' During his first months in office, Heath himself boldly talked up his government's prospects. 'We were returned to office to change the course of history of this nation,' he told the Conservative Party conference in October 1970. 'Nothing less.'

Heath's plan for Britain had been drawn up with unusual thoroughness during his long, derided tenure as Opposition leader. 'We produced this huge path chart, the day every bit of legislation was going to be introduced,' remembers Brendon Sewill, director of the powerful Conservative Research Department during the period. 'We posted it through the letterbox at Number 10 on the morning after we won the election.' Heath relished this patient, preparatory side of politics – between leaving the army and becoming an MP he had briefly been a civil servant in the Long-Range Planning Department of the Ministry of Civil Aviation – and frequently dropped in on the Research Department's policy discussions. The press were less interested. The legislative ambitions of Opposition parties can often seem like castles in the sky, and the regular dramas of the Wilson government seemed more substantial material.

The one exception to this pattern came in January 1970. With a general election expected soon, Sewill organized a weekend retreat for Heath and his shadow cabinet. 'The idea was to try to pull together all the policies which had been developed by this incredible number of policy groups, and make the shadow cabinet consider them and say, "Are we trying to do too much? And do these policies conflict with each other?" And then we said to each other at the Research Department, "Well, it would be rather good publicity too."'

The retreat was held at the Selsdon Park Hotel, a baronial complex of long conference rooms and photogenic lawns near Croydon in south London. The shadow cabinet's discussions were energetic and thorough but not conclusive. Little was said that challenged Heath's central idea about how to revive Britain: that a Conservative administration could make the economy vastly more efficient through government chivvying and ingenuity, and that everything else would follow, which had been in his head since he had read Keynes and Macmillan in the thirties. Then, midway through the weekend, came a moment that would make the Selsdon conference infamous.

Peter Walker, a close ally of Heath then and since, described it to me. 'On the Saturday morning, at about a quarter to twelve, Michael Fraser [a senior Conservative party official] said to Ted, "Don't forget you've got the press at 12.15." "Press?" said Ted. Michael said, "Yes, we agreed we'd have a press conference today to get in the Sunday papers." So Ted said, "What on earth am I going to say to them? We haven't decided anything." So Iain Macleod of all people [the liberal shadow chancellor] said, "It's quite easy, Ted, you just tell them we believe in law and order." So Ted went off and said at the press conference, "We're going to be very strong on law and order." And the next day every Sunday paper did enormous right-wing stuff.'

The press – and Wilson – claimed to have sighted a new, crueller species of British Conservative: 'Selsdon Man', tougher on crime and on immigration, harsher in his economic thinking, impatient, in fact, with the whole herbivorous post-war consensus. In reality, 'Selsdon Man' was somewhere between a breathless exaggeration and a malicious fiction, but in the seventies, more than in most decades, political spectres and misrepresentations had a habit of solidifying into flesh-and-blood political issues. Heath, grateful for the publicity and for a catchphrase to differentiate his policies from Wilson's, did not completely disown the label.

In the short term, it seemed a canny decision. With a general-election campaign coming, the Conservatives suddenly looked more focused and hungry. And in the election itself, they received more votes than usual from a group of growing social and political importance. One of the consequences of Britain's increasing suburbanization and prosperity in the fifties and sixties was the appearance of a wealthier, more individualistic skilled working class in the new towns and commuter settlements that increasingly ringed the run-down cities. Sociologists christened them C2s; later, this sort of person would be called Essex Man. In 1969, Rupert Murdoch relaunched the Sun, aimed at upwardly mobile 'pacesetters', partly to appeal to the C2s. At first the paper supported Labour, expecting its readers to do likewise, but there was an abrasiveness in the Selsdon message that appealed to the embryonic Essex Man.

The long-term consequences of Selsdon for Heath himself were less favourable. The conference awakened hopes in right-wing Conservatives which he, not being a genuine right-winger, would inevitably dash when he took power. This had a damaging effect on his reputation, and ultimately on his position as party leader. And 'Selsdon Man' allowed left-wing Britons to believe – or to pretend to believe – that Heath was a thuggish Tory who would turn the country upside down. They would prove much worse opponents as a result.

3

Heathograd

In the first purposeful months of Ted Heath's administration, Selsdon soon became only one political initiative among many. The government set up a new Department of Trade and Industry and a new Department of the Environment, covering housing, public works and transport. It established an official Whitehall 'Think Tank', then an untried concept, to work on long-term strategy. It hired businessmen to stir up the civil service. It despatched ministers to stir up businessmen. The personification of this approach, this hoped-for fusion of the public and private sectors into a vigorous new whole, was the confident young Peter Walker.

Like Heath, he came from a strikingly modest background. His father worked in an engineering factory, was unemployed for a year and a half during the Depression and later became a shop steward, a shop-floor trade-union official. But Walker's father and mother were both Tories, and, before he reached his teens, so was he. He first stood for Parliament, in 1955, at the age of twenty-three; by the early sixties, he was a noted Conservative MP; by 1965, he was running Heath's successful leadership campaign. Walker's politics were typical of the rising generation of post-war liberal Tories who were in favour of material advancement for the masses and a more efficient capitalism, but what gave his views an additional credibility was his own parallel career as an entrepreneur. He had begun reading the Financial Times at thirteen. In his twenties he became a well-known City of London player in property and insurance. In 1964, he joined up with a frustrated motor-industry executive called Jim Slater to form an investment company, Slater Walker. Between 1964 and 1970, when Walker became a minister and scaled back his business activities, the firm made huge and spiralling profits by buying shares in companies that were, in Walker's description, 'badly managed', taking them over and running them on a more realistic basis, or – as Slater Walker's critics saw it – stripping their assets and quickly getting out. The company grew with an aggression and raw ambition new to the relatively gentlemanly post-war City. Slater Walker would prove too jerry-built and controversial to survive the harsher economic climate of the seventies, but Walker would have too many other interests by then to be seriously damaged.

Between 1970 and 1972, Heath promoted him from minister for housing and local government to secretary of state for the environment to secretary of state for trade and industry. Walker was still in his thirties, with a slightly gauche smile and cocky long sideburns, at a time when most of the people who ran things in Britain, such as Heath and the rest of the Cabinet, were middle-aged or older. Yet Walker sometimes approached his duties as if he alone was a man of the world:

When I became the Secretary of State for Trade and Industry, my surprise was how bad top management was … The great one was at a shipbuilding yard. I had lunch with the board, and we had grouse and salmon, and you knew that the salmon had been caught by the board and the grouse had been shot by the board. They were all that sort of background. And when you started to discuss what was happening in worldwide shipping, they were lost. When I went down and had tea with the union, they were incredibly well-informed. When I left, I said, 'If in that shipyard the shop stewards would become the board and the board would become the shop stewards, you would have the ideal combination.'

Walker finished the anecdote with a jolly laugh. He was sitting, almost slouching, with one hand in a suit trouser pocket, on a pale green sofa with gold trim in his office in the City of London. It was 2004; he was seventy-two, still slim, and a director of the Anglo-German bank Dresdner Kleinwort Wasserstein. Through the glass walls of his corner office the tops of other skyscrapers steamed below us in the blue morning and the Thames was a silvery scribble. Walker's upward trajectory and air of self-assurance had comfortably survived the seventies – he had called his memoirs Staying Power – and the very different decades that came after.

So had his belief in the Heath government. On one of the walls of Walker's office, among photographs of him meeting various dignitaries, there were pictures of Heath as prime minister, and Walker spoke about the time as if it had been one of almost unbroken government successes and timely initiatives. 'There was a united Cabinet,' he said in his brisk voice. 'There was no disunity. There was never a moment in the whole period of Ted's Cabinet where there was disunity in the Cabinet. Margaret [Thatcher, then education secretary], Keith [Joseph, then social services secretary] – none of them were voicing opinions against Ted.' Walker continued: 'The start of trade union reform was done by the Heath government. The basic reform of things like water cleanliness. A new approach to the environment was done by the Heath government. I think there are areas where if we had had more time … we were very busy during that government …' His voice turned quieter and more thoughtful: 'If we'd won that next term, then I think we would have been a very successful government.' His confident broad-brush tone returned: 'I think the government, when history gets it properly in perspective, will be seen as a very considerable one.'

One of the main ways the Heath administration sought to modernize Britain was through large building projects. Back in the thirties, Heath had noted the success of Roosevelt's New Deal in reviving the American economy. The New Deal included much state-funded construction work, creating jobs and economically beneficial new infrastructure. In the early seventies, with the British economy in trouble, the Heath government embarked on massive building schemes of its own. Undeterred by almost a century of false starts, it started digging a Channel Tunnel to France. As environment secretary, Walker commissioned the Thames Barrier in east London to avert the growing possibility of the capital flooding. 'The estimate of the cost was ￡60 million, and it turned out to be ￡600 million,' he remembered. He gave a satisfied look: 'And we got the go-ahead on it.'

But perhaps the most ambitious project of all, and the most revealing about how the British government still thought during this phase of the seventies – a phase which later in the decade would come to seem almost impossibly comfortable and remote – was begun about thirty miles to the east. It was a building scheme which assumed that state spending would remain relatively unconstrained, and that much of it should be directed towards the long term. The scheme was called Maplin.

The Maplin Sands are a great smooth maze of mudflats and grey-brown horizon the size of central London, gleaming dully as an old hubcap off the coast of Essex near Shoeburyness, the easternmost suburb of Southend. At low tide in the summer, parts of the sand bake hard enough in the sun for you to walk out on, and you can listen to the small noises of water trickling and poke dead jellyfish and cockle shells. In other places the quicksands go eighty feet down. Sudden North Sea fogs are also common. In February 1970, a Mr P. Arnold, a local explorer and authority on the area, noted eighty-eight people buried in the churchyard of St Mary the Virgin on Foulness, a marshy island north of Shoeburyness, 'whose bodies were found on the sands'.

Foulness has been farmed by a scattering of people since Saxon and possibly Roman times. In the Middle Ages sea walls were built, and the island began to be slowly extended. Maplin Sands to the east became favoured by cockle pickers. But until the mid-nineteenth century the island and the sands were best known for their great clouds of seagulls and Brent geese, Foulness meaning 'place of birds' in Old English. Then, in 1849, an official use was found for the area's emptiness, when the government opened an artillery range, allowing firing from the shore onto the mudflats. Over a century later, as Heath took power, military fences, warning flags and distant booms still dominated life on Foulness and Maplin Sands. But he had other plans for the area.

During his time at the Ministry of Civil Aviation in the late forties, Heath recalls, 'I sat on numerous committees, including one overseeing the building and development of the new airport at Heathrow. Every time I arrive at Heathrow,' he continues, 'I shudder to think that I was in any way, however slightly, involved in the creation of that monstrosity.' By 1960, the noise of Heathrow was considered enough of a political problem to merit investigation by a government committee, which concluded in 1963: 'The noise to which many people near Heathrow … are subjected is more than they can reasonably be expected to tolerate … Heathrow has proved to have been established in a much too densely populated area.' Yet there was no question of restricting the rapid post-war growth of British civil aviation. Governments from Attlee's onwards regarded airports as essential generators of economic growth and voters' pleasure, so other airports had to be built near London to relieve Heathrow. The first was Gatwick, commissioned in the mid-fifties after years of planning strife, financial headaches for the government and frenetic switching between possible sites. In the early sixties, Whitehall decided that London needed a third airport, and the same painful process started again.

In January 1971, after what was then the longest and most expensive public planning inquiry in British history, the Roskill Commission recommended that the airport be built at Cublington, a village in rural Buckinghamshire. The Commission conceded that the choice would be controversial, but asserted that if Britain's decline was to be reversed, such decisions were unavoidable: 'The nation's unsatisfactory economic performance in recent years can at least in part be attributed to a national tendency to forgo economic gains and to prefer other goals.' Yet Cublington quickly proved politically impractical. The village and its soft surrounding fields and hills was the kind of corner of England – conventionally pretty, pastoral-seeming, prosperous – that could organize a ferocious campaign against the government imposition of an airport. At the same time, the Cublington campaign was able to dignify and publicize its more parochial arguments by invoking a new political philosophy: environmentalism.

Britain at the beginning of the seventies was fertile ground for green politics. For decades, conservation and animal welfare had been more popular causes there than in most comparable countries. During the sixties, such thinking began to intertwine with the back-to-the-land strand of hippy idealism. In 1966, the first British environmentalist magazine, Resurgence, was set up. In 1970 came a second, The Ecologist, edited by Edward, or 'Teddy', Goldsmith, the well-connected brother of the millionaire businessman James Goldsmith. In 1971, a British wing was established of the pioneering American green pressure group Friends of the Earth. In 1972, a paperback spin-off from The Ecologist called A Blueprint for Survival, which warned that 'the industrial way of life' was 'not sustainable', became a best-seller in Britain.

Westminster politicians took note. Walker invited the Blueprint authors to come and brief him, while Heath established the Department of the Environment. For the first time, green concerns, for presentational reasons at the very least, became a regular factor in government decisions. When the Roskill Commission announced its decision to concrete over Cublington, one of its members, the famous town planner Colin Buchanan, publicly dissented. An airport at Cublington, he wrote, would be an 'environmental disaster'. Instead, the runways should be sited somewhere emptier and on the coast, where the damage would be much less. 'I believe the mood of the country is such', he continued, 'that some inconvenience of accessibility to a new airport would be willingly accepted as the price for conserving the environment.' And he had a site in mind: 'Foulness … would be a [choice] of great significance for the future of Britain. It would show that this country, in spite of economic difficulties, is prepared to take a stand.'

Buchanan made another potent argument. An airport on the Maplin Sands (for which 'Foulness' was the shorthand) would, through its eastern position and transport connections, 'assist the less prosperous eastern side of London' – the depopulating East End, with its soupy miles of derelict river wharves and disintegrating dockyard economy. Walker and his new Department of the Environment were persuaded – in The Times he praised the 'beautiful prose' of Buchanan's arguments – and Walker persuaded the Cabinet. In April 1971, the trade and industry secretary John Davies announced that the government would ignore the Roskill Commission's painstakingly formed preference for Cublington: 'On environmental and planning grounds the Foulness site is the best.' The response was unambiguous. 'For the first time in nearly thirty years,' wrote the journalist David McKie in a book on British airports published in 1973, 'a major decision in airport policy commanded general enthusiasm.'

The project got under way at unusual speed. In 1971, civil servants were ordered to make an immediate start on the paperwork for the airport and any transport links it needed. The following year, a special army unit, 71 Explosives Ordnance Disposal Squadron, was formed to clear decades' worth of old artillery shells from the sands. In 1973, the Maplin Development Act was passed, creating a government-appointed Maplin Development Authority (MDA) with powers to borrow up to ￡250 million, 'acquire land compulsorily for any purpose connected with its functions' and pay compensation to 'any person [who] … derived the whole or part of his means of livelihood from the taking of fish or shellfish or the gathering of white weed' on the sands.

That same year, the first construction work started. In the spring, when the North Sea storms were at their most testing, 155,000 cubic metres of gravel were deposited on the sands almost three miles from shore and piled up using pumps and bulldozers into a long, concave, artificial island, like the fuselage of some enormous passenger aircraft rising up from the shallows. This 'trial bank', 300 metres by 30 at high tide, was a tiny fragment of the planned airport, built at the same angle to the shore and intended to test if the complex could be protected by gravel-based, relatively economical sea walls. In April 1974, an MDA report on the trial bank's condition after a year found that it had been 'exposed to very severe conditions … with a large number of southerly gales and waves up to one and a half metres high', but that the damage had been minor. The MDA's logo, appropriately it seemed, was of a muscular letter 'M' standing impregnably above bobbing waves.

The confidence that Maplin could be built had several sources. There was the long history of land reclamation at Foulness; there was the fact that the Dutch had already constructed an offshore airport, Schipol, in similar North Sea conditions; and then there were the private plans for airports off Foulness that had been piling up for decades. The first scheme had been in the thirties. Another had been drawn up in the fifties. In the sixties, a consortium including major construction companies got as far as unveiling a model airport the size of several tennis courts, complete with simulated tides and winking miniature runway lights.

In a crowded coastal country like Britain, it was perhaps not surprising that people should dream of expanding their island a little. But with Maplin there were also more abstract and political preoccupations at work. Britain's airports and airlines, disproportionately large for a middle-ranking European country, were a legacy of the empire and its need for a far-flung transport network and one of the dwindling number of areas of economic activity where Britain remained a world power. Yet, by the early seventies, there was a growing fear that in civil aviation Holland and France, which was also rapidly expanding its airport capacity, would catch up. 'Maplin is necessary to maintain Britain's position as one of the world's great centres of international aviation,' Walker's successor as environment secretary, Geoffrey Rippon, told the Commons in early 1973.

Heath himself, with his deep-seated dislike of Heathrow and his belief in government planning to get the economy moving, was excited by Maplin. Later the same year, he told a meeting of Conservative MPs, 'As a nation, we should not falter in major projects which other countries take in their stride.' The airport scheme was also a literal manifestation of his desire to move Britain closer to the rest of Europe. In 1972, the year he signed the treaty marking Britain's entry into the Common Market, an outline of how Essex would be extended eastwards to accommodate the airport was produced.

I looked at the drawings on a sweltering May afternoon in the House of Lords record office thirty-two years later. A young woman in a sundress fetched the huge rolled-up sheets of paper with a slight air of puzzlement at my interest. Unrolled, they seemed pristine enough to have barely ever been touched. Across empty expanses of white representing the North Sea, bold lines were flung out to form a new lozenge-shaped peninsula, eight miles long and three miles wide. Part of one side was shielded by the eastern edge of Foulness; the rest was surrounded by water. A sea wall around the airport was indicated, with a height of between forty and fifty feet. Two runways were also marked, positioned so that the planes, as in many of the world's more shrewdly sited airports, came in to land over the sea and not over the roofs of Southend to the west.

These plans, however, were just a cautious early draft of the ambitions for Maplin. Once the first runway was completed, which it was initially anticipated would be in 1975 or 1976, and the second became operational, anticipated in 1980, work would begin on a further two runways, giving the airport twice as many as Heathrow. In addition, the Maplin complex would contain a new seaport that would receive container ships and supertankers. With oil being so cheap and very much in demand in the early seventies, it was believed the latter would soon be too big to sail up the Thames Estuary towards London. The seaport would replace the capital's dying docks and rival the much more modern Dutch port of Rotterdam, Europe's largest.

And then there would be a Maplin New Town. 'Maplin will create a need for large-scale urban development … built to the highest environmental standards,' announced the junior environment minister Eldon Griffiths in 1972. The following year, his department predicted that the New Town – or 'a brand new jet city', as it was sometimes more excitedly referred to in the Commons – would have an eventual population of over 300,000. This new settlement would extend from the airport and seaport in the east, across the flat windswept vastness of Foulness and its neighbouring islands and tidal creeks to Southend and the hills beyond, half a dozen miles to the west. The building work would continue 'to the turn of the century and beyond'. New industrial estates would serve the conurbation, and additional expansion out into the North Sea was anticipated. 'Further reclamation', said Griffiths in 1972, 'will be undertaken when needed.'

To link it all to London and the rest of Britain there would be a new eight-lane motorway and high-speed railway, racing through the towns, villages and marshes of south-east Essex. There was talk – and with Maplin it was sometimes difficult to separate the plans from hopes and rumours – of 'an Advanced Passenger Train system' carrying people at 125 miles per hour non-stop from the airport to a new station between King's Cross and St Pancras in central London; or of the same twenty-minute journey time being achieved by the use of passenger-carrying 'tracked hovercraft'. Around King's Cross, one of London's tattiest railway quarters, property speculators bought up streets of buildings in anticipation.

In Essex, the reaction to Maplin was more ambivalent. Southend was a place in a slight limbo in the early seventies. It was a British seaside resort in a dawning era of cheap flights to Spain – a problem that building Maplin was not going to diminish. And it was a potentially well-positioned dormitory town – but before mass commuting from Essex to London had really started. Local unemployment was notably high, even at a time when the national rate was rising rapidly. In 1973, the British Airports Authority predicted that building Maplin would create over 16,000 long-term construction jobs, 'approaching' 70,000 positions serving the airport and seaport, and over 15,000 additional vacancies in the enlarged Essex economy. People began moving to Southend to wait for them.

The borough council strongly supported Maplin. So did the local trade unions. In 1973, a Maplin Movement was formed which would claim 'several thousand' members. Yet others felt differently about living next door to what Rippon liked to call 'the world's first environmental airport'. The most prominent were the Defenders of Essex.

In Southend, people still nod knowingly when you mention them. The Defenders were strongest in Shoeburyness and the other parts of town closest to the Maplin site, but they had support from all over the county and from all three Southend MPs. The Defenders' campaigning was a mixture of church-hall politeness – coffee mornings, piano concerts, raffles – and something more abrasive and modern – mass rallies, lurid yellow posters of 'Jackboots Over Essex', a car convoy to London to dramatize the extra road traffic Maplin would generate. Local and national journalists loved the Defenders; Friends of the Earth, damagingly for the airport's green credentials, backed them too. One of the Defenders' most fruitful issues was the proposed demolition of properties that stood in the way of the Maplin motorway. When the government distributed a questionnaire to Essex libraries asking the public which of six nervously circuitous motorway routes they preferred, the libraries ran out of copies in twenty-four hours.

Other local objections to Maplin made equally good news stories. Foulness islanders claimed that noise carried unusually far across the sands: a conversation between two yachtsmen was said to have been overheard half a mile away. The quicksands would destroy the runways: they were said to have swallowed a ship carrying timber in a matter of minutes. In Leigh-on-Sea, a picturesque old part of Southend whose cocklers made a living from the sands, the Shellfish Merchants Association claimed that the national balance of payments would be damaged by cockle imports if Maplin was built. And then there were the Brent geese. A fifth of the world's population spent their winter on the sands. The birds were large and dark-bellied and hard to see in dim light; they might be sucked into jet engines over Maplin, with catastrophic results for all concerned. The possibility was exhaustively debated all the way to the House of Commons.

But for all the colour of the Essex protesters, they did not seem to be gathering decisive momentum. The minutes of a meeting of Southend anti-Maplin protesters in March 1973 note in exasperation that even 'At Shoebury … the apathy of people was appalling … Young people had accepted the government's assurances and adopted the attitude that if the airport comes, we can move. The old … took the view that they would be dead before the airport was built.'

It was in the Commons that the scheme began to encounter more formidable opposition. Crosland, now shadow environment secretary, was an eloquent and relentless critic. Maplin was a 'thoroughly bad site' for an airport, he argued in a debate in February 1973; rather than reviving east London, it would draw people and jobs away; and, above all, it was a reckless extravagance: 'We have … much experience now of the constantly escalating cost of these grandiose projects.' Labour's scepticism was shared by some Conservative MPs – not just the traditional foes of development in rural areas, but also a new kind of Tory.

Norman Tebbit was one. He was from a working-class background and represented one of the upwardly mobile working-class constituencies on the London–Essex borders – first Epping, then Chingford – that had recently acquired political significance. He was unashamedly right-wing and abrasive in his manner. In the debate on Maplin in February 1973, despite having been an MP for less than three years, he was openly contemptuous of his party's flagship infrastructure project. 'This will be the most expensive airport ever built,' he said, his prediction given credibility by the fact that he had been an airline pilot before becoming an MP. He went on to compare Maplin to one of post-war Britain's most disastrous government economic initiatives, the Attlee administration's abortive scheme to solve a shortage of cooking oil by growing peanuts in Tanganyika.

In Tebbit and Crosland's attacks on Maplin, the beginnings of broader misgivings about the high level of British state spending since the Second World War could be heard. In early 1973, the rising right-wing economist Alan Walters, who had been expressing doubts about the post-war consensus for years, turned his attention to the airport project in a letter to The Times. Building Maplin, he suggested, might contribute to Britain's worsening rate of inflation. By June 1973, when the airport was debated in the Commons again, additional worries had crystallized. It was noted that none of the airlines were keen on the site and might have to be compelled by the government to use it. The Labour MP Tam Dalyell, often full of foreboding but far-sighted with it, also raised the possibility that Maplin might be made redundant by future problems with the global supply of jet fuel. The government won the debate by only nine votes.

Crosland began mocking Maplin as 'Heathograd'. Like the best political insults, it had a strong core of truth. The prime minister remained determined to see the scheme built. He personally reprimanded Michael Heseltine, one of the more ambivalent members of the Cabinet, for failing to sell it to Tory MPs with sufficient enthusiasm. Heseltine recalls in his memoirs: 'The prime minister insisted categorically [that] anyone with doubts [be] put firmly in his place.'

Yet Heath, with stubborn confidence, as on other occasions during his government, increasingly ignored the way the situation was developing. The predicted cost of reclaiming the land for Maplin rose from ￡70 million in 1971 to ￡110 million in 1972 to ￡175 million in 1973. By the autumn of 1973, with a building boom in the south of England pushing up construction prices, the overall cost of Maplin was being talked about in Parliament as ￡1,000 million, or ￡2,000 million, or even higher.

In September, the government conceded that the airport would not open in 1980, as planned, but in 1982. The following week, the international oil crisis that Dalyell had half-predicted began, with seemingly disastrous implications for civil aviation and airport-building. In November, Maplin's opening date was put back again, to 1983. On 16 January 1974, with the Heath government now struggling with a whole host of oil-related problems, it was announced in the Commons that Maplin was to be subject to a 'wide-ranging and comprehensive' review. 'In view of the ornithological implications,' the Conservative MP and Maplin critic Robert Adley asked the environment secretary Geoffrey Rippon with typically heavy-handed Commons wit, 'may I ask whether my right honourable and learned friend is able to differentiate between a lame duck and a dead duck?'

One weekday morning three decades later, I took a train from London towards the Maplin Sands. The train was clean and modern, with air conditioning and a smooth gliding motion, but it took four times as long as the public transport the airport's planners had envisaged. Shoeburyness, six miles short of the sands, was the last stop. Half a dozen other passengers got off.

I started walking north-east towards the airport site. The centre of Shoeburyness – a few shops, a quiet seaside park – soon gave way to dusty cul-de-sacs and fenced-off old warehouses. Beyond them flat countryside opened out, windy and treeless, with empty roads and tidal creeks where the skeletons of ancient boats gleamed in the silence. All the way to the east, where the airport would have been, there was blue-grey sea and an empty horizon.

The Ministry of Defence was still using the sands as an artillery range. When I reached the southern boundary of the MOD land, there was a phone number pinned to the fence for inquiries about access. I rang it, and a security officer politely explained that access would be difficult. But when I mentioned my interest in the airport, he offered a consolation. 'The experiment', as he called the Maplin scheme, had left one trace: the trial bank built out to sea in 1973. 'People round here', he said, 'call it sand island.' Then he explained how to get the best view of it.

I took a taxi back to Shoeburyness, walked to the north end of the park and looked out to sea. The sun had come out and the waves were a deep blue; just below the horizon, too far out to be a sandbank, there was a sliver of gold. The sun went in and it disappeared. Then the sea brightened again and the golden sliver returned. I put 20p in a seafront telescope and traced its profile, which was long and bare and gently sloping, like some fantastical sand dune marooned in an ocean or a story-book desert island that had lost its palm trees. Two container ships ghosted by behind it. A small passing cloud covered it in rippling shadow. Next to the telescope, a middle-aged man was sitting on a bench watching the sea. I asked him if I had been looking at sand island. 'I don't know what it is,' he said. 'But I do believe it was something to do with the airport at one time.'

When I got back to London, the jumbo jets were moaning overhead as usual, queueing for Heathrow. In Salisbury a few weeks later, near the end of our interview, I asked Heath if he wished Maplin had been built. 'Yes,' he said with emphasis. 'There would have been enormous benefit.' From the depths of his chair came a heavy mirthless laugh. 'Look what's happening over London at the moment – all that. And if we'd done Maplin in time the cost was bearable.'

The scheme – perhaps the most melancholy symbol of Heath's foiled ambitions for Britain – was never cancelled by his government. That decision was taken by the next administration. The idea was never quite killed off, however. During the late seventies, and again in the eighties, and into the present century, the idea of an airport built on an artificial island in the North Sea or the Thames Estuary has periodically bobbed to the surface. Besides Heath, its supporters have included the consumer guru Sir Terence Conran, the British National Party and, most vocally since his election in 2008, the mayor of London, Boris Johnson.

*

Many of the Heath government's other great hopes proved less enduring. The first of these was its ability to transform the economy smoothly. In July 1970, barely a month after the Conservatives' election triumph, the chancellor Iain Macleod died of a heart attack, and the new administration lost one of its best economic brains, most effective communicators and most popular figures. Almost immediately, the fragile recovery inherited from Wilson, far from strengthening into a boom under Heath as the Conservatives had planned, seemed to go into reverse.

Growth fell from a vigorous 3.3 per cent in the second half of 1970 to a sickly 0.3 per cent in the first half of 1971. Inflation, which had been steadily declining before the election, began to rise sharply afterwards. Most dramatically of all, the number of unemployed Britons, which had grown slowly in 1969 and 1970, suddenly surged by over a quarter in 1971. By the end of the year, the total was approaching a million, a level not seen since 1940.

In Britain, as in many Western democracies, the mass unemployment of the Depression years and the fear that it might return still chilled politicians, economists and voters. 'Full employment' – official code for a situation where only those who would not or could not work were jobless for long – 'had to be maintained,' says Brendon Sewill, who was a special adviser to Macleod's less able successor as chancellor, Anthony Barber. 'To suggest that you should … increase the level of unemployment so that [for example] trade unions became weaker was unthinkable.' Having grown up and formed many of his political ideas during the Depression, Heath, even more than most, regarded mass unemployment as a social evil. Yet within three months of his becoming prime minister, the Conservative Research Department announced that a 'seismic change' in the British job market was under way. The CRD saw only one parallel in recent British history: the years leading up to the thirties.

The government's response was jumpy. In the run-up to the 1970 election, and particularly at the Selsdon Park conference, the Conservatives had given contradictory signals about how they would treat the economy. As well as promoting Heath's rather conventional, essentially Keynesian ideas about using state initiatives and new ministries to invigorate business, the party had talked another, tougher, in some respects new economic language: reduce the government's role, free up the market, let 'lame duck' enterprises fail. Some of this was just political point-scoring, an attempt to distinguish the Conservative approach from Wilson's Keynesian policies in the sixties. But the Tories' new tone also reflected the influence of a genuinely anti-Keynesian school of economics that had been gathering momentum in Britain and the US since the Second World War.

In Britain by 1970, this movement had an effective propaganda and research centre, the Institute of Economic Affairs (IEA), several influential advocates in the media and a small but increasingly active minority of converts in the parliamentary Conservative party. Even Heath himself had offered them intermittent encouragement. His abolition of Resale Price Maintenance in 1964 had been a deregulating, anti-government initiative, influenced by the arguments of an IEA pamphlet. In 1969, he appeared to promise further such reforms in his speech to the Conservative Party conference: 'We will banish the regulation and control of business activities,' he said. 'We will begin to introduce private ownership into nationalized industries.'

Yet Heath's bold undertakings soon turned out to be little more than rhetoric, one of his periodic – and often damaging – moments of overcompensation for his lack of charisma as a public speaker. In office, he made only a few early concessions to the new right-wing radicalism. He 'denationalized' (the word 'privatized' was still thought too raw and undignified even for use in IEA pamphlets) the pubs of Carlisle, a backwater of the state-owned economy left over from the First World War, and the travel agents Thomas Cook.

But as the broader economy began to ail he quickly switched back to traditional Keynesian remedies. In early 1971, when the aircraft division of Rolls-Royce was threatened with bankruptcy, the Conservatives effectively nationalized it, citing the size of its workforce in areas already short of jobs. In the summer, the government began to increase public spending on housing and public works. In the autumn, a secret Cabinet committee chaired by Sir William Armstrong, Heath's most trusted civil-service adviser, began a review of the economic situation. Its conclusion that cutting unemployment should be an urgent priority would heavily colour the government's policies the following year: simultaneous tax cuts, increases in state benefits, and new subsidies for industry, the latter on an unprecedented scale for a Conservative administration, especially one elected promising to let 'lame ducks' fail. Heath's critics quickly came up with a memorable phrase for the direction of economic policy from 1971 onwards. They called it his 'U-turn'.

Democratic governments always betray some of their initial promise. Incompatible interest groups and electioneering's necessary half-truths see to that. But Heath's administration had started out with less political credit than most. It owed its existence to a shock election result, miscalculations by opponents and a vague feeling of national disillusionment rather than to any deep popular enthusiasm for Heath and his brand of Conservatism. As soon as the government's novelty wore off and it encountered the inevitable problems of office, public attitudes to Heath and the Tories simply reverted, in a sense, to what they had been for much of the sixties. At the end of 1970, after a strikingly brief post-election honeymoon, the Conservatives fell behind Labour in the polls – including the one poll that had correctly predicted their recent general-election victory – and remained behind almost continuously for the next three years.

Yet over this period their unpopularity also acquired new dimensions. Some of this would come from the right-wing radicals at the IEA and inside the party, and their reaction to the 'U-turn'; and some would come from the other strengthening political movement that Heath, for all his ponderous moderation and reasonable intentions, roused to fury and politically lethal plotting: the trade unions.