Gang of 25

The Gang of 25 or the Group of 25 was a cohort of British Conservative Party backbench members of Parliament (MPs) that threatened to vote against prime minister Margaret Thatcher's 1981 Autumn Statement. The statement contained monetarist measures to control inflation. Similar measures introduced since 1979 had reduced inflation but caused job losses in the manufacturing sector.

The majority of the Gang put their names to a 25 November letter to Thatcher's Chief Whip, Michael Jopling, that stated they would vote against any disinflationary economic measures. A potential revolt by the Gang, plus twenty others suspected by Jopling, could negate the Conservatives' 45-seat majority and lead to the government being defeated in the House of Commons. The move came at a low point for Thatcher, following the Brixton and Toxteth riots and when the new SDP–Liberal Alliance was polling strongly. There were concerns that Stephen Dorrell would defect to the SDP, to join Christopher Brocklebank-Fowler, who had defected in March. A conciliatory approach was adopted, with meetings arranged between Gang members and senior government figures. Thatcher's parliamentary private secretary (PPS), Ian Gow, took over the response to the crisis, and he considered that Jopling was overstating the risk of a significant rebellion. The vote on the Autumn Statement passed on 8 December, with none of the Gang voting against the government, though 12 were among 14 Conservative MPs who abstained on the motion.

Thatcher, leader of the Conservative Party, came to power in the 1979 general election. She inherited a weak economy, just emerging from the Winter of Discontent. She considered inflation a key problem to be brought under control. Under her Labour predecessors, this had been as high as 25% (in consumer price index terms) in 1975, though it had fallen to 17% in 1979. The Conservative government attempted to reduce inflation by raising the Bank of England base rate of interest. This was increased from 12% at the 1979 election to 17% by the end of the year.

Interest rates were lowered to 12% by early 1981 as the high rate had increased the value of sterling, rendering exports more expensive. Chancellor of the Exchequer Geoffrey Howe's Spring 1981 budget was strongly monetarist and was intended to allow further interest rate reductions to weaken sterling and improve exports. However, the value of sterling depreciated quicker than expected, and the government was concerned that it would lead to excessive inflation. Howe raised interest rates by 2% in September and 2% in October to reach 16%. Around this time, the UK started to feel the effects of the early 1980s recession. Thatcher's economic policies, including monetarism and the elimination of government subsidies, led to the collapse of many manufacturing companies and an increase in unemployment.

By mid-1981, Thatcher's leadership was in her "darkest hour"; her popularity plunged after the April Brixton riot and the July Toxteth riots. The Conservative leadership were also worried about the effects of the June SDP–Liberal Alliance. The Social Democratic Party (SDP) had been formed in March 1981 by the Gang of Four and like-minded MPs who had defected from the Labour Party; they were joined soon after by Christopher Brocklebank-Fowler, who defected from the Conservatives during a debate on Howe's budget. Polling showed Thatcher's approval rating was the lowest recorded for any prime minister and below that even of the unpopular Labour Party leader Michael Foot. The Conservative Research Department conducted polls in late summer that showed the popularity of the Alliance might render the Conservatives a minority party, achieving just 16% of the vote (compared to the SDP–Liberal 40%) which would be their worst election performance for 100 years. The Conservative leadership feared the party was close to splitting.

Thatcher carried out a cabinet reshuffle in September; this was considered to be a purge of the so-called wets, Conservatives on the left of the party who tended to disagree with her economic policies. The party was shaken by SDP–Liberal by-election victories in the formerly Conservative-held seats of Croydon (22 October) and Crosby (26 November). The SDP at this time was actively courting moderate Conservative MPs to join their party in order to demonstrate their centrist appeal.

On 25 November, Thatcher's Chief Whip, Michael Jopling, received a letter signed by 21 backbench MPs. The letter noted that the signatories had previously warned Jopling that they were in "fundamental disagreement with the government's economic analysis" but that they believed no action had been taken. The letter stated that collectively the signatories would "vote against any consequent measures presented to the House" if the effect of the Autumn Statement was to "deflate aggregate demand in the economy". The letter was typed on one side of paper, headed with the House of Commons logo. The text is just two sentences long, and the remainder of the page is taken up by the handwritten signatures of the MPs.

The letter came when Thatcher's economic policies did not show results, with factories closing, unemployment increasing, and inflation increasing. There were significant concerns that the 21 named MPs, as well as suspected Gang members Jim Lester, Richard Needham, Chris Patten and John Wheeler, would split from the party. Thatcher and her chief advisers nicknamed the group the "Gang of 25", after the SDP founders. One of the Gang was Ian Gilmour, a "wet" who had lost his position as Lord Privy Seal and Commons foreign affairs spokesman in the September reshuffle, and another was Keith Speed, a former navy minister who Thatcher had sacked in May for objecting to defence cuts.