alternatehistory.com

When the 1991 General Election was over, it was clear that neither Labour nor the three traditional right-wing parties would have a Parliamentary majority – the balance of power would be held by New Democracy. However, Paddy Ashdown was adamant that any government the Liberals would take part in should not be dependent on Goldsmith's insurgent group, and so the broadest possible coalition should be formed. All three parties ended up being included directly in the governing coalition, which was only 11 seats short of a majority, and the tacit blessing of the Ulster Unionist Party gave it the working majority in confidence and supply matters that it needed. Michael Portillo, the National leader since Tebbit's resignation in 1989, became Prime Minister.

The new government had its work cut out for it. The country was going through its worst recession since the war, with the massive bubble that had been formed by the shock deregulation of the credit market in 1985 now bursting. Millions of pounds of debt was created as a result, and by 1990 the situation was so bad that the Labour Government had been forced to nationalise the Midland Bank in order to keep it from collapsing entirely. The crisis still deepened, however, and Chancellor Virginia Bottomley found herself having to introduce uncomfortably hard budgets for 1992 and 1993. An unpaid day of sick leave was mandated, excise taxes on petrol, alcohol and tobacco were hiked, domestic rates and capital gains tax were kept high in spite of election promises to cut them, and most embarrassingly, the Workers' Dividend funds, which the Nationals had promised to return to the companies from whom they were originally levied, were instead diverted into state pension funds.

One promise the government did fulfil was privatisation – and boy, did it privatise. Steel, coal (what remained of it), shipbuilding, British Leyland, several power stations, and a number of other state enterprises were sold off with the blessing of the Ulster Unionists. The railways, however, were not privatised – a bill to that effect was tabled in early 1993, but Labour managed to turn the Unionists and a few Centrist backbenchers over to their side by pointing to the cutting of rural rail services under private operation in other countries. It also helped even the balance of trade figures slightly when it took the pound out of its peg to the US dollar, ending the last vestige of the Bretton Woods system and establishing its own floating currency value – the pound did drop in value as a result, but when it stabilised it was significantly more competitive than it had been.

The main achievement of the Portillo government, it must be said, was taking Britain into Europe. EEC membership had been considered by Harold Wilson; however, Charles de Gaulle consistently blocked British accession, and with Benn a soft eurosceptic and the Plumb government heavily disunited on the matter, the issue was passed over. Portillo, however, was adamant that membership was right, and that with the Iron Curtain gone and the Maastricht Treaty worked out, continued non-membership would be an economic disaster. He was able to secure a deal whereby Britain would join in 1995, alongside Austria, Sweden, Finland, Norway and the Irish Republic, pending referenda in each of those countries. The British referendum was scheduled for August of 1994, and campaigning began that spring. Throughout the campaign, the Nationals and Liberals were solidly for; the Centre Party and the Communists were just as solidly against. Labour, for their part, were divided, but eventually worked the issue out by allowing its members to campaign on either side – separate “Labour for Yes” and “Labour for No” campaigns were set up as a result. The campaign divided Britain as few events have before or since, and polls were unanimous insofar as the result was going to be close. August came, and with it, the result – by a 52 to 48 margin, Britain had said yes to Europe. Portillo's ambition realised, he expected the polls to turn in his favour as 1995 rolled on – however, events would overtake him.

The accession to the European Union meant improved transport links were in Britain's interest, and negotiations with the French government for the Channel Tunnel had been underway for almost as long as the accession negotiations themselves. By September of 1994, the details were worked out, and the Channel Tunnel Bill put before the House of Commons. The Centre Party, who had made their opposition to the Tunnel known, voted against, and while Labour's backing meant it passed easily, the government's position was made slightly uncomfortable. Frank Dobson seized the moment, calling a no confidence vote – which to everyone's surprise, passed. Early general elections were called for the 3rd of November, and the short campaign proved devastating for the government – Labour ran rings around them by pointing to their economic record, and the fact that for all the bluster about Europe, an unprecedented number of British subjects were still unemployed. On the promise of hard measures to turn the economy around, Labour were elected, and Portillo left Number 10 about as abruptly as he had entered it. New Democracy collapsed in the elections, the result of their internal bickering following Goldsmith's departure, and were never heard from again.