[Some three and a half months after Hacker became Prime Minister he had to face his first Cabinet crisis, and the way in which he overcame it was a tribute to his increasing political skills. The crisis involved many issues simultaneously -- his fight to save his Grand Design, threatened leaks, the threatened resignation of at least one and possibly two junior ministers, and his use of the powerful tobacco lobby in a fight to outwit the Treasury and obtain tax cuts to give him some short-term electoral advantage.

The origins of the crisis may be seen in the notes of a meeting that took place early in May between Sir Humphrey Appleby, the Cabinet Secretary, and Sir Frank Gordon, the Permanent Secretary of the Treasury. There is no reference to this meeting in Sir Humphrey's diary but Sir Frank's notes were recently found in the Civil Service archives in Walthamstow -- Ed.]

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