Just for the record it was Jonathan Powell who cancelled Doctor Who in 1985, Grade just OKed it.
But didn't Grade insist on the 18 month hiatus during Colin Baker's tenure?
Yes. Grade was the Controller of BBC1 who had to OK the decision, but Jonathan Powell was the man one step down, as head of drama department, who among other things had to make cuts if he was going to fund the launch of Eastenders that year. So he suggested getting rid of Who (he seems to have disliked it in particular, but wasn't keen on anything that predated his time in charge, as almost every established series went when he took over), and Grade saw no good reason to second guess his recommendation, as he didn't like the series much either.
So, Powell decided to drop Doctor Who, and Grade confirmed his recomendation. And then took the flak in public while Powell hid.