Speech at Now! First Anniversary Dinner
|Document type:||public statement|
|Venue:||Savoy Hotel, central London|
|Source:||(1) Thatcher Archive: speaking text (2) BBC Radio News Report 0700 11 September 1980|
|Editorial comments:||Available on CD-ROM only. Embargoed until 2130 and marked "Please check against delivery". MT plainly departed from the text in a significant way, as the extract from the BBC Radio News Report shows.|
|Themes:||Employment, Energy, Economy (general discussions), Industry, Pay, Monetary policy, Trade, Foreign policy (Asia), Science and technology|
In your kind introduction, [Sir James Goldsmith] Mr. Chairman, you offered a theme for the occasion which may be summarised as follows:
"Recover your pride in achievement and prosper."
It is a maxim or prescription which we might usefully examine today, faced with a world in deep recession and distressingly high unemployment.
How did this come about? And how can Britain return[fo 1] to a high and stable level of employment which all, repeat all, of us want—not just some of us—and thereby restore and advance our prosperity.
Over the past two years oil prices have more than doubled at a time when most industrial countries were already suffering from sluggish growth and a high rate of inflation.
With so much more money having to be spent on essential supplies of oil, there is correspondingly less available to buy other goods so demand has slumped everywhere and not just in the United Kingdom.
Unemployment has risen across the developed world and some countries are worse hit than ourselves. The United States, Canada, France, Italy and Belgium all had higher rates of unemployment in July.
While Britain's oil resources do give us security of supply, they do not insulate us from the higher prices now being charged for oil as an internationally traded commodity. So high oil prices have cut our own demand for goods, too.[fo 2]
But over and above the consequences of the international recession, as intensified by oil price increases, there is the tragic result of Britain's long post-war decline.
That decline, I am sorry to say, arises more from our own shortcomings than from anything else. It is, in short, our own fault. There is no-one else to blame.
We have come perilously close to believing, against all our better judgement, in some fairytale technical device or suspension of economic law which will enable Britain to muddle through.
Over the years, a bewildering variety of weapons for dealing with economic crises or difficulties has been fashioned and paraded before us, all too often without any reservation or mention of their consequences or side effects.
Devaluation, import controls, prices and incomes policies, more public spending, worksharing, easy money, to mention but a few.[fo 3]
Many are the remedies which have been tried. All of them have been found wanting.
Events speak for themselves—prices have risen and so has unemployment.
Yet throughout this deterioration in our economic performance some trade union negotiators, although not all their members, have demanded a substantial annual pay increase regardless of output or whether they could sell their products at a higher price.
We have also demanded better housing, better health services, better social services, better education—better everything, regardless of where the money to pay for it was to come from.
To cap it all, we have sought as a country protection against change, regardless of our diminishing ability to prop up unprofitable industries or firms or to meet the cost of overmanning.[fo 4]
So we have plundered our principal provider of wealth—our industry and commerce—in two ways: — by taking out too much in pay without justifying this in higher output and productivity; and — by demanding that more and more of their profits should be devoted not to investment but to welfare.
Consequently, our past has now caught up with us.
Recession abroad combined with poor industrial performance and excessive wage claims at home are taking their toll.
Now is the time for truth.
And the first truth we must face is this:[fo 5]
To exact an ever rising standard of living without creating the wealth to pay for it through higher output per worker simply raises prices and costs jobs.
And unfortunately all too often those who take out too much in pay for themselves cost other people their jobs and other people their incomes. That is what happens when industrial muscle is used in monopoly industries to obtain higher pay settlements which haven't been earned.
The second truth is that the blame for all our economic and industrial ills does not rest upon the shopfloor. Contrary to what some would have you believe, the Government is well aware of that.
While workers and their unions can and do influence costs and prices and the pace of innovation and change, they are not responsible for management decisions—on designing new products, on research and development, on marketing or on corporate strategy.[fo 6]
Responsibility for our present condition is widely spread. Similarly, responsibility for working our way out of our difficulties is broadly shared.
But we need to be clear how it is shared.
The third truth is that the Government cannot create wealth. But it can create the climate in which wealth producers flourish.
Getting inflation down is at the heart of our strategy. For if we fail there, we fail on every other front.
There are already clear signs of success in that the inflationary pressure of 1979 and the first part of this year is weakening. Increases in manufacturing prices over the past five months have been considerably reduced compared with increases seen last year. The annual inflation rate is now falling. It is vital that this progress is continued.
But this can only happen if we stick firmly to the monetary policy set out at the time of the Budget.[fo 7]
The monetary statistics in the first half of this year have been disappointing. There have been two problems. The first is that the ending of the "corset" has led to the appearance in the statistics of a large amount of lending that was previously disguised. This started as long ago as June, 1978 when the corset was imposed. Its effects upon the economy were already present but it did not appear in the official figures for sterling M3. This hidden lending turned out to be higher than expected.
Secondly, even allowing for these distortions, monetary growth has been too fast. Government borrowing is still too high. These factors are related and that is why it is so crucial that we keep Government borrowing under control.
The high level of Government borrowing so far this year is similar to last year's pattern and chiefly reflects the uneven distribution of receipts and expenditure throughout the year.[fo 8]
Receipts from oil taxes, sales of assets and the European Community budget will all reduce Government borrowing towards the end of the year.
It is only by maintaining monetary discipline that the welcome improvement in inflation will be sustained.[fo 9]
The fourth truth is that we cannot, in any circumstances, prosper unless firms produce goods or provide services that consumers want to buy.
And the customer will only buy if he is attracted by design, quality, reliability, service before and after purchase, delivery and overall reputation—as well as price.
That is the message of Singapore's success as told last week by Lee Kuan Yew to a Commonwealth Summit in Delhi.
Singapore, he pointed out, had no resources of any consequence and no great land-mass. But by making use of what it had, it was able to compete in the biggest markets of the world.
"If you want to industrialise, you have to come to terms with the real world," he said.
Or take another example, Switzerland from which, as you know, I have just returned from holiday. Switzerland is not lavishly endowed with natural resources. Yet it is strongly[fo 10] exporting textiles and instruments—despite the presumed disadvantage of one of the strongest currencies in the world.
If landlocked Switzerland can do it with a high exchange rate so can we.
And of course we can and some of us do.
The fifth truth is that we do have what it takes when it comes to our innate inventive genius. That genius in the nation of Newton, Watt, Arkwright, Davy, Baird, Barnes-Wallis, Rutherford and Fleming is alive and well and working all around us.
In aerospace, for example, from jump jets to navigator systems; from swing wings to angled flight decks for aircraft carriers.
What is more, we have Farnborough to prove it. During last week's airshow, Britain's aerospace industry announced orders worth £286 million and these are expected to lead to others to bring the total up to £500 million.[fo 11]
In energy, from pumped storage of electricity to North Sea oil, which by any standards is an outstanding achievement for technology and private enterprise. From discovery of oil to national self sufficiency in a decade.
In machinery, from powered roof supports, which have made a dramatic contribution to longwall coalmining, to the Magnascan electronic scanner which has done so much to advance the standard of colour reproduction.
These examples of British technological innovation are proof of our post-war achievements. They are examples of the sources of new jobs.
And we can deliver our exports. Hong Kong's new underground system opened 3½ months ahead of schedule because the British rolling stock from Metro Cammell arrived early.
We are, after all, exporting to the tune of around £1 billion—a thousand million—a week.[fo 12]
Just think what could happen when the world economy picks up if we really did put things together.
This brings me back, Sir James, to your opening theme.
You prescribe a restoration of pride; the re-establishment of excellence.
Yes, we need both. But two things would help to restore that pride and that sense of values.
First, a new respect for the risk takers; for the producers of wealth; for the tradesmen of this world who for so long have been looked down on instead of up to as the source of our prosperity.
And second, a new determination to succeed as a nation, by translating the risks and enterprise and invention into the rewards of new markets.
A Government's duty is to promote the pathfinders of tomorrow; to cushion the hard corners of change; and to convince the nation that only their best will do.(2) BBC Radio News Report 0700 11 September 1980:[fo 13]
And ... speaking in London last night, Mrs Thatcher made clear that far from being ready to be pushed into any u-turns, the government was determined to stick by its monetary policy, even though the latest money supply figures were disappointing.
The very best prospect for better and more jobs is to tackle and to beat inflation, and you cannot do that while you leave too much money in the economy, or inject more in it, because if you do, it will come out, not in extra production, but in increased prices with all the consequences that that has. All the fraud on savings and all the difficulties for investment. And that's why we must stick, and will stick to our policy of tackling inflation.