Speeches, etc.

Margaret Thatcher

Speech to CBI Welsh Council

Document type: Speeches, interviews, etc.
Venue: Ferrier Hall, Cardiff
Source: Thatcher Archive: speaking text (THCR 1/17/76)
Editorial comments: The press release was embargoed until 2115, marked "Please check against delivery". MT’s minor manuscript changes to the press release are embodied in the speaking text. The only substantial change she made was to eliminate a paragraph (already released to the press) on interest rates: "We want to reduce interest rates further as soon as circumstances allow. Borrowing by the private sector is coming down, and we are determined to keep Government borrowing in check". Sections of the text have been checked against BBC Radio News Reports 2200 11 December and 0700 12 December 1980 (see editorial notes in text).
Importance ranking: Major
Word count: 2487
Themes: Economic policy - theory and process, Employment, Industry, Monetary policy, Privatized & state industries, Energy, Pay, Trade unions

Introduction

Emrys EvansMr. Chairman, Lord Mayor, Ladies and Gentlemen:

It is always a great pleasure to be in Wales particularly in this splendid City Hall of Cardiff; and I am very glad to have the opportunity this evening of congratulating the CBI's Welsh Council on its positive and constructive approach to the industrial problems that confront us, and on the wider role it plays in the life of the Principality.

You, Mr. Chairman, provide a particularly striking proof of that wider involvement. The diversity of your interests has become a legend. I am told that if you go to the Royal National Eisteddfod or the International Eisteddfod you will find Emrys Evans. If you go to meetings of the Development Corporation for Wales, the Development Board for Rural Wales, the Welsh Industrial Development Advisory Board, the London Welsh Association, you will find Emrys Evans. [end p1]

I am even told—although I find this a little difficult to believe—that if you go to the Midland Bank …   .! CBI of Wales—their foresight in having an understanding banker for their chairman.

Unemployment

Mr. Chairman, you spoke of the very great difficulties facing Wales. I need no reminding that Wales is feeling with particular severity the consequences of the present recession, and the effect of the major changes in basic industries which are taking place.

Every parent appreciates the feelings of a son or daughter, leaving school without work to go to.

It is just as frustrating and worrying for those in the early stages of their careers who are made redundant; and also for those in their fifties, faced with change, and fearing that society regards them as too old to adapt. [end p2]

For all these, there is, sadly, no easy solution. If there were, it would have been seized upon years ago. Those who pretend that there is a magic button to press only deceive and betray the very people they claim to serve.

Compassion for the unemployed is not the prerogative of one political party, of one group, or of one region of the United Kingdom. It is not the monopoly of the few. It is part and parcel of the thought of the overwhelming majority of all the people, and of the Government.

But demonstrations do not provide solutions, and those who threaten disruption or law breaking do not help the unemployed. Beginning of section checked against BBC Radio News Report 0700 12 December 1980:

They do not present a true or an attractive picture of Wales. And I believe that people who act in this way sell Wales short. They make it that much more difficult to attract new investors and new industries to Wales. And obstruct the arrival of the new jobs that are so badly needed here. End of Section checked against BBC Radio News Report 0700 12 December 1980. [end p3]

But, Mr. Chairman, unemployment is not just a Welsh problem: it is a national problem, and indeed an international problem.

Look what's happened in other countries. Since January 1974, our unemployment has increased by 240 per cent—almost exactly the same in France. In the last two years, when Britain has had a 40 per cent increase in the number of people unemployed, there has been a similar increase in the United States where there are now 7½ million people out of work. EEC figures show that Belgium, Ireland and Italy all have higher unemployment rates than we do.

Self-inflicted Causes

But that is little consolation to our own unemployed. To find the right solutions for them we first have to realise that we in this country have created some of our own problems—and not just recently but over a period of years under successive Governments. [end p4]

We have paid ourselves more regardless of performance. Last year, Britain we took 22 per cent more for producing 3 per cent less goods. The Germans only took 7 per cent more and produced 2 per cent more goods.

We have contrived a trade union system which was originally designed to shield the weak and protect the craftsmen, but which has resulted in restrictive practices and disputes that lose the very jobs they were designed to keep—and diminish the very prosperity they were intended to increase.

We have taken out in higher wages profits that should have gone to investment.

We have ignored delivery dates, yet retained an astonishing capacity for surprise when orders go elsewhere.

We have invented great engines of public spending which require ever larger amounts of lubrication. [end p5] We have built up standards and expectations that we cannot support. We have assumed that someone, somewhere, would go on creating wealth for Governments to redistribute. We have resisted change with all the stubbornness of being British.

The time had to come when this all had to stop. That time has arrived. And now we have to overcome these problems not against a background of expansion in world trade but of severe world recession.

Moreover, we need more jobs now than we used to, because the number of people in the working population has gone up by 600,000 since 1974.

Mr. Chairman, despite the deep seated nature of these problems, I am optimistic about our ability to solve them. British people are every bit as [end p6] capable of good productivity, prompt delivery and high performance as their competitors overseas. Welsh industry has proved that.

A recent survey showed that almost every one of the hundred or so American companies with factories in Wales spoke of production matching the performance of their plants in other parts of the world. It is significant that in the great majority of these factories a single union structure has been introduced, supported by the Welsh TUC. And the best modern industrial practices have been willingly accepted.

These successes point the way to industrial recovery.

Interest Rates and Sterling

But I understand very well that at the present time even the most efficient companies are finding life difficult. The CBI has not been reticent in expressing its own anxieties. In particular I know you and your members have [end p7] been deeply concerned about the level of interest rates and the strength of sterling.

I too would like to see interest rates falling further. But Government borrowing is still running at a very high level, as was confirmed earlier this week. — That is why we recently announced cuts in some of our spending programmes in in order to compensate for unavoidable increases in others. — That is why we had to obtain more revenue by the new tax on oil production and the increase in national insurance contributions.

The alternative would have been even higher Government borrowing—which would mean either raising interest rates again or printing more money, leading to more inflation. [end p8]

The level of sterling is much less within our power to influence. Contrary to what some people had predicted, lower interest rates here coupled with higher interest rates in the United States have not had a significant impact on sterling. North Sea oil is, and will continue to be, the most important factor in holding up the exchange rate.

I share your concern at the speed at which sterling has appreciated and therefore at the speed at which some industries have had to adjust. [end p9]

But please don't downgrade your achievements. Inspite of the difficulties, many industries are coping remarkably well with the higher sterling rate; exports have held up well. Today we have a greater proportion of world trade than we had a year ago.

Steel

Mr. Chairman, no-one would expect me to visit Wales without mentioning the steel industry, its problems and the anxieties felt by all who work in it particularly in Wales. The steel industry worldwide faces enormous problems; there has been a large fall in demand; by all commercial criteria the British Steel Corporation is insolvent—and has been for some time; and many private steel companies are in difficulties. You all know the seriousness of the situation. [end p10]

I must make it clear that I have not seen Ian MacGregorMr. MacGregor's plan for the future of BSC and I do not know its content. As I speak, he is considering it with his Board.

Clearly the plan is of major importance to Wales. The Government understand this. When we consider it, we shall take full account of its impact on both BSC's activities in Wales and on private steel firms. But [Beginning of section checked against BBC Radio News Report 2200 11 December 1980:] our aim must be to secure a steel industry that is and will stay competitive internationally.

We shan't achieve that by strikes, by demonstrations, by restrictive practices and demarcation disputes. We shall only achieve it if both management and workforce understand the problem and co-operate to the full to overcome them.

That is the way for BSC to become and remain competitive and prosperous. That is the way to keep steel works going. End of section checked against BBC Radio News Report 2200 11 December 1980. [end p11]

Defeating inflation

Mr. Chairman, to defeat inflation remains the first task of the Government. Inflation has priced us out of jobs both in lost exports and in cheaper imports competing with home produced goods. Indeed persistent wage inflation has been a greater factor in the loss of competitiveness than the exchange rate. [end p12]

Inflation is a major cause of unemployment. Every measure taken to defeat inflation is a measure taken to defeat unemployment.

Other tasks for Government

But there is another task for Government as well. It has to encourage the industrial change that is so urgently needed to make us competitive; and it has to cushion the most painful consequences of change.

Let me say this to the unemployed people of Wales. Of course the Government cares about the problems you face. We can offer you opportunities for work-experience and training if you are school-leavers; we can offer retraining schemes for others; we can offer tax incentives, regional incentives and enterprise zones to encourage the creation of new jobs; and in the last resort we can offer the safety net of social security. [end p13]

As a result of the measures we recently announced the number of entrants into the Youth Opportunities Programme in Wales will be increased from 27,000 this year to 43,000 next year, and all unemployed school-leavers next year should be offered a course or work experience before Christmas. All that we can do as govt.

But we cannot, in the short term, create permanent new jobs ourselves. But there are some things we can do to help bring those jobs nearer. [end p14]

Infrastructure

First, we can provide the infrastructure for new enterprises. In Wales, very large sums are going to prepare industrial parks; to build advance factories; and to construct new roads. In our first two years over £300 million will have been spent in Wales on job-creating projects, on building advance factories and on special employment measures. More is being invested here on facilities for new industry than anywhere else in Britain. [end p15]

Facilitating Change

Second, we can encourage change by creating the right industrial climate. I understand the importance of maintaining effective Regional Incentives, to which you, Mr. Chairman, referred; and we are concentrating those incentives where they are most needed.

When Nicholas Edwards visited the United States this summer, he found a tremendous interest in investing in Wales. And this week alone, senior representatives from six US corporations are in Wales looking at specific sites and discussing investment details.

Enterprise zones are a new and exciting initiative.

There, industrial and commercial property will be exempt from rates, and will qualify for a 100 per cent capital allowance. Planning procedures will be simplified. Industrial development certificates will be abolished. [end p16] And the Government's requests for statistical information will be reduced to a minimum.

These measures will apply to both new and existing firms in the enterprise zones.

As you know, one of these new zones is to be in Wales. I am happy to be able to tell you tonight that agreement has been reached on its boundary and the principles on which it will operate. Tomorrow Nicholas Edwards will invite Swansea Council to prepare a detailed scheme for a 735 acre zone in the Lower Swansea Valley.

Constructive Intervention

And our third role, Mr. Chairman, is what I call constructive intervention. I say constructive because I mean stimulating industries which do have a future, rather than shoring up lost causes—helping to create tomorrow's world, rather than to preserve yesterday's. [end p17]

One example is the National Enterprise Board's stake in the new biotechnology company in Cambridge. This will develop products and know-how based on the excellent research in biotechnology which has been carried out there.

Another example is the Government's backing for the Inmos microchip project.

In taking the decision to locate it in Wales we were of course aware that high technology is not new here. In electronics alone in Wales, some 85 companies are employing 15,000 people. [end p18]

Mr. Chairman, we fully understand the seriousness of the problems in Wales. Perhaps what Wales needs more than anything else is confidence in all it has to offer.

I have always believed that a country's prosperity depended on its people, their brains, their skills, inventiveness, work ethic, capacity for saving, organisation, co-operation. Now the Welsh have all these qualities in full measure, indeed, they are famed for them. That is why we have real grounds for hope both here and in the rest of the United Kingdom.

And there are real grounds for hope. — Inflation is coming down. — Interest rates are coming down. — There is a new sense of realism in wage negotiations — Exports are holding up well. — Fewer days have been lost in strikes in the last four months than in any comparable period since the war. [end p19] Beginning of section checked against BBC Radio News Report 0700 12 December 1980:

Even more important, attitudes are changing.

Attitudes—to restrictive practices and overmanning Attitudes—to the acceptance of new technology — to relating pay to productivity — to unofficial strikes and petty stoppages — to the need to deliver on time — to the need above all to compete, by producing the goods that the customer will buy. End of section checked against BBC Radio News Report 0700 12 December 1980.

Mr. Chairman, the burdens on companies who are efficient and creating wealth cannot for ever be increased by those who are not. Subsidies are not meant to be permanent. Their purpose is to put industries in a position where they can contribute to the creation of wealth rather than be a drain upon it. [end p20]

Some will say that those changes in attitudes I referred to a moment ago are just a temporary reflection of present circumstances. It is up to management to see that they persist when the recession is over.

Good sense and moderation must become a permanent feature of industrial relations. But this will only be achieved if a sense of partnership and common interest is developed between management and workforce.

With these changes in attitudes, we can achieve real and lasting recovery.

And that is why, in spite of present difficulties, my message to you tonight here in wales is one of confidence and hope in yourselves and in the future.