HY
I want to talk mostly about the future, but I'd like to begin by asking you a question about the past, because in your years as Leader of the Party and four years as Prime Minister you've changed the direction of Conservatism, and what I keep wondering to myself is, were the Macmillan years an aberration?
PM
I don't think I have changed the direction of Conservatism. I may have redesigned it, but don't forget that in the Macmillan years the proportion of public expenditure was lower than it is now. I think sometimes you misinterpret the Macmillan years. The proportion of public expenditure was lower and if you look at taxation, we managed to get it lower. There are many things, for example, in the social services we have now which were never there in Macmillan 's time. Let me give you an example: fuel for the elderly and for families with young children, £300 million. It was from Harold Macmillan that I learned really how to deal with industries that are in difficulty. Don't put in for petrol subsidies. Put in a subsidy on condition that they get their own house in order. You'll remember, he did that with cotton. They didn't put in for petrol subsidy then. Get them constantly on the taxpayer … I think it was £30 million in those days. But just look it up … For the cotton industry, so that it could in fact. There was difficulty in textiles in those days. The word I suppose today would be rationalise—to rationalise and get it more efficient. And in a way that's what we continue to do with British Leyland. Of course, there had been enormous improvements. It wasn't just money regardless. It was money on certain conditions. And there had been enormous improvements in the manning, etc., of British Leyland. What do you find that's very different from Macmillan 's time and mine? [end p1]
HY
Well, Macmillan is certainly remembered by his great devotees as somebody first of all who was defying [sic: defining?] the middle ground as bringing in unions, working-class people, the centre of the Tory Party, not as a ideological party, quite far to the Right, much more in the middle of the political spectrum.
PM
The Tory Party has always had a large number of what you … . and to use your own words … . working-class people … always, all my life, and for a long time before. And I think that what happens is people talk rather loosely about the middle ground, etc. The Tory Party had a lot of people from all backgrounds in the last election and still does have.
HY
But didn't he believe in expanding the welfare state?
PM
No. He believed in Winston ChurchillWinston's view that you want, and you are all brought up on that view, that you have to have a safety net and a ladder. And it was always the view that I was brought up on in the Tory Party. You need a safety net so that no-one should fall below it. There's always someone to catch someone. They should always have a basic standard of living no matter what has happened to them because the more specialised society gets, the more you're going to have people whose jobs are going to become obsolescent. All right, so long as you can retrain quickly, then you have with the speed of technology when industries and, with the development which has come since Harold Macmillan 's time, in the newly industrialised countries. Don't forget that during his time the challenge from those industries, from those countries which were devastated in wartime, had not come to flower. Nor indeed had the challenge from the new and industrialised countries but there were still challenges of technology and obsolescence. You look back … If you look back in that Full Employment White Paper—It was not called Full Employment. It was called Employment for the 1944 White Paper—it's all written there and it's extremely good. It foresees structural unemployment. It foresees what would happen if industry had become obsolete, or the [end p2] goods they produced no longer in fashion. It says ‘Look, no amount of demand can overcome that’. It foresees the need for mobility of labour. Now, how did we get on to this? But what I was saying was Harold Macmillan 's time was before we had these challenges.
HY
Did things begin to go wrong then in the early Seventies? I mean, there is a sense in which what you're doing is trying to correct what people perceived as being the direction of the Heath government.
PM
I think things started to go wrong in the late Sixties. If you look back at … Inflation is not a bad guide. And actually if you look back during that time, we had an extra discipline that broke down in the early Seventies. I won't be speaking in order. You'll have to turn it into order. I'll just try and answer. If you look back there are two things which I think you should look at that are indicative. First, your inflation really was amazing, but sometimes comparatively … when I say steady … did not rise above 3–4 per cent. And there was one year, and I think it was in the year when Harold Macmillan was Chancellor, when we actually had prices stable. Do you remember we had that before the [word missing] prices? But the inflation rate then was not more than about three per cent. And it stayed there. It started to rise during the late Sixties and it went on rising and it really became at its worst throughout the Seventies. Now, that's one thing. The other thing was in that time you had something which later collapsed—and I remember there was a great argument in the Labour Party— [word missing] had not yet been defeated by inflation. So you had an inbuilt discipline that the moment your spending started to get too big, you weigh out your balance of payments and you are then in difficulty. And you then had to have corrective measures before things really got wrong. It was only when inflation really fundamentally broke down … . Of course, we devalued again in 1967 … Then inflation broke [word missing] in the [end p3] early part of the Seventies—long before the oil price increase. I remember the debate in the Labour Party about whether you should put your reserves into defending the value of the Pound. There was a colossal debate then. They did, and then had to devalue it. So you had in those days the inbuilt discipline of the exchange rate and you kept down your inflation. Once you got your inflation rising and once you get … . let me put it this way … the challenge which we'd not had in the Macmillan years of the defeated countries, or the countries which were completely overrun in Europe … . the challenge of those industries. If you look back, you'll find … . I can remember debates starting in 1959–60 when I was first in Parliament, when we were still fairly more towards the top of the production per head league and others were coming up. Well, they came up towards the end of the Sixties and the Seventies and they came into full competition. Once you got this, we stopped growing, but public expenditure, which during the growth years we've got used to having out of growth, we got used to having increased public expenditure, but at the same time you partitioned your growth. Some went to increase public expenditure in social services and pensions and the other also went into reduced taxation.
HY
But that went on during the Heath Government …
PM
That went on … Well, I was about to come to say. The habit and custom. We got so accustomed to growth that the habit of increased public expenditure and increased wages went on but the growth was not there to accommodate it. And so the extra money went straight into inflation and that's really when we began to get into difficulty. The fundamental difficulties about the distribution of expenditure … the distribution of income as between the public and private sector … . And fundamental difficulties on costs, because if you go back and look at … I've forgotten the precise amount … . But I think if you look, you've a 100 per cent increase in money supply that went in in those times, you'll find [end p4] 95 per cent went in an increase in prices. And only 5 per cent went into increases in production. But the point I want to make is that the habit and customs [words missing]. We've got growth to do on the sellers' market and we've not got the competition. And the increased public expenditure, increased standard of living and reduce taxation went on although the growth stopped. So he did not have to tackle the things I have to tackle. And he has, in fact, as you know, in some of his interviews, been one of the quite vociferous critics of the amount taken by the public sector—quite a vociferous critic. Indeed, everybody's as vociferous as I am. And he's also been vociferous about the fact that if today you come with more money, it does not guarantee increased production. It will increase wages and it will increase prices. And you'll find that point also in the Employment 1944 White Paper. The Employment 1944 White Paper is excellent but it's on my side, you see. It says that habit is a terrible thing to break and if your habits go on for ten or twelve years after you have the means to finance them, that's when we got into difficulty. And that's the difficulty that faced me.
HY
And do you think you should have seen that much earlier in the early 1970s?
PM
Oh yes. Oh yes. I remember when. I am interested now and I see people demanding new Bretton Woods. You can't have new Bretton Woods when you've got the money and all you have got to get is more paper in your hands and have a higher standard. I never forget the day the [word missing] went up. Bretton Woods broke. The [word missing] went up and a fixed standard. … I remember it.
HY
But were you opposed at the time?
PM
No. We had no choice. We had no choice. I can remember vividly at the beginning of that … Strange though it may seem, I was a great Reggie Maudling fan. Although I seek his dream in 1963 [sic], what you had to do was, in fact, was to borrow a lot of money and then you could pump it all into [end p5] growth was the wrong one. Because it didn't go into growth it went in … in 1965 were Reggie 's dreams of growth … . and that was fundamentally wrong. And I can remember Reggie when I was Education and Science, I can remember us having meetings, groups of Ministers, you always have these outside the ordinary structure of Cabinet, groups which you get together. And I can remember Reggie saying 9%;, 9%; growth … and those were the very words he used. So have I got the message across? That we went into a different period because the world patterns of trade and the prosperity and the growth was changing. Added to that you had suddenly got the additional fundamental cost increases with oil and in fact what we did was try to obscure those by printing money. We didn't take them up. Germany took them at full tilt, and did not get the increased inflation. Because … we have to reinvest money to … There is a reason.
HY
Yes I understand. Just going back, just one more point on this question which fascinates me really about the change of people's understanding and the change in their outlook. I mean you actually have a particular fondness it seems to me for converts, converts from different ways of thinking.
PM
Well, you might just as well get rid of your illusions without seeing through anything. You've just got to come down to realities. And this is what I am saying. We have those illusions. Habits and illusions are very difficult to break. And people never believe they are going to break. You know you see difficulties coming up on the horizon. Again I can remember in the early 1970s reading articles and being a little disturbed about them but not sufficiently disturbed that there would be a shortage of energy in the world and that prices would rise. Now of course we did go into that period, we had this sharp rise in prices for different reasons. And all of us felt the effect together we had this sharp rise in 1973. It really was being forecast by … . The sharp rise in prices then and a double one in 1979. You can't put something up [end p6] tenfold in prices without cutting the consumption because people will then economise on it and use alternative processes, alternative machinery. That too one ought to have foreseen. But all of them you see. Basically the fundamental law is working. And you can't get round fundamental laws by printing money. And again if you … you'll find that he said yes, now two years, if your money supply is below your production, you have got to bring your money supply up to your production. But you can only have, take one year with another, you have got to keep in balance. They forgot about keeping in balance from one year to another. And I would say that I really am the true Keynesian, when I take him as a whole.
HY
Is one of the illusions that you are trying to get people to get rid of about the role of the state? I mean you have been talking quite a lot about the role of the state and I wonder whether there is, I mean looking to the future, to say another Tory Government, another five years, the, what is the minimal role of the state?
PM
It came to be thought that you could overcome everything by state action. But you can't. And basically the state is not the creator of wealth, you see that. … on a sufficient scale.
HY
But I was thinking more in the area of welfare and the protection of the citizen and all that. The stuff which has recently come out about the family, about the welfare state.
PM
Well, the stuff that has really come out about families … There is something very wrong with the Tory Party if it weren't a continual fountain of thought, continual fountain of re-considering everything and reassessing. But really there has been hysteria in the Labour Party about this. You just might think that they sort of had a notice on all Labour Party cars thinking it's dangerous for your health. And of course that is the history of Marxism. It is morally bankrupt. No, my view of the welfare state [end p7] is this. That I think as people get, let me put it this way, the next stage of growth which we have to earn … But can I go back to something else which you said? It's no good looking to the state for extra prosperity. That, the creation of wealth, really has to come when people are free to create it. It really is that Karl Popper, you know that marvellous book “The Open Society” when he deals with the argument that the dictatorships are more seditious. It is a bit difficult in a war, the dictatorship is, by coercing, and can be more efficient and maybe for a short time they can. But he then deals with it. No. Because over anything more than a short period everything will become ossified because people are not allowed to challenge the ideas, they are not allowed the freedom of discussion and therefore you get, if you go wholly to state action, you do not get that freedom of discussion, the freedom of reassessment and you do not get what you get in a free society and a free enterprise society, a largely free enterprise society. The quick response to the needs of the customer, that's the way people can see it, but they never can. And so in a freer society you've got to have the free enterprise society in order to get that response, in order to create the wealth. And you must look, what was happening was—and I have seen it also to some extent on the welfare state—people think they get their standard of living, and it has happened to certain groups of people, they look to it not from their own endeavour [but?] by massive protest, massive monopoly strikes to coerce governments to give them a greater share of what there was. They could not by looking to government get bigger total wealth. And you'll find a lot of socialism, a lot of protest, and really about the re-distribution of wealth and not about the creation. You had gone absolutely as far as you could on re-distribution. Now a lot of people were looking to government to increase their own standard of living. They could only do that by getting more for themselves at someone else's expense. For a time that was done by inflation. And inflation was a re-distribution of wealth not from the rich to the poor, although that, if you owned land, that what it was to some extent, [end p8] but the re-distribution from the savers to the earners.
HY
But what about the customers of the welfare state not just the workers? I take the point about the workers.
PM
I was then going on to say that the next stage of growth—I am sorry, you must tell me if I am not answering your questions—The next stage of growth really, should in my view, go back, and I'm sure Helmut Miller would agree, into the personal pocket by taxation, by lower taxation. So that people have more money in the month, do earn more. And I think, if you do that, you will find that naturally they will wish to do more for themselves. You see it in many many aspects. You see it with a number of people and I am sure that it's through BUPA. They are not all wealthy people. You see it with a number of people who struggle, struggle to send some of their children to sometimes a small private school. You will find that will happen. Now that is not dismantling the welfare state in any way. But you see, can I say this to you? I think your line of thought is broad in the sense that many people's is broad. They think that you've got to have a flourishing private sector, a flourishing public sector, and the overspill is the private sector. But I can only say to you, the truth is that you will only get a flourishing public sector being able to do the things you want to do, the people for whom you must do it, provided you have a flourishing private sector. Take the health service.
HY
But if you have a flourishing private health sector doesn't that necessarily mean that scarce health resources, the resources in terms of manpower, medical skill and all that, available to the National Health Service are bound to be reduced?
PM
No of course it doesn't. Of course it doesn't. If we get an extra demand coming up you will have extra jobs. Let me put it that way. Extra jobs. You have got training for doctors now. You will get extra demands for doctors and you will get extra demands for nurses. [end p9] And I might also say that if the private health service earns a lot of money, earns a lot of export money. No, no, no. You were looking at it in totally the wrong way. It can be an extra creation of wealth. You've got caught in the …
HY
No, I don't think I have. I do think that there is a residual level of society.
PM
No, there is a fundamental feeling. Absolutely fundamental feeling. I remember … as Gaitskell. In a free society people must be free to spend their money. Private health and private education. And you can't stop them in a free society. You can't do things like that.
HY
What do you say to people who really are in no condition to take what is generally described as personal responsibility, who are very poor, chronically unemployed, the under-side of society? It seems to me that the Tory Party is vulnerable to the charge. The way it talks and the way it's now thinking and the whole thrust of this actually neglects those people.
PM
You are totally and utterly wrong. Totally and utterly wrong. Indeed by the time you have got a flourishing private sector you are also earning outside money. And less people with calls on the National Health Service, and at that time you have more resources to give to the people who really need it. And that is the fundamental flaw of the argument. That the more flourishing private sector you have. Don't forget we have also the National Health Service whether we need it or not. And the whole private sector, and the more people are prepared to look after their own wants, the less demands you have on the state. And the more resources you have by definition to look after those who really need it, and those are the poor, the elderly, the disabled and those who wish to make use of it. [end p10]
HY
In the other aspect of what was recently being discussed, is it the job of the state to affect the moral climate of society, and particularly the moral climate of schools?
PM
It is the job of the state to uphold integrity. Yes. Of course it is. And right in the 1944 Education Act. And this I think is one of the few legislative provisions for a moral—it is the only one that I can think of quickly—I'll put another interpretion in a moment. In the 1944 Education Act, I think this is one reason why you have provision for an act of worship, a group act of worship and the reason for religious education. And that is actually, indicates that the state recognises that you really, I think, cannot have a free society unless there is acceptance of certain standards of values. And those I would say are based inherently on Judaism and Christianity. The acceptance of those principles, whether you accept the religions or not, I mean, I think one of the differences between them at times earlier in this century and the last, whether you were a Christian or Jewish or not, you accepted certain standards of values. Those really do come from a mixture I suppose of classical values of the Old Testament and the New Testament. And that found itself in schools in the 1944 Education Act. And you will find millions of people who wish that to be upheld because you will find millions of people who have got their background, they say they want their children to be taught thing which are good. Now that's—you also of course cannot get again a free society unless, let me put it this way, the enormous, the overwhelming majority of your people are honest. Now that's a moral standard. Unless you get the collapse of freedom if you get the collapse of law. You can't have freedom without law. … . When I say an ordered freedom, you and I would use it in a sense of a just law. Law isn't right just because it's law. You have law in the Soviet Union. But it is because we have this feeling that there is a justice in law and your law should be founded on justice. And where do you get that justice except from a very definite [end p11] sense of values? And that I would go back to say that your fundamental freedoms and your fundamental human rights are not state given. They are more fundamental than that.
HY
But is the priority which it appears the Conservative Party wants to put on this, in the next period, an indication that it thinks that things have gone wrong in recent years?
PM
Well, let me put it this way. As I indicated to you earlier, there was an earlier period which I think some said I had to get rid of, and I think it was fostered by prices and incomes policy. The state took over a decision on what a person should be paid, prices paid for goods, the state took that over. There was then a tendency: it pays more to demonstrate to the state and then we'll get a bigger standard of living. And I would say both the moral thing and if I might say the practical politics as well, they both count if you believe in a free society. It's that basically you look for your inherent standards into your own personal endeavours. If you start to look to the state … . the only way you will get more for yourself is by taking it away from others and you can do it in many many ways, by demanding, if you are a monopoly industry, by withholding your services not really so that you can get more and it has to come out of someone else's pocket. It has to come out of someone else's savings. And I get very cross that those who talk most about a free and caring and compassionate society sometimes are those who seem to care more for their own politics rather than the politics of other people.
HY
Talking of practical politics, isn't it about time that all politicians admitted that by the end of the next government it is really quite improbable that there will be fewer than two million people unemployed? [end p12]
PM
I wouldn't like to say about the end of the next government because it depends how rapidly your services develop. You know the classic example. At the beginning of this century weren't there about half of our people employed in a mixture of industries and domestic service. No matter—a mixture of farming, agriculture, and domestic service. Now you know the … . the sense of fear that when machines started to replace people and the sense of fear when cars started to replace horses. But it would have been a difficult thing to have foreseen at the time. The massive creation of jobs which the industrial revolution would bring. I think you will get. You had also a massive creation of jobs in services. And look, the aeroplane brought massive creation of jobs. Tourism brought a massive creation of jobs. I think you will get a massive creation. Basically we used to take to one another's laundry, now we spend a lot on services to one another. And I think you will get a massive creation of services.
HY
But that's an act of faith more than anything else?
PM
Yes indeed. But so it was at the beginning of this century. It's not an act of faith, it's an act of experience. It is learning from past experience. Who could have foretold at the beginning of the 1970s which is only thirteen years ago, when I was a Cabinet Minister, that today in Scotland there would be more jobs in the new electronics than … And the new electronics in Scotland than there are in steel and shipbuilding.
HY
Yes but there aren't more jobs now than there were in 1970.
PM
No there aren't. Who could have foretold that? That in mining, there were what, when I came to power, 700,000 jobs in mining, there are 200,000 now. And who is suggesting that mining would be more flourishing or industry would be more flourishing if we put £500,000 back into them? It wouldn't. But there are jobs. Now [end p13] there are jobs in industries which did not exist. And you have to look for your new jobs in new industries. And you will have to, in new industries, which will start. And one of the worrying things in this country, and it has been part … And I must say that I feel that the Socialists, that the extent to which the ideas of Socialism took hold, that you look to the state not to your own endeavours for the solution of your problems, that you have got in this country a smaller proportion—and the figures go back to 1979—we haven't got any up-to-date figures, but I know they are very much better now—we have a smaller proportion of our people employed in small businesses. And a smaller proportion of staff employed. And that is where your new services, etc., are going to start. Certainly you will have some of your big sophisticated ones and your big sophisticated computer services and your computers, your calculating machines. There's a lot of things possible that weren't possible before. And those will come from investment of your … IBM and ICLs, etc. But the real increase in employment tends to come from your small business and your self-employed. Which is why we have put such a lot of our state help, and I do accept a role for this, in encouragement in getting your taxation system, in getting your aid, not necessarily totally subsidising old industries, you have to mitigate the effects of change there. But to getting the incentives and stimulation, and for your money to add to the nucleus to attract private money into the small industries—this is what we have done. And into the new electronic industries. Don't necessarily think we have put state money in it will be better. Don't forget INMOS has had £100 million. Now there are lots of small businesses if they had been given £100 million would have done differently. We might have done better. I don't know. But we are doing both at the moment.
HY
But accepting all that. I do accept all that. Wouldn't it also be sensible for government which is thinking in the long term to think much more about society which has got a large lump of permanently unemployed people, [end p14] maybe a shifting population, therefore thinking more about leisure about working hours, a different concept of work?
PM
Leisure. Don't forget tourism is leisure. Many of the things, the leisure centres which you go to can create jobs as well. Yes, I accept that. That we have to do something of that as well. But please do not accept, because I think you would be wrong, a suggestion that you are going to have large numbers of people permanently unemployed. You may well. You may well have different ages of retirement, though I think people are wrong to think, very wrong to think, that the problems of unemployment are going to be solved by the … Older folk find work for themselves that could not be done. They do all kinds of work that would not be done unless they were prepared to do it. And often sometimes they have skills for which there might not be a mass market but there is a local market in self-employment. And also when thinking of [word missing] it will be much better when they have something to do. And they do make their own work. And a lot of people do. And this is really is a new enterprise. And I was just particularly interested, and do look at it. That in the labour survey we don't have enough of them. In 1981 we found that we had 700,000 people more self-employed than we knew about. I was very pleased about that because it meant that people were finding their own work and making it in a traditional way by responding to a need, seeing it, and fulfilling it. And I think that in a way you are going back, you are thinking just in the way of the old Luddites. Smash this because we won't have jobs, or just because you have got big machines you will never have more jobs. I would not accept that. We couldn't see exactly where they would come then. But they did come. And we are trying to put money to help.
Before I forget it. Can I just point out one thing where we are very very active now, and in the way that I think the previous government would not have been active? I tell you why and what. [end p15] I was sitting next to a very able manufacturer one day. He said, “Look I can compete with any other country in the world provided it's in free and fair competition. What I simply [cannot?] do is to compete with overseas projects where it is not me against that company, it's me against that company which has got a government behind it giving cheaper interest rates or subsidies to aid” . Now that is why we have to come in, much much more on the international concept now more than ever before. Because there is quite a channel of trade in the world which is not pure fair trade and [word missing] would not get the jobs. It is better to get that down because if you are not careful you will get competitive subsidies, which is why we try to have agreements on the amount of individual [word missing]. I would also say that there are quite a number of governments which [word missing] not only on the basis of best value for money but on a political basis and therefore again you do have to have some sense of partnership. Now what I am saying to you is that it's not laisser-faire. Because you know the origin of laisser-faire. It was the fact of saying get the government off our backs. They are in too much. That came at a time when government was doing too much and you have to get government off, although there is a need for government to do things which only government can do. I am saying you do not shrink from doing it.
HY
Do you agree with what Jim Prior said at the Young Conservative Conference, that there is a real fear of two nations—particularly geographically two nations?
PM
Oh, the Labour Party has created two nations. My God, it is creating two nations.
HY
But the employment situation …
PM
But you are taking, not chivalrous, phrases, without going into them.
HY
I'm trying to provoke you. [end p16]
PM
Now where were we? Look the Labour Party is creating two nations. They are creating two nations by trying to get so many people into the public sector on jobs that they could say, “You vote for us, your jobs is at stake. You vote for us and there is a council house and we'll keep your rent down.” I'm trying, oh yes, Glasgow. I am trying to … No employment-wise you will find people out of jobs from all backgrounds of society, from all backgrounds of society. If you can go and create a business you should do so, and employ them. You are in the private sector, but it's the private sector that has not got overseas complications and you are a darn sight more efficient.
But I am much much more nearer to creating one nation than the Labour Party will ever be. Socialism is two nations. The rule of the privileged rulers and everyone else. It always gets to that. But what I am desperately trying to do is to create one nation by having everyone being a man of property or the opportunity to be a man of property. One should become a man of property and you start with your own house. And you then go on to savings which will keep their value. You are then much much more … and then go on to free enterprise where there are more small businesses—you have a people which are much more independent from government. Much more prepared to take responsibility for their own and are much more caring society because they will look after their own and they will have the resources to go and look after someone else who they recognise in their society is in need. Who else is offering them that? No-one else. Oh, no. This is why we have to get right in to selling off those things. Selling off your council houses and shared ownership is a totally new concept. It's giving many people, if you haven't got enough to buy a house whole, all right, start by buying a half that gives you a stake and gives you independence. No. No. No. The Labour Party don't like people having independence. They are prepared to keep them in council houses. They are prepared to keep them in nationalised industries. They are prepared to [end p17] more and more into the state sector. And they were jolly nearly getting to the stage where they could get so many people that way. They would have had people afraid to vote otherwise. Now that is two nations. And it's two nations in a way that would gradually bring down the standard of living. Oh, no, I'm a one nationer.
HY
Do you feel that you are climbing a mountain which is going to be unscaleable, or do you really feel that you are still on the move, you are still on the up?
PM
Look inflation has got to go down further. It will bump I'm afraid this year because of exchange rates, it will bump but all figures bump. I mean you've only got to look at last year, your balance in payments figures bump. They never go in nice straight lines on graphs, they can't. Your inflation figures will bump. But they will bump on a falling trend, the inflation figures. And it's got to go down because Germany is lower than we are, Japan is lower than we are. But not only on costs but …
HY
People's attitudes.
PM
People's attitudes are now coming back to what … If I say the true values, I just mean the fundamental things from which you cannot escape. And that was what we learned. You can't escape them. If we went on as we were we had rip roaring inflation—I would like us to become the savers' Party. My grandmother who was the wife of a railway guard and she died in 1935. They had saved £600. That generation did. And my Alfred Robertsfather was taught—look he earned 42 shillings as a manager of someone else's grocery shop of which twelve went to digs, one shilling went for saving and one was for spending. Now they saved. And, my goodness me, government after government plundered their savings by what they called reflation. £100 in 1935 is worth only £8.70 now. I mean you're going to change the whole of your life, the whole of the nation's life, the whole of the attitude to honesty and integrity if the pounds which you put in and save out of your earnings you can still use in your retirement. You are going [end p18] to alter the whole attitude towards investment because when you start building you are going to finish building—the price will not have gone up from when you started. There was a very interesting case about Eltis on how different society would be. It was one of the London stockbrokers, or people … about the … you see its a much more honest world, much more honourable and decent to your older folk and to your savers. Because what you have got, I thought you had got a thoroughly dishonest society in the sense that those who did everything right, if I might use right in the broad sense of the term, got a raw deal.
HY
Will we know at the election?
PM
And those who flouted all the rules got on marvellously.
HY
Will we know how precisely the Tories are going to go about this in the next term or will we just have a statement of general attitudes?
PM
Oh, but you all complain. I get all sorts of papers coming up, you have to think all sorts of things, you have to think the unthinkable. And a lot of it you reject.
HY
Yes but what, I am asking, is in the Manifesto?
PM
We will try to show the way ahead. I always do. I am not a destructive person, as you know, this is my difficulty in politics. I don't necessarily go wham wham unless someone really provokes me and then I do. But basically I've always been constructive and have tried to build a better life. But not by flouting things which you can't and not by … I have never really had enormous respect for people who live beyond their income. They have done jolly well some of them, I'm afraid, and some of the people who have lived within their income say they've had a rotten deal. And I want to reverse that. And it is now becoming a reverse at last. But of course we'll [word missing]. That's why we start discussing not only ideas but you've got to turn to practicalities. We haven't solved the problem [end p19] of rates yet. But please give us credit. We have never stopped thinking and regenerating new ideas. We have never stopped thinking forward and please contrast that. Let me put it this way. When we took over the basic welfare state socialism had nowhere to go except to go Marxist. But nothing else. We've got the basic welfare state with the opportunity as well. And this might have been the combination of the Macmillan years and mine. But what I have now got to do is the imbalance, is that there is not sufficient opportunity, not sufficient enterprise, not sufficient reward-winning endeavour. And that is where the new jobs are going to come from.
HY
One of the things which everyone is always impressed by is that you are always on the job. Do you ever relax?
PM
I don't think so very much. But I have got used to living that way. Do I relax? Now and then one goes for a walk, now and then one would turn to the ordinary household things. If I relax I like to do something practical and basically …
HY
Do you read?
PM
Yes always.
HY
What do you read. What are you reading now?
PM
What am I reading now? I'm reading one of the Archbishop of York's books, it's “Ten Commandments” . I am always trying to read a fundamental book. I must say a very interesting one that I have not yet finished—that one just here—it's the last chapter that is interesting.
HY
Do you watch television?
PM
I watch television not a great deal. I watch the news, the BBC very kindly let me have “Yes Minister” and “Barchester Towers” , which I have just seen. [end p20]
HY
So you read texts you disagree with?
PM
Oh yes, but I must. Look I must. “Political Pilgrims” by Paul Hollander. I also read, do you ever read … and a number of things like that, which go into the political scene more deeply. The last one I thought had a very very good article on the Soviet strategy. And also some comments on the United States. … It came out in a short letter I noticed to the Times but he did a much much longer lecture about it. Also look how he gets hold of quite a number—is it a good lecture going, I put it that way, and then it's printed. I always try to get hold of them because they really are distilled experience. (General chat about books.)
The whole idea was that in the early days of nuclear, we knew. I remember Winston ChurchillWinston saying that nuclear was the thing which equated the smaller nations and the big nations—enabled them to have sufficient deterrent for a smaller nation and you accredit yourself to the bigger nations. That of course in the early days was a great reassurance and his point is that in the early days … . everything was a reassurance to Europe. But at the moment somehow it's become the other way. All of these things—I read avidly and often. (General chat about books)
Because your mind is like a bank—you put a lot in and you draw on it. And you draw on it for your speeches too. You've got to go on putting it in. Otherwise you will go and find that you have drawn out the deposit. You've got to go on putting things in because your mind will take them and be like the very very best computer, put all sorts of things together and all of a sudden you will find that you have information or thoughts which enable you to think something new and fresh. [end p21]
HY
Talking of speeches, will you be disappointed if they deprive you of Michael Foot as the Leader of the Opposition?
PM
No, no. I never worry about things over which I have no control. No, I don't, I have been opposite many people. I have been opposite Harold Wilson, Jim Callaghan and now Michael Foot. I have debated often with Denis Healey, Peter Shore. Oh, tell you someone whom I used to really enjoy debating, I can't call it against, with—Dick Crossman. He always had an original mind and you will remember long ago he was on pension schemes and of course I, in my first Ministerial job was on pensions and I was always immensely grateful for that, because I went right back, again as I would, right back to … As I have always done, you said I go right back to the original philosophies, well yes, I do. Whatever I have done I have gone right back to it.
HY
Is it we, or I? I'm struck by talking to some of your colleagues what an enormous weight they put on you, on what you want. They are interested to see what you want after the election. I mean do you accept that it is we or is it I?
PM
It is we, with I there. Because I am the only person who can draw all we together. It's no earthly good having twenty-four, twenty-two segments of policy, unless together they will all make an orange. If you see what I mean. Now let me put it much better. Twenty-four pieces of a jigsaw unless together they make a picture. Now we discussed the picture together—this is why we will have one study group after another—never accuse me of not thinking or not stimulating, or for other people not wanting thought. Because we always have to move on, always. And the essence of Conversatism—someone used Disraeli today—is change is constant. The only question is whether change comes about, whether or not change comes about in accordance with the habits and traditions of the country. And that I would embrace totally. [end p22]
HY
Yes but you said before you came in that you would have no time for arguments in the Cabinet. There must have been arguments. Well, that at least must have changed.
PM
I said no time for arguments in the Cabinet? Well you do have your arguments much further down on the whole, much further down, arguments within your groups, in your ad hoc groups you have and the discussions which go on. But by the time you come to Cabinet—one of two things really, one of three things, either to take a decision collectively because most of the argument has been worked out before in other Cabinet Committees before it came up, or to dispute something that can't be settled anywhere else, or to take the general temperature, what I call a second reading debate which we sometimes have in Cabinet before you decide on a direction which you are going to take. Or you have a second reading debate on your general economic policy. But I have always said it's no good telling you what to do unless we can decide how we are going to do it. What cannot exist without how. And sometimes what can't exist except with how. But it's not only what, it's how. And you will find that a lot of the level of public debate is carried on—this is what we want to do without really sorting what is practical to do and what is not. You will also find in the past that a lot had been done with the best of intentions but which has turned out to have exactly the opposite effect from that which was intentioned. Can I give you the outstanding example which I just had occasion to think about the other day? That was rent control. Put on with the best intentions in the war and the legislation went on and on and on. And the object of it was so that people could have reasonable accommodation and housing families at a reasonable cost, and what happened? And what happened was that with rent control the standard of housing went down and down and down. Because people hadn't the courage to … So there you had a policy done with the best intentions but obviously had the reverse effect from that which was intended. So you have to look, dare I actually say, or shall I, no maybe I better not say it. One of the [end p23] problems with the West Midlands now is that companies are not allowed to build there.
HY
Because of regional aid and all that.
PM
Not regional aid—IDC—Industrial Development Certificates—we still kept regional aid—Industrial Development Certificates actually stop people building where it would have been best for them to build. Industrial Development Certificates are intended to … Now that with the best of intentions, so that added to your regional policy and regional aid you have a compunction [sic: compulsion?]. If you want to build, you have to go there. Well now, some of those that went there have in fact fallen by the wayside. And that is exactly why I say to you, dare I say it, I thought you'd take it that way. It is not an argument for dismantling regional aid. We have virtually dismantled Industrial Development Certificates, but we've not dismantled regional aid.
HY
I'm glad you made that point.
PM
You'd have leapt to the wrong conclusion. But do you see, it's a very good example. … . done with the best intentions, and have finished up by creating unemployment in an area where we could have had much higher … .
HY
Yes, but I can say to you in return for that, things not done with the best of intentions, neglecting things leads to all sorts of social evil.
PM
But I'm not neglecting things. We have the biggest youth training programme. I don't think any other problem … . But I want it to be done in a way that gives young people the flavour of what it's like to be in business. I still think … . still get convinced that by the time we've trained them all at the polytechnics, further education colleges … . they've no idea about cost control … . [end p24] Now again, give me credit, for the first time, I said look, one of the first things I fought for when I was in Education was to keep the Grammar Schools and keep the technical schools. I managed to keep some Grammar Schools, but not very many technical schools. We've got to go back to having some technical schools, so what are we doing? Right, MSC are going to start up ten. But this is all new, it's the needs of the time and the needs of the future. But regional policy. No, I'm a [word missing] of regional policy but we'll have to do it, but equally you've got to look at the effect … . [Transcript ends.]