Interviewer, Financial Times
I want to start, if I may, on Ireland. Maybe you will have nothing to say, but something is happening. What is it and what are the long-term aspirations?
Prime Minister
Look! We are still in negotiations with them, but I constantly say in the House any result of the negotiation, one thing will be absolutely clear: decisions north of the border will be the responsibility of United Kingdom Government, and decisions south of the border the responsibility of the Republic; and that is the clear line, and therefore we are talking about improving stability north of the border in Northern Ireland.
You see why I put it that way when I said at that press conference and I was surprised it caused such a fuss, it could not be joint authority, obviously it could not be unification of the whole—that is obvious—; it could not be joint sovereignty, it could not be joint authority. So that holds, and the decisions stay. North of the border with the United Kingdom. The constitutional position stays [end p1] absolutely the same. It is entrenched, fortunately, in the law.
Interviewer, Financial Times
If you have an agreement with Dublin—everyone is getting rather excited about it—it is quite an historical achievement … .
Prime Minister
If ever you do anything in Irish history, everyone gets very excited about it, and if we do come to an agreement, it will be necessary to look at it and keep very calm, because you will find it is absolutely within the parameters I have indicated.
Interviewer, Financial Times
Will it be necessary for it to be quickly endorsed by the House?
Prime Minister
If we reach an agreement, it will have to debated and approved by the House. Any agreement you reach—if we reach one—obviously would have to be approved by the House.
Interviewer, Financial Times
I meant quickly endorse the feeling so you get the full authority behind … . [end p2]
Prime Minister
It could not be so quick that they did not have time to look properly at what the agreement entailed. We have our normal House rules that people like usually two week-ends—if not two week-ends, at any rate quite a long period.
Interviewer, Financial Times
Just turning to the general political and economic situation, I think we have the impression of something of a sort of re-launch of the Government, or by the Government, a sort of regaining of momentum, and perhaps some greater emphasis given to different priorities over the last few days and weeks. I just wondered whether you saw it that way or how you saw it.
Prime Minister
No, I do not see it that way, because I have been trying to get across what we have been doing on this—I will call it “infrastructure” , I hate the word, but you know what I mean—for a very long time. Indeed, I have just said to my people this morning: “Do get out some of the things that I have been saying, 31 January 1985, 11th of July, in answers to questions in the House!” There are all the figures. I have been trying to say for a long time and I have been fed up with hearing people saying Britain is crumbling. It is not! It has not been, and I have steadily been ploughing through questions saying: “Look! It was you who cut all the expenditure on roads in the last Labour Government; on hospitals etc. We [end p3] have been building it up!” and I have been solemnly ploughing this through. I have been at the Womens' Conference, and when it came to doing it at the Lord Mayor's Banquet, I just thought: “Well, on the whole, people hear my voice going out over radio. I will just repeat it!” It is a repetition. But can you imagine, I have been sitting here hearing people saying: “Crumbling Britain!” It is absolute nonsense! At the same time as they were screaming about the water charges and a greater part of the water charges is because we are spending capital on improving it … screaming about counter-flow on roads, because we are doing so much on roads. If only I could have a sort of GLC board outside every hospital scheme that we are doing: “This is the Government building a new hospital, extension of a hospital, a health clinic, for you” I would be doing brilliantly, and it has taken me, what, eleven months to get it across, and it is known as presentation. Now, all of a sudden, it has got across, but you look back at some of this. 11th of July is the last time I had a go.
The fact is the last Labour Government cut expenditure on hospitals by 35%;. Capital expenditure on hospitals is now up by 23%;. Labour cut expenditure on roads by 33%;; we Conservatives have now put it up by 25%;. Labour cut capital expenditure on water by 29%;. Last year we put it up, in January. Nor is it lack of public spending. Nor is it neglect of infrastructure. Spending on major roads has increased by 25%; in real terms under this Government; investment on water is increasing by 9%; next year. Infrastructure [end p4] investment must, however, like all other … . be judged by its return. It is not a cheap route to more jobs.
Interviewer, Financial Times
You only started saying that eleven months ago.
Prime Minister
January, that is right, but you see, it was in the programme. It is only happening because it had been in the programme.
Interviewer, Financial Times
But isn't the presentational problem the contrast between what you say on individual programmes and at the same time saying: “Yes, we are maintaining firm control of the total!” What the Chancellor was saying yesterday on reducing the proportion of GDP from public spending. Therefore, in order to convince people, isn't there a difficulty of the emphasis?
Prime Minister
No, because right back in our 1979 manifesto we made it quite clear that we were going to keep strict control of public spending, but we were going to put it up on defence and law and order. We were going to hold it on health and we were pledged on inflation-proof pensions.
Now, of course, therefore, on some of your housing, because we are against building more public sector housing, that took the reduction. On education, your pupils have [end p5] fallen by a million, so of course, that takes some reduction. It did not take reduction individually as far as pupils were concerned. But you see, it is quite possible to keep public expenditure under control as a whole and within that, to have priorities, and this is why one has difficult public expenditure rounds—because it has got to make room for extra on one thing and obviously you have to make room for reductions on another, and we did just that.
But therefore, people were saying: “Cuts, cuts, cuts, cuts!” Now, I think what they have seen is really very good management of public expenditure and of the economy. It is working.
Now, the Labour Party, I thought, went berserk yesterday, because they saw that it was working and it was growing, and you are having a basis of success, and so they turned round and said: “Election bribe!” . These things have been in our programmes, but not as a matter of job seeking, because frankly, you do not get much jobs from infrastructure. You have to do it on a matter of basic return. Yes, you do want good roads to your ports. Yes, you have increasing lorry traffic on roads, so you have to put it in. Yes, you must keep your structure on water, and what put up the expenditure on water? I will tell you! I said when we had that drought: “Well now, people will understand if we put up more capital expenditure into water and will be prepared to pay for it!” I perhaps overestimated that a little, but that is why in that also we were able then to put in more as well.
Now, housing: it has been a deliberate policy to have less new build on public sector housing, because we have gone over to the private sector, and private sector, both on renovation and new [end p6] build, has been excellent. Indeed, we got 1¼ million more houses and flats than we had, but that again, is over to the private sector.
So the things were really all well in programme and all of this idea that Britain was crumbling really was a myth, but it has taken this time to counter it.
But I am only able to say this, last January, because it had been in previous programmes.
Interviewer, Financial Times
Now you are going to concentrate on the bottlenecks. You have completed the M25 but you need …
Prime Minister
There are a number of cross-roads that we still need, yes, and we are having a look at a new Dartford Tunnel. I am very anxious, actually, to get the Channel link going, because I just think that our generation needs to do something exciting.
I just remember, when we first went into Opposition, the day that Tony Crosland announced that we were cutting out the Channel Tunnel and Maplin. I remember my automatic thing: there has gone all the excitement. We were just going to the humdrum. All right, we have had to do quite a bit of the humdrum, but our infra-structure—that horrid word—is not in bad shape at the moment, and we are doing it steadily.
We switched quite a lot to the private sector and do not forget the privatisation programme is a fundamental philosophy and also it means a lot of your capital expenditure there is switched to the judgment of the private sector and what it can get a return [end p7] on, and I do not notice that I have brilliant industrialists and managers round my Cabinet table and these things ought not to be within our control. And, of course, they are doing much better outside.
But, as I say, you go back and look at the manifesto. On health, our 1979 manifesto said: “It is not our intention to reduce spending on the NHS. Indeed, we intend to make better use of what resources are available.” Now, to take into account the increase in numbers and so on and research, we have actually increased it, but we kept it within what is reasonable, knowing that we can get quite a lot of extra to health care from the waste that is there, because it is quite considerable.
On roads, we had already increased spending on roads since 1979—this is coming up to 1983—by 30%; in real terms.
Law and order: the manifesto made it clear that … . spend more on fighting crime while we economise elsewhere.
On housing: we spent less on building new council estates—that was what the Chancellor said in his Autumn Statement—but very considerably more on renovation, both in public and private sectors.
So the Autumn Statement has no radical change in Government as opposed to public spending and we shall still have it.
Interviewer, Financial Times
This is not a criticism. You sound terribly like Ted Heath. We have to have the money … . [end p8]
Prime Minister
What I am being accused of is of having changed. What I am saying is No.
Interviewer, Financial Times
What we are saying is that it is interesting hearing you doing some of the things that Ted Heath was trying to do—the Conservative Party was trying to do in 1970–74, new airports, Channel Tunnel … it has taken us that long to get …
Prime Minister
Well, the Channel Tunnel is going to be wholly private. Please can I put one or two things for myself? Again, may I point out this is the only government that has actually tackled the airports question between London and Stansted, and at one stage I was quite fearful that the grouping that we might get, wanting airport development where people did not want to go and so on, might prevent us from taking a decision. It did not. That decision has been hanging around for 20 years. We took it.
I sat down in the last Christmas Recess. I read every word of that report, and what really came out is that we have the most colossal asset in Heathrow—colossal. We are not using it to the full extent. All right, we got the fourth terminal through. We will eventually have to look and do other things, but we got the decisions through, but they were decisions.
Yes, of course you have to have your public expenditure right, but you have got to judge it mainly on return or on [end p9] social merit. Never look at it on job creation, because what people who do that forget to do is, they forget the jobs lost in the place where you take the money from.
Interviewer, Financial Times
You mentioned the attraction of the Channel Tunnel as something that people can be enthusiastic about. I wonder if you could perhaps elaborate on that, because I suppose one of the things that is sometimes said about the Thatcher years is that the mistaken view is about harshness on public expenditure—it is alleged that there is an element of divisiveness that has crept in, and I just wondered, on a broader front—and perhaps this takes in such questions as the inner cities—whether you can see yourself and your colleagues somehow giving a more inspirational message or a message that people can identify themselves, as something ‘we can build a better country’ and this kind of thing?
Prime Minister
Let us look at the divisiveness. I mean, years ago it was the north that was prosperous, at the time of your big heavy industries. Your coal, your steel, your big heavy engineering. It ws the north that was prosperous. It was all in this heavy engineering. You had not got a great deal in the south. Great prosperity. You have only got to go and look at some of the buildings of that period and the textiles. It ws the north that was very prosperous.
Now, it seems to me that, with some exceptions, the north did not adapt to change fast enough, and that is the problem. Now, you get some of your Midland towns, your Leicesters for example, has always had quite a readiness to adapt to change and a variety of skills, and if you look historically, the cities live and still stay prosperous when they have a variety of skills and constantly adapt to change.
Now you have got, in a way, dare I say, a mirror image of the last century, in that some of those areas have not adapted fast enough. We have got Nissan going to Sunderland and we have got some electronics into some of those cities, but the key thing to prosperity is always—the key thing if I might put it, to security, and it is a paradox, is not to stay as you are—that does not give you security; that can give you decline. The key thing to security and prosperity is adaptation to change and diverse skills.
So yes, we do have some problems with the northern towns, particularly in the north-east, although I must say last time when I went there, I got all the papers together and said: “For God's sake, stop running yourself down! You have beautiful wide streets. Look at your shopping centre in Newcastle! Look at the amount that is being put in! For God's sake, sell yourselves!” Because there is a lot happening there now.
Interviewer, Financial Times
That is my home town. I know it very well. I had the impression last time, just a few weeks ago, that it was actually beginning to run down and I had always used the argument before … [end p10]
Prime Minister
Well I thought it was really very good. You look at the new big shopping centre, it is terrific.
Interviewer, Financial Times
They have been there 10 or 15 years and they are not as prosperous as they used to be.
Prime Minister
The battle is to get variety there, isn't it?
Interviewer, Financial Times
Are you convinced that you are winning that one?
Prime Minister
I cannot do it alone, Malcolm RutherfordMr. Rutherford. I cannot do it alone. I can do incentives.
Interviewer, Financial Times
… .regional emphasis …
Prime Minister
No, we have incentives. Nissan chose where it would go. Nissan went to look around; Nissan chose where it would go. I cannot direct. I do not intend to direct.
I lived through a period when we had industrial development control, when we stopped factories from developing in the place where it was propitious for them to develop. We sent steel, Laporte, to South Wales. It has now closed down. It could not [end p11] develop in Birmingham where it wanted to.
Linwood could not develop in Birmingham. It had to go to Linwood—Chrysler. 18 years out of 19, it made a loss, so it closed now, so now they neither have it in Birmingham nor in Linwood. In the meantime, it went up there with high wages and the small businesses there could not compete with the high wages, so the result of that policy was now, in 20 years time, to take the heart out of Linwood and to have killed the very small businesses which were going to be its diversity and its strength. Do you wonder why I stopped development controls?
We can still have the incentive to go there, which we do have, and we are very pleased when people go there, which we do have, and we are very pleased when people go there, but they go there of their choice. We are not saying: “Thou shalt not go there or Thou shalt go there” or “Thou shalt not go anywhere else!” We are saying: “If you go here, there are certain incentives!”
Interviewer, Financial Times
Do you think the existing pattern of incentives on that front is reasonably all right, do you, or do you think that one could move a bit further?
Prime Minister
No, I do not think so, because you have got the discretionary one as well. You have got the mandatory incentive, you have got the one that comes automatically, and then you have got the discretionary one. And do not forget, I remember, look back, it used to be said in certain places: “Unless you let us have a university, we shall not be able to thrive!” Well look what the [end p12] north-east has got. Newcastle has got a good university. It has got polytechnics. Liverpool. It has got a university. It has got the polytechnics. It has had them for a very very long time. So it has got the means to cooperate and do the research with local business. It has got that.
I think what I am saying to you is really what I have said before: we can get the framework right. If the response does not come, then there will be no hope in getting growth, but we are getting the growth. We have had it for four years. It is going on. It is coming. Less faster than I would wish. But it is coming. And after all, when people have been used to saying: “I have a problem, Government must give me a subsidy and solve it all!” it is not bad to do what we have done in 6½ years.
Interviewer, Financial Times
At what stage did you realise how much longer it was going to take, because that is the key to what you have been doing, isn't it?
Prime Minister
I think one did not realise the extent to which we had the most colossal overmanning and inefficiency and, if I might say so, partly due to government policies, lack of good management, in two senses: first of making its own decisions, which it had not been able to do because so much had been put to a prices and incomes policy which dropped out the middle manager. In two senses of making decisions … . and in the enterprising sense, because it is management's job to keep the new products going … . coming to the [end p13] market.
That really was the turning round, in some respects, an attitude which had developed, really, over thirty years. You see, we were successful from 1945 to about 1962/63 because those whom we beat had not yet recovered and the newly industrialised countries had not yet got going. When we came under true competition, we could not compete, and actually the 70s were not a good period for making us compete. They were a period for palliatives, getting round, so that we did not have to compete, and so when I did come in, yes, it was a much more fundamental job, because the only basis for expansion is successful profitable industry and commerce, but a lot of your commerce is related to your industry. You cannot expand except on the basis of successful profitable industry. I have now got it!
Interviewer, Financial Times
You have?
Prime Minister
Well, look at the profits! Industry has had the most profitable year for a very long time. I have got it to a far greater extent than I have had it before. There is one danger developing: that is, unit costs are going up faster in this country than in Germany and in Japan, and that is the thing. But it's only on the basis of successful profitable industry and new industry and business. Now, both are in much healthier condition. Do not think I am satisfied with the profitable industry, but it is much much better. You look at its profits! [end p14] Very much better, and that is partly why your private sector investment is going up.
New industry and the self-employed are coming along quite well—not as fast as in the United States, because we have not yet got the enterprise culture, but it was a very very big turn-around to do, but it is happening.
Interviewer, Financial Times
Well we had this question on the list. It is about international competitiveness. It is true that we have got more efficient as a country in many ways, but West Germany, perhaps even France, Italy and Japan and the United States have gone ahead faster.
Prime Minister
They were far ahead of us in 1979. If you look at the OECD figures, you will find that we were at the bottom of the growth league throughout the 70s, save in 1973, which as you know was an artificial boom year. Starting in the 80s, in 1983 we led. They say we are going to lead this year OECD. I never believe it until it actually happens. Last year “we wuz robbed” if I might put it that way, because of the coal strike.
If I might just say: we rode the Falklands without an exchange rate crisis because we were doing firm policies. We rode the coal strike and still had 2½%; growth. Does that not indicate something to you about the strength and discipline of the policies we are following? How we rode that coal strike, I wish to goodness I had perhaps been a bit more presenting the [end p15] achievement, but even with a coal strike we had 2½%; growth last year, so we are coming up. Our productivity has gone up very considerably. Yes, there was room for it.
I agree we are still not quite as good as Germany because the Germans are much much better—the unions and whoever does the negotiation are much more realistic and I find myself saying so many times: “Please, we do not have just to talk about wages. It is not wages; it is wages in relation to output, and that is your unit labour costs!”
But four incomes policies got people used to thinking that they are entitled to an increase in wages every year regardless and we still have not got that out of peoples' minds. They still have not got wages in relation to earnings, but it is enormously better. The profits are good, but there is this problem coming in that our unit labour costs are going up faster than those in either Germany or in Japan, and that does now make me say to industry: “Well, I hope I was right. I tried to knock out National Insurance Surcharge to help you keep your unit labour costs down. If you are merely going to put what we the government took on to wages, I could have done better on incentives by taking that 3½ billion and knocking it off the standard rate of income tax, which would have increased peoples' net take-home pay, and have been in line with our belief that you need incentives.
Interviewer, Financial Times
Does that mean that is now the priority, that going to the standard rate now should be the priority? [end p16]
Prime Minister
No, no, it is just that I am using it and it does not mean that that is a priority, because you do not take decisions until it comes up, until you know what you have got to play with, and I think it has been a great mistake in the past to pronounce a fiscal adjustment.
Interviewer, Financial Times
The last cut in the standard rate was in 1979 when you did that big cut and in the higher rates. Then the priority shifted to doing a lot for industry, as you said. Does now the priority shift round a bit?
Prime Minister
I do not think you are quite complete in your selection of facts. We also have done a great deal on thresholds; enormously, they are up by about 20%; in real terms.
I admit that I still get very worried that we come very sharply into the highest rate of income tax plus national insurance contributions, but we do not make decisions like that until we have had the latest forecasts which we get, I think, in February, and then you have a look and see what you can do best at that time.
Interviewer, Financial Times
I wonder if we could ask a couple of questions about privatisation since it is such an important … . [end p17]
Prime Minister
If I am giving too long answers, just shut me up, because I want you to get the answers you want, or the answers you need, not the answers you want! The answers you need. You make the assessment. Not the answers you want.
Interviewer, Financial Times
Two things really. One: do you feel at all concerned about the criticism, I think particularly in relation to British Gas, that the keenness to privatise as quickly as possible has made you less concerned about possible changes that would inject more competition into the industry?
That is one thing, and then there is a more general point about whether in accelerating the proceeds from privatisation—and that is an important part of the sort of fiscal outlook—you are taking risks at all? In other words, by moving in a slightly move reflationary direction, do you feel … .
Prime Minister
No, we are not moving in a reflationary direction. We just are not. Can I deal with that last one first, because just supposing you take your proceeds from privatisation and add it to your borrowing requirement, which is really what you are saying, you will find that we are still running a tight policy. It is another argument, put another way, for holding your actual borrowing right down, which we are doing.
Do not forget we rode the coal strike last year with only an extra billion on PSBR. That was not bad! Now we could not have done it had we listened to those who want to reflate and said: [end p18] “Borrow, borrow, borrow more!”
This is in the Autumn Statement. Now look! This is general government expenditure and this is actually with what we pay in interest added. You know there are many ways of doing it. As a percentage of GDP.
Now that was labour peak year, 1975–76. This one was our worst year, as you know. That was really after the heart of the recession. That should have been down last year; but for the coal strike it would have been down, and this, even with all of the … this is the planned growth … this is treating asset sales as borrowing and still, look, it is flat and is coming down.
All the assets sales last year, 2½ billion, British Telecom, even add that, just treat it for example as if it were borrowing, just for the sake of your argument; it has still been a very conservative policy. Quite right, and will continue to be a conservative policy. That is the sort we have run the whole time and intend still to run.
Privatisation is worth it on its own grounds. Incidentally by the time we have privatised British Gas the output from nationalised industries will be back to about the same proportion of GDP as it was in Mr. Macmillan 's time. He was a member of a government which actually denationalised steel. I have not yet succeeded in doing that!
You see the point that I am making? Even with that, it is still a very conservative policy and it will continue to be. Privatisation stands on its own. It is not for government to run these businesses and we will profit from them far better when [end p19] they are out in the private sector and we do the ordinary thing, we tap in in Corporation Tax.
Interviewer, Financial Times
Even if it is a monopoly though? That is an anxiety …
Prime Minister
We are doing Common Carrier, as you know. We have done Common Carrier—absolutely vital—and I think industries can purchase. Obviously, we freed up industry; they can get their feedstock from elsewhere, so it was as much freeing-up as we can.
If you actually look at Gas, you will find that there is not in any given area in almost any country in the world, very much choice as to the supplier from whom you can get your gas, so you do in fact have to have certain protection, as you do on British Telecom. And even if you split it up, you would still get virtually the same problem, that you tend to have a kind of monopoly which is why you have to have special regulatory things, but it will still be run and be out of our decision-making. Governments ought not to have to make decisions on this kind of thing, and they are run better, and do not forget they will be more efficient and you will get shareholding up. I cannot tell you how anxious I am to get that up.
My whole vision of society is not people dependent on the state, but independent of it and do not forget that they will be able to keep those share when they retire and in a world where you are having a fantastic technological revolution, where a lot of your new wealth comes from your new technology, you want to be able to [end p20] plug in to something from that new technology when you are retired, and the only way you can do it is by having a share in a highly technological industry so that you get some dividends so privatisation stands on its own, but even when you take the assets and add them to the borrowing requirement, we are keeping it pretty nearly, in real terms, flat, even with that. So we are running, and will continue to run, a pretty conservative policy, on general financial … . because that is our prevailing strength.
Interviewer, Financial Times
Coming back to the shareholding for one second, do you see that—I mean, one question we wanted to ask you really was what you saw as the sort of unfinished agenda as it were or the kind of objectives further ahead.
Prime Minister
It is part of the unfinished agenda. We still have far too much in the public sector and it is happening all over the world. People who have been running their things by the state, there tends to be an inherent view in the state that either it can protect jobs—it cannot actually—job falling in nationalised industry has been terrific. I had to do more of that because as you know, the Beswick Report, Labour did some of it but ducked a lot of it, so we had still to do that but what are industries nationalised for? Only so that governments can interfere. It is not a very good basis! Far [end p21] better to get them out in the private sector and if they are a monopoly, then you do your protection of the public through special provisions in your legislation, and you try not to make them a monopoly. That is why I have done Common Carrier; that is why industry can purchase.
Interviewer, Financial Times
And do you see—what's interesting in yesterday's Statement—a programme into the 90s?
Prime Minister
Oh yes!
Interviewer, Financial Times
With the other energy industries possibly … . electricity and so on?
Prime Minister
Yes, indeed.
Interviewer, Financial Times
Coal in the next manifesto?
Prime Minister
Coal. What one is desperately trying to do—again, it is part of what I was saying to you: we have to take the decisions which either enable the private sector to get its own house in order, or we have to get the state industries in order in such a [end p22] way that then they are efficient. I would be absolutely thrilled to bits if some of the coal people came and said: “Look! We would like to buy ours!” Why shouldn't they? Because our coal is expensive.
Coal is fairly far down on the list and I cannot think that we will ever get British Railways out, and I do not know whether we will get coal out, but first get it efficient. Then you can decide what to do with it.
Interviewer, Financial Times
Can I just come back to the unfinished agenda?
There is one thing that I think is rather important to check with you. You were emphasising that the financial policy still is tight in public sector borrowing. Now, part of that tightness presumably is deliberately having a fairly high exchange rate, or is it?
Prime Minister
No, it is the market that is doing the exchange rate. When the market goes sharply down, and as you know, all of a sudden markets get a feeling—they are not all on logic; they are emotion—then I am afraid you do have to use your interest rate, as we did have to sharply. The exchange rate of course is also inflation. People tend to forget that. There is a double effect in any exchange rate. Too many people want extra competitiveness by a falling exchange rate. That is a silly policy which is very limited and anyway, when a country has to import as much of its raw materials and semi-fabricated components as we do, the effect of having a low exchange [end p23] rate next year is higher raw materials and component prices.
Interviewer, Financial Times
This is a well-known question, but you do not think getting locked into a sort of anti-inflationary exchange rate through the EMS would actually be helpful to your economic objectives?
Prime Minister
We look at exchange rate in any event; the EMS would not help in any event the dollar. It is the dollar we have had trouble with. I think you have to be very careful before you lock yourself into a mechanical thing. We do look at the exchange rate very carefully now in any event, and exchange rate with the dollar. We are able to look more broadly at the moment.
We said we will join it when the time is ripe. I think that is still true, but I do not think the time is ripe yet. The exchange rate trouble we had, of course, was with the dollar.
Interviewer, Financial Times
But it would rob you of flexibility, you believe, to go into it?
Prime Minister
At the moment yes. I think we are still sufficiently different from the European currencies to be buffetted about by some things that would not affect them and therefore I think the time is not yet ripe. We will go in one day. [end p24]
Interviewer, Financial Times
Just one other European question. Do you think that there is much mileage in the Eureka programme? Is that something that you think could be quite helpful?
Prime Minister
I think it is just an extra stimulus which I think perhaps some of our industries need; to say: “Now, look! You have got to move into the future!” and unless we got the kind of agreement we have on Eureka it would not get off. The agreement is that although it goes beyond Europe, it seems to me the key to it is that if we get cross-collaboration which we are getting, then people will genuinely have all Europe as their market place and the fact is that even though we are a Common Market up until now, when it comes to government procurement, even though it is against the rules, quite a number of governments make a point of purchasing from their own industries, and you have not therefore had come to pass the kind of reason for which the Community was created—the benefits of a larger market. Once you get cross-industry collaboration, part of the unwritten agreement is that you have to have a Europe-wide market, just as the United States has a nationwide market for its own technology. Those two things I think will help, but it is one of my problems that people long for security and they think security lies in sticking to the old. It does not. That is not security—it is insecurity. Security lies in getting on to the new and being right up front. [end p25]
Interviewer, Financial Times
Getting back to the domestic scene. On the union front, I would have thought developments in general have been very satisfactory in terms of employment legislation and the kind of evolution of the trade union movement, with perhaps the one rather difficult exception of the teachers' strike which is still rather troublesome. I just wondered whether there was any particular lesson or thought arising from that.
Prime Minister
I think to some extent it was a sort of outward manifestation of our fundamental philosophy which basically is that democracy consists in believing that the overwhelming majority are honourable and decent and given a chance to exercise their influence, will exercise it in that way, and therefore, we had to find a way of taking decisions away from the few who often can be those who get in charge, where you have got a few in charge of anything, they can be the most fanatic, and they can therefore tend to say: “Ah, we represent the rest!” , which they do not.
So all of your policies have to be designed to enabling the overwhelming decent, law-abiding honourable majority to make their views felt and prevail and if you look, that is what we have done with the unions, and it is working.
It is more difficult to do it. The difficulty we sometimes had—I am talking of the coal strike—was intimidation. The difficulties sometimes that you can have in inner cities, when people will not come forward to give evidence. But basically, it is the same philosophy. It is the same strategy. The only question is how do you actually work it out in any given [end p26] practice? Again, in inner cities, may I say, I do think one of problems that we have is to try to keep things in perspective. There have been the four things.
There has been a sharp reaction against them, because as people saw what was happening, a very sharp reaction, and of course they have happened in places where we have poured in money. But basically, I can say one thing which I said at the Party Conference speech and at the Lord Mayor's Banquet: Look, people turn to the state when the authority of society weakens. It is power that resides in the Government and some authority, but authority also lies in all the other institutions of society. It starts with the family, it starts with schools, all the institutions of society, all voluntary institutions. Your civic pride. You see it perhaps better in a small town. When that weakens, they turn to the state, but there is another thing.
It is no good having a royal commission on crime or anything like that. I mean, the fact is that there is evil in everyone of us and the whole of your laws and your constraints have to be to stop that evil and push it back and protect others against it. But in a prosperous society with a lot of freedom, the opportunities which the young have, you know, of the temptation they come across, frankly, are far greater than anything we had, because the conventions helped us.
Interviewer, Financial Times
How do you explain how it has not yet applied to the teachers? That you have not got through to the least fanatic? [end p27]
Prime Minister
We are starting. I worked myself with the NUT for a very long time. We have had two goes during the lifetime of this Government at trying to get pay related in common sense terms to duties. They would never do it. It is very silly and it is very disturbing in a way that this, your most educated group, do not see the common sense. It is a paradox. But it is not a paradox when you think that so many people use education not to reach conclusions but to reinforce their arguments for their prejudices. That is what happens. Obviously, we all think our prejudices are right, but we also have a pretty good notion when they are wrong, and I think we had a go at it in Mark Carlisle 's time. We did not succeed and this time we have got to succeed because it makes common sense.
It also makes common sense to give the better teachers more and therefore you have got to have a structure to do it, and therefore we are holding out for what we think is common sense and what makes sense for education, because I am grief-stricken that we are spending more per pupil than ever before, we pursued a policy that it is best to have a bigger proportion of teachers to pupils than ever before because that is what education is all about, and in many areas we are getting worse education. Now, not in them all. In the Shire counties when they come and talk to me they are very satisfied with their education. You start to talk to some of the parents and teachers in ILEA schools and I must tell you the political indoctrination is horrific.
Interviewer, Financial Times
I am aware of what you say as a parent, but do you [think] [end p28] it is deliberate sometimes?
Prime Minister
I think it is something that is deliberate.
Interviewer, Financial Times
And what is the answer to that?
Prime Minister
I do not know. Some of the parents are now complaining. Some of the teachers are now complaining, and we just have to look and see what we can do about it, because otherwise you are sacrificing the education of whole generations of children. But then, you see, you are, again as I say to teachers and parents, we are not going to get enough people coming through—with science and technology until we can get enough people going to universities, and that means getting enough teachers, good teachers in science and technology, and if we are not getting enough good mathematics teachers because computers are taking them all and statistical departments, then we have to just pay mathematics and physics teachers more, maybe to come in part-time from industry. “Oh no, no, you cannot do that because of History and English” and I said: “Do you really mean that you are prepared to sacrifice the education of whole generations of whole generations of children because of a false shibboleth? Why?” But it is terribly difficult to get these things across against peoples' own interests, but we will just go on trying. You see, we have actually said: all right, there is a row about [end p29] supervision of school meals. Right, we will take … . and you shall not supervise school meals, so you know now you do not have to supervise … . I think it is sad you are not supervising school meals because I think you learn an awful lot about youngsters from what you see.
Interviewer, Financial Times
Of course they do.
Prime Minister
From what you see and I think it is sad that you are kicking up a fuss about some of you not talking to parents out of school hours. You will never know about youngsters unless you do something with them out of school hours.
All of a sudden you are sitting up and taking notice of the infrastructure … . it does depend upon getting other people with me.
Parents come to me and say: “Look! We cannot do anything, because our children are still at school! We cannot say anything. If we complain it will be taken out on them!” Some of the education is extremely good. It is not all over this.
Interviewer, Financial Times
On the unions, Prime Minister, you talked about what had been achieved so far in changing the balance. There now seems to be a kind of pause on legislation. Is there a feeling that you have had acts every two years; now there seems to be a bit of a gap? [end p30]
Prime Minister
There will be other things that we have to do, but we are just having a look. You see, where you have not done enough or where it has not worked properly or where there are loopholes or where you need to go further.
Interviewer, Financial Times
Are there any particular indications of where you think that the three major Acts have not gone far enough?
Prime Minister
There are one or two, but I am not going to say those now to you. We are looking at one or two things.
Interviewer, Financial Times
On the not unrelated subject of unemployment, I think we were quite struck by some of the measures, particularly the one affecting long-term unemployed, the Chancellor announced yesterday …
Prime Minister
We are going to do a pilot scheme on this to see if it works.
Interviewer, Financial Times
I wondered whether this indicated perhaps a willingness to look at more innovative measures for dealing with the problem and in particular on the issue of pricing people into jobs. [end p31]
Prime Minister
Well on the pricing, of course, that is why we are doing wages councils and of course, we have done a lot with young people, do not forget. … young workers scheme … . we also did a lot of getting … and of course, I was absolutely delighted when the electricians' union lowered the wages for apprentices, the number of apprentices went up. That we will go on, but it is government's job, when you have got the enormous changes we have got, as I have said, from industry as it was … there was a fantastically relevant article in the “Guardian” , I think it was on Saturday, of a man who is now unemployed who said he now takes 1¼ hours to go and have a Coca Cola in a bar and he is depressed and demoralised, but then he goes on to the end, he was in a factory where they only worked three hours a day, they went to sleep on the night shift, and they realised at that time that it was not going to work. We have had all of those. We have had a technological revolution. We have had a changing pattern of trade. Things have shifted from Birmingham to Taiwan.
Now, in that you obviously have—and you have got the smoke stack industries which is part of the different pattern of trade—and you have got the high productivity, part of the same thing. You therefore have got … the productivity success of industry comes out on to the unemployment rate, so you have got to do something, you cannot leave it alone, and you have got the demographic trends against you until 1990 when they turn turtle. So you have got to have quite a problem of mitigating the hardship and of retraining. We still have not quite got the retraining. We still have not quite got the retraining right. There are numbers of people who still come and say: “We cannot get people to fill these skilled jobs!” That is part of the scientific and technological thing. In the South East at [end p32] any rate, and sometimes farther north, we sometimes cannot get people to fill the YTS. You have got to have a major mitigation of hardship programme.
You have got to encourage the pathfinders and cushion the harsh corners of change, so you have got a major programme there and you look at it from time to time to see if it is achieving its objectives. Your best relief is training and retraining, and that is really the direction in which we go. So it is a dynamic relief programme. It is not just a passive “help them through to get back self-respect” . I do not think you get back your self-respect unless you think that you have got some role in the future as well.
But the Community Programme is for the long-term unemployed and that does enable them to do jobs which obviously need doing, because most people when they are working want to know not only they have got a job, but what they are doing is broadly right. There is a sort of fundamental feeling in British society and thank goodness there is. It is one of its strengths. So you do look and we still have to face this demographic thing for another five years. It started about 1978; it is a 12-year run. One and a quarter million people more in the population of working age than we were in 1979. It does not turn turtle until 1990, but by that time we should have people trained for a new technology and you can then come up against, if we do not get the training right, considerable labour shortages there.
So you have got then to take your mitigation cushioning of the hard corners of change and look at it and see that it is getting at those who either are demoralised or want retraining or really want to come back in. And you do need new ideas and [end p33] let me say this: David Young is a person of ideas. Then, when you have an idea, the first thing you need to do is to run the pilot scheme before you go full blooded to see that it works.
Interviewer, Financial Times
I wonder if we can come into what I call PR politics. What about the … . stance of the Labour Party and Mr. Kinnock 's attempt to change it and the Alliance? Who is the greatest threat to you?
Prime Minister
I have seen every Labour Prime Minister duck this one, every Labour leader in my time duck it. Gaitskell came nearest to dealing with it; not enough to talk about it; you have got to take action.
Interviewer, Financial Times
Is he doing that, do you think?
Prime Minister
No.
Interviewer, Financial Times
But he only started in Bournemouth.
Prime Minister
No, I watched it. Harold Wilson … it is run by a [end p34] closely knit group of … . then he came off it … and as it comes up to an election they try to draw the veil over the extreme left and present themselves as respectable. I saw Wilson do it, I have seen Callaghan do it. It will happen again, and if only they … . what ought to have happened, and I felt this strongly … this is why I criticise the SDP so much … they ought to have stayed in and done the in-fighting and made the extreme left split off. They have not. They took the easy way; they split off.
Now had they done it historically and split off the left they would have gathered strength—had they become what I call the true old-fashioned Labour Party. Then I think they would be far stronger. I believe they have to do it some time. I believe the splitting off of the SDP really was a step in the wrong direction, because it was what delayed the purging of the Labour Party of the extreme left. This argument has been going on most of my time in politics in Parliament.
I remember … Konni ZilliacusZilliacus. There were only a few when I was first in. When will it split? And then it split. The ones who should have stayed in and fought came out and they made the present problem more difficult. Now, by doing that, you have got far more extreme left in the Labour Party than at any time in my lifetime in Parliament and unless they say: “You shall not stand as Labour!” they will not deal with it.
Interviewer, Financial Times
That is what Denis Healey says and you are not surprised to hear that? [end p35]
Prime Minister
No, but he is part of the cover up, you see. He has allowed himself, Denis HealeyDenis, you know—a most attractive personality—is a sort of political Vicar of Bray when it comes to taking the actual decision and he just allows himself to go along with the leader, whoever is leader of the Party.
Interviewer, Financial Times
… (inaudible due to coughs) … .
Prime Minister
Well that would have been the right thing because it was sticking out a mile, when will the Labour Party split, and I can understand the leader of a party tends not to split the party, and so therefore what happened is you got, I thought, into a cul-de-sac, which actually delays the reformation of the Labour Party. They should have chucked the left out, but I think it is going to be extremely difficult to do because they rely on them.
Interviewer, Financial Times
You do not think the Alliance is gathering enough strength?
Prime Minister
No, I do not think so, because look at it! It is not inherently a strong alliance. I mean, it is very weak. It has got one or two strong personalities, but even there, there is virtually no consistency. No, it was a wrong direction, because if I might say so, I have always regarded part of my job as—and [end p36] please do not think of it in an arrogant way, I do not want you to—if part of my task has succeeded in killing Socialism in Britain—now I am putting it strongly, because Socialism has only one direction in which to go, and that is further left, because there is a welfare state and there will continue to be a welfare state, and the only way Socialism can demonstrate is to go much further left, into making people depend on government for everything: their housing, their welfare payments, everything, and deny them the fundamental independence. That is the kind of Socialism that I want to kill because ultimately it denies freedom.
It is part of my job in getting things … the new conventional wisdom is that that is not on for Britain ever … it is not British … . it is outside their character … which I firmly believe … and therefore that is unacceptable in Britain. You then get to two parties for which that kind of thing is unacceptable and then you have two parties which I believe is in fundamental keeping with the character of Britain, and that is part of my role and I will not be satisfied until I have done it. I am only 6½ years, but give me another 5 and we might have entrenched it. I have not entrenched it yet.
Interviewer, Financial Times
Probably you will because of the split opposition. You must feel very strong.
Prime Minister
I have often thought had they done their split last time or the time before, then we would be halfway there. Put it this [end p37] way: we have not had anyone who has the same views as I have strongly enough to change the conventional wisdom. We are changing it but it is still there, and you have only got to look and see how it operates in the inner cities. You have only got to look and see how ILEA operates. You have only got to look at Haringey, at Camden, it is still there.
Interviewer, Financial Times
But another 5 years will give you the chance to … .
Prime Minister
In another 5 years then I would have been in 11½ years, then someone else will carry the torch, but by that time I think that we will have got the conventional wisdom, to use again a jargon phrase, such as that is not acceptable to Britain.
Social democracy, that is looking after the underdog, yes, but at the same time, the best way to look after the underdog is to make certain you keep your wealth creators going. That is what a Helmut Schmidt social democrat would say. It sounds terribly arrogant. It went the wrong way, the SDP.
Interviewer, Financial Times
The very last point and just thinking about the next 5, 7 years or whatever, is there anything else that you would specifically point to as the way you see your task or what you would like to achieve? [end p38]
Prime Minister
Just remember what I said about the unions. Let me put it broadly so that you can see what I am getting at.
Self-government is about those who can exercise self-discipline. You cannot have the self-discipline without government. Put it another way, you cannot have the freedom, freedom, the one side of the coin, without the responsibility on the other. So I have to try to give people both the independence and responsibility and the realisation that democracy is about exercising it, not saying: “Leave that to the Government!” .
Now that really is why … they have to have property; they have to have shares; they have to have independence. We were taking out some figures the other day. Do you know, 80%; of our people still live within a family unit. Look at the one-parent families, yes, but I think … Michael Alison told me that 80%; still live within the family structure, so I believe that what we are going through now we can overcome. I would not still be here if I did not. I believe that we are going through now we can overcome. I would not still be here if I did not. I believe that we are going absolutely in the right direction and yes, I do get a bit upset when Harold Macmillan says that because I am just really trying to get people have the sort of independence, not at the level which he had it, but yes, I do want them to have houses, I do want them to have shares, I do want them to have a look at their own money, to have a look at their own savings, because your pride comes with your independence and self-respect and then you do exercise your responsibility. But do not get the things we are suffering from now out of perspective in those inner cities, because what you are seeing is the realisation of people about what democracy is all about, and it started in the … . and we could not have [end p39] won that coal strike without that exercise of responsibility. 6½ years, about halfway through!
Interviewer, Financial Times
Would you like to stand before the election?
Prime Minister
What I was trying to say is we do the things because I believe in them. Privatisation is part of it. We will keep firm control. We will not let it go!