IoD

TRANSCRIPT OF AN INTERVIEW WITH RT. HON. BARONESS THATCHER L.G., O.M.

Andrew Main Wilson (Institute of Directors’ Chief Operating Officer):

This convention today is all about Britons who have exerted a massive influence over business, politics and sport during the 20th century. One such leader is Lady Thatcher, who at the height of her 11 years in office was the most powerful woman in the world. She is now 77 and she has not given a single interview for the last two years, so I am delighted that she has agreed to talk to me today and share with us her views on the greatest challenges she faced as Prime Minister. She has also agreed to share with us her current views on Britain’s standing, economically and politically in the world today.

Lady Thatcher, thank you for joining me here at the IoD today.

What were the biggest challenges that faced you when you very first came to power as Prime Minister?

Lady Thatcher

When we came to office in 1979 Britain was a long way towards a socialist state, so far in fact that many people thought it was too late for a change of direction. They were wrong, and from the very first year of office we mapped out a different path. Income Tax rates were so high that they had penalised effort and had led to a brain drain of talent. In fact, high tax discouraged everyone from working except for the accountants who had a hey-day, and who can blame them.

Andrew Main Wilson, Institute of Directors:

Is that why you took such radical action with taxation levels?

Lady Thatcher

We cut the basic rate of Income Tax from 33% to 27%, and later to 25%. We cut the higher rate from 83% to 60%, and later down to 40%. The top rate of tax on so-called "unearned income" had risen to an absurd 98%; we slashed that too. We also reversed the trend to ever greater control. We ended the controls on prices, wages and dividends, and we ended exchange controls, and that really astonished the City.

It is extraordinary how at one moment policy changes are thought of as completely impossible, and then at the next nobody can imagine how it could ever have been otherwise. Underpinning all this was relentless pressure to keep down public spending and to bring down inflation. It took nearly three years for it come right, but by the time of the 1983 election we were coming through and people understood that the sacrifices had been worthwhile.

Andrew Main Wilson, Institute of Directors:

I am sure that most of them did. Many business leaders right now are very concerned that the fire fighters strike might just herald the return to trade union militancy. What was the key issue for you, and how important was your determination to reform trade unions when you first came to power in the 70s and early 80s?

Lady Thatcher

People have forgotten just how powerful the trade unions were when we took office. We had just had that notorious ‘winter of discontent’ of course, but it was not a one-off event. Trade union power had destroyed Ted Heath’s government. The trade union leaders threatened to make Britain ungovernable. They were not consulted on economic policy at every occasion and naturally what they wanted from the government was more socialism which was very bad for Britain. Step by step we reformed trade union law, restricting union privileges, curbing the closed shop and giving ordinary union members greater democratic rights. Above all, we brought the unions under the same rule of law as the rest of us.

Andrew Main Wilson, Institute of Directors:

What about government handouts?

Lady Thatcher

At the same time we refused to reflate the economy to give open-ended subsidies to nationalised industries to cover irresponsible wage demands and low productivity. That is how we introduced trade unions to the real world. Naturally, after years of make believe many did not like it. The year long miners’ strike in 1984/85 was the last gasp of trade union militancy. You could say that by the end of it the extremists had lost, but I prefer to say that Britain had won.

Andrew Main Wilson, Institute of Directors:

You were very well known world-wide as the Iron Lady, and I do not think any one will ever forget that phrase, and yet some people would say that you were just too inflexible.

Lady Thatcher

I really cannot understand those people who go into politics without a clear set of beliefs and principles. It must be very hard to know what to do in tricky situations if you need to scratch your head and just wonder, as some people do today, what works. I have always known what works. Free enterprise works. Limited government works. Encouraging initiative and responsibility works. They go with the grain of human nature, not against it.

The wonderful thing about a free market is that it allows people to pursue their own interests and at the same time automatically advance every one else’s interests. As Adam Smith taught, it is not through the benevolence of people, but through their intelligent self interest that society as a whole becomes wealthier. We do not need to be saints in order to make an economy work well, we just need to set the right rules and then leave individuals to get on with the job.

Andrew Main Wilson, Institute of Directors:

Some people, and indeed some countries even, believe that it is a blend of capitalism and socialism that is the best way forward. Do you believe there is such a thing as a middle way, and that in fact capitalism alone might be seen as a bit too selfish?

Lady Thatcher

People sometimes say, this is selfish or greedy, but it is neither. Capitalism, remember, is the only system that creates the wealth needed to help those who cannot help themselves, and the most successful nation in the world, America, is also the most generous. A sense of duty towards others is most encouraged where individuals are most in control of their own lives.

Andrew Main Wilson, Institute of Directors:

What else would you like to have achieved as Prime Minister?

Lady Thatcher

When I left Downing Street there was still a lot that I would have liked to do. In particular, I wish that I could have seen through to the end the first Gulf War and been able to construct a new framework for Britain’s relations with Europe. That was not to be, but I take the greatest pride in the fact that by 1990 Britain’s reputation in the world had already been transformed, moreover that transformation has proved lasting. We had stood up to our European partners and secured a much fairer financial settlement than any one had ever imagined was possible. We were no longer the sick man of Europe. We were Europe’s most successful economy. We had fought and won the Falklands war, and in doing so we demonstrated that we would never allow our own people to be oppressed by a foreign dictator, and that we had the most professional armed forces in the world. We had proved ourselves to be the staunch ally of America, and we had held the line against all attempts by the Soviet Union to get its way by intimidation. Indeed, we had helped win the Cold War without firing a shot.

Andrew Main Wilson, Institute of Directors:

You won the 1983 election with a massive landslide - you won 397 out of 650 seats – yet just 14 years later Tony Blair won over 400 seats for a similar landslide majority. To what extent do you believe that he used your policies to gain power?

Lady Thatcher

I do not think many people imagined when the Conservatives formed a government in 1979 that we would so effectively transform the economy, but I am quite sure that nobody thought that we would so thoroughly transform our opponents. Indeed, that has been a bit of a problem for the Conservatives; Mr Blair and the Labour Party sound too much like us!

Andrew Main Wilson, Institute of Directors:

So how effective do you believe Tony Blair is proving as our leader today?

Lady Thatcher

The Prime Minister has proved a bold and effective war leader. I also think that he probably understands that business has to succeed if the country is to prosper, but that is as far as my approval goes.

Andrew Main Wilson, Institute of Directors:

But surely you cannot accuse the current Labour Cabinet of adopting your policies from the 1970s and 80s?

Lady Thatcher

In many respects new Labour shows signs of reverting to old Labour with its irresponsible policies of tax and spend. Britain just cannot afford this.

Andrew Main Wilson, Institute of Directors:

Many of our members at the moment are expressing grave concerns about future taxation, the state of the company pension schemes, and the rise, as they see it, of Brussels induced red tape. How serious do you feel the repercussions are for the British economy going forward?

Lady Thatcher

In Gordon BrownMr Brown’s first budget some £5 billion a year of extra taxation was imposed on the pension funds, which is now helping to cause a major pensions crisis. Public spending has been growing too far, too fast. The projections for the public finances are in doubt. Taxes are now being raised in the form of higher National Insurance contributions, and they may have to be raised yet again if public expenditure rises faster than economic growth in future years. On top of all that, we have seen more regulation, much of it originating in Europe. Trade unions have also received back some privileges and that has helped fuel a rise in renewed militancy in the public sector. This does not signal a wholesale return to the 1970s - of course it does not - but it does mean that Britain is now moving in the wrong direction towards the failed European model and high spending, high taxing and high regulation. So I am very concerned for the country’s future if those trends continue.

Andrew Main Wilson, Institute of Directors:

And the euro?

Lady Thatcher

All this would be much worse if we moved still closer to Europe by abolishing sterling and joining the euro, but I do not believe that this will happen. Even this Government must now appreciate some home truths about Europe, and I am sure the general public already do.

Andrew Main Wilson, Institute of Directors:

What do you believe that we must do now to best support our members going forward?

Lady Thatcher

The Institute of Directors must continue to argue the case for enterprise, and with passion. That has been the vital role of the Institute of Directors in the past, and it will remain so while there are political forces in Britain whose traditions are plainly anti-business.

I hope your members will keep up the fight and that your conference is a great success.

Andrew Main Wilson, Institute of Directors:

Lady Thatcher, thank you very much indeed.