Speeches, etc.

Margaret Thatcher

Speech to Conservative Party Conference

Document type: Speeches, interviews, etc.
Venue: Brighton
Source: Conservative Party Conference Report 1967 (pp119-21)
Editorial comments:
Importance ranking: Key
Word count: 2130
Themes: Parliament, Conservatism, Conservative Party (organization), Industry, Privatized & state industries, Energy, Public spending & borrowing, Labour Party & socialism, Transport

When I looked at this motion I thought that it was extremely far-reaching in its practical consequences, and I believe that it would, if followed, set us on the right path back to an increasing amount of private enterprise. I note the restrictions Mr. Gorst placed on his support; having, however, criticised the terms of the motion he, I thought, himself made an extremely well-balanced speech.

Mr. Fletcher-Cooke started in the way in which a number of people start when thinking about the subject of nationalisation by trying to assess the practical consequences. Although many of us have deep philosophical reasons for being against nationalisation and for private enterprise, we must accept that many people judge these things purely upon the practical results, so let us start by adopting that approach.

Let us have a look at the practical results of these industries: first, the practical results in terms of the cost of living. A few months ago, Sir John Vaughan-Morgan asked a question of the Minister of Labour in the House of Commons. He wanted to know by how much the retail price index had risen in the nationalised industries compared with certain other commodities. He got a very telling reply. Let us take the other commodities first. Between when Labour came to power and February 1967, clothing had gone up by 5.8 per cent; house-hold goods by about the same amount; food, a bit more—8.8 per cent. But bad enough as that is, none of it approaches the record for increasing prices of the nationalised industries [end p1] —up by 14.6 per cent. That was before the latest increases in electricity, and before the latest queue to put up prices. So on that account the nationalised industries have failed.

Let us look at their accumulated losses. Over the years they have lost some £845 million—as much as one pre-war Budget.

Let us look, as Charles Fletcher-Cooke did, at the return on investment, because this is the normal way in which one judges something; if you are going to put money into it you want to know what return you will get out. We, the public, have put into the nationalised industries an amount which is currently valued at £9,000 million, and if you assess the losses over the years, the capital that has been written off, against the interest we have had out and the minute amount of tax these industries have paid, you find that the return on this fantastic investment has been a loss of £367 million.

So, on all those counts, the nationalised industries have nothing to commend them. Indeed, they have failed. The lesson has been that when you nationalise an industry, not only do you pay a higher price, but you pay twice in increasing taxes to meet the deficit on the capital investment.

How are we to set these things right? Some of them have to be set right. No one will buy a rotten enterprise, or he will not if he values his money. Let us try to assess where the difficulties are and where the faults lie. There are many differences between the way a nationalised industry is run and the way private enterprise is run. The disciplines on the employee side are quite different. You cannot hire and fire in a nationalised industry. Therefore, you have a tremendous artificial element of security. In the past, of course, this was traded for lower salaries and wages, and the consequence was that you did not get the best people and so you had to have more of them, giving a larger number of people employed. This never makes for efficiency. The disciplines on the investment side are different. A private industry has to justify its investment to the market. One has to look at the project in which one proposes to invest, making certain that there is no alternative means of reaching the same objective more cheaply. One has to make sure of a good return on one's money. We do not feel that this is always done in the nationalised industries. So often it seems as though the attitude is, “There is plenty more money where that came from” .

A nationalised industry is not as cost-conscious as a private industry. Private industries have to be. It is always noteworthy that Chancellors, in their annual speeches, point out that private enterprise is becoming more and more cost-conscious. Would they apply the same advice to nationalised industries? I wish they would. Finally, of course, there is no ultimate sanction upon these nationalised industries. If you or I do not like the products of private industry, if they are not produced at the right price or at the right time, we can take away our custom. This is our ultimate control. Unless private enterprise produces what the public want, it will go bankrupt. There is no such ultimate sanction on nationalised industry.

I have been given a good deal of advice on what to do about the nationalised industries. Let us see how we can tackle some of the problems now, for some of them will come up very quickly. On steel, as you know, Anthony Barber gave a pledge on the Second Reading of the Iron and Steel Bill that we would denationalise. I shall not repeat the pledge or the terms in which he gave it. On transport, as you know, Peter Walker said the other day that we shall fight the Bill line by line. So we should. It affects the livelihood of many small operators as well as some of the big concerns. It is an enormous further encroachment on the private sector, and we must fight it to the utmost. What we want is the Enfield spirit in private enterprise.

If the Bill goes through and it is added to the other enormous measures of nationalisation under which we now suffer, how little will be left to the private enterprise sector. There are many people in industry who would have to buy their coal and steel from a nationalised concern. If the ports are nationalised, any goods have to come in through a nationalised concern. They would have to be distributed through a nationalised concern. The more nationalisation we have, the more one's only customer becomes the nationalised industries. This is what we are fighting. It is a colossal encroachment on private enterprise, far greater than seems at the outset.

This coming Session, we shall have to fight the Industrial Expansion Bill. This is a Bill to further State control with as little Parliamentary scrutiny as possible. I note that, some ten years ago, Harold Wilson said in Brighton: “When we say extend public ownership in any industry, we mean take over, nationalise” . This is yet another blank cheque to do more nationalising. We shall fight it.

We cannot immediately denationalise everything. What, then, can we do? Here are a few guiding principles. First, we can see that the industries work on sound commercial principles. This does not exclude helping those people who cannot afford a particular commodity. One did not have to nationalise the cotton industry in order to help it through a difficult period. We must introduce as much competition as possible. In this connection, I refer you to the statement made by Sir Keith Joseph about introducing competition into the design of nuclear reactors. It is most important that we get the right changes in the Atomic Energy Authority before the Government go off on the wrong track.

What we all fear at the moment is further nationalisation. You and I know that every time there is a revolt on the Labour back benches, they are thrown a titbit, and the titbit is more nationalisation. One year, steel. This year, transport and the Industrial Expansion Bill. But there are lots of other ideas floating about in the Labour Party. There is a group which wants to extend State control over the search for North Sea gas. Will that be the next one? I hope that this Government will remember that every time they nationalise anything more in this country, they teach countries abroad how to nationalise our overseas assets which we built up over the centuries.

Last year, there was a group in the Labour Party which suggested that there should be State control over the investment policies of [end p2] insurance companies—your pension fund and my pension fund. They have not finished yet. Let us beware of every proposition which they put up.

Of course, there are always plausible arguments advanced for every new take-over. Everything is plausible. So are the tactics of the confidence trickster. But that does not stop him from taking your money. It is all done in a suave smooth manner, using the cosy fireside chat technique, but this does not alter the fact that he is taking your livelihood and reducing the independence of our people.

The Motion speaks not only in practical terms but it speaks also of freedom. I shall spend a moment or two on the philosophical reasons behind our policies today, why we are opposed to nationalisation, and why we stand for private enterprise. No party can carry on unless it has these fundamental beliefs and deep convictions. The Motion speaks of freedom. It is good to recall how our freedom has been gained in this country—not by great abstract campaigns but through the objections of ordinary men and women to having their money taken from them by the State. In the early days, people banded together and said to the then Government, “You shall not take our money before you have redressed our grievances” . It was their money, their wealth, which was the source of their independence against the Government. This is crucial.

So long as Parliament is careful about public expenditure, watching the moneys of individual persons and seeing that the Government do not take too much, you find our liberties and freedoms increasing. Once Parliament wants to spend more, being the guardian of what goes out instead of trying to stop the Government spending so much, our liberties are at the same time curtailed.

There is a subtle difference in approach to be noticed here. I looked up one of Harold Wilson 's Budget speeches in the House. In 1960 he expressed the view that the individual taxpayer is a trustee for wealth and income on behalf of the nation. What a change of attitude. Our freedoms depended on our having independence, independence in the wage packet, and independence of the Government. Now, we are virtually told that everything belongs to the Government except what they will beneficently manage to hand back to us.

This is not the way to preserve the freedom which we have built up over the years. When we couple this change of attitude with the undermining of the rule of law, which has proceeded far further this year than any of us expected, and then add this third factor, we see how far the basis of personal independence has been further undermined.

The other day I was looking, once again, at Herbert Agar 's book, A Time for Greatness, which was published in war-time, and one sentence caught my eye: “Power over a man's support is ultimately power over his will” . Now this, of course, is true. If you rely always on a Government for your wage packet, then the source of your independence to fight that Government has gone. All of you will know from having canvassed how many people say to you, “Of course, I work in a nationalised industry” , or “I work in the Civil Service” , or “I work for the local authority, and therefore I cannot take part in politics.” Already one person in four works in the public sector. This is more than enough, and we must stop the encroachment from going any further.

The arguments for further nationalisation are quite false. They purport to put power into the hands of the people. What they do is give them power which they cannot exercise and, therefore, they result in putting that power into the hands of the sitting Government. Make no mistake about it, we have a Government now which is dedicated to the pursuit of power for its own sake.

Then the other philosophical reason for which we are against nationalisation and for private enterprise is because we believe that economic progress comes from the inventiveness, ability, determination and the pioneering spirit of extraordinary men and women. If they cannot exercise that spirit here, they will go away to another free enterprise country which will then make more economic progress than we do. We ought, in fact, to be encouraging small firms and small companies, because the extent to which innovation comes through these companies is tremendous.

I looked back again the other day to a quotation from 1943 from one of our previous leaders, and he said this:

“We must beware of trying to build a society in which nobody counts for anything except a politician or an official, a society where enterprise gains no reward and thrift no privileges.”

That is jolly nearly what we have got now, and we must watch this and beware of it as Sir Winston Churchill said in 1943.

Let us stress that it is not merely that we are against nationalisation but that we stand for private enterprise. We wish to conserve that independence for which once we were famous. We want to conserve that ability and inventiveness which lead to our progress and prosperity and which, when fully restored, will enable us once again to command the respect of the world which this Government has lost.