Surely the most intersting development of the last 24 hours must be Mr. Hugh Scanlon 's statement last night about the so called agreement between the Labour Party and the Trade Unions on Incomes Policy. The major issue of this election is to have a strong government which is going to deal with inflation and that means having an incomes and a prices policy. We have a strong control over prices, over profits, and over dividends. We also have an incomes policy which is fair. In Stage III it has been accepted by more than 6 million people, most of them Trade Unionists, and we can now add the dockers to the list.
Now the Labour Party said it is going to abolish the Pay Board which carries through the Incomes Policy in all aspects, whether it is the normal stage, whether it is anomalies, whether it's relativities, whatever it may be, and I have always said that they have no means therefore of dealing with the problem of wages and incomes. But then we were told by the Leader of the Opposition last Sunday that in fact there has been an agreement between the Labour Party and the TUC that all this matter was going to be dealt with on a voluntary basis of wage restraint which would prevent inflation, but last night we heard from Mr Scanlon that in fact no such agreement on specific policy exists at all, as far as one can see, not even a piece of paper, and so the great proposal of the Social Contract which we heard on Sunday appears to be non-existent and there is still no means by which the Labour Party will be able to [end p1] deal with very difficult questions of wages and incomes. Mr Scanlon has taken part in, I think, almost all the discussions over the last 21 months which I've had with the TUC leaders and with the CBI, whether they've been tripartite discussions or whether they've been just the TUC and oursleves, and I've always found that, although we had our differences of view, quite obviously, about which is the best way of wage negotiation, he's always been quite clear and specific about every matter which we've discussed and he's always told me quite frankly, my colleagues and myself, exactly what his position is. You will recall that he did this over the Relativities Report and, although the TUC said they couldn't accept our proposal that they should cooperate with us over the Relativities Report in the Pay Board, Mr. Scanlon said that he did believe that this was a possible way of dealing with these problems, and in particular with the question of the miners' dispute, he was quite clear about this as well. And so we now find that the Social Contract, or the agreement or the piece of paper, does not exist and the Labour party has absolutely no means of dealing with wage inflation.
Now I want to make one very simple point in this discussion about prices and inflation and it's this—under the last Labour government prices went up twice as fast as world prices, twice as fast as world prices, and this was basically due to the fact that wages, even when they had an incomes policy, were out of control and so you had wage inflation in this country. In our period of office prices have only gone up one quarter of the extent of the increase in world prices, only one quarter of the increase in world prices, and this is due to a variety of factors, in part because we've had an effective incomes policy over these last 21 months, in part also because we got the economy expanding which therefore spread the costs of manufacture and reduced unit cost. That was another very important factor, there was stagnation under a Labour government. With an expanding economy, industrial production expanding by 8%; in a year, then of course this was [end p2] able to deal with some of manufacturing costs. What is more, if you take the OECD countries, Europe, North America, Japan, we are in the middle of the league table—we are the average price increase, the average inflation of all of these countries. When the Labour Government was in power, Britain was, in fact, the worst country as far as inflation was concerned, out of all the OECD countries, Europe, North America and Japan. So that is the comparison between the record of the two Governments, the last Labour Government and the present Conservative Government, and it brings us back once again to the fact, the issue here in this Election is having a Government with a strong majority which is able to deal with inflation, and to do it through a fair incomes policy and a strict control of prices, profits and dividends.
Well now, home front first as usual: [end p3]
Mr. Thorpe this morning has asked the Government to stand by the Relativities Board's decision and ask the NUM to submit that decision, whatever it may be, to a miners' ballot. What is your feeling about this?
I have already said that we will take the recommendations and back-date them to March 1st, so as far as the Government position is concerned that is quite clear. I would hope of course that the NUM Executive would be prepared to deal with this matter themselves and to say, well, they have put their case and other Unions may well be putting their case from the information we have and that the Pay Board would have to consider the file [sic] position. I would hope the NUM would be prepared to take a decision on this matter themselves, but, if they did go to ballot, then I would hope that on this occasion they would put the whole proposition to the miners and let them decide on that specifically. I regret it that at the last ballot it simply became a question of, “Are you going to be loyal to your Union?” That wasn't the issue, as I have repeatedly said. I expect miners to be loyal to their Union. The issue was that, if they want to accept the very fair proposal which was made by the NCB, far greater than most other groups would get in this country, or did they wish to reject it, and I have often repeated that when the offer was first made the general view of everybody, commentators and those in touch with the miners, who with the [words missing] was that the offer at that time would have been accepted and everybody felt that it was a very fair offer indeed. Can I tell you something about this? You see, on the question of relativities, we the Government took the initiative in all of this. We asked the Pay Board last March to take action about it and give us a report as to how to deal with it. As I said, the report was three weeks late, because of the mass of evidence submitted by the Trade Unions to the Board, and directly we received it we published it. I sent it to the TUC and CBI and said we are prepared to act immediately you are ready and then, as you recall, on Panorama I said that I thought this was a means of inveigling the miners to put their case. I told the House of Commons and the leader of the Opposition [end p4] wrote to me and said would I go further, would I actually invite them to come whether they were ready or not, so I did that and at that particular point the leader of the Opposition lost interest. And then the TUC came and said unfortunately it couldn't co-operate. The CBI said, yes, they would co-operate fully and after that, when we found the TUC weren't able to co-operate at that stage, we asked the Pay Board itself to deal immediately with those two issues instead of setting up new machinery and we said the miners could be the first case. I have no doubt that there are other cases who want to be heard by them as well.
Is it not a fact that every year since 1951 until last year world prices accounted for more than a quarter of the rise in British domestic prices? [end p5]
Well I would like to check that figure, but as far as the comparison I've given is concerned, that is absolutely valid.
Yes, by all means I am fully prepared to check that figure.
Have you any observations about Mr. Daly 's statement today that the miners will want more than their original claim?
I think, myself, it's better that, while the Pay Board is having hearings in public, that I should not comment on the details of the arguments which are being put forward. I think it much better that the Pay Board should have its hearings, and they are fully reported in the public press, and people can read everything that is said and so on. I think it is much better to leave it like that. I think the only comment I would make is perhaps now those who have said across the floor of the House of Commons and elsewhere, “You only just need to offer a little more and the whole thing's over,” may, perhaps, now appreciate that there was much more involved.
Has your attention been called to the article in the Times this morning which suggests that the Conservative proposals for miners' postal ballots will facilitate a move to the left of trade unions, as demonstrated by the TUC? [end p6]
I don't think I will accept that—in any case I think that a postal ballot on its own is preferable, and it avoids people being under any pressure of any kind. I also find immense popular support for this, I believe the public thinks it's right, and they also accept that the cost could be covered by the Government.
Did you see another letter on the same subject this morning in the Guardian by the trade unionist who felt you were being paternalistic in making it a law for a postal ballot when the union was capable of deciding for itself?
Well this, of course, is one point of view which can be put forward, but throughout our history, or certainly for the last 150 years, we have taken the view that, when there are very powerful bodies in the State, then there ought to be certain regulation of their activities. We have taken this view about companies as well as about unions, and I don't regard this as paternalistic in any way. I think the Government has got a responsibility, Parliament has got a responsibility to lay down in general regulations under which great and powerful bodies shall be conducted in the State. Now to hear some people talk one would think there had never been any trade union legislation in the past. What we were doing was bringing up to date legislation affecting trade unions and industrial relations, and I have made the offer on countless occasions to the TUC and the CBI, if they think there are amendments required, then come forward with them. We are working out amendments ourselves, in the light of our own experience; so far we have never had an amendment from any of them, but after this Election is over we can sit round a table, they can put forward every argument, every case where they think that there ought to be an amendment, and we will put before them where we think the Act needs changing. In the Manifesto we have put down one particular one, which is that before a case can be taken to court, there should be conciliation. We have done this quite deliberately because of many things that have been said to us by trade union leaders and employers, that there may be people who go straight to court and [end p7] and I think this would help trade union leaders, from what they have said to us, and employers would welcome it as well. [end p8]
Would you care to comment on the predicted rise in London GLC rates of 75%; announced this morning?
I don't want to comment particularly on the GLC because I haven't seen the figures. What I would say is this, that we have increased the rates above the ground, we have increased the arrangements for the domestic ratepayer and what we have asked is, that local authorities should also limit their own expenditure in the same way as the Government is limiting Government expenditure in the present situation in the country, in which it is quite apparent that we have got to use so much more of our resources for exports to pay for the oil which we have to bring into this country, the price of which has been increased four times in the last few weeks, another two thousand million pounds in the balance of payments, the increased price of raw materials and food, which we are having to pay. In these circumstances it must surely be obvious to local authorities that the country cannot afford a massive expenditure in this way. Now the government has limited its expenditure, the Chancellor cut back by £12,500 million and before Christmas, and what we ask is that local authorities to be just as responsible and cut back their expenditure at least to lay projects and, er, help the country in this way.
(re private exploitation of North Sea oil being acceptable—and whether the multi-national companies will be governing the country.)
Companies do not govern this country and they are not going to govern this country and they have not governed this country and they are NOT going to, and they come under British Law and they will remain under British Law as a responsibility to the government to govern this country. As far as the development as North Sea oil is concerned, we believe it is better that companies [end p9] should put their own capital at risk, as I explained last night in the speach in Edinburgh, they should put their own expertise at disposal of the country in exploration and in the section above, as I have said last night, when 17 wells have been sunk, only one comes across oil or gas, where it costs two million pounds to sink a well. Well, the companies already put in a thousand million pounds of investment in North Sea oil alone without having had a penny back yet, because the oil has not started to flow. I believe that this is because it has been used as a risk capital, as well as required, the government will take the necessary action to see that the fair share of the proceeds come to this country and that the companies get a reasonable return so that they will continue to have an inducement to carry out exploration round the rest of our shores. I hope we won't become monopolised by North Sea oil and already we have granted the 52 licenses for the Celtics. We know there are other places around our shores where it is highly likely that [words missing?] very large products of oil, and we want to see this exploration and development continuing. [end p10]
Are you still as ready to back Concorde in the light of French reports that extra expenditure will be needed? Would you like to say whether the risks are worth it?
The progress of Concorde is regularly reviewed and the next review is due to take place at the end of the month. We shall then be able to hear what the views of the French Government are and we shall be able to put our views about the development of Concorde, its sales, cost, and so on. Of course most of the cost has already been incurred either under ourselves but mainly under the Labour Government and at least under the first Conservative Government which made the treaty. Now under the present government, and as far as the future is concerned, we must reach the decision on the review. [end p11]
Do the latest reports cause you concern that extra expenditure will be needed to make this a viable project at all?
Well, you are pre-judging, if I may so, the review which is due to take place at the end of this month, and we must await the information which the French Government will put before us and we of course have our studies made ready to put before them.
Could Mrs Thatcher comment on whether she has found keen interest in education policy in the country and comment on the reviewing of student and indirect grants? [end p12]
[words missing] a phone-in for an hour, so she may as well argue with you now. [end p13]
There is quite a good [words missing] there are really two sorts of questions, one the big political question, but the other, which I get even more of, are the intensely personal immediate questions of, “Why can't I get my child to the school I want?” or “Why isn't that school up to standard?” or “Why hasn't it got the sort of range of staff it ought to have?” Those are the intensely practical problems and they all of them show that more parents want to choose the schools to which their children should go. And that's taking a much more significant part in the campaign now then it has done previously. On the general big issues, I dealt with a similar question, in London it's London allowance, and that of course will be dealt with by the Pay Board, which I'm afraid all the teachers don't yet know. It's been referred to the Pay Board along with similar claims for all other people affected by London allowance and the Pay Board is expected to report by the end of June, and there's an undertaking in the manifesto that we will act upon it urgently. Elsewhere, it is the general pay and conditions of service of teachers and I have the impression, which I had a while before the election, that they are all very keen to use any relativities mechanism, because one of the essence of their claim is that they have fallen behind compared with the earnings of manual workers. So the relativities mechanism would be ideal to them. Obviously, if I am anywhere near a university town we get questions on students grants and there the ordinary review mechanism is going forward and the results I will hope to announce at the end of April or beginning of May of the increases in students grants. They are reviewed every three years, but last October we felt that the review wasn't sufficient and introduced an extra 9%; increase. But those are the main questions. Intense interest in parental choice, as with all audiences, whatever kind, they would not like to have, I think, the independent schools abolished. And the general political questions on teachers and students grants.
Have you changed your mind about the oil companies? A couple of months ago, arrangements were being made for a major share for Britain. Now oil companies can make their own arrangements. Surely this would cut across the Cabinet arrangements? [end p14]
No, that worked out satisfactorily, I don't know whether Lord Carrington wants to comment?
(as to whether policies and issues are vague re North Sea oil and possible announcement re setting up of a separate corporation.)
We don't have that in mind, no. I don't think the issues are vague, if I may say so. On the first question of taxation, there is the big one which the Chancellor announced in his last Budget, he would deal with in this coming Finance Bill, which is the question of losses which are made elsewhere in the world being used to offset against profits on North Sea oil. That is going to be stopped in the next Finance Bill, and I explained the other day how these very large losses come about through [words missing] and so on. As far as the other form of ensuring that the proper share comes to this country, this is obviously a budgetary matter which we dealt with in the Finance Bill, and that is the right way of dealing with it. Question missing?
Well, that will depend on a variety of other things. The fact is, of course, that the Government is losing nothing at this moment, because there are no profits coming from North Sea Oil, and so we have time, but I would not commit myself to the next Finance Bill, but it is not excluded. [end p15]
Do you have corporate tax in mind?
I am not going to anticipate the Chancellor's next Budget.
The oil companies executive did not seem as certain as you were that they would withdraw from the North Sea under the Labour proposals. Did you base your statement that they would on the information from the oil companies?
Neither in fact, there was no collusion, but I just used my judgement, and you know what happened. [end p16] Question missing.
It was organisational not school bearings when you think that all kinds of schools, organisations are a system in my opinion. Question missing.
This is a very technical matter if you look at Ml in fact there wasn't a very large increase, it was very small. If you call at M3 then there was a [word missing] claimed by the Treasury yesterday and at this time of the year, then it is normal, I think, that in M3, the whole money supply taken altogether, more kinds should be increase [sic] very largely because of the tax payment due at the time and so on, and also of course, so far as some firms are concerned, going on to the three day week means that they are affected in their money flow and their cash flow and that also is bound to affect the money supply, the training [sic] did go into a very detailed statement analysing the different aspects on M3.
Shall we go onto, er … . [end p17] Question missing.
Well, we have revealed our policies as far as North Sea oil is concerned, we are not going to nationalise it, it is entirely under British control, it all has to be landed on these shores, and, as far as the companies are concerned, we have dealt with our overseas profit—we have announced that we are dealing with our overseas profits position, which we will do in the next Finance Bill, and as far as the future profits of North Sea oil are concerned, then we shall deal with that in the Finance Bill at the proper time, to ensure that the country gets a fair share, and the companies still have sufficient inducement to go on exploration and development. That is a very clear policy. [end p18] Question missing.
I was highly welcomed by the Scots last night, when I was in Edinburgh too, which is one of the reasons we are going to gain seats in Scotland. Question missing.
You are always asking me not to indulge in personalities and attack other people, we musn't slang each other, we musn't slam each other … Question missing.
Executives or manufacturers? Who was suffering? … . really. I thought it was their elders who suffered from that angle. I must say all the young people I met round the country over the last ten days, none of them were complaining to me they are suffering from pot, [sic] that is the last thing they are suffering from. [end p19] Question missing.
We are going to have good gains in Scotland, that I'm quite convinced about. Question missing.
I don't know what they are going to get. I wouldn't form a judgement on any figure they like to put forward, and, as we go back to a strong majority, it won't effect us. [end p20] Question missing.
I don't comment on the internal affairs of other countries and on the strength of other Governments, particularly not after reading news in today's papers.
[words missing] mentioned foreign policy at all. Is this a grievance or indifference on your part?
It is very seldom, I think, in British elections that foreign policies feature as a major issue. I think most people would agree about that. As far as our position in foreign policy is concerned, it is very clear and it's also set out in the Manifesto. Everybody knows about our attitude to Europe. We negotiated entry into the Community. We believe in developing the Community both in its political and economic aspects. Now, of course, here there are differences between us and the Labour Party. As far as development of the Community is concerned, it is a constantly dynamic changing Community, developing to meet changing circumstances, and I fear that what the Labour Party means by re-negotiation is putting up an ultimatum, a group of terms which means in fact that they would be quite unacceptable to the other members of the Community because the Labour Party wants to get out. Though there is a difference here between us, but this election will settle it once and for all and we shall stay a member of the Community and we shall be able to develop our policies there. Of course, the impact of the internal on the external is that if you have a strong Government here apparently we can exert our influence much more in the European Community as well as abroad, which the present Conservative administration has done a great deal to improve our relationships across the world, particularly with China, where we have now got full diplomatic relations. Particularly with the Arab countries, including Egypt where relations have been indifferent for a long time, and we have good relations of course with our own European [end p21] partners and those who were in EFTA and that has been happily sorted out, the arrangements between EFTA and the Community, and I am particularly proud of that, because after all we were instrumental in starting EFTA in the first place and so in all these ways our overseas relations have greatly improved. A rather interesting fact, I think, is that as far as the Soviet Union is concerned, who took offence at the action we took in 1971 in returning to them a number of their own nationals, they have since resumed much more friendly relationships and it is quite obvious now that the Soviet Union has been coming to us and saying we want to restore friendly relations. We have always wanted this, they took offence and now apparently the offence is removed, the Foreign Secretary has been there and I look forward to going there later in the year. [end p22]
You attacked the Labour Party as backing law breakers; should school children now be taught to condemn … . Cayman Islands … Mrs. Pankhurst …?
Well, that's a genius question and you must have given great thought to it. (Laughter.) I would have thought the first thing to get straight is, where are people breaking the law? And, as far as the Cayman Islands are concerned, nobody has shown they are breaking the law. I myself have condemned the practice because I thought it was undesirable, but I have never at any time said it was breaking the law. I believe it is wrong for any government or any party to connive at the breaking of the law.
Well, both of those questions, if I may say so, were condemned at the time as being breaking the law. It is a perfectly clear situation in a modern state, as I said in my speech on Saturday, if you have a totalitarian regime, and this has all been in our minds during the past week, as one very famous international personality, then of course there is no alternative. Where you have got a free democratic society, as we have, with a free parliamentary system and every opportunity to influence the making of the law, then it must be wrong to break the law or for politicians to connive at the breaking of the law, yet alone support the breaking of the law, as happened at the Labour party conference over the Clay Cross affair. [end p23]
Do you see any change in policy towards Rhodesia and South Africa in the new Tory Government?
Towards South Africa and Rhodesia? In Rhodesia we tried to get a settlement, it wasn't acceptable to the, to all the peoples of Rhodesia and therefore under the fifth principle we said that we would be unable to implement it. That was perfectly honourable. We made the attempt, very very serious attempt, and I wish it had succeeded but it didn't. We then said [words missing] for the people of Rhodesia themselves to talk together and work out a basis on which they can do so. Now fortunately this has been happening and Mr. Smith and his colleagues have been talking toname missing and his colleagues and progress has been made. They haven't yet reached an agreement, we wish them well in doing so, because the firm basis for life in Rhodesia can only be settled if those who are there can work out how they are going to manage to live together. This is absolutely fundamental. We have said if they want our help in any way in working this out, of course we are prepared to give it. They know of our deep interest in African education, so that people can be trained to take more important positions in life in Rhodesia. It may be we can help in that way, but we are perfectly willing to help, but basically we think that they must try and work it out for themselves. As far as South Africa is concerned, our policy remains the same. We do not believe in using force in South Africa, we do want to see internal change, and there are many signs now against the views of the sceptics that this is coming about, basically I think, because a modern complex industrial society cannot develop in the natural way, it would do with the sort of limitations which you have through racial relations in South Africa, and therefore these arrangements gradually get eroded and they crumble, and if you talk to the businessmen in South Africa they will tell you this is exactly what is happening and people are being trained for more and more important positions, because if they are going on with an expanding economy, then they simply have got to have these developments. [end p24]
How would you set about strengthening the new European Parliament?
We have just of course said in the previous elections the procedures laid down quite clearly, that Parliament is [words missing] recommendations that the Council of Ministers [words missing] and when they do so then the Council of Ministers will consider it and take decisions about it, this we agreed at the summit, no recommendations on this are being made while we have been a member. In other respects, of course, we want to see the system developing perhaps rather along the lines of our own system, more questioning, greater flexibility and those who are handling a questioning, as a Minister has in Parliament and has shared and demonstrated since he came [words missing] of the Ministers, but this can be done, and can be done very effectively indeed and the Parliament appreciates it. Of course, we agreed that the early board should be set up, we are strongly in favour of that ‘cos it is going much like our [word missing] and Lords in general, who sees that when money is allocated for purposes a complete check is kept on it to see that the money is used for those purposes. We believe that this is very important and as fares the other institutions of the Community are concerned in the Commission, we also would like to see inside the Commission the institution of greater financial control. We have suggested there should be one Commissioner given the job specifically of looking after financial control inside the Commission and it also would be his job to see that the proposals pulled [sic] by Departmental Heads to get the value of the money. So, in all these ways, we would like to see not only the Parliament but the institutions strengthened. We also want to see the Council of Ministers organised in the way which will allow the Farm Secretaries to take us to the top stragetic decisions and the lesser ones, the much more technical ones, taken at a lower level, subject eventually, [end p25] as in a cabinet, to the decision of the Council of Ministers. Another thing, of course, which I would have liked to have seen was that the Labour Party in the British Parliament would take its part in the European Parliament, which I believe was that the Prime Minister said, it would be strengthened, Britain would be strengthened by having all party representation in the European Parliament and I very much hope that once this Election is over and the whole matter is settled and the Labour Party will well agree to send its own Parliamentary representatives to Strasbourg.
The letter in the Times a few days ago blamed some of the rise of world prices and commodities on our failure to reach agreement on commodities in the past. Do you think we have missed opportunities to make long-term commodity arrangements?
You will get the great increase in food production, you will find that prices are much lower, and here we are stuck with the higher arrangements, since then of course, the food markets have opened up all over the world, people have been forward, and this has been able to even prices out to a certain extent but at least we haven't been landed with commodity deals of very high prices, but the reverse has happened, sugar, and I have mentioned before that [word missing] say to us that you are not going to be able to get the Commonwealth sugar into the Community or to us while we are members of the Community, but first of all this is not true because we have negotiated the one point four millions times, but the problem lies in an entirely different one, the problem now is, how do we get the sugar from the Commonwealth to Britain? Because we are paying, under the Commonwealth sugar agreement, £61 per ton for sugar from Commonwealth countries.
The Caribbean came over to see me about this three weeks ago, very concerned that the United States with a poor shipping port and sell it there for a £115 per ton, against £61 which [end p26] we are selling under the Commonwealth Sugar agreement. So there is a difference between £61 from us, £115 from the States, and £200 from the rest of the world, and so they are saying are they, well, interested in selling sugar under the Commonwealth against Britain? And we have been carrying on further discussions with them about the prices of this, but this is now an entirely different problem and we have moved into a different world. It is exactly the same as New Zealand lamb. We made a perfectly good agreement in the Community about their lamb, it can come in, it is not coming in as much as we want, because they can sell it as well, as much as people are prepared to pay much higher prices for their meat. I am not blaming the New Zealanders for a moment, and this used to happen with Australian soft wheat where we had our own agreement £750,000.
We are facing a different problem. Not guarantees to other countries, but they will be able to get their food and raw materials here, what we are facing is a problem at our level of prices. We get them to sell the stuff here instead of selling it in much more profitable places elsewhere in the world. [end p27]
Mr Thorpe suggested that the large bank profits could be channelled into the building societies at a lower fixed rate of interest. Would you like to comment on this?
I did say that we have been carrying on confidential discussions with the various institutions as to how we could channel finance into the building societies, and I think, for the moment, we had better leave it like that.
You made a good agreement with the Common Market on imports of New Zealand lamb. What was that agreement?
Well, New Zealand lamb can come into this country, and, pardon … of yes, indeed, of course, it was made by Mr. Rippon, and it covers the period, I think, up to 1976, and then there is the review of that … No, dairy produce, of course, is included, but, as far as New Zealand lamb is concerned, it can come into this country perfectly well. [end p28]
You are described by Time magazine as being uncommunicative, cold, lack of feeling and bloodless—would you like to comment on this?
At least it contradicts what I was reading yesterday in some [word missing], after our little gossip on Sunday in the pub, that he is glowing with health, etc., etc., you can hardly be bloodless if you are that.
You do appear to be glowing with health—do you thrive on this?
Thank you very much. On that happy note we might end.