Speeches, etc.

Margaret Thatcher

Speech to Exeter Conservatives ("Increasing tax means diminishing freedom")

Document type: Speeches, interviews, etc.
Venue: St George’s Hall, Exeter, Devon
Source: Thatcher Archive: speaking text
Editorial comments: Press release (175/76) embargoed until 1330. There is a single word difference between the press release and the speaking text. A section of the text has been checked BBC Radio News Report 1800 26 February 1976 (editorial notes in text).
Importance ranking: Major
Word count: 1613
Themes: Conservatism, Conservative Party (organization), Employment, Public spending & borrowing, Taxation, Labour Party & socialism


It is a very real pleasure for me to speak in John Hannam 's constituency.

As all of you know, John works immensely hard for the Party both in his constituency and in the country.

We used to think of Exeter as a marginal seat. [end p1]

I am glad to note that you are rapidly improving your image.

Thanks to your efforts, and to John 's, Exeter has ceased being marginal and has become let's say—safe-er.

At the next Election I am sure I can rely on you to double John 's majority at least.

Next week will be the second anniversary of Mr Wilson 's return to No. 10. I shall do everything in my power to ensure it is his last. [end p2]

There are no doubt some people in Britain who think that nothing much has changed these past two years.

But you won't be under that delusion if you are unfortunate enough to be one of Labour's one million four hundred thousand unemployed.

And you won't be under that delusion if you are one of the millions of pensioners with small savings who have been crushed in the nut-cracker of Socialist inflation and Socialist taxation. [end p3]

And you certainly won't think that nothing has changed if you are one of the multitude of skilled workpeople and professional men and women whose living standards have been deliberately reduced by Labour.

Anyone who still thinks that nothing has changed in the last two years couldn't in fact be further from the truth.

Because what has actually happened since February 1974 is that we have had a Government that has taken more out of the pockets of the people than ever before. [end p4]

The truth is that Mr Wilson's Government is addicted, more than any other peace-time Government this century, to the non-stop expenditure of other people's money.

Labour has gone on spending our earnings and spending our savings, regardless of what we as a nation can afford and regardless of what individual families can afford.

The figures tell the whole, dismal story. [end p5]

Under this Government public expenditure is now, for the first time since the war, taking a higher proportion of our national wealth than it did in 1946 when our economy was still on a war footing.

Under no Government in our history has State spending grown more massively, more quickly.

This year the Government is spending some £20,000 million more of our money than when we Conservatives were in office just two years ago. [end p6]

To find these huge sums, the Socialists have taxed us up to the hilt—and having reached the hilt they have then lumbered us with mountainous debt.

In their first twelve months alone, the Government increased our national debt by no less than £5,800 million. That's £298 of extra debt for every family in England, Wales, Scotland and Northern Ireland; extra debt that will be round our necks and round our children's necks for years to come. [end p7]

But, as well as repaying the capital sum borrowed, we have to pay the interest year after year.

And the Government imposes extra taxes to pay the extra interest.

The other day one of our Members of Parliament asked the Chancellor of the Denis HealeyExchequer by how much he would be able to reduce the basic rate of Income Tax if the amount of debt interest this year were the same as it was three years ago. [end p8]

The answer was astonishing—seven pence off the basic rate of Income Tax.

None of us doubts for a moment that a sizeable measure of State spending is necessary in a modern society that is educated, caring and adequately defended.

But how much the State should spend must be limited to what the nation can afford.

If it is not, the State, ends up by taking far too much out of the pay packet and that is exactly what is in danger of happening in Britain today. [end p9]

I wonder how many people realise how much more income tax they are paying now than they were when the Conservatives left office two years ago.

This year the average family in Britain is going to be paying no less than £335 more income tax than it was at the beginning of 1974.

Think what you could be doing with that extra £335 a year; and think how much better you could have used it than the Government has. [end p10]

Of course it is reasonable and necessary that we pay tax. [end p11]

But whilst everyone—or nearly everyone—acknowledges that the principle is fair, no-one has yet convinced the British Labour Party that there can come a point when the level of taxation ceases to be reasonable, and instead becomes positively confiscatory.

For a few the present levels of taxation are confiscatory already.

For millions of others, their tax payments are oppressive and demoralising and, amongst the retired in particular, they arouse a profound sense of injustice. [end p12]

When Parliament temporarily abolished income tax in 1816 Castlereagh accused it of having “an ignorant impatience” of taxation.

160 years later the British people are very far from being ignorant on this subject; they have learnt about tax the hard way—by paying it.

But we could do with a lot more impatience of taxation from the present Government. [end p13]

Back in 1973, Mr. Healey, then Shadow Chancellor, warned with relish that the increased taxation wanted by the Socialists would produce “howls of anguish” .

Labour supporters fondly imagined that the only people who would be howling would be the very rich.

How wrong they were!

It is those on average incomes who have been really savaged by Mr. Healey. [end p14]

In 1975 a married man with two children earning the average industrial wage paid a quarter of his income in tax and insurance contributions, and for every extra one pound he earned, 40p. was taken by the Government. [end p15] Beginning of section checked against BBC Radio News Report 1800 20 February 1976

The punitive level of personal taxation is really self-defeating.

It discourages the greater effort, and we in Britain urgently need greater effort.

It ceases to be worthwhile for people to take on greater responsibility and it makes a nonsense of the pre-tax pay differentials. End of section checked against BBC Radio News Report 1800 20 February 1976.

It causes some of those who have been highly trained—usually at the taxpayers' expense—to go overseas, and it deters British people who are already overseas from returning here and giving us the benefit of their skills. [end p16]

Many a multinational company which has sent some of its best managers and skilled craftsmen to its branches overseas finds it impossible to persuade them to come back home.

The reason is simple.

The present level of tax in Britain is so high that we cannot afford to pay the salaries that would leave these people the same amount after tax as they would commonly get elsewhere. [end p17]

But these unnecessarily high rates of tax work not only to the economic disadvantage of Britain; they strike at the very roots of the free society in which we Conservatives believe.

Freedom of choice is the essence of a free society, and that includes the right to choose how you spend your earnings.

Every time the Government takes a bigger slice of your pay-packet, it is taking a bigger slice of your freedom.

And yet in yesterday's White Paper on Public Expenditure the Government said “the tax burden will still increase” . Where will it end? [end p18]

Those on the Left of politics are fond of deriding our preoccupation with freedom as theoretical or abstract.

They are so wrong.

The exercise of individual freedom is an intensely practical—not theoretical—matter.

It is the right to express ourselves—however critically—in private or in public. [end p19]

It is the right to move freely within a country—or to leave it.

It is the right to reject the Socialist philosophy that the Government knows best, and the right to order our lives, and our families' lives, in our own way.

But the inescapable condition for the exercise of individual freedom is a measure of personal prosperity. [end p20]

When this is undermined by the use of the tax system for Socialist ends then personal freedom and choice are diminished.

The more heavily individuals are taxed, the more difficult it is for them to move house, to acquire new skills and experience, to set up their own business, to give their children a better start, to help out their elderly parents, or to plan their own retirement.

Surely these are fundamental personal freedoms which no-one should be denied? [end p21]

Yet they are freedoms which the Socialists are increasingly putting at risk in Britain.

Today we have to be on our guard.

No-one should take our hard-won freedom for granted—even in Britain.

The Warning that the price of freedom is eternal vigilance is as true today as it was two hundred years ago. [end p22]

Looking round the world, it is all too clear that freedom of action and expression are denied in many countries.

Where we have freedom, they have fear.

Freedom can be lost more swiftly than it is gained.

Even in a parliamentary democracy a Government machine can gradually and silently whittle our freedom away. [end p23]

Governments can legislate it away; they can regulate it away; and they can tax it away.

In a free society the State is the servant of the people—not the master.

But under this Socialist Government the appetite of the State for the people's resources is boundless; not for nothing did Hobbes call the State “the leviathan” . [end p24]

A person's pay packet belongs to him.

It is not for the Government to act as if it can take as much as it wishes, and hand back what remains to the taxpayer.

There are limits to what it can levy.

A prime task of the next Conservative Government must be to check the advancing power of the State over the lives, earnings and savings of ordinary people. [end p25]

Without individual freedom there is no freedom at all.

And if personal economic freedom is slowly strangled, political freedom will not survive.