Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1976 Mar 3 We
Margaret Thatcher

Speech to the Greater London Area Conservative Council ("Towards a prosperous Britain")

Document type: Speeches, interviews, etc.
Venue: Caxton Hall, central London
Source: Thatcher Archive: speaking text
Editorial comments: Press release (231/76) embargoed until 2030. The speaking text has minor additions and stylistic modifications of the press release.
Importance ranking: Major
Word count: 3115
Themes: Conservative Party (history), Employment, Industry, Monetary policy, Privatized & state industries, Public spending & borrowing, Taxation, Labour Party & socialism


When a Conservative Government is returned to power, it always has one urgent, immediate and inescapable task.

That is to clear up the mess that the Socialists have left.

It was true as far back as 1951, when Sir Winston Churchill formed his first peace-time Government.

It was true in 1970 when Mr. Heath came to power; and it will be true after the next Election when the electorate chooses the Conservatives once more. [end p1]

Indeed, after the next Election, it is going to be truer than ever.

The Socialists have not been in power for long.

It just seems like an age.

But it will need a tremendous effort merely to repair even the worst of the damage that they have inflicted in so many directions in these past two years.

A plague of locusts could not have done more damage than Mr. Wilson and his colleagues have inflicted on this country. [end p2]

They deceived the country in order to win the October 1974 Election.

Do you remember Mr. Healey 's claim that inflation was at a rate of only 8.4%;?

And who said in September 1974,

“I am certain we can get through the whole of next year with well under a million unemployed” ?

He is still Chancellor of the Exchequer. [end p3]

Labour turned a serious inflationary situation, reflecting world-wide conditions into a disastrous one so much worse than nearly all our industrial competitors.

They then waited till the eleventh hour and fifty-ninth minute before even trying to check it.

They have rammed a mass of spiteful and ill-digested and damaging legislation through Parliament.

And all along they have been spending more and more money—our money. [end p4]

The vast bureaucratic machine of Socialism is racing away quite out of control, sucking money out of the pockets of ordinary people and pumping it out in the form of wasteful public expenditure.

In order to pay the bill, taxes have gone up.

Yet in spite of all the extra money the Government have raised they are spending it faster than they can get it in.

For every five pounds the Government spends today, one is raised by borrowing. [end p5]

Naturally the cost of that borrowing, in interest, has increased enormously since the last year of Conservative government—by an amount equivalent to an extra 7p. on the standard rate of income tax.

And that's not all.

When the Denis HealeyChancellor announced his spending plans last Thursday week he boasted about the enormous cuts he and his colleagues are now proposing (not today or tomorrow of course—but sometime, or even never.)

What he failed to reveal is that those cuts will be more than swallowed up by the increasing burden of interest on the National Debt all the way through till 1980. [end p6]

So in effect no cuts at all—and deeper and deeper into debt.

A sure recipe for bankruptcy.

Nor is that the end of the story.

They are not even getting value for the money they have borrowed.

Money is being poured out—again, your and my money—for nationalising oil, aerospace, shipbuilding and repair; money for the National Enterprise Board to buy its way into free enterprise companies, which up till this moment at least have been profitable. [end p7]

Much of our money has been going in hiring more and more officials.

The Community Land Act, for instance, will alone cost a million pounds a week to administer.

Bureaucracy is the only growth industry under the Socialists.

Immediately we take office we will be faced with the tremendous task of repairing the damage, and of re-uniting a nation divided as never before by the malice and envy of socialist doctrine. [end p8]

There will be a great deal to do.

But however busy we are, trying to dam the breach we must not lose sight of our longer-term hopes and needs.

It is not enough simply to stop doing the wrong things.

We must start doing the right ones.

In particular we have to provide a framework in which commerce and industry have the opportunity to prosper because the prosperity of every single one of us depends on that. [end p9]

Every pension every welfare payment every penny the Government spends depend in the last resort on the wealth-creating capacity of industry and the earnings of those who work in it.

It is commerce and industry that pay the wages and provide the money that Governments spend.

It is they that earn the exports without which we could not buy the food and raw materials on which the country depends.

No-one can claim that British industry is in a happy condition at the present time. [end p10]

It has been starved of cash, squeezed by price controls, bullied and hectored by Ministers, and threatened with nationalisation and planning agreements. [end p11]

The Labour Party offer us no serious diagnosis of the problem. They refuse to face up to those few parts of the truth that they have now understood, and are continuing in practice to pursue the same disastrous policies as before.

But if we reject the Socialists' remedy, we must provide a better one of our own.

For years now commentators have talked about the “British sickness” and argued as to what its cause might be.

Some of them believe that at the root of our problems lies the fact that we were the very first great industrial nation, the very first to have an industrial revolution. [end p12]

Others point to the sacrifices and the losses caused by two world wars.

More important, however, than the historical explanations of our industrial problems is how they can be cured.

There can be no easy solutions to a deep-rooted structural problem no instant remedy which suddenly transforms the situation.

Industry has had enough of that kind of treatment from Mr. Wedgwood Benn to last it a lifetime. [end p13]

We reject the notion that a day spent at Chequers is enough to cure all industrial ills that is instant Government at its worst.

We have had more than enough grand declarations of intent to last us a lifetime.

No, we must pursue a determined, steady long-term improvement in the climate in which industry operates.

There can be no overnight miracles. [end p14]

A change like this will not happen by itself.

Our policies will have to make it possible.

That is why we must start now to work towards the prosperous industrial future we need. [end p15]

Confidence and Stability

First, we have to restore the confidence of industry—confidence in a stable and settled future.

Confidence in its own ability.

In order to give industry that confidence we must stop pretending that the man in Whitehall knows so much better how to run a business than the people actually in charge of it. [end p16]

We must stop chopping and changing every five minutes so that no-one knows from year to year what the system of company taxation is going to be or what assistance or encouragement they will get for new investment.

We must free industry from constant pettifogging intervention.

And we must provide a background of economic stability. [end p17]

Incentive and Reward

Second, we must make it worthwhile for people to work hard.

It does not make sense to have a tax system which actively discourages hard work or even any work at all.

We want a system that leaves rewards in the pocket proportional to individual effort. [end p18]

This is not just a question of directors, managers or executives—though talent is not so plentiful nowadays that we can afford to see some of our ablest people lured away by lower taxation in other countries or to have companies complaining that their overseas executives cannot afford to be persuaded to return to take up posts in this country.

No, when we say we wish to reward effort, this applies to everybody, whether their job is unskilled, skilled, professional or managerial.

We believe that far more is lost by discouraging people from work than is ever gained by squeezing taxation to the limit. [end p19]

Industry is not just, or mainly, machines.

First and foremost, industry is the people who work in it,

They need incentives and rewards.

One has only to look at the rates of tax in other Common Market countries to see how much more harshly the burden of tax on incomes bears down on British shoulders. [end p20]

The £5,000 a year man is more than £500 a year better off in France than in Britain.

A man earning £15,000 a year is nearly £1,200 better off in Germany; and if he lives in France, he is left with £3,000 more to spend, or better still to save, than in this country.

But our harsh tax rates bite at all levels.

Anybody working overtime knows this well enough. [end p21]

When National Insurance is taken into account, the State takes about 40p in every extra pound earned by the standard rate taxpayer.

And yet the Denis HealeyChancellor has stated that the burden of taxation will still increase.

So, the reduction of personal taxation is an essential step in improving the working climate and the industrial performance of Britain. [end p22]

Partnership and Freedom

Third, we must recognise the benefits which can come from the greater involvement of all employees in the way their enterprises are run.

As I have said, industry is the people who work in it as well as the money invested in the machines they operate.

To be fully effective, Labour and Capital must operate in Partnership. [end p23]

Management and workforce must work together developing the mutual trust which comes from full consultation and discussion of future plans.

We have to replace conflict with co-operation. [end p24]

The Role of Profit

Fourth, we have to appreciate the role of profit in the economic system.

This is a message I have been concerned to spell out to various audiences in recent months.

It is one of the most vitally important messages for Conservatives to put across today.

Never in history have so many different forces joined together to squeeze industry's rate of profitability. [end p25]

It has been eroded by inflation.

It has been cut into by taxation.

It has been held down still further by the harsh and unimaginative extension of the Price Code; a Code, which was never intended by its creators to continue largely unaltered, in circumstances such as today's.

Allowing for inflation, the rate of profit earned by companies has been halved since the early sixties.

And that is almost certainly an understatement of the true situation. [end p26]

Some foolish people think that the more that profits are reduced the better.

But over the past two years we have had ample opportunity of seeing what happens when profitability falters.

British Leyland has been forced into the arms of the State not through making too much profit over the years, but through making far too little.

Lacking the necessary profit, it could neither save invest nor, in the end, borrow. [end p27]

The net result is that the taxpayer is being asked—except that ask is not the right word, the taxpayer has no choice—to put up at least £1,400 millions for British Leyland over the next few years.

And if for whatever reason Leyland does not even then make proper profit, then have no doubt about it the public will be required to pay still higher taxes and put up still more cash.

And equally important, thousands of self-employed people and smaller companies have been forced into liquidation—record numbers in fact. [end p28]

Let us therefore not be the slightest bit squeamish or apologetic in proclaiming the vital necessity of earning profits.

It is profit, honestly earned, that is the measure of a firm's success.

Profit shows that the nation's resources are being used to create wealth rather than destroy it.

It is adequate profitability that is the best guarantee of jobs and of pensions, too. [end p29]

Too many firms and workers have learned the hard way in recent months that when profits go, so does the security of their job,

State handouts are certainly no substitute—as the history of some recent workers' co-operatives have shown.

There is a further reason for insisting on the vital importance of creating the conditions for industry to operate profitably. [end p30]

Out of profit comes most of the money which industry needs to invest in new plant and machinery, so that it can produce the goods that people want at prices that they are able to pay.

And it is the prospect of profitability that enables a firm to increase its financial resources by going to its bank or the stock market.

Deprived of profit, it cannot raise the money it needs.

It is left with the choice between the receiver and the lender of last resort which in this case is the State. [end p31]

The people of this country do not want nationalisation—that is clear enough.

But without adequate profitability there will hardly be a firm in the country that is not controlled by the State.

We know how far profitability and value for money go hand in hand.

What is less often realised is that profit goes hand in hand with freedom. [end p32]

Savings and Investment

This leads me to the fifth point in our six point programme—the need to encourage savings and investment.

This does not mean that we believe that the solution to the whole of Britain's industrial problems can be found in higher investment.

Wise investment is at least as important as more investment. [end p33]

Nor, unlike our opponents, are we so stupid as to claim that industry, starved of cash, bedevilled by bureaucracy, and in the middle of a recession is somehow “failing” the nation if it doesn't invest cash that it hasn't got and cannot afford.

But it is true that both Germany and Japan, two of our most formidable competitors, have been prepared to consume less today in order to invest more, to save now in order to secure the future for themselves and their children.

They have managed to ensure that, where industry needs more cash than can be generated from profits, the savings are there to fill the gap. [end p34]

We have therefore to be prepared, as the Governments of other countries have been, to encourage saving and to encourage investment.

Industry itself has been over-taxed in the past.

Because companies don't have votes, Chancellors of the Exchequer may have felt that they were that much easier to extract money from them than from private individuals—some of it overtly in the form of taxes, but much of it discreetly in the form of social security contributions. [end p35] We must not forget that, however desirable the services financed in this way, employers' contributions are a tax to all intents and purposes.

We must ensure that the State does not withdraw excessive resources from industry and that its demands are met through a stable system of taxation so that industrialists can know where they stand and plan ahead.

At the same time we want to encourage savings to provide the finance that industry needs.

It is no good clobbering the income from savings. [end p36]

Many on the Left argue for this because they believe in redistributing incomes.

But it is a fallacy to think that dividends and interest payments from companies go simply to the rich.

If anyone doubts this, they have only to turn to the pages of the Diamond Commission, appointed by this Government to report on the distribution of income and wealth. [end p37]

This shows that out of 2.1 million private shareholders in 1972/3—the last year for which we have statistics—there were one million (nearly half) with total incomes from all sources of less than £2,000 a year, less than £40 a week.

Then, the investment income surcharge bears down particularly hard upon retired people and pensioners.

The same report showed that 45.9 per cent of all dividends and taxed interest went to pensioners. [end p38]

It is not, however, enough to encourage investment by industry and saving by the people.

Something more is required.

Only so much saving is possible.

If the Government pre-empts most of the funds available, then private industry must inevitably get less than it needs.

That is another reason why the issue of Government spending is central to our economic prospects. [end p39]

Already there are serious fears that as recovery comes to the economy and industry starts to increase its investment not enough cash will be available because of the amount the Government itself wants to borrow to finance its spending.

When there is not enough to go round, the Government must stand back. [end p40]


Sixth, if industry is to prosper there has to be a determined attempt to reduce overmanning.

In Britain we are not getting the most out of our old plant and machinery, let alone out of new installations.

Employers are unable to Operate them at their maximum efficiency.

This benefits nobody in the long-term. [end p41]

It keeps up prices and holds back sales, employment and profits.

It means that instead of aiming at the high-wage, high-productivity economy we are tending to settle for low-productivity and relatively low wages.

We have to make it easier for people to change their jobs.

There is no greater economic fallacy than to believe that high productivity adds to unemployment. [end p42]

On the contrary, efficient production creates new prosperity, new demand and new jobs.

This is eloquently spelt out in the Think Tank's penetrating study of the problems of the car industry.

We have got to get out of the trench warfare mentality, clinging to old jobs that no longer really exist instead of creating new ones that are wanted. [end p43]

These, then are six central points.

None of them is easy.

None of them is instant in its effects.

But all of them are essential if this country is to get itself out of the slough of despond and create a prosperous industrial future for itself.

I believe that this country is ready for a change of course.

People are tired of seeing Britain year by year slipping further behind, every year getting a little shabbier and a little more discontented. [end p44]

The British people will never for long be content with second best, or to have their hopes and aspirations frustrated by slow growth and mediocre industrial performance.

They know that to improve the quality of life, both personal and national, we need efficient prosperous industry.

People want a change.

Yet strangely enough almost the main obstacle to making the changes we want is the feeling that change isn't after all possible, that it can't be done, that it won't work. [end p45]

People have been disappointed so often; they have seen so many Socialist plans go sadly astray that they are wary of being disappointed yet once again.

The first thing we have to tell them is that this is still, in spite of everything, the same British nation that ever it was.

The British are still a wonderfully inventive, wonderfully ingenious people.

The story of our industrial progress has been one of innovation.

It was true at the time of the steam engine and it is true today. [end p46]

The British people have beyond the shadow of a doubt the ability to prosper.

People long to be free of the extremists whom they see dragging industry down.

They are fed up to the back teeth with the wreckers and the pessimists.

If they don't act, it is because they don't quite see how.

Our task therefore is to convince them that it can be done and to show them how.