Speeches, etc.

Margaret Thatcher

Speech to Conference for Management in Industry

Document type: Speeches, interviews, etc.
Venue: Albany Hotel, Glasgow
Source: (1) Thatcher Archive: CCOPR 10/78 (2) Scotsman, 10 January 1978
Journalist: (2) David King, Scotsman, reporting
Editorial comments: Press release available here; full version on CD-ROM only. Embargoed until 1030. A section of the text has been checked against the BBC Radio News Report 1300 9 January 1978 (see editorial notes in text). The Scotsman account of the speech includes later remarks by MT on the role of trade unions, perhaps derived from a question and answer session after the speech or from the Press Conference she gave at the end of the day. MT was speaking to an audience of 200 or so Scottish businessmen. Jim Prior and Keith Joseph also spoke.
Importance ranking: Major
Word count: 4041
Themes: Union of UK nations, Conservatism, Economic policy - theory and process, Employment, Industry, Energy, Pay, Public spending & borrowing, Taxation, Labour Party & socialism, Trade unions, Strikes & other union action
(1) Thatcher Archive: CCOPR 10/78.

Time for a change

This is the time of year for resolutions.

You will not be surprised to learn what my resolution is for 1978. It is to remove the red label from Number Ten Downing Street and to free the British people from the grip of Socialism which has been holding us back for very nearly ten out of the last thirteen years.

In by-election after by-election over the past two years, the people of Britain have been saying loud and clear that it is time for a change. According to the present Government, all we need is a change in our economic fortunes; and that, they claim, is just around the corner. The most recent outbreak of caref ully-orchestrated euphoria followed the publication, last week, of the OECD's forecasts for 1978.

Why the euphoria?

According to the OECD, over the coming year our national output will rise by 3 per cent, inflation will fall to 8½ per cent (I seen to have heard that figure before, somewhere) and then to rise again to 10½ per cent, and unemployment will rise to 6½ per cent.

The interesting fact about that forecast is not whether it is right or wrong: who knows? What is interesting is that, in each and every respect, it is rather worse than what the OECD expects to happen in the western industrialised world as a whole. [end p1]

And what it forecasts for the OECD area as a whole is described in terms of gloom and despondency, as the possible harbinger of renewed world recession.

In other words, a performance rather worse than that seen as a disaster for the industrialised world as a whole is presented by Ministers as little short of an economic miracle for Britain. Well that may be Labour's standard for Britain.

But it isn't mine. And I don't believe it is that of the British people, either.

The truth of the matter is that all the Ministerial euphoria of recent months boils down to this: having (for the time being) stopped banging our heads against a wall, they expect us to fall over ourselves in gratitude for the relief.

The past four years

Over the past four years we have suffered

—inflation at an average annual rate of 18 per cent; twice as much as under the previous Conservative Government,

—a near trebling of the number of people out of work, compared with an actual fall in unemployment under the previous Conservative Government. I well remember, seven years ago, when we were in office, unemployment in Scotland reaching 120,000 and the Scottish TUC describing this as “havoc” every bit as real as “ that caused by any natural disaster” . Yet you now have half as many again out of work—and under a Labour Government which has repeatedly claimed this to be the supreme yardstick by which they wished to be judged. Remember how they were going to “get us back to work” ?

Again, over the past four years we have seen total stagnation in national output—indeed, according to the OECD, manufacturing output by the end of this year will not even be back to the level reached in 1973—and an actual fall in productivity. So much for the so-called industrial strategy. [end p2]

And the real value of the take-home pay of the average married working man has now fallen well below what it was four years ago, and is back to the level of 1970. [end p3]

Now they boast of the fact that the balance of payments is moving into healthy surplus, and the pound is once again in demand in the markets of the world.

I couldn't be more pleased. But this, of course, is entirely due to the one thing for which they can claim no responsibility whatever: North Sea oil, deposited off our shores by a beneficent providence, and extracted by private enterprise.

Not much Socialism about that. Nor, when boasting about the pound, do they stop to remind people that, despite its recent rise, it still has lost a fifth of its international value since they took office.

Indeed, their overriding hope is that the electorate will forget that the past four years ever happened. Well, it won't—and nor will future generations, who will have to pay the interest on the vast debts the present Government have piled up.

The national debt began in 1689. Under the present Government it has more than doubled. In other words in four years Labour have accumulated more new debt than all previous governments, going back over nearly three hundred years, put together.

If people won't forget the past, Ministers fall back on the two commodities that are never in short supply under socialism: promises and excuses.

They have two main excuses. The first is that everything that has gone wrong is the fault of their predecessors. Well, they have now been in office longer than we were; and I don't remember them saying that everything that ever went wrong during our time was their fault. Their other excuse is that everything that has gone wrong is simply p art of the world inflation and the world recession.

Now there is no doubt that world conditions have been very difficult in recent years, and are likely to remain so for some time to come.

And I fully understand the very real difficulties with which you, as businessmen, have had to contend, quite apart from the handicaps imposed by Socialist legislation and taxation.

But there is equally no doubt that, despite this, by all the objective yardsticks—output, unemployment, inflation and productivity—we have done far worse these [end p4] past four years than any of our major competitors.

This would be a matter for dissatisfaction, if not shame, at any time—after all, historically, we have tended in the past to do best, relatively speaking, when the going has been roughest. But it is doubly so now, given that we have already enjoyed a measure of benefit, denied to our competitors, from North Sea oil.

Attitudes to taxation

So much for the excuses: what of the promises? The latest one is a so-called give-away Budget in the Spring. That is one promise you can be quite sure will be kept. When a Conservative Government cuts income tax, it means that we are doing what we believe in. When a Labour Government cuts income tax, it means t hat there is an election in the offing.

“Our programme is going to cost money, and money can only be raised through taxation” warned Mr Healey in 1973, gloating over the “howls of anguish” which the extra tax would cause.

Unfortunately most people didn't read Labour's programme then—or if they did, they didn't believe it.

Now they have gone into print again, with a new official programme for the future, in which they write: “the additional spending involved in implementing our programme would be considerable … a great deal remains to be done to bring in more income tax revenue …” This time their “Programme” should be read—in that sense, I commend it to you—and believed. We have been warned.

Nor is it merely the Marxist element in the Labour Party who believe in high taxation. During our last period of office we cut income tax substantially—indeed, it would take Mr Healey very much more than all the tax and royalty revenues expected to arise from North Sea oil at the peak rate of extraction, simply to get back to the level of pe rsonal tax he inherited.

And what did they say at the time? I remember that we cut income tax during our first year of office. The then Labour shadow Roy Jenkinschancellor complained that this was “a clear case of redistribution against those who do not pay income tax” , and that Tony Barber had introduced a “Budget fo r strengthening inequality” . [end p5] And who was then shadow chancellor?

That well-known moderate social democrat Mr Roy Jenkins, now departed to more favourable fiscal climes. It has been well said that, at the end of the day, the only difference between the Marxists and the social democrats in the Labour Party is that the Marxists want to see the Socialist mill ennium tomorrow, whereas the social democrats wish it to be deferred until their children have completed their private or grammar school education.

Indeed, when we talk about levels of taxation, and attitudes to taxation, we are coming near to the true explanation for our dismal economic performance these past four years—and the future to which we are condemned so long as Socialism holds sway.

Winston Churchill put it well almost twenty [sic] years ago, during the first post-war Labour Government:

“What we have here now” , he pointed out, “is a capitalist society on which we are dependent for our daily bread and survival, and a Socialist Government which views it with the utmost hostility and is trying continually to gain credit with its own extremists by casting a baleful net over its activities, by denouncing it and threaten ing it all the time and stabbing it with gusto whenever a chance offers.”

(Hansard, 27 Oct. 1949, Col. 1621)

And now, when one stab or another wounds it, they have the effrontery to claim that this is a “failure of capitalism” , and the justification for still further socialism. It is all there, in “Labour's Programme” —the nationalisation (including new forms of nationalisation without compensation), compulsory planning agreements an d all the rest. [end p6]

What makes a free economy tick

If we are to understand the real reason for the economic failures of the past four years, and grasp what really needs to be done to make a fresh start, we have to understand what it is that causes a free economy to grow, to succeed and to prosper: what it is that really makes it tick.

The socialist creed—and this is true whether the methods used owe more to Keynes or to Marx—is that the vital drive comes from the state. For then it is the state that must decide what investment is needed, and where; what industries should be ‘supported’ and what wages paid.

We believe that it is the individual who makes the economy tick; whose enterprise, ingenuity, industry, thrift and attitude to work are the true springs of economic growth and success.

This is no empty assertion: it is a vital distinction, and a number of practical consequences flow from it.

Restoration of incentives

It leads us to make our first and overriding priority the restoration of incentives through a reduction in taxation on income and capital at all levels.

I have already spoken of the importance we attach to cutting income tax, even in years when there is not an election in the offing.

But scarcely less important is the reduction of the burden of capital taxation that the present Labour Government has imposed in particular on the family firms which are the backbone of our industry and commerce. It is ironic that the present Government itself—in the engaging person of Mr. Harold Lever—has at long last begun to grasp the immense harm that Capital Transfer Tax has already done. [end p7]

The very last job I had, before becoming Leader of the Conservative Party, was that of leading the Conservative team on the Finance Bill Committee examining what eventually became the Finance Act, 1975—the Act which introduced the Capital Transfer Tax. Night after night, we pointed out the havoc that tax was bound to wreak over a wide range of British business and farming—only to be met by blank astonishment from a Government which either had no comprehension of what it was about or else deliberately sought to destroy the family business. And now that they claim to recognise the error of their ways, they propose to do the same thing all over again with a Wealth Tax.

And still they have the gall to talk of the failure of capitalism!

Of course, reductions in taxation have to be paid for. We have made clear our determination to see that government spending—both national and local—must be steadily reduced as a proportion of total national output.

North Sea Oil revenues

Beyond that our emphasis on the individual, and on the superiority of the market, for all its imperfections, in allocating resources, has implications for the use of the significant government revenues that will arise from North Sea Oil.

We reject the Socialist view that these should be retained by the Government and used to increase state power by state intervention in industry of one kind or another for political purposes: this is the road, not to regeneration but to degeneration.

Instead, we believe that this provides us with a means of reducing still further the necessary evil of personal taxation; so that once again it pays to work, to acquire a skill, and to take a risk. [end p8]

Government interference

The Conservative Party understands the individual, because it believes in him, and in his potential provided he is allowed to be his own man and not a creature of the State.

And we understand and cherish the family business, where relations between employer and employee are frequently best, because we are the Party both of the family and of private property. We will reduce not merely the burden of direct taxation, but the almost equally oppressive burden of unnecessary government interference thro ugh legislation. One example is to be found in some of the provisions of the Employment Protection Act in their present form.

It is no part of Government's job to tell businessmen how to do their job, and I have no intention of telling you now, or in the future, how to do yours.

Independence and autonomy is the very air that entrepreneurship breathes and lives on. Socialist politicians plan to destroy it, and yet they look to you to create the jobs of the future! It is effrontery for them to criticise the calibre of middle and senior management when it is they, the politicians, who have turned management into a career without rewards. But it is equally preposterous to complain about strike-happy employees when throughout the wole range of earnings the differential between the prizes for hard work and the penalties for idleness have largely disappeared.

I do offer you the hope of a climate in which you can do your job better than you can at present—and I believe that this will have the incidental benefit of enabling Government to concentrate more on what is inescapably the Government's job.

No soft option

But I certainly offer you no soft option. It is not only the enterprise of management, but also its responsibility, that has been sapped and undermined in recent years. [end p9] Beginning of section checked against BBC Radio News Report 1300 9 January 1978

The habit has grown of looking to Government to regulate the wages you pay, and what was once a tiresome interference is in danger of becoming a kind of tired convenience and I must be absolutely clear about this. Most of you want Government to withdraw from interference in prices and profit in the private sector. We all want to see that, but the counterpart of that is inevitably the withdrawal of Government from interference in wage bargaining. There can be no selective return to personal responsibility. You're never likely to get withdrawal from interference in profit and prices and have Government nevertheless fixing wages, and if you did you'd probably soon find yo u could not get the skilled labour you wished and which is essential to carry on your work because they got far too rigid a system. End of section checked against BBC Radio News Report 1300 9 January 1978. [end p10]

The way to a free and responsible society

I spoke, right at the start, of the widespread desire for a change; and have concentrated on the changes that are needed to bring our sick economy back to health—changes which a Labour Government will never and can never introduce, because they run counter to the most fundamental beliefs of socialism, even in its seemingly most moderate guise.

But the desire for a change far transcends the economic dimension. What we offer is the true enfranchisement of the individual—and with it the responsibility, self-respect and robust independence which enfranchisement brings.

For the democracy of the ballot box, important though it is, is only one form of democracy. In a truly free society, and a society of truly free men, it must be reinforced by the democracy of the market, in which people can cast their vote, not once every four years or so, but every day as they go about their daily business, making their own de cisions about how to spend—or save—their own money. The ballot box may be the best way of enabling people to have what most people want. But how much better, wherever possible, to let everyone have what he or she wants most.

That way lies not only a free society, but also a responsible society.

Some people say that the British no longer value freedom. I don't believe it. [end p11]

Indeed, the desire is manifesting itself every day. More and more we are seeing a new and healthy rebellion among ordinary working people against some overbearing and unrepresentative trade union leaders.

Who would have thought that miners at the most productive pit in Scotland would be driven to strike in protest against the orders of Mick McGahey? Yet it has happened—and it was the ordinary rank and file who won.

How much stronger that emancipation movement will be when taxation once more makes it possible to earn and to save!

That is why I believe that so much of the comment about the role of the trade unions in our society misses the point.

They are not monolithic armies: they are composed of millions of individuals, very many of whom regularly vote Conservative at every general election. If in recent years they have appeared monolithic, it is because a malign combination of excessive government, excessive taxation and rampant inflation have polarised out society and politicised e very corner of our national life. I am determined that the next Conservative Government will reverse this trend, and place the emphasis once more on the individual citizen, the family, and on their needs and ambitions.

Devolution is back to the citizen

That is the sense in which I, too, am a passionate devolutionist at heart. I am not convinced by the present devolution model currently before Parliament. Surely, the last thing that Scotland needs, or the Scottish people want, is another layer of Government, another swathe of bureaucracy to support, when it has so many alread y.

The true devolution is away from Government of every kind and at every level, and back to the citizen. [end p12]

“Power to the people” is a sadly abused slogan, appropriated and perverted by the collectivists whose purpose is all power to the State at the expense of the people.

But in its genuine and literal sense, tracing its pedigree straight back to those twin giants of Scottish thought, David Hume and Adam Smith, it is a tribute to the potential and nobility of the individual human soul.

Let us not be afraid to raise that standard together. [end p13]

(2) Scotsman, 10 January 1978