Mr. Chairman, L.L.G. Thank you.
—distinguished exposition
—borrowing money
Change—Banking Bill.
Parliamentary—Quite a lot to dislike about the politics of some.
Start of press release
As we read the headlines which describe the strident slogans of the handful of militants and wreckers in our midst,
it is all too easy to suppose that the basic instincts of common humanity and fellow-feeling which have inspired the people of this nation, throughout its history, have suddenly deserted us. That nothing is left but rampant greed and callous indifference.
I don't believe that. [Notes by MT] Current problems. T.U.'s. Financial matters. Govt. spending. Monetarism. Tax. Prices Bill.
Most of us know that a free society will not survive unless its citizens recognise that they have moral obligations one towards another. [end p1]
But we have to get the law right as well.
If we do not live by a rule of law, the rule of lawlessness will soon take its place.
The law must protect fundamental liberties and must also reflect current needs and conditions.
Otherwise the balance of society will be upset, and the way will be open for those whose objective is to use freedom only to destroy it.
In the past few weeks I have spoken about how trade union power has
—got out of balance with that of employers,
—out of balance with other citizens,
—out of balance even with individual members of the Unions. [end p2]
Unless that balance is restored, collective bargaining becomes collective bullying.
The James CallaghanPrime Minister is constantly saying that you can't put these things right by law.
But industrial practices don't just happen to be where they are now—they didn't get there by accident.
They are the result of years of legislation, added to by this Government, which enhanced the power of the unions and which extended their immunity from the law the law which ordinary citizens and businessmen have to obey.
Someone who uses the law to upset the balance, cannot then complain if circumstances require him to change it to restore the balance. [end p3]
But as well as trade union power there are other things which are out of balance, and it is about those that I particularly want to talk this evening.
It is important to identify some of the other root causes of our national decline.
Too much concentration on the distribution of wealth, too little on its creation.
Too much expenditure on the public sector,
too little left for the private sector.
Too much penalty for success,
too little liability for failure.
Now, at last we are seeing a healthy reaction against years of accelerating encroachment by the state upon the earnings, the aspirations, the rights and the responsibilities of the private citizen. [end p4]
Three years ago, a former member of this present Government (Roy Jenkins) warned his colleagues that this encroachment had already reached the point at which the fundamental freedoms of society were at risk.
For a few brief months they seemed to heed his warning on the public spending side.
But this all too temporary abstinence reflected not a real change of heart, but only the inescapable need to do what the IMF required as a condition for their support.
No sooner had the existence of their supervision, coupled with the windfall of North Sea Oil, led to a recovery in international confidence, than the Government reverted to its former ways.
You are all too painfully aware of what this has meant to the financial markets of the City of London. [end p5]
More than four-fifths of all the savings of the nation, channelled through the Stock Market, have been swallowed by the rapacious appetites of the public sector.
A minimum lending rate of 12½ percent may sound almost modest by the standards of the rates of 1976. (15%;).
But as you know well—none better—when measured against the current levels of inflation it represents the dearest rate at which any Government has found it necessary to borrow since the war.
Ministers sometimes pride themselves on the rectitude and orthodoxy of the monetary policy they have been pursuing.
I do not begrudge them that self-satisfaction.
Monetary discipline as the Bank of England and the Treasury (from time to time) now agree, monetary discipline over a period is the indispensable condition for the abatement of inflation. [end p6]
But it is very far from being all we need.
Through time it will halt the debasement of our coinage. But unless we can, also, abate the spending appetites of Government, we shall find that like the German tribes of classical times we have “made a wilderness and called it peace” . (Tacitus)
Soaring interest rates may prevent excessive public borrowing from depreciating the currency at home and abroad.
But they do it by choking off private investment.
The quangos thrive, but the opportunities for genuine jobs for our young people are stillborn. That is happening today. It is all around us. [end p7]
Last summer the City found itself accused of staging an “investors strike” . In reality of course, the market had accurately divined—as is the way of markets—that an
£8,500m borrowing requirement,
a monetary target of 8–12 per cent,
and interest rates somewhat below the going rate of inflation
Were simply not compatible at a time when the Government had launched a consumer boom. Something had to give.
What should have given was the borrowing requirement. It was far too high.
It should have been reduced by pruning public expenditure.
What gave, in the event, was the interest rate. It rose sharply. The equation was resolved. [end p8]
But it was resolved, once more, at the expense of the private citizen.
Yet even now the Government is planning for a continuing growth of public spending programmes at a rate of 2 per cent a year in volume terms.
I must tell you openly that in our estimation this is far beyond what the British economy can sustain if its health is to be restored. [end p9]
No-one who has been in politics as long as I have can fail to be aware of the persistant pressures for better public services.
Too many of our essential services are today deteriorating— from road surfaces which represent a hazard to the user, to hospitals whose waiting lists lengthen.
The calls upon the public purse for these services are genuine and urgent
Yet we must all recognise that the only consequence of allocating wealth we have not earned, to pay for improvements in services we cannot afford, is that the precious stock of enterprise and initiative is further undermined. [end p10]
That way lies a vicious circle of shrinking private resources leading to shrinking public services.
The only way to have flourishing public services is to have policies designed to achieve flourishing private enterprise.
Levels of personal taxation in Britain have long passed the point of what is reasonable.
Men and women who have built a business giving work and satisfaction to their fellow-citizens go from our shores to the sterile refuge of tax-havens or to managing businesses overseas.
I wish more of them would stay here and fight to restore in Britain the right to succeed, and to be rewarded and respected for success. [end p11]
In the factory, night-shifts and week-end shifts are difficult to fill: for why suffer the inconvenience when the lion's share of extra earnings passes straight over to the taxman?
Moonlighting and the ‘cash economy’ have become a way of life for millions of our fellow-citizens.
But if Government policies result in similar rewards for those who don't work as for those who do, it is not surprising that they encourage idleness instead of endeavour.
The top levels of our present tax structure are inspired by nothing more constructive than worship of the Green-Eyed Goddess of Envy. [end p12]
Substantial reductions in the highest marginal rates on income from earnings and savings would not just leave the tax revenues unaffected.
We believe that by stimulating extra enterprise,
—rendering much existing tax avoidance obsolete
—and encouraging some of those who have left these shores to come home,they could actually yield more revenue.
Considerable reductions in the lower rates of tax on incomes are just as urgent. We all need incentives.
But here the implications for the public revenues are formidable indeed. In part the loss of revenue can be recouped—and may have to be recouped—by higher taxes on spending. [end p13]
If we need to divert resources from consumption to investment, as this Government never tires of telling us, that is one way to do it.
However, the scale of personal tax cuts which are now needed is so great that we couldn't hope to recoup all the lost revenue that way.
The impact on inflationary expectations would be more than we could contemplate at a time when a return to stable money must be the foremost of our economic priorities.
Least of all can we afford an even wider gap between what the Government raises in taxation and what it spends. On the contrary, that gap is already far too wide. [end p14]
So I fear that over the next few years there will be little scope for improvement in the provision of services by the state unless we first earn it. And not just that.
Because some politicians measure virtue by how much of other people's money they can spend, waste has assumed alarming proportions.
You don't need to read the cautionary publications of the Public Accounts Committee, or the admirable expose published eighteen months ago by a former civil servant (Mr Chapman)—to know that there is much scope for economy in public administration. [end p15]
You referred in your remarks, Mr. Chairman, to the need for fuller consultation over legislation in the field of consumer protection and consumer credit between the lawmakers and the professionals. You called for a wider exchange of personnel between Whitehall and the City. I accept your case. But I must tell you that I regard these as only palliatives.
It is not so much better communication that is needed; it is much less legislation of the kind which attempts to regulate every detail of business life. An excellent motto for Parliament for a time might be caveat legislator. [end p16]
We face today the gravest disruption of essential services this country has known for fifty years.
Yet on whom does this Government turn with all the might of the law?
Not the trouble makers, but their victims.
Over many years, our present Ministers have left no stone unturned to extend the powers and privileges of Trade Unions.
They talk of the ‘independence’ and ‘good sense’ of ordinary citizens. But who dares display either when the price of defiance of Trade Union orders is deprivation of the right to work? [end p17]
Then, these same Ministers complain of the weakness of private employers who are unable to resist the powerful force that the Ministers themselves have helped to create.
Ministers don't just complain. They invoke pains and penalties against the companies which have been driven to yield to force and threat.
That's why next week Mr Hattersley is to submit to Parliament a Bill to withdraw the essential safeguards for profits which even this Government had previously conceded were necessary to prevent firms being bankrupted by price regulation. [end p18]
What Mr Hattersley is proposing has little to do with curing inflation, but everything to do with damaging profits.
Every vote that is cast for next week's legislation is a vote for unemployment.
We shall fight it all the way.
The road to recovery will not be short, or smooth, or easy.
Anarchy, like appetite, grows with feeding.
It will not readily give way to order.
But give way it must. Give way it shall. End of press release. [end p19] Rough notes by MT. [?] indicates illegible word. [? words] indicates uncertain words
[Prejudice]—Free Society—each and every person by [? birthright]
—social [? morality]
—[?] [?]
—responsibility individual worth
—Private Property—Human Rights
—Constitutional ways—through our Institutions
—Rule of Law
—Govt strong
[?] [?]
Limit the scope of its activity.
—Britain. Secured
Bastion—example—of a free society