Yesterday was a great day for the United Kingdom.
Tomorrow—and it can't be far off—will be even better. Beginning of section checked against BBC Radio News Report 1300 3 March 1979:
For two years this Government have laboured night and day to drive the Scotland and Wales Acts through Parliament.
They insisted that their plans were a response to the clamour for Assemblies in Scotland and Wales, but even with that argument, the legislation would never have passed if the Cabinet had not been compelled to hold Referendums.
Nor would it have survived without the 40%; rule. But with total cynicism they've tried to whip up emotions which just weren't there. And all that to appease the few whose votes they needed in Parliament. End of section checked against BBC Radio News Report 1300 3 March 1979. [end p1]
On Thursday, the people of Wales voted overwhelmingly against the Assembly by a majority of 8 to 1. Every county voted NO.
In Scotland, of those who voted, almost as many were opposed to the Assembly as favoured it.
And if you count the abstentions as NO votes—and that's how Labour were describing them in the campaign—then you can only conclude that the Scottish people rejected Labour's plans decisively.
Dumfries and Galloway said NO. Shetland said NO. Orkney said NO. The Borders said NO. Tayside said NO. Grampian said NO. Beginning of section checked against BBC Radio News Report 1300 3 March 1979:
There is no sound or honourable basis for the great constitutional change which Labour have proposed, and [end p2] the final insult would be for this dying government to try to bend our constitution to keep themselves in power for a few more wretched weeks.
Clement Attlee wouldn't have done it. Hugh Gaitskell wouldn't have done it. We wouldn't do it. End of section checked against BBC Radio News Report 1300 3 March 1979
Does what has happened affect the timing of the Election? You'd better ask the James CallaghanPrime Minister and the minor parties. Our opposition to Socialism has never been in doubt.
It wasn't in doubt in Knutsford. It wasn't in doubt at Clitheroe. And the people were in no doubt at all. [end p3]
Labour has been the government now for exactly five years this week-end. They have been long and hard years for the British people. Five years of decline. What was the phrase?—five wasted years.
During these years, the Conservative Party has been greatly helped by all of you in local government which you know—who better—is about providing services and fulfilling human needs.
It is about giving genuine choice and variety in Education,
about the drive to make home ownership a reality.
about cutting out waste so that everyone benefits from the lower prices and costs which competition brings. [end p4]
about involving small business in the work of house repairs and house improvement.
about helping those who can, to help themselves, so that we can do more for those who need it most.
about Nottingham selling its 5000th Council House.
about Northampton County Council letting out school bus services to private enterprise.
about East Sussex setting up a task force to encourage local industry.
about Leeds cutting the time to process household planning applications to 28 days.
about Hickley and Bosworth cutting its rates three years in succession.
about Wandsworth holding the rates this year—which the Labour Councils—Hackney, Lambeth, Southwark, Camden and the rest are about to raise them sky-high—20, 30, 40%;—perhaps even more. [end p5]
You have shielded your people from the worst effects of Labour government. We are grateful for all that you have done.
We've worked with you in Opposition. We shall go on working with you in government.
Good government rests on a partnership between Whitehall and Town Hall.
We are going to give back to you more of the responsibility for running your own affairs. And we will talk with you about how those affairs can be run on the same principles of good government that will shape our policies at the centre.
I'm speaking about the future. But there may of course still be some way to go before we can roll up our sleeves and get down to business. [end p6]
People are already asking me— “What will the Conservatives do as Labour wriggle this way and that to avoid their inevitable rendezvous with the voters” ?
I will tell you.
We shall continue to put to the people the great issues which will determine whether this country can succeed in the 1980's where it has failed for the last fifteen years—the issues which will decide whether we can survive at all as a society of which we are all justly proud and in which we want to bring up our children.
We cannot go on as we have been. We can and must halt and reverse the decline. We have the skill ability and resources to do better—much better—provided that we have a government that works with and not against the grain of human nature. [end p7]
The Conservative approach to Britain's problems is based on four clear principles.
First, we believe that the power of the State has been increased far too much.
We intend to reduce it and give power back to the people.
That is genuine devolution.
Second, we believe that the interests of all groups and people in a nation are ultimately the same.
Labour's philosophy of setting one group against another in an increasingly bitter struggle for larger shares in a declining economy destroys confidence, self-respect and any chance of progress. [end p8]
Third, we believe that the rule of law is the basis of a civilised society. A great political party can't be neutral on this question.
We have no time for so-called Labour moderates like the Shirley WilliamsEducation Minister who is prepared to bring in new laws to destroy good schools, but won't use the existing law to keep open those schools that are hit by industrial action.
And fourth, we believe that the time has come when we must strike a reasonable balance between the powers and responsibilities of the trade union movement.
Those are our principles.
They are not shared by Labour.
All they have to offer is more of the policies that have led to our present troubles. [end p9]
The Labour Party is at a dead end. It is quite simply incapable of giving this country the leadership that it is crying out for.
What will be Labour's strategy, as the government rots away to its inevitable end?
Well, Ministers have made no bones about it.
The first plank is the concordat, announced two weeks ago with so much ballyhoo, and broken before the ink was dry on the paper. [end p10]
That deal was concluded with the explicit purpose of saving Labour's bacon, not Britain's future. Its basis is all too familiar.
In return for the promise of more Socialism—direction of savings in pension funds and in insurance, more planning agreements, legislation on industrial democracy,—the union leaders undertook (if that's not too strong a word) to do—something or other. Exactly what that amounts to, exactly what is on their side of the bargain, is not too clear.
Take picketing, for example.
We are now assured that there is a code of practice which will prevent the abuses of the last few months. [end p11]
But it's a code which endorses secondary picketing, and even in some unspecified cases, wider picketing still; it's a code which is actually less strong than the code which we were told was being operated by the Transport and General Workers' Union during the weeks of the road haulage dispute. You remember that was the time when the government of Britain was handed over to the pickets and strike committees. Not much comfort there.
Or look at what is said on the closed shop.
I've got one simple test for the effectiveness of what is proposed.
Let Ministers and union leaders urge the reinstatement of those who have lost their jobs, lost their livelihoods with not a penny of compensation under Labour's closed shop law.
I can tell them where to start.
They can begin with the British Rail men who've been thrown out of work. [end p12]
The day they do that, we might start believing in their good intentions.
Or take another example—the proposal that there should be no industrial action before an agreement has expired.
What difference has that made to the civil service stoppages?
The truth is that the concordat doesn't begin to provide the sensible framework of law on industrial relations that this country needs and wants.
It is no more and no less than its authors meant it to be—a life-line for a sinking government. The real job of encouraging—indeed insisting upon—responsible trade union behaviour will be one for the next Conservative government. [end p13] Beginning of section checked against BBC Radio News Report 1800 3 March 1979:
The other plank in Labour's strategy, we're told, is to have a long campaign so that they can—and I'm only paraphrasing their argument— “nail that woman” . (Laughter.) I imagine that is a reference to me. (Laughter.)
They seem to think that in a long campaign I'd make a lot of mistakes.
Well, no one's perfect and I can't make any guarantees.
But I promise to try not to go to Guadeloupe next winter. (Laughter and applause.)
And if I do, I promise not to give a press conference at the airport when I come back. (Laughter.) End of section checked against BBC Radio News Report 1800 3 March 1979.
If we are to fight a long campaign, lasting through the summer, your elections in May will be the first serious battle.
I know the problems you face.
Many of you are defending the massive gains we made three years ago and it will be difficult to do better than you did then—though I'm sure you'll try! [end p14]
You're also having to carry on your shoulders the full weight of Labour's mismanagement at the centre—the inflation, the high interest rates, the fiddling of the rate support grant the threat of another upheaval of local government functions and boundaries, and the imposing over your heads of an expensive pay deal, which will almost certainly mean a big increase in the rates of some however hard you struggle to avoid it.
The advice I give you is this.
Make sure that the guilt is firmly pinned where it belongs—namely to the Government which clinched the deal.
And do your best by applying Conservative principles in housing, education and the rest to protect your people from the burdens and failures of Socialism. [end p15]
Remember this, above all.
People want to get, and have a right to expect, the best possible value for the money that is taken away from them in taxes and rates.
We've seen elsewhere—in California for example—the rebellion against excessive property taxes.
If we cannot give the ratepayers in Britain a better deal, we will face a similar rebellion here.
So if you're pressed at great cost to the rates to concede big pay increases in the guise of comparability with private industry, I suggest that your comparability study includes comparability on productivity, comparability on manning levels, comparability on job security and comparability on inflation—proofed pensions. That is the right way to run a Town Hall—or a government department for that matter. [end p16]
We can certainly pay people more if they do more.
But as a trade union leader, Frank Chapple, said the other day, “it is no good having an emotional involvement with the cause of low paid workers if this means paying three people to do one man's job” .
That argument lies at the heart of the economic reality which we have to face up to in this country. But reality is almost the last thing that Labour are prepared to accept.
Only one thing has been worse than the quality of their economic policy making since they came to power in 1974. That is the dishonesty with which their policy has been justified.
Ministers have continually pointed to the contrast between what they describe as the harsh, inhuman monetarist policies proposed by Conservatives and the wholly benevolent policies which they claim are being pursued by Labour. [end p17]
But when you look a little more closely, the harsh policies turn out to be Labour's, not ours.
Interest rates are already up. If Labour clings to office, taxes will soon rise too, and so will prices.
The Government's much vaunted single-figure inflation looks as though it could turn out to be a nine-month wonder.
Higher taxes and higher interest rates will lead to a new recession.
British business, which is already producing less than it did in 1973, will produce less still as the recession bites. [end p18]
Mr Callaghan and Mr Healey are wrong, and of course they know it, when they claim that rates of interest would have been higher and the crisis deeper had our Party been in power, pursuing those “wicked” monetarist policies. The Prime Minister and the Government have encouraged both their supporters and the public, to believe that monetarism is a dirty word.
Yet they knew all the time that a monetarist policy was vital, that sound money—and that is what “monetarism” means—is essential to our economic recovery.
The country is suffering because Labour has been pursuing not a comprehensive monetarist policy, but a half-baked one.
There are two basic tests of any economic policy.
First, is it internally consistent and comprehensive? [end p19]
Second, has it been carefully explained to everyone, since everyone has a part to play in making it succeed?
Labour's policy meets neither of these tests.
They boast about their firm resolve to curb the money supply.
But that claim is never matched by an equally firm determination to cut government spending.
Yet all of us know that Government spending has got to be brought down to a level that can be financed, not only today but in the future, by taxation and rates which is at tolerable levels and by borrowing which is at acceptable rates of interest.
Unless this is done, the money supply will accelerate again and with it inflation. [end p20]
Nor has the Government tried seriously to put its policy across either to the trade unions or to the general public.
It has failed to make clear that inflationary expectations in general, and trade union pay demands in particular, must be brought down as the money supply comes down.
If they are not, unemployment will rise, output will fall, and interest rates will increase.
This is in danger of happening now.
A bad economic policy has been converted by a lack of frankness into a disastrous one.
In the Labour movement, the dissembling are leading the credulous. [end p21]
As a Party we have consistently emphasised that it is the failure of so many to face the truth, that is largely responsible for today's crisis.
Under Labour, both Government and people have too often accepted the glib solution; taken the short cut; chosen the easy option.
That is why the prosperity Labour promised has proved to be not a miracle but a mirage.
If we are to escape from the endless cycle of recurring crises that we have endured in recent years, we must first face up to the underlying economic realities.
I want today to point to three of these.
The first reality is that there is an inescapable link between prosperity and productivity. [end p22]
Since 1979 began, scarcely a week has passed without some group calling for higher pay: tanker drivers, lorry drivers, grave diggers, hospital workers, school caretakers … . You can complete the list as easily as I can.
Everyone, or so it seems, is demanding more pay as though this were the automatic guarantee of a higher standard of living.
Listening to the chorus of pay demands, you could easily be forgiven for imagining that a one-hundred per cent pay rise for everyone in the country would solve all our economic problems.
Yet the reality is that doubled pay that is not earned would before long mean doubled prices.
The key to prosperity lies not so much in higher pay as in higher productivity. [end p23]
The reason why Britain is today the third poorest nation in the EEC, classed with Italy and Ireland, has little to do with pay; it has everything to do with productivity. Trade union leaders hanker after a West German standard of living. But they fail to recognise you can't have a West German standard of living with a British level of output per person.
We may state a truism—West German pay plus British productivity equals inflation.
Read any international study of productivity and you will find that in most industries we produce less goods per head than the countries whose standard of living we envy—the USA, Switzerland, France, Germany.
Only when we stop being obsessed with pay and start to be obsessed with productivity are we going to prosper. [end p24]
Our government will cut direct taxes and increase incentives so that we release the latent energy and enterprise of the nation. We can put the ball at people's feet. Only they can kick it.
We also need a change of attitude if we are to do better.
The clamour for more pay shows conclusively that people want a higher standard of living.
That is as it should be.
But if we are to get it, we must put pay second and productivity first.
We must talk productivity and think productivity.
We must become as insistent on higher productivity as we are now on higher pay.
It is the duty of a government to provide an economic climate in which increasing productivity leads to expansion, not to fewer jobs and more unemployment.
But we should not be too depressed about the chances of achieving that objective so long as our goods are competitive. [end p25]
So, the first economic reality is that only increased productivity will give us increased prosperity.
Any policy which promises greater prosperity without higher productivity stands automatically condemned.
The second reality is this.
Until we have increased productivity, individuals can take more of what the nation earns only at the expense of other people.
In recent years we have become a jealous and divided society.
A major reason is that for more than six years there has been no increase in the amount of wealth that the country produces.
We have failed to increase our standard of living either as individuals or as groups in the only way we can—by increasing output. [end p26]
Many people have therefore resorted to attempts to increase their pay at the expense of their fellows and these people, in their turn, have done the same.
Well-intentioned attempts to increase the incomes of the low paid have foundered against the resistance of the higher paid.
Unions like the NUR and ASLEF struggle to outbid each other in leapfrogging pay claims.
We each quote examples—real or not—of those with whom we compare ourselves and who, we say, are paid more than we are.
The result is a society with little pity, racked by strikes where no quarter is given.
Strong unions may in theory believe in greater equality of incomes, but not in practice.
They want to have their cake and eat ours too. [end p27]
They demonstrate the second reality. If output stagnates, there is a temptation to take a larger share for ourselves even though that means less for others.
Our dependence on each other expresses itself not in a virtuous circle of cooperation and generosity but in a vicious circle of division and selfishness.
There is, or if there is not, there should be, an old American proverb:
A lot you can share; nothing you can't.
That sums up precisely the second economic reality.
A lot you can share.
Since we have little, the result is that we are not one nation; we are not even two nations; we are a host of squabbling factions; and we are encouraged to fight and quarrel by Labour's philosophy and Labour's economic failure. [end p28]
The third reality is that we are bound to suffer from the problems of a divided society so long as the emphasis is on what we can get out of the economy in pay by strikes and not on what we can put into it through productive effort.
Division is inevitable because while our ambition steadily increases, output is held down.
The myth that we have to demolish is that somewhere there is a crock of gold—owned by some unnecessary and underserving group—which we can raid whenever we want to increase our own standard of living without hurting anyone else.
Those who receive dividends are the prime example.
The Left continually calls for tough price control in order to reduce profits and the dividends paid by business and, they wrongly assume, to raise substantially the welfare of the mass of the population. [end p29]
But this imagined crock of gold does not exist.
If all dividends were confiscated and shared out equally, that would raise average incomes by a mere two pence in the pound.
In other words, to get rid of all dividends would be like the country putting in for a two per cent pay claim.
And, these days, even the Government's suggested five per cent pay rise is greeted with scorn.
Look at the consequences that would follow from such a step.
Pension schemes—in both public and private industries—would be decimated.
The retired would suffer.
Investment would be hit.
Unemployment would rise.
Our decline would steepen.
The painful truth is that there is no crock of gold. [end p30]
We can improve our position as a nation only by working together to create greater wealth.
We cannot do it by each fighting for a bigger share of the existing cake.
The cake is too small; the fight too damaging; and the result, impoverishment, cynicism, and conflict.
It will be the job of the next Conservative Government to set the economy on a new course of expansion. [end p31]
But our policy will only work if men and women use the opportunities we create.
We must face the reality that we cannot, as individuals or as a nation, live beyond our means without disaster.
We must work for greater productivity, not simply agitate for higher pay.
We must not be diverted from this by a fruitless attempt to improve our personal position at the expense of each other.
Nor must we imagine that there is somewhere some stock of wealth that we can confiscate to give ourselves instant prosperity without the need to work for it.
Those are the lessons of the last five years. We ignore them at our peril.
We shall need all your help in local government to bring this country face to face with that truth. [end p32]
That must be our goal in the weeks and months that lie ahead.
While the disreputable last act of this government is played out, while they lose their last shreds of self-respect in the struggle to cling to power, we must not be diverted from the task of showing that there is a more honest and rewarding way of running our affairs.
Now is the time for truth and courage.
The age of alibis and deception is over.