Speeches, etc.

Margaret Thatcher

HC S [Her Majesty’s Government (Opposition Motion) (motion of confidence)]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [965/461-70]
Editorial comments: 1534-1603.
Importance ranking: Key
Word count: 3420
Themes: Executive, Union of UK nations, Conservatism, Education, Employment, Industry, Monetary policy, Privatized & state industries, Pay, Public spending & borrowing, Taxation, Foreign policy - theory and process, Labour Party & socialism, Law & order, Trade unions, Strikes & other union action
[column 461]

Mrs. Margaret Thatcher (Finchley)

Mr. Speaker, I beg to move,

That this House has no confidence in Her Majesty's Government.

The timing of the motion arises from the Government's inept handling of the result of the referendums on the Scotland and Wales Acts. When we thought that it was a time for decision, James Callaghanthe Prime Minister thought that it was a time for talks. As he had previously spurned them, we were not wholly convinced that the reasons that he advanced represented the whole truth. We were similarly sceptical when he expressed his willingness to consider modifications to the present Acts, presumably by an amending Bill or a totally different measure.

From his days as Home Secretary we know that the right hon. Gentleman takes what might be charitably described as a flexible view of constitutional niceties, but even he might find it difficult to arrange for major changes on a subject like this to pass through all their stages in the three working months, at most, that are left to this House. Any such changes must be for a new Parliament.

The only decision that the Prime Minister really took was to delay a decision. For reasons that I find difficult to understand, such momentous delays seem, these days, to be accompanied by ministerial broadcasts. The good government of the United Kingdom and its unity are matters [column 462]of supreme importance to this House, wherever we may sit. The new proposals are not for a dying Parliament but for a new one.

The essence of the motion is that the Government have failed the nation, that they have lost credibility, and that it is time for them to go. Lest the Prime Minister should advance his customary explanation of failure—namely, his political inheritance—I point out that his and this Government's inheritance was from a Labour Government led by the right hon. Member for Huyton (Sir H. Wilson).

This Parliament was elected in October 1974. By then Labour had been in office for seven months. The Government has had plenty of time to assess the economic state of the country. The election of October 1974 gave them the opportunity to state it clearly. They did. Denis HealeyThe Chancellor claimed that inflation was down to 8.4 per cent. on his chosen basis. Later when inflation went soaring up, how did the Chancellor explain it? Not by any talk about the previous Conservative Government's policies—that excuse had not been invented.

On “Analysis” , on BBC Radio 4, in October 1976 the Chancellor said:

“I think it is fair to say that inflation went up much more after the October election than I, or anyone else, expected, because the trades unions didn't at the time observe the social contract as they had defined it earlier in the year.”

When the Chancellor was pressed, he stressed the point even further:

“I think it's fair to say that wage inflation was the main reason for the runaway inflation in the months that followed the October 1974 election.”

Nor was it only inflation that had been beaten by October 1974, according to the then Government. The Chancellor said on 24 September, after six months in office:

“I am certain we can get through the whole of next year with well under 1 million unemployed.”

Not only did he get through 1975 with under 1 million unemployed; he did not get through 1976 or 1977 or 1978 with under that figure.

It is no good, therefore, for the Prime Minister now to say that the disasters since October 1974 were the fault of the Conservative Government. In October 1974 the Labour Government took full responsibility for the state of the economy. [column 463]Let us be fair to Harold Wilsonthe previous Prime Minister; he was prepared to take responsibility.

Let us take the Prime Minister's own objectives as the test by which he should be judged. He set them out in the first censure debate, which took place in June 1976. His first objective was to overcome inflation. Apparently the Chancellor of the Exchequer had not performed that feat by the time that the last election took place. Be that as it may, the fact is that this Government have been responsible for doubling the prices in the housewife's shopping basket.

Far from being overcome, inflation is rising again and will rise in the coming months. Indeed, on the Healey basis, it is already into double figures. It was on that basis that we were given by the Treasury, in a written answer, the figure of 13.3 per cent.

The Prime Minister's second objective was

“to make inroads into the unacceptably high level of unemployment … and to reduce it by 1979 to 3 per cent.”

Today it is double that figure. On that, too, the Prime Minister has failed.

The Prime Minister's third objective was

“to achieve a high-output, high-productivity, and a high-wage economy based on full employment” .

But only a week or so ago we had news of the worst level of manufacturing output this decade. A few days ago we had a chilling reminder that not only are our industrial competitors ahead of us in output but that they are pulling away from us at what seems to be an even faster rate.

For every extra unit of output from a worker in British industry over the last five years, our least efficient competitors—the Italians—produced two units, the Americans more than three, the French four and a half, the Germans five and a half and the Japanese more than six. In the same world conditions that we face, their Governments seem to be able to generate the conditions for success. [Hon. Members: “Hear, hear.” ] This Government have failed.

Those were the Prime Minister's objectives. His strategy was the social contract, and then a new social contract [column 464]

“to enable us to proceed with confidence in the years ahead.” —[Official Report, 9 June 1976; Vol. 912, c. 1458–62.]

That strategy has totally collapsed, as many of us said it would, but we were regularly vilified for saying so. The fourth phase of that contract—the 5 per cent.—was never accepted by those for whom it was intended. It resulted in creating the very confrontation that the Prime Minister boasted he had replaced by co-operation. The people witnessed the spectacle of a Government abdicating their authority to strike committees. The Prime Minister's objectives were not achieved, and his strategy failed.

The Prime Minister said that had his dream of new economic strength come about he would use it to strengthen our position abroad, to ensure a peaceful solution to world problems through the use of the United Nations, and to strengthen Europe's voice. What is the reality? Rarely in the post-war period can our standing in the world have been lower, or our defences weaker. The international position is graver than at any time since the 1930s. The difference is that Britain is now a nation on the sidelines.

In one diagnosis, however, I agree with the Prime Minister. Influence overseas depends upon economic strength at home. A nation that cannot manage its own affairs properly is not in a position to give advice to those who can.

There are, I believe, four main things that have contributed to Britain's decline in the last five years. First, far too little attention has been given to wealth creation and far too much to wealth distribution. What has to be done? Top of the list must be a policy of incentive tax cuts. There has been agreement on that for years. The trouble is that the Government just do not do it. The Chancellor of the Exchequer has sympathy with the tax position of management, but sympathy is as far as it goes. Harold LeverThe Chancellor of the Duchy of Lancaster, the Government's resident example of congenial and civilised man, is much more expensive. In a television interview he said:

“The rate of tax on salaried talent is very high in this country … The putting of this right is a massive problem that will take a little time. I believe this to be a number one priority in the Chancellor's mind for future action … That is my own view and ought to be.”

[column 465]But nothing was done. Even the Prime Minister tells his colleagues “If you talk to people in the factories and in the clubs, they all want to pay less tax.” But pronouncement is not followed by policy. The lack of that policy leads to a haemorrhage of talent in management and resentment amongst the skilled.

The Jeremiahs sometimes say that the ordinary people of this country have lost the will to work, but let them work in other countries, where they are no longer frustrated by British tax rates, and they can out-produce and out-sell our competitors.

Vital as tax cuts are to restore management morale and the morale of the skilled worker, they are also needed to encourage the growth of small business. Mainly from that sector shall we achieve the new jobs—tomorrow's jobs—that we need for our young people.

No Government can protect yesterday's jobs for ever. They can postpone the day of reckoning, but they cannot escape it. They can ease the transition from one job to another, but this Government try to protect yesterday's job without facilitating the growth of new industries. That is a policy for penury and unemployment, from which the regions suffer most of all.

For wealth creation a different attitude to profits is required. Profits are pitifully low. As a result, several companies have announced cutbacks in investment plans. Examples are ICI and Hoover. The alternative of borrowing to invest is precluded from many businesses by the continuing prohibitive interest rates which are the consequences of this Government's policies.

All our hopes for better homes for families, better schools for our children, better pensions for retirement and better health services depend for their fulfilment on our ability to create the wealth to pay for them. Fail in that and we fail in all the other things. The Government have failed, and the social services of others nations consequently have overtaken ours. That, I believe, is the first reason for the decline.

The second reason for the decline is that the Government have concentrated far too much power in the hands of the centralised State and left too little with the individual citizen. Indeed, if the [column 466]Government had assumed less power over communities and individuals the more remote areas in the United Kingdom would have less reason to worry about the power coming from Westminster.

Although Socialism is about centralised planning and control, even some members of Her Majesty's Government have, from time to time, begun to have doubts about the wisdom of the policy. The Antony Crosland, in a lecture in October 1975 said:

“But we must take seriously the fears about the growth of State power, especially given the penchant of some socialists for the continued spawning of giant new institutions under centralised control … We should not be in the business of creating giant leviathans manned by armies of bureaucrats.”

What a pity he and his colleagues did not take that advice. That was added to by Harold Leverthe Chancellor of the Duchy of Lancaster, who said, in Birmingham this year:

“We have to acknowledge that the decentralised private sector has out-performed the old-fashioned concepts of centralised planning.”

Of course, such wisdom marks him out as a man whom the Left must try to oust from his constituency. But those views are ours. We believe that they are in tune with the nation; not, however with the actions of this Government as centralisation continues and even increases. For example, the Price Commission, with its investigatory powers, descends upon even the most successful companies to pronounce on their efficiency, having had no experience in that sort of business. The concordat demands more planning agreements between the Government and companies—yet another hindrance to the job of seeking new markets and producing the goods.

In the chemical industry, plant worth millions of pounds would be lying idle today if companies had based their investment on the totally unreal market projections that were put forward by the Government and the trade unions. The concordat also foreshadowed the direction by the Government of savings in pension and insurance funds—away from the object of providing for pensioners and insurance holders to the objects of industrial strategy. If the object of that strategy is to back success, the companies concerned will have no difficulty in getting [column 467]finance. If the object is to back losers, it would be better for pensioners if their money were not invested in that way.

Perhaps the most debilitating and damaging aspect of the Government's policy to increase State power is that the supporters of the Government positively believe in taking a higher proportion of the national income away from the taxpayer and letting the Government decide how it should be spent. In no way have the Government been reticent about that.

What the policy boils down to is this: that the State should take more tax from the citizen and provide him with his basic standard of living, according to what the Government decide he needs. That would leave only less essential things to be found from his pay packet—a sort of pocket-money society policy. These measures are put forward in the name of social responsibility, social morality, social progress, and so on. What the Government forgot is that we shall never have social responsibility unless, first, we have responsible individuals.

How does responsibility grow if decisions on personal property and savings are constantly transferred to the State? We shall never have social morality without having individuals of moral worth. That cannot be attained except by exercising choice and not taking it away. We shall never get social progress except through the efforts of individuals with a sense of purpose.

Part of the reason for our decline is that Britain now shows every sign of a destruction of individual and productive energy, which is wholly exceptional on any comparison with those European States most like ourselves. Those are the first two reasons for our decline—insufficient attention to the creation of wealth and too much concentration on increasing State control.

The third reason for our problems is that the balance between power and responsibility in the trade union movement needs to be restored. So does the balance of obligations between the employer and the employee. I have dealt with the immediate measures needed on those matters on previous occasions; I shall not enlarge upon them today. However, because of the ties of the Labour Party with the trade union movement, because the trade union movement effec[column 468]tively controls the conferences and executive of the Labour Party, and because it provides about 90 per cent of the finance of the Labour Party, I do not believe that a Labour Government will ever make the necessary changes.

The Prime Minister could have taken action with our support. He chose not to do so. He is the prisoner of his own history in this matter. The unions were his stepping-stones to power, and they know it. So be it. Changes will have to be made by another Government, and I believe that they will have the overwhelming support of the people, including the majority of trade union members.

On the economic side, we have to break through the prosperity barrier in manufacturing industry. We can do so only if, through good management, proper incentives and co-operation, we are able to cut restrictive practices and raise output per person. If half as much time had been spent on policies to raise output as had been spent on policies to increase pay, we should have achieved a higher standard of work and hence a higher standard of living today. The truth is that in the countries of our main industrial competitors, union and Government policies have combined to do far better for union members than is the case in Britain.

The fourth reason for our decline—this pervades the whole life of the community—is the Government's position on the rule of law. They have shown insufficient support for the rule of law in this country. The most cogent example of that proposition came from Michael Footthe Lord President in 1977. He said:

“It does so happen to be the case that if the freedom of the people of this country—and especially the rights of trade unionists—if those precious things in the past had been left to the good sense and fairmindedness of judges, we would have precious few freedoms in this country.”

Some of us were so appalled by what the Lord President said that we tackled the Prime Minister about it in the House of Commons. He said:

“Frankly, I do not think that he went far enough.” [Official Report, 17 May 1977: Col. 932, c. 233.]

The Government set the tone. The events of the winter produced a new phrase from S. Silkinthe Attorney-General— “lawful intimidation” . If the Prime Minister and his Ministers take that view of the law, it is not surprising that others will follow. [column 469]

Of course, it was not long before one of the trade union leaders did. He said:

“My advice is to carry on picketing. I cannot see union members accepting the court decision. They will inevitably act in such numbers that the authorities will have to use football stadia for detention centres.”

That is the rule of the mob—not the rule of law. It should be condemned by every institution and Minister in the land. As it is, the people have identified the weakness far quicker than the Government.

Go anywhere in the country, and one finds that the demand is for two things—less tax and more law and order. The phrase “law and order” does not refer only to vandalism and violence—although that is uppermost in many people's minds. It means that our citizens expect and are not getting an ordered or orderly society. They expect the rubbish to be cleared, the schools to be open and the hospitals to be functioning. They are not. They expect each man and woman to rise to his obligations in an orderly and decent way. They expect bargains to be kept between trade unions and employers. Finally, they expect Ministers to support them in those views.

In the recent closure of schools, the authorities did not support the law-abiding citizen or his children. It was the citizens who had to go to the courts when their children were denied access to the schools. It was the law that upheld the parents when they could not persuade the council or Ministers to help them. Shirley WilliamsThe Secretary of State for Education took the view—astonishing as it may seem—that the council had not failed to discharge its duty. The right hon. Lady has been prepared to pass new laws to close good schools. It is a pity that she has not been as eager to use existing laws to keep present schools open.

At least there was a law to invoke. There are many cases when the interests or livelihood of a person can be changed or taken away and there is no remedy at law. That is the legacy of this Government. After five years, it is not surprising that our people want the benefit of a Government who regard the maintenance of the rule of law as the foremost of their tasks.

There we have the record, and some of the reasons for failure. Each crisis, [column 470]industrial or financial, has been met by short-term measures, but there has been no serious attempt to deal with the underlying problems. On the contrary, they are worse.

The Government have doubled prices, doubled dole queues, doubled debt, diminished our defences and undermined public respect and confidence in the law. There has been a failure not only of policies but of the whole philosophy on which they are based—the philosophy which elevates the State, dwarfs the individual and enlarges the bureaucracy. Across the Western world the tide is turning against that, and soon the same thing will happen here.

I return to the occasion for this motion, which arose out of a constitutional matter affecting the whole House. Hon. Members from both sides made an eminently reasonable request to the Prime Minister that he should determine the matters outstanding from the referendums by the end of this month. He deliberately chose not to make a matching response but to try to manipulate the situation for his own ends. He can have no grounds for anger if others judge it for the manoeuvre that it was. Nor, in view of the Government's conduct of parliamentary matters during the past three years, can he complain if his present action is dubbed characteristic.

It is not unusual for minority Governments to carry on for a considerable time as this Government have. What condemns the Prime Minister now is the justified feeling that the substance of matters before the House takes second place to the survival of the Government. That feeling is widespread, and it robs the Government and the Prime Minister of authority, credibility and dignity. The only way to renew the authority of parliamentary government is to seek a fresh mandate from the people and to seek it quickly. We challenge the Government to do so before this day is through.