Mrs Thatcher
Ladies and Gentlemen, on the last press conference of the campaign can I just thank you all for coming and for being a very nice, pleasant audience and can I thank you all for the way in which you have reported. We really have enjoyed these press conferences, we hope you have too, our staff have gone to great trouble to try to make the necessary arrangements and I really shall quite miss them. I am not suggesting that we put off the date of the election for a fortnight, but we have enjoyed them very much indeed and would like to thank you, electronics and scribblers alike, and photographers.
We entered this campaign very much with the theme it is time for a change. We have not swerved from that theme. People know what they are changing from, they know that it has led to a steep decline for Britain. They don't like that decline, they feel very strongly about it, they feel also strongly about the prices, the jobs and the issues which are a part of that decline. They know what they want to get away from.
Our campaign has been to try to show the kind of direction in which we want to go and the kind of vision of society which we have. I hope you will have noticed it has not just been a miscellaneous collection of policies. They have been all of a piece stemming very strongly from our deep beliefs about society. We believe that you have the greatest good of the greatest number genuinely when in fact you have a society in which people are personally responsible in which they exercise greater personal initiative in which they have greater personal independence. That not only leads genuinely to the greatest good of the greatest number, it is the only way which truly respects both individual rights and minority rights because it starts from the sanctity of the individual.
I mention this because when we come to cutting tax policies they are more than just cutting tax, they are more even than the method of getting the expansion of our industry and commerce going again. They do come very deeply from the belief that people are entitled to more of the fruits of their own labour, that they spend it better than anyone else and that government should be severely limited in the way in which they say that they are entitled to impose their judgment on what the people want by taking a larger and larger proportion of the national income. So the cutting of tax is a moral case as well as a material one.
You then go on to our belief in personal independence and the housing policy reinforces that as well. We want a nation of independent people and therefore [end p1] we have offered council houses to council tenants giving them an opportunity they have never had before to purchase their own homes. We are very keen on home ownership. Again, its part of the independent people which we wish to see and the housing policy reinforces it too.
Now when it comes to education again I would take an individual view, the job of education is not to impose as system from the top, it is again always to try to get the best out of each individual child and to adapt your structure of your schools to that end and we feel that is not being done at the moment.
Now that is on that side of policies and as we go to the other one, freedom under the law, that also ties in. You will never hear me talking about a free for all. That belongs to the other Party which has not done as much as it can to uphold the rule of law. If you believe in freedom as I do, you know that freedom to do good is inseparable from freedom to do some harm and therefore you have to have a strong law to protect the freedom, and that is why we are the Party of liberty under the law and why I constantly have stressed freedom under the law and unless you stress the rule of law, which of course is slightly different from just law itself, the rule of law has certain fundamental underlying propositions, the rule of law, you cannot be the Party of freedom. Free for all belongs opposite because they are not the Party of the rule of law. We are the Party of the rule of law so it has been freedom under the law and that too has found a great echo in the hearts and minds of people.
And then of course you come on to defence. Our first duty, if you believe passionately in freedom under the law as I do, is to defend our own liberty, and again we have always found a great echo wherever the audiences have been when we have mentioned defence and that we must really see that our people who risk so much for us are properly equipped in the field. But I want to stress it is a policy which is all of a piece, stemming from these passionate beliefs in the individual, the family, and the right of individuals to lead more of their own lives and to become a nation of independent individuals rather than the alternative, which is a nation of people constantly more and more dependent on the state for their jobs, for their houses, for the solutions to some of the problems which have been created by the state themselves. It is the material case for an expanding economy, it is the moral case for a free society. That is how we see it. That is why we say it is time for a change, a change of direction. We find an echo in the hearts and minds of people. They put it slightly differently. They say, “We can't go on as we are, we can't go on like this.” I have tried to show them what we can go to and I would just like to say that you might like to know all our information coming in, even at the last moment, is that we believe there will be a change and that that change will become known by Friday. You never hear me boast or brag or anything like that, so [end p2] can I put it in my own way? We have very considerable grounds for cautious optimism.
We have got quite a number on the platform for you this morning. Sir Geoffrey HoweGeoffrey, I thought might like just to have a go at the economics once again. He usually does it absolutely magnificently. Lord ThorneycroftPeter of course has been in charge of the campaign from Central Office.
Isn't it interesting how they have hid Frank Allaun from the other side? Maybe he wasn't quite in tune with what they wanted to say. We haven't hid Peter at all, he has been absolutely marvellous, and we have been very fortunate. You evinced a certain amount of interest in the House of Lords the other day, and the other Lord CarringtonPeter is here as Leader of the House of Lords, Leader of the Opposition for the timebeing in the House of Lords.
Now shall I just ask Geoffrey to sum up on the economic side.
Sir Geoffrey Howe
Very shortly, Margaret. The response that I have got in virtually every part of the country has been certainly, we can't go on as we are, it is time for a change. And when you ask people what they mean by that, more often than anything else they say we must get our income taxes down. We have been pressing that case throughout the last five years, because it gives people choice, because it gives people incentive, because it gives them freedom. We have explained throughout the election campaign that it isn't a give-away, that we are explaining how we would finance it, that we recognise the need for economy in public expenditure, that we have recognised the need to put some part of the burden onto the taxes of some of the things people buy. That presentation does at least add up and people respect us for having put forward a programme that does add up, and it is designed to extend people's freedom to give us a chance of creating a more prosperous society. And I found people in Scotland yesterday in one shopping precinct, the wives of two Scotsmen, one of whom had left to work in Germany, one of whom who had left to work in Saudi Arabia, and asked them why: because they have a chance and they want to have a chance of saving enough out of the income they get to build something for the future, something which they have had to go abroad to find. Now we have presented a formula that does add up to achieve that and it is in accordance with our philosophy. The alternative offered by the Labour Party is muddled, but they are trying to present to people the view that they can cut taxes and increase public spending massively and that doesn't add up. It is in accordance with their philosophy. They believe in high public spending and in their hearts they believe in high taxation. The people don't want that. We have presented a [end p3] formula that adds up, they have presented one that doesn't, and I think that is the difference that people respect.
Mrs Thatcher
Now, shall we have the usual system of questions? Home press first and then the overseas can join in towards the end. Home press?
Q
Can I put a question please to Sir Geoffrey Howe, following up what you have just said, and this is on taxes on income from investment. Can you say what plans you have for alleviating, or removing altogether, the burden of the investment income surcharge which largely falls on people over sixty-five who are trying to live off their savings? And secondly, can you say if you have any plans for instituting fair or equitable fiscal treatment on investment income? The distinction, in other words, between investment income surcharge paid by individuals and those who invest through institutions.
Sir Geoffrey Howe
Well, there clearly is a difference at the moment between investment income as earned by the individual and as earned for the institutions. One wants to correct that balance to make it fairer and the most important way is by lightening the burden of the investment income surcharge. But remember that when Tony Barber established that in place of the old difference between earned and unearned income, he set the level at which you started paying investment income surcharge higher than it had previously been at £2,000 a year. The first thing that Denis Healey did in his first budget was to drop that to £1,000 and it still hasn't got back to the original £2,000. It ought to be up to £4,500 as a starting point for investment income simply allowing for inflation and we regard it as important at least to restore that balance. Because about half of the investment income surcharge is paid by people who have retired on the savings of a lifetime of thrift, very often on the proceeds of the sale of small businesses they have build up when they haven't been able to belong to inflation proof pension schemes. So we are determined to lighten that burden substantially. I get more letters and more complaints about it than any other aspect of the tax system. It is very important to make that change.
Mrs Thatcher
Can I just say that I agree it is very important for old folk? I have heard it time and time again during the campaign. People who have saved quite modest amounts really are paying very heavy taxation on it. Again, it is part of the all of a piece. You have got to make it pay to be responsible, at the moment it [end p4] doesn't it and that is just totally in the wrong direction to which we ought to go, so we will change the direction.
Q
… keep the 100%; allowances … part of the machinery.
Sir Geoffrey Howe
I am not going to begin embarking on that kind of detailed discussion at this stage.
Mrs Thatcher
Nor do I think could you, Mark. I don't think anyone who runs any company, let alone Great Britain, could say exactly what things are going to be in five years' time.
Q
When Sir Geoffrey says “at least restore that balance,” does he mean make up for inflation to £4,500 or is he referring to the original £2,000 which is now inaccurate?
Sir Geoffrey Howe
It's the same point isn't it? The original £2,000 should now be £4,500, if you take account of inflation. That is the level at which Tony Barber set it. It's even for old people over sixty five, it's still only £2,500, so they are paying a much heavier burden of investment income surcharge and clearly we want to correct that as soon as possible.
Q
The other side of course have concentrated very heavily on prices, or price increases, which they say will result from the tax cuts. Can Sir Geoffrey say any more on that?
Sir Geoffrey Howe
Yes, I will. We have not attempted to conceal that if you switch a part of the burden of taxes from taxes on earnings and income to taxes on some items of expenditure, that involves a modest price change. One has had examples of that given by the Treasury. The price change resulting from that would be far less than that which resulted for example from Denis Healey's first budget. He introduced a budget which actually raised prices by nearly 4%;. The difference is that at the same time he was doing that, he raised income tax as well. And his first two budgets added 6.5%; to prices and 5p to the basic rate of income tax. That's a characteristic set of Labour budgets and I suspect that any budget [end p5] which the Shadow Chancellor Denis Healey might introduce if he were to have the chance would follow the same pattern. But ours would be different. We would be securing a substantial reduction in income tax and giving back to people a chance to spend some of their own pay packets instead of having politicians doing it for them.
Q
Mrs Thatcher, if you fail to win an overall majority despite your confidence on Thursday, are you prepared to talk to Liberals on the basis of a referendum on proportional representation?
Mrs Thatcher
I am not prepared at the moment to contemplate anything other than victory.
Q
On the same point, you did touch last night indirectly on the effect of a Liberal vote in tomorrow's election. I wonder whether you would like to say a little more about that?
Mrs Thatcher
Yes, indeed. I think there is only one way of securing the change which I believe people want and that is to vote Conservative. Any other way can mean putting back a Labour Government, which is carrying on with the present decline, not only carrying on with the present economic decline but carrying on with the present fundamental labour philosophy of an increasing share of the national income ultimately going to the state and increasing control by the state over people's lives, over housing, over companies big and small, over pension funds, and insurance. There is only one way to vote, to go and be sure of going our way and that is Conservative. Voting Liberal, voting Nationalist could in fact result in putting in a Labour Government, which clearly they don't want, because they were not voting for that.
Q
If you have a substantial shift to VAT, would you reformulate the Retail Price Index?
Mrs Thatcher
Will we reformulate? You can always have looks at the Retail Price Index and certainly one could get a third one going as well. Well, there are several at the moment as you know. There is the ordinary Retail Price Index. It took a long time to get, a long time to get a pensioner's index going, and really you ought in fact, I believe, to put in tax as a cost. I mean tax is an enormous cost in people's incomes. It is, if I might say so, just about the biggest cost of all in [end p6] many ways—the cost of the Inland Revenue on the pay packet—and it would be quite possible to do a new Retail Price Index which took the cost of tax into account, which of course would be a standard of living index and a very much truer one. The other way is, you could say, all right, if you don't have one sort of tax in, you take all other sorts of tax out. At the moment it is half and half. Certainly we could have a look at it and would like to have a look at it, but it doesn't necessarily mean that you will drop the others. You can quite easily run several along together. But I would agree with the fundamental assumption underlying the question, but at the moment it is illogical. You have got some tax in but not the rest.
Q
Have you enjoyed the election and is there any particular part of it you have enjoyed most?
Mrs Thatcher
It's like those questions that come at the end of ‘Any Questions’ on radio. Yes, really I think I enjoyed the walkabouts most, because there you really do see the warmth of people. Yesterday when we were in young Winston Churchill , juniorWinston's constituency the warmth was tremendous, absolutely tremendous. And you know it is no longer argument, it is a matter of person to person, actual warmth, and we do, as you know, quite a lot of walkabouts. And really we do it, and we go round factories to see people who otherwise I wouldn't have the chance of seeing and all the time we are picking up, if I might call it, the genuine questions which they are worried about rather than the academic questions. But then I always during tours have done quite a lot of walkabouts.
Q
At the Labour press conference yesterday, Peter Shore said that five and a half million council tenants are what he called “under threat” and said that under a Conservative Government they would face rent increases of £2 a week at least. Can you comment on that please?
Mrs Thatcher
But I understand that Mr Shore said at a previous conference, when asked how much he would put rents up, said yes but of course they have to go up with average earnings. So how much is he proposing to put them up? I don't know. You cannot have rents absolutely static with rising costs. He knows that, I know it. Why get the whole thing onto a totally artificial phony fictitious basis? Why can't he approach it with the same element of common sense as we do? He also knows that the rents vary from local authority to local authority, according to the state of the housing revenue account. And there are many of them, if they put their rents up cannot use it locally and it has to spill over into [end p7] the national exchequer and they don't like that. So it varies. But I really do wish, instead of putting up some of these phony-isms, they had approached the whole thing on a basis of common sense and realism, accepting that there are some things that any government has to do, if it is to keep the finances of the nation sound. But it seems to me they are not interested in sound finance in any way.
Q
You said in the Granada 500 programme the other night that you would do something about people who went for jobs from job centres and were delighted to return to the job centre with ‘unsuitable’ written on their cards. What would you do about this?
Mrs Thatcher
I think you have got to be very very much tougher on seeing that they do take jobs which they are offered, I really do. It is all too easy at the moment for them to come back saying, “I have been for that job and its unsuitable.” And it just won't do. We have in fact got to look at the rules which govern it now, as you know there are quite a number, and see that they do take jobs which are available, otherwise they cannot just go on preferring to live on social security payments which are taken from someone else's tax.
Q
Can I ask Sir Geoffrey? You said you wanted to cut back public expenditure partly by cutting back on waste. Do you think it will be possible to make the necessary reductions without actually making people redundant, rather than just waiting for them to retire in the public sector?
Sir Geoffrey Howe
Well, the experience of all those local authorities, for example, where substantial savings on waste have been under Conservative control is that it has been possible to achieve it by relying upon natural wastage and that is the way in which we would hope to achieve it. There is after all a very substantial turnover in the number of people employed in all sections of the public service, just as everywhere else. That seems the right way to set about it.
Mrs Thatcher
Isn't it 9%; cumulative? 9%; per annum is the average wastage rate, which of course cumulative is very considerable.
Q
Do you not think you will have to actually make some people redundant? [end p8]
Mrs Thatcher
Well, in the public service I think you might have to have, by agreement, and only by agreement, some early retirements on generous terms and I think that quite a number of people would take that. But I don't anticipate major redundancies in any way, that's not the way in which we operate and 9%; cumulative compound over say three years is an enormous figure.
Q
The City of London expects the Conservative Government to sell off their stateholding in BP and possibly British Aerospace and use the money to reduce taxation. Could you say what the intention would be and would you feel justified in using this money to reduce taxes if you did sell it off?
Mrs Thatcher
I rather thought it was Mr Healey who had sold off some of BP As a matter of accuracy he sold off some of BP. We have made absolutely no statement about BP and we shall leave our hands completely open. We have no intention of just selling the lot off just like that, no intention whatsoever. Were you wanting it?
Q
No, would you feel justified in using the money to cut taxation?
Mrs Thatcher
If you are able indeed, as in this case, then we might almost say that one of the steps Mr Healey did take was to sell off some of BP to use it keep down the public sector borrowing requirement from … . I must say there are a tremendous number amount of assets in the hands of public sector authorities. The land in the hands of public sector authorities is enormous. We are not going to tie our hands in any way by saying that we are not going to sell any of it. We may well sell some of it but we don't want to tie our hands at all. But I have no intention of selling the lot of BP. And if you wanted it, I am very sorry. A very good investment, I would have thought.
Q
If I could follow-up the last question but one on public sector redundancies, it is reported this morning that British Steel are by negotiation to make payments of up to £22,000 in order to run-down the workforce at Bilston Steel Works. Is this the kind of expenditure which you would consider justified in the future or do you see this as something which is not entirely beneficial? [end p9]
Mrs Thatcher
British Steel will have in fact to run-down the numbers of people they employ. The lesson is that nationalisation does not and cannot save jobs when they are yesterday's jobs and you are not competing on the product. It can't. We have learned this, steel is a classic example, and you cannot avoid redundancies there. The amount which is negotiated for redundancy is a matter for negotiation and again I don't want to get into any specific figures.
Can I just say this? I have been in areas where some very interesting things are happening to the redundancy payments. You are getting people who have been made redundant from nationalised industries, they have got these small capital sums which quite honestly are larger than they'd ever hoped to get, or larger than many of us can ever hope to get under the present Government from saving out of our earnings. What they are doing is going and starting up a number of small businesses on their own. Now this really is a sort of revival that you could get and it is a very interesting one and it does really prove our economic argument, that you can't indefinitely save yesterday's jobs and still be a thriving society with a higher standard of living. You have got somehow to get the change from yesterday's jobs to tomorrow's jobs, and some of them do it by the ordinary initiative and therefore you have got to reduce the regulations on them and, because of planning requirements, you can no longer start-up in a shed at the bottom of your garden, you have got to have places where they can go, at very very modest rents and start-up their own business. And it could start to happen on a much larger scale.
Q
Could I ask about defence policy … . defence spending? Where would the emphasis lie? Would it be on substantial increases in forces' pay or conventional weapons?
Mrs Thatcher
No, we are committed to give the full increase recommended by the Pay Review Body and I have, as you know, said that once or twice during the campaign. As far as equipment is concerned, then you do need to take advice as to what is the most urgent area for equipment. I know we have some ideas about it, but you obviously need to go to your Chiefs of Staff and say, “Where are the areas which we could remedy quickest of all?” And I understand that some of them are quite modest, but there are some considerable remedies that need to be put into effect.
Q
On jobs again, several Labour Party spokesmen have said that you have been putting a slightly different emphasis on your attitude to the Labour Party's [end p10] jobs saving programme depending on whether you are in the North or the South.
Mrs Thatcher
No, I don't never [sic] vary my answers whether I am North, South, East or West, or to whomever I am talking, even an ordinary audience or a press audience. The task of the state is to mitigate the effects of change. It is not to stop them. If you start to stop the effects of change, you are stopping a prosperous tomorrow for our children. Though always it is to mitigate the effects of change and that is a limited operation. It is temporary, but you must not by mitigating the effects of change take so much that you stop the new change coming into existence. And I think one of the problems now is that the new change, the new companies, the new small businesses are not coming into existence on anything like the scale that we need. But there is no difference. It is perhaps just that I am asked about it more in the North than I am in the South.
Q
Following something you said a few minutes ago, would you be in due course in favour of a reform which would make it quite impossible for an unrepresentative government, in other words not necessarily proportional representation, but something like the French system of two polling days, just to make sure the government is representative of the majority?
Mrs Thatcher
Mr …, you know, when you have a problem everyone tries to solve it by an organisation or an institutional change and what that usually means is that they are not tackling the real underlying problem. The people who put forward that proposal for change are often those who want an easy way of fighting socialism and an easy way of keeping socialism out of this country by making some arrangement, some change in the constitution. I would say that the only way to fight the state socialism that we have got now is to fight it and to take it head on and to beat it head on, and I really think that so many of those changes do not in fact succeed in their objective and some of them I believe are thoroughly undemocratic, when you get a small party in the middle deciding which party shall be in power, and I recoil from the wheeling and dealing that you get behind the scenes after an election when you have got a massive number of parties who fought their election campaign on certain principles and the first thing they do is go behind locked doors and start to compromise everything. That isn't my way.
Lord CarringtonPeter, you are a constitutional expert, come on. [end p11]
Lord Carrington
One of the things I wouldn't do is either to abolish the second chamber or abolish the powers. One of the things which Mr Callaghan has got away with is appearing to be moderate by not abolishing the House of Lords yet by removing its powers. What is the point of having a second chamber which has no powers? So one of the things I wouldn't do is that, and I would see that you would have a second chamber which was both credible, authoritative, and had sufficient powers to act as a safeguard in our constitution.
Q
Can I go on that point? Lord Carrington is very keen on reforming the House of Lords, the Labour Party is committed to abolishing it, what is your feeling? You have already two reports, Lord Home and the Conservative Lawyers. Would you like to see the House of Lords reformed?
Mrs Thatcher
We would like to see a very effective second chamber, I think, with stronger powers than there are now. Now we all say sometimes we would like to see reforms of the House of Lords and many of their Lordships say exactly the same thing, because the burden upon them is tremendous. They do a fantastic job. And we then say, “What reform would you like?” and it is there that the argument begins and it is there that you find, I am afraid, no agreement on what we would like to go to. You couldn't possibly have an agreement just by pulling rabbits out of a hat. You really would have to have a very major constitutional conference to get agreement. It's not top on our list of priorities. We just have to turn the economy around and turn several other things around first. Then we will start to look at organisational changes. You do know what happened in the House of Commons before when we had it? We had that sort of unique, unexpected, unanticipated combination between Enoch Powell and Michael Foot. It kept us all up very late for a very long time and nothing got done.
Q
There was a formal agreement though in both the Conservative reports, Lord Home's report and the Conservative Lawyers. What was your attitude to Lord Home's report?
Mrs Thatcher
Lord Home's was my attitude towards it. Lord Home did an excellent job. He put forward four options and did not say which one would be best. I thought it was a very very wise judgment on his part. [end p12]
Q
… cash limits, reconciling cash limits with pay determination systems in the public sector. How would you do this?
Sir Geoffrey Howe
Well, exactly in the way in which the present government have explained they were going to do it, that cash limits have got to stand at one end of the equation and adjustments have to be made in the rest of the programme. I have got here a letter written by David Ennals to Patrick Jenkin explaining what they will be doing in relation to the Health Service in the life of pay settlements, and it says that “cash limits will be adjusted in full for the excess cost of current and future pay settlements approved by the Government except that in accordance with the Chief Secretary's statement, the National Health Service in Great Britain will be required to absorb a proportion of the cost assessed at £22 million at 1978 prices” . These arrangements, he says, “will go a long way to protect the NHS but no programme can be exempt from higher rates of pay and price inflation. Health Authorities will therefore have to assess where savings can best be made and to make economies in manpower and other costs.” That has been the way in which cash limits are expected to work. We pressed for their establishment, the Government accepted our advice, we shall maintain them.
Q
Does that mean you will set a pay limit at the start of the cash limit year, so to speak, as far of the public sector is concerned?
Sir Geoffrey Howe
No. I have explained how the pay pattern has to be accommodated and accepted within the cash limits established. It is one of the limits in which negotiations have to take place. And insofar as the pay limits go beyond what you expect the pay settlements to be, as David Ennals says, Health Authorities will have to assess where savings can best be made and make economies in manpower and other costs.
Q
Enoch Powell has recently called on the electorate to work for candidates who are against the Market, … . how do you think this will affect the Conservative vote around the country and will he find any Conservative candidates in this category?
Mrs Thatcher
I don't think it will affect the Conservative vote at all.
Q
Given that a great deal of the time and expense of campaigning in this [end p13] country is devoted to persuading people actually to go to the polls, rather than persuading them that your policies are better than other peoples, do you see any merit in compulsory voting in General Elections?
Mrs Thatcher
Not here, no. We shall have a very high poll. People go voluntarily up to about 80%;. We get about 75%; or 80%; which, bearing in mind it's on an election register and there are removals and all sorts of things, it is very good. No, I am against going to compulsory voting.
Q
If the Conservatives get a majority, I think you have to go to Tokyo for a summit conference as a Prime Minister.
Mrs Thatcher
I have got it in my diary.
Q
Have you got any idea what you are going to say in the summit?
Mrs Thatcher
I am sure it will be very exciting both for me and them.
Thank you very much. Here is to the next time and please vote Conservative.