My Sir Peter Gadsden Lord Mayor, my late Lord Mayor, Your Excellencies, my Lords, Ladies and Gentlemen:
My Lord Mayor, I will not deny that I am, as you have said, the first woman Prime Minister to have had the honour of replying to this toast. However, we have just listened to a man who was born in Canada, educated in Northern Ireland, England and Spain, has worked in the Middle East, is a Vice President of the Shropshire Society and is a member of the Council of the Australian Big Brother Movement. That also must be some kind of first. I offer you, Lord Mayor, my warmest congratulations, and best wishes to you and the Lady Mayoress for this next year—a great year in your lives.
You will be aware, Lord Mayor, that at first it was far from clear that the invitation to holders of my office would be a regular one. Shortly after Prime Ministers began to come to your Banquet, more than 200 years ago, one of my predecessors was so provoked by one of yours that he had him thrown into gaol. The City responded with its customary vigour. For ten years, no Prime Minister was invited to dine in the Square Mile. After this evening's dinner I can see that the penalty was a substantial one.
Peace broke out long since between Westminster and the City. Even so, speakers at your Banquet have not always had a friendly reception. In 1839 Her Majesty's Ministers were met by a “storm of hisses and groans” . They were described as a “crestfallen and woebegone” group. The Lord Melbourne Prime Minister's efforts to secure a hearing were “completely ineffectual” . I hope you will be kinder this evening.
I would like also to read a kinder report tomorrow in The Times—from whose columns I have just been quoting. But in truth I shall be happy to read whatever The Times prints tomorrow. For the important point is that The Times will be back. Its absence has been tragic and overlong. I welcome its reappearance with enthusiasm.
No doubt I shall regret those words now and then in the months ahead. It would be surprising if I had to wait long before hearing some criticism from Grays Inn Road. But Prime Ministers must learn to live with criticism. After all—and despite the occasional strong temptation—Prime Minister's can no longer have those with whom they disagree taken out of circulation.
The Continuity of Problems
As I read the remarks made by predecessors at earlier Banquets, I am struck by the similarity between their problems and those we face. Let me instance just two who were deeply concerned about the security and prosperity of Britain. Exactly a hundred years ago, Disraeli said: “although Europe is covered with armed millions of men, we still hope, and I venture to say believe, that peace will be maintained” . And Disraeli's Britain had faced a time of deep economic difficulty. The commercial interests of this country, he said, “had been suffering under a period of depression which in length and severity was almost unprecedented” . Disraeli's economic policies, coupled with the efforts of the people, overcame the difficulties.
In his first speech at the Guildhall after coming back to power, Winston Churchill said in 1951: “It is not cheers that we seek to win, or votes we are playing to catch, but respect and confidence. This cannot come from words alone. Results cannot be achieved by the wave of a wand.”
Those were wise words. They apply with equal force to the situation now. We face problems greater, perhaps, than any faced in time of peace by Disraeli or Churchill.
The world is wracked by economic confusion and inflation.
There is the prospect of a growing energy crisis.
The countries of the Third World aspire, legitimately, to improve their lot.
New military technologies complicate the calculations of security.
New civil technologies, such as the microprocessor, complicate the calculations of industrial management.
New financial techniques complicate the calculations of economic and money management.
The Principles of British Foreign Policy
In this difficult period, the search for security and prosperity will continue to guide our foreign policy. The two are inextricably linked. A trading island like Britain cannot rely on a policy for security designed to defend only our territorial integrity. Our world-wide commercial relations, our Commonwealth links, our growing trade with Europe, call for greater stability throughout the world.
This stability is not easily gained. Whatever some may think, other people's politics will not stand still for our convenience. We shall continue to find ourselves directly affected by discord between East and West; change in the Middle E* war in the Far E* uncertainty in Africa.
We must continue, as in the past, to seek to balance and contain these instabilities by national action and by negotiation where this is open to us. And by combination with our friends and allies where we cannot act alone.
Three particular issues require an answer this year. These are: the problems in Europe; the decisions to be made in the Atlantic Alliance; and the future of Rhodesia.
Europe: The Community and East-West Relations
Despite our world-wide trading interests, our nearest preoccupation is Europe. In Europe we are seeking with our partners to create a Community inspired by mutual obligation and a sense of common purpose. The present British Government is deeply committed to this European ideal. We are less committed to some of its present policies. My predecessor spoke here last year of the need to reduce the unjustly high net contribution we pay to the Community Budget. We can't go on any longer being Europe's most bountiful benefactor. The present situation is unacceptable and, in language adopted by the Community itself in 1970, “the very survival of the Community” demands “that the Institutions find equitable solutions” . Our Community partners understand that what is at question in the period ahead is not only a British interest but the future conduct of the Community itself. For, as Edmund Burke said, “—a state,” —and he would have added, “a Community” — “without the means of some change is without the means of its conservation” . Some of the Community's policies must be changed, and the change must be put in hand soon.
We rest our security on the Atlantic Alliance. This voluntary alliance of free nations has endured for three decades of peace because the threat has endured. Today the “armed millions” of which Disraeli spoke are ranged behind the Elbe. By extending her own armament efforts, the Soviet Union compels others to do likewise. Her forces are even now receiving the most advanced missiles and the latest bombers to enhance her offensive power against Europe. By contrast in these vital areas NATO has introduced no new weapons for over a decade. We must not fall further behind. The decisions needed very soon are hard for democracies to take. We are too prone to believe that our devotion to peace is universal. It is not. We must see those who could threaten us as they are and not as we would like them to be.
When I put these arguments at more length recently, a gentleman on the staff of Pravda accused me of trying on Churchill's trousers. I took that as a considerable compliment. I draw additional comfort from the thought that so long as I wear them our European partners are unlikely to confuse me with Sister Bountiful .
Yesterday Pravda, Izvestya and Tass—the full Soviet chorus—took up their familiar theme again. But not for the first time our Russian friends have missed the point. They choose to arm themselves for offence. We look only to our defence. They proclaim the ideological struggle. We respond, confident that our democratic ideals, our devotion to liberty, our economic and social system, are superior to anything they can offer.
We do not seek to confront anyone. The world is too small and precarious a place for that. We and the Communist world share a common interest in the avoidance of war, and in the development of trade and commerce. We long for the freer movement of people and ideas. Four years ago, in Helsinki, East and West signed an undertaking about this. We are still waiting for the spirit of that undertaking to be given substance.
The third great overseas issue that we face is Rhodesia. Success or failure at Lancaster House will have immense consequences for Southern Africa and the world at large.
The coming days are days of decision. Only Britain can bring Rhodesia to independence. We have set about our responsibilities profoundly conscious of just how much is at stake.
At stake—for all the people of Rhodesia who need peace to live their lives in their own way under a government they choose through the ballot box.
At stake—for people in neighbouring countries who need the trade and the facilities Rhodesia can offer.
At stake—for the people of South Africa, whose whole future will be influenced by the fate of Rhodesia.
At stake—for the whole of the Western world seeking in the heart of Africa a sign that democracy can triumph.
Thanks to the supreme negotiating skill of Lord Carrington , we have come closer to success than many people thought possible. For eight weeks now negotiations have inched forward. A constitution for independence has been agreed—in itself a great achievement.
New elections have been agreed.
Negotiations on the interim arrangements are at a critical point. If agreement can be clinched within the next day or so only the ceasefire will be left to discuss.
Rhodesia is our last dependent territory in Africa. A terrible burden will rest on any party which unreasonably withholds its agreement and thus denies peace to Rhodesia and the surrounding countries.
The Role of Government
The Government has not flinched from its heavy responsibility in Rhodesia. But in general the power of governments to direct events is less than some politicians like to think. Governments have a duty to show the way ahead. They must give leadership—as this Government has done and intends to go on doing. But the power to bring results lies with the men of enterprise, the manufacturers, the financiers and the businessmen who deal with the real products of real industries. Responsibility for securing our prosperity lies heavily on all of us and on our colleagues and co-workers at every level throughout the country. Without that prosperity, and the political and social stability which goes with it, Britain would have little influence in the world.
You referred, Lord Mayor, to some of the great principles and traditions which guide those who work in the City of London.
Tradition affects a nation no less than individuals. Sometimes it can decay into a kind of wistful nostalgia. Sometimes it can provide inspiration for the wise conduct of public affairs.
We still live under the continuing and undoubted influence of the first industrial revolution. In negative terms concern with tradition has led to great efforts to preserve regardless of cost—some of the industries created in the past. That course reads the wrong lessons from history and if pursued would lead to an industrial museum.
There is, however, a positive way in which we can be inspired by the early pioneers of British industrial, agricultural and commercial excellence.
We can acknowledge that they had a supreme confidence in their own ability to create new enterprise and to prosper.
The intellectual basis for that confidence was provided by the Scottish philosophies of David Hume and Adam Smith .
The practical realities were demonstrated through the greater part of the 19th century when British policy rested on sound money and a modest regulatory role for government. Then, Britain turned her face to the world and prospered.
Can this spirit be recreated?
Of course the world will be very different in the 1980s from what it was in the nineteenth century.
Nevertheless, the time is long overdue when the balance between the individual and the state has to be readjusted in favour of the individual. We are more likely to prosper on the basis of rewards for men and women who build up success, than on the basis of politically directed industry and commerce.
Against that background I should like to refer briefly to four major points of domestic policy.
First: we are committed to getting inflation down by essentially a monetary policy. The aim is to restore sound money. A situation where the currency of the realm can be a store of value as well as a means of exchange.
It is a herculean task; but we are not faint-hearted pilgrims. We will not be deflected by a stony path. Although they were for one month only, the recent bank lending figures were a serious disappointment. We shall take whatever action is necessary to contain the growth of the money supply. This Government, unlike so many of its predecessors, will face up to economic realities.
Second: our task, Lord Mayor, will be so much easier when we have reduced public spending as a proportion of national income. Much as we would like to do many things in the public sector, there is nothing sound or moral in spending money we haven't got.
It is still difficult to put across the message that the only cash the Government has comes from taxation and borrowing: the same tax that everyone complains is already too high: the same borrowing whose scale is pushing interest rates up, and which has to be repaid. Pennies don't fall from heaven, they have to be earned here on earth.
We are embarking on a long-term programme aimed at reducing the share the Government takes from our national resources and increasing the share kept by those who earn and save.
Thirdly: the pattern of taxation. We have inherited a tax system that was deliberately weighted against success. There was neither sense nor equity in such a system. Success at every level needs encouragement not harrassment. Already we have made major tax changes and we shall return to this theme in future budgets.
Fourthly: exchange control. For forty years the commercial sector of our economy has operated from within the Bastille of exchange control. Now the prison doors have been thrown open. Once again Britain is prepared to face the world on the same terms as other major Western nations.
We have already set these policies in hand. But there are many decisions ahead that will be hard for us to take. It isn't easy to say no to requests we should like to accept. Sometimes we have to prescribe unpleasant and even painful remedies: but that is because we really care about curing the disease that has afflicted Britain. We want to restore her to full strength again.