Speeches, etc.

Margaret Thatcher

Speech to Welsh Conservative Party Conference ("Contract with Realism")

Document type: Speeches, interviews, etc.
Venue: Patti Pavilion, Swansea
Source: Thatcher Archive: speaking text
Editorial comments: The press release (571/80) was embargoed until 1145. Only the middle section of the speech was included in the press release (see editorial notes in text).
Importance ranking: Major
Word count: 2396
Themes: Conservatism, Defence (general), Economic policy - theory and process, Employment, Industry, General Elections, Monetary policy, Privatized & state industries, Pay, Foreign policy - theory and process, Foreign policy (Middle East), Foreign policy (USSR & successor states), Labour Party & socialism

Mr. Chairman.

It is good to be back in Wales again.

I spent yesterday in Anglesey, where we had a spectacular victory at the last Election, with a swing to the Conservatives of 12.5%;.

That was matched by other Conservative gains, and Wales returned more Conservative MPs than at any time this Century.

Today I am in Swansea. David Mercer deserved to win. I am sure that next time Swansea West will be another Conservative gain.

We received a third of all Welsh votes. Indeed, we cut such a swathe through Wales that if you wished to do so—and why not, for it is a lovely country—you could walk from the South-East corner to the North-Western most point and find yourself on Conservative territory all the way. [end p1]

Let me start by recalling one or two facts about economic life at the start of the nineteen eighties.

Economically, we are living in a harsh world. We are in the midst of a general recession, a world-wide decline in commercial activity. The prizes open to us are few. We have to strive to win them.

The world won't buy our goods because they are British—but only because it thinks they are the best.

We can recognise this truth or bury our heads in the sand. At last year's Election, the people chose truth and rejected illusion: they voted for reality and banished yesterday's dreamworld.

It would, of course, have been possible to go the other way—the way we had been going, with brief interruptions, for years. [end p2]

We could have given up the struggle against inflation, left union power untouched, given the extra subsidy here and there and simply hoped for the best. But do not imagine that the world of fantasy in which we had been living would have remained even tolerably comfortable much longer.

Runaway inflation, would soon have produced unemployment on a scale infinitely greater than that which we are facing now. [end p3] Press release begins:

There are certain myths about our policies which I would like to dispel.

Our opponents say that the Government is deliberately depriving people of jobs in obedience to some fanatical and obscure economic doctrine invented by foreigners.

Does that strike you as probable? Does anyone really suppose that any party, having won a great victory, would actually want to send the unemployment figures up? I tell you this:

No Government deliberately creates unemployment.

We could, of course, take the easy, popular way of reflating the economy and preserving jobs by subsidy, as Labour did in the run-up to the election. But this would be to entrench inflation and high interest rates. It would be to destroy more jobs permanently than it preserved temporarily. In other words, the last state would be worse than the first.

What is this alien economic doctrine, by which we are said to be obsessed? It is this: that nations cannot go on consuming more than they produce, and that anyone who tries to avoid this elementary truth by the simple expedient of printing money may, for a while, give himself the illusion that he is richer than he is, but will soon become a great deal poorer than he need be. [end p4]

I can only say that if this kind of thing is a obsession, then those obsessed by it include every prudent businessman and every sensible housewife in the country.

There is little that Britain can do about the unemployment caused by world recession. But there are other causes of unemployment about which we can and are doing a great deal.

We could have a larger share of the world market, and indeed of our own home market, if our goods were truly competitive. Too often they're not, because of the restrictive practices by which in the past we have sought to protect ourselves and because, in some industries, workers have persistently demanded, and have been able to secure, wages which put prices up to a level the customer won't bear.

If excessive wage demands are granted, one of two things will happen. Either workers price their products out of the market and lose their jobs, or, if they are in a monopoly industry and can hold the country to ransom, end up by destroying the jobs of others.

There is another profoundly important cause of unemployment. The pattern of world trade is changing. Demand for the products of many of our historic industries will be far lower than it has been.

Mr. Chairman, we have to adapt to what is going on around us. Our future largely depends on new industries and on the ability of enterprising and risk-taking people to recognise what the world needs and to supply it.

Enterprises of this kind must start in a small way, and that is why small businesses are so desperately important to our national future. You can't command this kind of enterprise. You can't order people to excel. You can't plan to produce imagination and courage. What you can do is to create conditions in which they can flourish, reward them when they do or, at the very least, refrain from strangling these qualities at birth. And you can stop giving business success a bad name. [end p5]

Industrial revolutions are painful. We know that from history. Adaptation is painful. It's a natural and, sometimes a healthy human instinct to want to go on in the old way.

For example, people are reluctant to move—even a comparatively small distance—to take new jobs. Well, it's a natural reaction. What woman welcomes the turmoil of moving house? Who wants to separate herself from friends and neighbours, to set about finding [word missing] for the children and discovering by experiment who is the best local butcher?

But the truth is, changes of this sort are part of real life.

They are fundamental to our survival. The great prosperity of this country in the last century would never have come about had people not been ready to face the upheaval of converting themselves from a mainly rural to a largely industrial country.

Frequently investment goes where there are skilled people wanting work. But there must be some mobility. If today people aren't willing to move as their fathers did, the economy can't thrive. That is why we are trying to make it easier for people to go where opportunity beckons.

Making change tolerable is one of the duties of Government.

That is why we make generous redundancy payments to those who lose their jobs as a result of the changing pattern of industry.

We also recognise that industries which have leant on the state for years can't suddenly have their crutches withdrawn. They must be given reasonable help while they adapt to the new world in which we all must learn to live.

These are all important qualifying clauses in our economic programme, in our contract with realism.

What we must not, and will not do, is to allow them to develop into a general plan to try to shut out reality, or try to pretend that the world is other than it is. [end p6]


If unemployment will dominate our thoughts in the next few months, inflation and interest rates have not been far from the minds of those involved in industry, commerce and agriculture. We are beginning to see here a glimmer of success.

We believe inflation has peaked, it is beginning to fall, and will fall faster next month.

Interest rates have come down, if only by 1 per cent. Many wanted a bigger reduction. I know we have experienced a year of tight money and high interest rates. We mustn't lose our nerve now, when perseverance will make a great difference to our future prospects.

Exports have been good for the last two months—in spite of a high exchange rate. We have some industries which are world beaters, and they are pointing the way for others.

Management is once again beginning to manage, now that responsibility for pay and prices has been returned to them.

New attitudes are prevailing as many employees are learning that democracy means the right to say ‘no’ to your trade union boss, as well as to your employer.

And everyone knows there is a resolve on the part of the Government not merely to start these policies but to see them through to the end. The message has got home.

We are engaged in setting free the creative genius of the British people. All this country's human energy is still here in abundance: only socialism could stifle that energy.

It's not going to be stifled—and I think in their hearts our opponents know it. They criticise us, not because they fear our failure, but because they'r afraid we're going to succeed. And we are going to succeed. [Press release ends.] [end p7] We are:

For be under no illusion about what Labour stands for in 1980. If Labour adopts its Executives' draft Manifesto, it will march ever further left and at an ever increasing pace, under Brigadier Benn and Sergeant Scargill.

Here are some of the things Labour's NEC say they would do if they came to power—and I quote:

“Give a Labour Government the powers to take individual companies into public ownership by statutory instrument”

In other words, a blank cheque for unlimited nationalisation.

“Restore to public ownership, without compensation, the assets and activities of our public sector industries sold off by the Tories.”

In other words, cheat those who invested their savings in good faith. [end p8]

So much for “more democracy” .

“End all fee-paying in private schools”
“Extend public ownership into banking and insurance” .
Your banks, your insurance.
“Abolish the House of Lords” .

There is nothing the Labour left would like better than a self-perpetuating single chamber.

Mr. Chairman, day by day, week by week, month by month, the Labour Party is being taken over at every level by those who would destroy but cannot build.

It would be only too easy—and I admit it's extremely tempting—for a Conservative Government to rub its hands at the sight of the Labour Left taking over the Labour Party. But it is a tragedy for democracy. [end p9]

Mr. Chairman, I came to office to lead a Government whose policies would be clear and firm and responsible. We were determined that this should apply abroad as well as at home. We did not accept that Britain's role in the world should be second class, but we believed that her voice should be heard with attention. Already the results are plain to see.

In Brussels we have pursued our national interest with vigour and success.

In Africa we joined with our friends in negotiating a solution to the seemingly insoluble problems of Rhodesia.

At home we announced earlier in the week major defence decisions affecting both our conventional and nuclear forces.

The other day in the House of Commons we were accused of “putting guns before butter” . We were told that the [end p10] decision to replace our Polaris deterrent with Trident “reflected a corrupt set of values” . What is corrupt about defending civilisation and freedom?

But of course those who attack us want unilateral disarmament.

That would endanger everything worth defending in our country.

If anyone doubts this, let them look east. To Czechoslovakia, where university professors stoke boilers and visiting dons are expelled from the country for lecturing on philosophy. To Moscow, where the Olympic Games are now opening. The security precautions taken by the Soviet authorities are without precedent. Moscow has become a city forbidden to ordinary Soviet citizens and indeed its own children, lest they be tainted by the attractions of freedom. [end p11]

Could there be a more comprehensive confession of the failure of the Soviet system? Or more compelling evidence of the fear felt by that system for our own?

Farther east is Afghanistan, where Soviet brutality and repression continue unabated. The Olympic Games are beginning not merely to the sound of national anthems and Olympic hymns, but against the background of “gunfire in the Hindu Kush and in the villages and plains of Afghanistan” .

That accurate prediction was made by Mr. Peter Shore last March. I wish that more members of his Party would reflect on his words before attacking the Government's defence and foreign policy.

The free world must respond to the Soviet challenge, a challenge which extends far beyond Afghanistan. Only a sustained and determined effort by the Alliance and by the European Community, in their different fields, can be effective. [end p12]

Single countries can no longer guarantee their own security. But they can undermine the collective effort. And the policies advocated by an increasingly influential section of the Labour Party would have precisely that effect.

This Government believes in the contribution that Britain can and must make in the search for a safer and more prosperous world. We will never allow the cause of freedom and democracy to go by default.

Mr. Chairman, I have spoken of the way forward—at home and abroad. It is not a new road mapped out by some new dogma. It is an old road, which the British people have trodden before, and which they should never have abandoned.

Our opponents speak of me as “a new Conservative” , as though belief in the people of Britain, in freedom and moral responsibility, in honest money were my invention or [end p13] those of the band of strange intellectuals by whom I am supposed to be surrounded, but whose existence, I am bound to say, I have never noticed.

I think I am a fairly independent—minded person, but I was brought up to believe that independence consists not in thinking differently from other people, but in trying to think for yourself.

Every woman of my age knows how sometimes you go to your wardrobe and take out some dress you bought thirty years ago only to discover to your delight that it is once more the height of fashion.

Today, the values I have worn throughout my life are, I think, coming back. They are the values which are going to bring Britain back as well, and they are already beginning to show signs of doing so. [end p14]

There is a struggle ahead, though not, perhaps, as dramatic as some people would like to think. But no danger confronts us which it is beyond the power of this nation to overcome.

What an amazing thing is our United Kingdom.

Here we have the Welsh, the English, the Scots and the people of Ulster, each proud of their origin and concerned for their posterity; each regarding themselves, in some ways, as a separate cultural entity, but all combining to form a British nation with a British patriotism. It is that patriotism which has carried us through far sterner days than these and which is going to bring us once more, through toil and mutual trust, to a new and splendid future.

In Emerson 's words: [end p15]

“I see this aged Kingdom not dispirited, not weak, but well remembering that she has seen dark days before. Indeed, with a kind of instinct that she sees a little better in a cloudy day and that, in storm of battle and calamity she has a secret vigour and a pulse like a cannon” .