JH
Prime Minister. I think you would expect me to ask you about unemployment. May I ask you first how much higher you think it will go?
PM
I don't know. I've never been a politician who forecast unemployment. I do fear it will be higher next month because, you know, during the school year, some 700,000 school leavers all of a sudden want jobs. Quite a lot of them have already come on to the register. Some more will come on it next month because they haven't been able to find jobs themselves. So I fear it will be higher next month and I fear it will stay high for quite a time as it did on the last occasion when we had a sudden increase in unemployment. But I can't give you a maximum figure. In part, it will depend upon how many people take out very high wage claims because, if they do, some of them will price themselves out of jobs and others, though they keep their own jobs, will take so much of the extra money available for themselves that there will be less available for other people and they'll throw other people out of jobs.
JH
Will it not depend in equal part—if not greater part—on how high you keep interest rates and what the pressure is on the manufacturing firms?
PM
I would very much like to take interest rates down as soon as circumstances permit. But, you know, they are high because so many people are requiring so much credit. Among them, Government—I must say—and that's why we have to try to keep Government spending down. But the moment the demand for credit is more within the nation's capacity to supply it, then interest rates will come down.
JH
If the unemployment figures are going to get very much worse … . The CBI are talking about 2½ million … . It would be wrong to keep people in the dark, wouldn't it, Prime Minister? [end p1]
PM
Yes, but we just cannot know. There's a world recession. We don't quite know how deep that will be. For example, in Italy, Ireland, Belgium, Canada, the United States unemployment is already worse in percentage terms than it is here. We can't do a great deal about that world recession. On top of that, I think there are two other things. One is we have problems in some of our older industries. Shipbuilding for example. There's a surplus of shipbuilding the world over. There's a surplus of steelmaking the world over. And we didn't slim down our steel industry as they did on the Continent, as they did in Japan, so we're having to do that now. And the third thing is how much people take out in pay. They take out more than the value of what they produce. We shall have increasing unemployment because we shan't be able to sell the goods. Those are three factors. Some we can do something about. Some we can't.
JH
Are you going to deny the Opposition's charge which comes into debate next week that your policies are spreading unemployment and demoralising the country?
PM
I think that is absolutely absurd to say that they are demoralising and spreading unemployment. We certainly have made our top priority fighting inflation. That takes a time, as you know, to show results. It's just beginning to show results. The alternative to what we're doing is to step up inflation. That wouldn't help in the long run with jobs. It would in the short run In the long run, you'd finish up with hyper-inflation—what I call “suitcase money” —and no firm would have the confidence to invest in the future. And in the long run you'd have larger unemployment. In the short run, therefore, it is absolutely right to fight inflation for all we're worth and to go on fighting it until we've got it right down.
JH
You said on Saturday “We mustn't lose our nerve” . Is your nerve being put to the test? [end p2]
PM
My nerve is not. I know we're absolutely on the right course. I'm not going for what I call “suitcase money” . I'm not going just to print more money. Think of all the people who have put their savings in banks or in the Post Office whose money would be devalued. That would be absolutely the worst thing …
JH
… . your Cabinet colleagues?
PM
They're wholly behind me in the policy we're pursuing.
JH
Is Mr. Peter Walker perhaps not losing his nerve when he talks about vigorous Government intervention in key areas of industry which he seems to have called for?
PM
No. I think what Peter Walkerhe is saying is that he agrees wholly with the strategy and that the alternative would be hyper-inflation … . He agrees wholly with the strategy … . But he agrees with what we're trying to do by trying to relieve the worst of the change—by trying very much to help school leavers with special measures to find special jobs. And sometimes by trying to help people through the transition. For example, you give good redundancy payments to people who've had a skill in a particular industry for years. That skill is their capital, so they get good redundancy payments. We still give a certain amount of help to firms in the development areas. We still give some short time working grants to people, for example, in the textile industry to help people through difficult periods. And that is the task of Government … . It is a duty of Government to do that.
JH
Does Mr. Walker get much support when he says, in Cabinet for instance, that the billions now being paid in dole money and lost in taxes because of unemployment is too big a drain on the Treasury?
PM
The alternative, as I say, is to reflate which would lead to hyper-inflation. And Peter is the first to accept that we can never do that. What he says—and what we say and what we are doing—is to recognise particularly the young school leavers. We must try to get them into a job. And we are going about it through the Youth Opportunities Programme which means that [end p3] they get paid a little bit more than they would if they were unemployed and companies take them on, give them work experience and train them in commerce. Can I just give you one example? In the last year of the Labour Government there was spent some £62 million a year on that programme. There were already 1,300,000 people unemployed then. This year we're spending something like £184 million on it. There will be about a quarter of a million young people who'll profit from it.
JH
Could you look enormously … expand this expenditure? If things got very much worse … I think people want to know … Do the Cabinet have a fallback plan, a reserve plan for creating a programme for public works or spending more money—much more money—to create jobs?
PM
To triple that expenditure is quite a big step to take. We have to take note … . We're directing it particularly to young people. Now, there are limits to what one can spend. Every penny that I get to spend I have to take from people in taxes or have to borrow. In so far as I have to borrow it, then I'm adding to the interest rates. And then I'm making it very difficult for small businesses. So one always has to try to keep that balance and the best thing we can do for small businesses—and it's from there the new jobs will come—is to try to get interest rates down. Then, it must mean that I have to watch public expenditure very carefully and try to hold it down. So far every extra penny we spend, we have to think ‘Now, is it really going to help?’. And I do think it's worth spending it on trying to help the young people to have work and not to be on the dole.
JH
Supposing your new man at British Steel, Mr. Ian MacGregor, comes back with a plan for shedding tens of thousands more jobs in the steel industry—would that make a difference to the quantity of money you're prepared to spend, say, in South Wales?
PM
We have already put some £48 million extra money into South Wales because we recognise that there are going to be quite a lot of steel redundancies there and an extra £15 million around Shotton. Again, to try to help. If you've got to look [end p4] after the jobs of tomorrow, other people—Germany and Japan—slimmed down their steel industries before. The last Government should have done it to a much, much greater extent. Then they'd have highly competitive steel industries now making a profit. We haven't yet done that.
JH
But if … . steel [word missing]. Would you put money in to meet that need?
PM
But we've put … . We've taken into account that fact there will be quite a lot of redundancies in Port Talbot and Llanfern. It's not a U-turn?
PM
Oh, no. People talk absolute nonsense about U-turns. We have to do what is necessary to get steel into a good industry that can compete with anyone either overseas or compete with overseas people selling here. We must have a good, strong steel industry and nothing will stop us from trying to get there. In the meantime, some people will be thrown out of jobs. They'll get very good redundancy money but that's not enough. They want other job opportunities. And that's why we try to build advance factories, why we try to encourage small businesses, why we're talking about enterprise zones—to get the jobs of tomorrow. That's a legitimate—indeed a necessary—function of Government to try to help those to come about. We can't do them. We can help them to come about.
JH
There's one marked effect of rising unemployment which you may be suspected of welcoming. It's weakened the bargaining power of trade unions and that was a major plank of your election platform.
PM
I never welcome unemployment—never, never, never. But no Government can guarantee full employment to everyone wherever they may be at any time. Democracy is about people taking responsibility for their own actions. If they constantly take [end p5] out more from their firm, without putting in more in efficiency … No, please can I finish? … they'll price the value of their goods out of the market, then they'll lose their jobs. That's nothing to do with me. That's the way in which they bargain. There's a firm in the Midlands I was reading about this morning. They demanded an extra 20%;. The firm said they couldn't pay it. The firm will be closing down. That unemployment will be deliberately caused by people demanding more in pay than the company could take because they said they can't sell the product. That is self-inflicted unemployment. It is ridiculous. Do you think I welcome it? Of course I don't. It's ridiculous.
JH
Do you think that the unions may be learning a lesson in your book?
PM
I very much regret that they couldn't learn the lesson without this. Surely, surely it makes sense that if you just demand too much, your price goes out of the market.
JH
Your Bill to curb trade union powers will be law in a few days. Do you still have doubts whether it will work?
PM
No, I think some of the strongest clauses are, in fact, the closed shop clauses. The picketing will be quite strong when it's added to by the Code of Practice Jim Prior will shortly be putting round for consultation. We've dealt with some of the worst of the trade union practices. For example, there's the practice by SLADE. There's quite a good deal in that Bill which will be extremely useful and which will deal with a lot of the things which people felt very strongly about. And, of course, personal ballots. People want more say in how their own union affairs are being run. And that's what we're trying to … .
JH
Was it wise to threaten to rouse union opposition by threatening more—presumably tougher—measures even before this Bill had become law? [end p6]
PM
I am determined to try to protect the individual members of unions from the powers of unions. I am determined to try to protect innocent third parties from the actions of trade unions which I think are not warranted. That's why we've put some anti-blacking provisions in the Bill—not going as far as some of us would wish but going further than the existing law does.
JH
But could you expect the unions to give the new law a fair trial when you're not prepared to do so yourself?
PM
But of course I can. Some of the existing law under which they were operating was giving them privileges which harmed innocent third parties. That is not British. I was elected to try to remedy that and we are remedying it. And we shall go on remedying it. People want protection against some of the actions of trade unions. Please don't say this isn't a sphere for law. The law is more protective and gives more privileges to trade unionists than to any other person this country, including giving them power to inflict damage on others. It's that that we're remedying.
JH
That's all we've time for. Thank you very much.