[Notes by MT:]Fred Henchman—chap understanding unfailing loyalty to our cause. Ch. part. Chairman 22 Committee Executive.—Chairman of Wales Charles Johnston Donald Willers. Gathering to renew confidence in our cause and in our capacity to cope come what may.)
Mr. Chairman, few people, I think, would accuse me of flinching from a political battle. Indeed, most political commentators seem to take the opposite view—and, of course, I always pay most careful attention to what the commentators say.
Political parties are there to state a case and to do so with some vigour. Mr. Chairman, I will do my best not to disappoint you this afternoon.
I begin with a letter to The Times—after much travail, happily still with us. Two weeks ago a correspondent wrote to that newspaper that he was cancelling his subscription to the Conservative Party in view of Sir Geoffrey Howe 's Budget.
This drew a spirited reply from a pensioner: [end p1]
“With an un-indexed pension based upon pre-1973 values as my main source of income, the purchasing power of which is now about one-third of the values of those days, my one hope of keeping any value in my remaining income from this source is in the Prime Minister's determination to slow down the rate of inflation.”
“I propose to increase my subscription to the Conservative Party.”
[I see Lord Thorneycroft beaming broadly …]
“My one hope of keeping any value in my remaining income …”
Mr. Chairman, inflation never tires. It works while we rest. It eats away while we argue. Like the ivy on the tree, it destroys the thing on which it feeds.
Inflation, like the ivy, had been destroying Britain.
THE GOVERNMENT'S MISSION[end p2]
This Government was elected to reverse this process; to liberate the nation's energies from the bonds of the state; to bring spending into line with earnings; to restore the balance in industrial relations; to encourage the growth of the businesses of the future, the only source of genuine employment; to conquer inflation, while preserving a free society.
Now this is what we said we would do. This is what we are in the process of doing. This is what the nation wants us to go on doing.
Mr. Chairman, this country is going through the most radical period of change and adjustment since the war. We warned before the election that to turn Britain and its economy round and put it in the direction of lasting recovery would take at least one term of office.
If you are going to achieve anything in life, you have to set your objectives and stick to them. This we have done. This, despite the inevitable setbacks every government experiences, we will continue to do. [end p3]
But, as Edmund Burke pointed out, “Nothing is more common than for men to wish, and call loudly too, for a reformation, who when it arrives do by no means like the severity of its aspect. Reformation is one of those pieces which must be put at some distance in order to please.”
“In order to please …” It's wholly human and understandable to prefer the sedatives which previous Governments have only too willingly prescribed “in order to please” . The trouble is, if major surgery is what is required to save the patient, a sedative will hardly do the trick.
Policies designed solely “in order to please” invariably fail. To avoid making the same mistakes, to create a future rooted in reality, Government and people alike need to learn together the painful lessons of the past. [end p4]
Ever since the last war, our nation has faced a challenge in some way hardly less testing than the war itself. Then we faced a threat to our free way of life that all could recognise.
Since that great victory, we have faced a danger, less tangible but all the more insidious. It is a threat not of invasion from abroad by our country's declared enemies, but of growing internal decline brought on ourselves by self-deception and self-inflicted wounds. The symptoms of this decline have long been visible however much we tried to avert our gaze and deceive ourselves that they would pass. From our unchallenged industrial leadership 100 years ago, the standards of living of our people have fallen further behind those of countries like Germany and Japan that rose from defeat to overtake us in the markets of the world.
Instead of earning a better living by adapting to changed methods and new opportunities we stuck to old ways, and struck for more money without more production.
However radical people's words and theories, most are intensely conservative in preferring established working methods and familiar places and modes of life.
And it is always tempting to politicians to try and promise an easy option that will avoid disturbing traditional ways.
So we put off adapting our old industries to modern methods, new markets, new competition. In printing, docks, shipbuilding, railways, steel, engineering, unions adhered too long to old practices and managers condoned demarcation. When new machines were installed managements were forced to agree to overmanning which cancelled out most of the gains from the new equipment. [end p5]
We politicians made speeches about ‘change is our ally’ and one even talked about the ‘white heat of technological revolution’. But in practice instead of using subsidies to ease the path of change they used them to protect old jobs that could not last. The task of pioneering new jobs was put off to another day.
But our competitors did not stand still. In Europe and in the newly industrialised countries, Japan, Korea, Taiwan, Hong Kong, Singapore, new processes, new products and new techniques were developed. And the irony is that many of our workforce who were resisting change, used their pay to buy the products of our overseas competitors because they recognised value when they saw it.
And so the new jobs were created not here but overseas. The very overmanning, the very refusal to accept new technology that was meant to protect jobs became the means by which those jobs were destroyed.
It is hardly surprising that in the league tables of real income per head Britain has fallen steadily behind.
STRUCK FOR MORE MONEY
But if we have lagged in production we have alas led the field in inflation. You don't have to be a monetarist to see that to spend more on static output must push prices up.
There are only four ways in which a company can lay its hands on more money to pay higher wages.
First—by increasing efficiency—the way of Germany and Japan where more pay is earned by more output. Their inflation is much lower than ours. Their unemployment is less than ours.
Second—by taking it out of profits, on money earmarked for investment. And that's what has been happening here for far too long and why investment is too low.
Third—by passing on the cost of increased wages in higher prices. It doesn't require a degree in economics to see that if a company raises its prices above its competitors at home or abroad it is likely to sell less and end up employing fewer people. That has too often been the British way which helps explain why our unemployment has gone on rising over many years to such appalling levels. [end p6]
And the fourth is to borrow and borrow and finally seek a subsidy to stay afloat.
Mr Chairman, it isn't difficult to agree that everyone's interest would be best served by ending this painful progression.
But until this Government came into power no-one had the courage to stick to the remedy for long enough to allow it to work.
We knew that it had been the Government's readiness to print more money that made it possible for inflation to continue.
It once seemed obvious that so long as there were unemployed hands and under-used wants we could put them to work by more or less throwing newly created money in their direction. That was the theory. But in practice, as governments increasingly discovered, the extra money did less to raise production than to push prices up even higher, and unemployment up even more.
It was this experience which persuaded the Government to give priority to stopping the spiral of ever higher inflation and unemployment. If we will learn from history or from the example of other countries today, there is only one sure way. It is to set limits to the increase in the supply of money which has always everywhere been the fuel that keeps inflation going faster.
Inflation is now declining rapidly—from over 20%; last year to around 12%; today. That is good news for industry and its customers at home and abroad. It is also good news for the unemployed. If wage and salary negotiations take account of falling inflation unions and management can price more jobs and goods back into the market.
Inflation can now be seen as a great divider of the nation. So we must find a common cause which will unite all who truly care for the future strength, prosperity and influence of a free Britain.
For a start we can surely agree that the grievous number of men and women who are out of work are bearing a heavier burden than those with a job and a regular pay packet.
Is it not then a small sacrifice for those in work to settle for pay which though less than we would like, is as much as can be afforded by private or public employers without bringing still more unemployment? [end p7]
We have one common cause we can all support. It is to keep inflation moving down as a condition of stopping unemployment moving up, and as a prelude to getting recovery going on a sound and lasting foundation. [end p8] Handwritten by MT
But that alone is not enough. We have to hold down the budget defict too. The policy could not work if government refused to take the kind of advice it liberally hands out to other people.
Geoffrey HoweGeoffrey talked to you about the budget.
Public expenditure—yes, spending is up in a recession. It has to be. Let it never be said that those who are in work refuse to look after those who can't find work.
But if we accept that, we have to be prepared to pay the taxes to do it.
If we try to borrow the extra money, interest rates would go up so much that they would affect the capacity of business to recover and invest. Small business, big business, agricultural business, and new business.
Yes, Geoffrey 's strategy is right. The tactics are flexible, but the strategy is rock firm.
So when we are accused of being inflexible, we can truly reply: in tactics, flexibility, in strategy, resolution.
That was why the Government was anxious not to put up the rates of Income Tax—for we need incentives to help us to recovery, [end p9] to new investment. And let us praise Geoffrey Howethe Chancellor for his judgment in giving special help to those prepared to finance new business.
Enterprise and risk taking—we need more of them. It is from the creation of new wealth that new jobs will come.
Here all these things are known as the Thatcher experiment.
Classic recipe adopted by those who because of previous success will be able to ride out the recession, not without difficulty, but better than we can. Typescript resumes [end p10]
Of course, universal agreement about what should be done is not to be expected in politics. But anyone who seriously offers advice to the Government should accept that there are choices which cannot be avoided.
I do not want to spend much time today belabouring the Opposition. Heaven knows, they have troubles enough, and I suppose we should be grateful that they can spare a minute or two from time to time to address themselves to attacking the Government, rather than each other. At least it makes a change.
When they do give us a thought, no doubt they feel it is all part of the political game that they should exaggerate their case. But there are limits. And the other day [end p11] their Peter ShoreShadow Chancellor—and may his shadow never grow less—told the House of Commons during the Budget Debate that he he did not “care a fig” about the extent of Government borrowing. What he was saying, in effect, was that he did not care a fig how deeply this country got itself into debt or how rapidly we moved to hyper-inflation.
Now if I had said that about him, he would, I think, have had cause to complain, for it would have been tantamount to a charge of total irresponsibility. As it was, he said it of himself.
No Chancellor of the Exchequer, of any Party, whether actual or aspirant, has ever quite adopted that stance before.
I suggest that what he meant was that he was prepared to attack every economy made by this Government and every tax imposed by this Government for one purpose only: to win votes at the next Election. At which time, if we took his advice, I am [end p12] sure he would experience no intellectual difficulty in saddling us with the blame for listening to him. That counsel of this sort can be given publicly by what is known, constitutionally, as “the alternative Government” is an indication of the current state of the Opposition. [end p13]
Not all our critics go to such extremes.
Many Socialists are in despair at the present predicament of their Party.
Two days ago a few of them bade goodbye to it for good- or ill- and set sail for no-one can say where, really; destination unknown.
One would like to be generous to fellow trawlers in political waters, especially on their first voyage in a new vessel, but I am not entirely clear what flag they're flying.
Socialist? Ex-Socialist? Don't-tell-the-Liberals-I'm-a-Socialist? Or I-haven't-used-that-word-for-years-sort-of-Socialist?
Generalities such as:- “The virtues of moderation” , “The beauties of the middle road” , “How nice it would be to have a party that is neither one thing nor the other” , these are no more than bland, innocuous sentiments designed to reassure.
I realise these are early days, but a political party with any claim to be taken seriously must be prepared to face up to [end p14] facts and choices. There will be no escaping. A hundred and one awkward and uncomfortable questions lie in wait for those who would counsel their country.
Too much policy is a nuisance, warns a sympathetic commentator. Possibly. But you can't be moderate in a vacuum. In a fight for national survival, it's not enough to be nice. [end p15]
Mr. Chairman, I sometimes feel that, as a nation, we have a tendency to decry our achievements, almost to the point of glorying in our shortcomings. The media—both press and television—reflect that tendency faithfully, following their general principle that you can't overdo a bad thing.
Modesty and humility have their place in politics, but so, occasionally, does blowing one's own trumpet. I now propose to blow a blast for the Government. [end p16] Rough notes by MT
We have raised Britain's standing in the eyes of the world.
Rhodesia—effect in Africa —Donors conference £800 million.
Budget refunds—£276 million ——[? £645] in since May 31st.
Stance on Defence—respected both sides of the Atlantic.
Swift and decisive in action—whether in the Iranian siege at home or with help in the financial arrangements for the release of the American hostages from Iran.
Belize—A few days ago agreement after long negotiations to bring yet another British colony to independence. Belize → Central America.
The contrast between us and the USSR is complete. As we bring countries to independence with the shape of democracy—so they extinguish democracy and independence.
But perhaps you will say, what about matters at home? Typescript resumes. [end p17]
Since we came to office, Mr. Chairman:-
Inflation, which was rising fast, has been falling sharply, and is still falling.
The monetary squeeze has obliged industry to slim and become more efficient, ready to take the best advantages of the new opportunities, when the recession ends. [end p18]
The general level of pay claims is falling, and without a statutory incomes policy.
Reductions in income tax have increased incentives.
Price, dividend and exchange controls have all gone.
In the third successive Budget, we have included an enterprise package to encourage small businesses.
We have increased the strength of the police in England and Wales by more than 6,000. The number of police forces more than 3%; below establishment have been reduced from twenty to three.
We have cut back the role of the National Enterprise Board; opened up the telephone system to competition; denationalised British Aerospace and taken powers to de-nationalise the National Freight Corporation; announced plans to de-nationalise Cable and Wireless, British Airways, British Rail subsidiaries, and the Docks. We have sold more B.P. shares to the people. We shall take powers to introduce private equity into B.N.O.C. [end p19]
Our Employment Act has removed immunity from all secondary picketing; given new protection against some of the abuses of the Closed Shop; repealed the most damaging parts of the Employment Protection Act; and provided public money for secret ballots.
We have extended, enormously, the programme of special employment measures, particularly for the young.
All strikers are now deemed to receive £12 a week in strike pay from their trade union, and the amount of supplementary benefit which their families can claim has been reduced by the same figure.
As John Stanley, our excellent Housing Minister, explained this morning, 118,000 Council and New Town houses have been sold to their tenants in the first twenty months of this Government. Sold, [end p20] Sold, that is, mainly by Conservative controlled Councils. Our Housing Act means that tenants in Labour areas have their right to buy as well.
One way and another we have really been quite busy.
In the National Health Service, there are 1,000 more doctors and dentists; 5,000 more physiotherapists, occupational therapists and technical staff; and 8,000 more nurses and midwives.
There are 100,000 fewer people on Hospital Waiting Lists.
Though there are nearly 9 million—yes, 9 million—senior citizens, their pensions have been uprated to keep pace with inflation.
We have increased child benefit; we have given extensive help with fuel costs; we have increased the mobility allowance for the disabled by over 50%;; doubled the special tax allowance for the blind; and exempted from tax altogether War Widows' pensions.
So much for Labour's lie about a hard-faced, uncaring, uncompassionate [end p21] Government. The most reactionary Government of this century? I throw the lie back with the contempt that it deserves.
Here, in South Wales, at Port Talbot and at Llanwern, our policies for the steel industry are bearing fruit. The work force has been reduced, and we now have productivity levels which match, the best steel plants in Europe.
Let us all congratulate them on their realism and their achievement. [end p22]
But none of these achievements, substantial though they are, make our greatest problem easier to bear.
Unemployment did not start on 4 May 1979. When we took over from Labour 1,300,000 people were out of work. Unemployment has been on a rising trend in Britain for years, irrespective of which Party has been in power. Today, we are in the depth of a world recession; every industrialised country faces this problem. [end p23]
Like some other regions, Wales has suffered badly. It cannot be said to often that the level of unemployment in our country is a human tragedy. It is the waste of a country's most precious asset—the talent and energy of its people.
Those who are not directly affected by change must try to understand what it is like for those who are. It is easy enough for them to look beyond the short-term misery of unemployment. But it is desperately hard for those without work to look at it that way. To them, “short-term” must seem forever.
There is no way a Government can stave off change. We have to face it. But we can and must do everything possible to cushion its effects.
This Government is doing just that.
The Youth Opportunities Programme is being expanded to 440,000 places, more than double the number when we came into office. 43,000 of these are in Wales. Even at a time of deep recession we are able to offer to every unemployed school-leaver a place in the Youth Opportunities Programme by Christmas, whereas formerly it had not been until the following Easter. [end p24]
We are engaged upon a massive task. It is no less than to rebuild a nation; a nation strong and confident and truly free, whose people live their lives and use the talent unencumbered by the State, but who have both the means and the will to succour those in need.
Our goal is clear, but as we move towards it we are faced with a recession of peculiar ferocity.
Our difficulties are not unique. It is not true that when it rains, it only rains upon the British people. Our friends and competitors abroad are struggling with the same problems as ourselves.
And, in another context, it is not only we, the British, whose future is in the balance. Others look to us for our part in the defence of the free world, menaced as it is almost as gravely as it ever has been in my lifetime.
Others look to us, others believe in us. Can we not believe in ourselves?
We have much on our side. Great material resources, great gifts of heart and mind, and, as I still believe, great courage. If we should fail, what would lie ahead but permanent decline and an eternity of mutual recrimination?
In the past our people have made sacrifices, only to find at the eleventh hour their government had lost its nerve and the sacrifice had been in vain.
It shall not be in vain this time.
This Conservative Government, not yet two years in office, will hold fast until the future of our country is assured.
I do not greatly care what people say about me: I do greatly care what people think about our country. [end p25]
Let us, then, keep calm and strong, and let us preserve that mutual friendship in which patriotism consists.
This is the road I am resolved to follow. This is the path I must go. I ask all who have the spirit—the bold, the steadfast and the young in heart—to stand and join with me as we go forward. For there is no other company in which I would travel.