Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1983 Apr 11 Mo
Margaret Thatcher

Interview for Observer (4th anniversary as PM)

Document type: speeches
Document kind: Interview
Venue: No.10 Downing Street
Source: Thatcher Archive: COI transcript
Journalist: Kenneth Harris, Observer
Editorial comments: 1700-1800 MT gave a fourth anniversary interview, which was published in two parts. Transcript of an interview by Kenneth Harris published in The Observer on 1 May 1983 and 8 May 1983 and reproduced with the permission of Guardian and Observer News Services.
Importance ranking: Key
Word count: 14096
Themes: Autobiography (marriage & children), British Constitution (general discussions), Executive, Parliament, Civil liberties, Conservatism, Defence (general), Economy (general discussions), Secondary education, Employment, Industry, General Elections, Monetary policy, Privatized & state industries, Public spending & borrowing, Taxation, Trade, European Union (general), European Union Budget, Foreign policy (Africa), Foreign policy (Asia), Foreign policy (USA), Foreign policy (USSR & successor states), Housing, Labour Party & socialism, Law & order, Leadership, Media, Science & technology, Society, Trade unions, Trade union law reform, Strikes & other union action

KH

Well, Prime Minister, everybody of course would like to know when you call a General Election and everybody knows that you can't tell me. But could you tell us what kind of considerations have to pass through your mind before you decide when a General Election should take place?

PM

I think really two things: first, there comes a time when things are uncertain and we've seen so many fluctuations in sterling and that certainly has to be a consideration one would take into account; and then, secondly, I'm always planning for the future. I believe that we shall win whenever we have the Election, we shall continue to be there. But there comes a time when other people are a little bit uncertain, particularly overseas and it's better then to take an Election so they know, too, that you're going to be there for some time. Look at Europe for a moment just now. President Mitterrand will be there a long time, Chancellor Kohl will be there a long time, and it would be nice if they knew that the same thing was going to happen here, and the other thing is that we're coming up to the year when the options are closing and one has to decide to take one of them and the number of options is limited—it's June, July or October, November or the following March or the following May and this kind of concentrates the mind in a quite different way because I haven't really had to think in those terms so far.

KH

Would it be fair to say, would it be a fair construction on what you've said to say that you've now had to start thinking about when the General Election should take place?

PM

Let me put it this way that after the four years are up I shall have to start thinking and thinking very much in the knowledge that there are about four times when one can have it and I have to make a decision about one of them. [end p1]

KH

In 1979, Prime Minister, when I had the honour of interviewing you two or three months before the election took place, we didn't know when it was going to take place, you said that …   .

PM

…   . I don't know when it's going to take place now …   .

KH

you said that if you became Prime Minister, this is 1979, you would want a Cabinet which had in it—and I'll give you a couple of quotes here, we won't use them all—“only the people who wanted to go in the direction which every instinct tells me we have to go. As Prime Minister I couldn't waste time having any internal arguments. My Cabinet would have to be a conviction government, and so on. Now as might have been deduced from that statement, Prime Minister, some people have left your Cabinet in the last four years, but from what we read and hear there are still people in your Cabinet who don't meet that 1979 specification. Now would their continuing presence prevent you from doing what you would like to do as Prime Minister of your next administration?

PM

We all had the same conviction about the general direction in which we wished to go—stronger defence, more resources to law and order, one hopes in the end less tax, though in fact there is lower income tax now than there was, more enterprise, less government control. In the general direction we were all conviction politicians. On the detail, how far we should go and how quickly we should get there, of course there are different views and you thrash these without within a Cabinet. You're quite right, there are differences. Again, that would be something strange if there weren't. But in spite of that we have come through the four years with things very changed. I'm not talking about the most difficult things—there has been a world recession, there is still a world recession that's hit not only us but the whole of the Western industrialised world and the underdeveloped world as well and, of course, the Communist Bloc—it's just hit everyone. But the direction which Britain has taken has been very different and that has been [end p2] due to things which have united us and our determination to keep going on in that direction. Now within that there have been certain differences, yes of course.

KH

Well, there's no doubt about it, Prime Minister, you have had, and you and your Government have had, a great success down the road which you said you were going to go. But people like—I won't mention names if you like, but for this purpose—people like Mr. Prior for instance, people like Mr. Pym, have expressed views about the conduct of the economy from time to time, not recently I must say, which have apparently been in conflict with your general conduct of the economy. Has that mattered, will it matter?

PM

The difficult year was the second year. Interest rates were much higher than any of us had ever thought. We had to put on taxation or that year we were not able to have income tax reductions—you remember that was the year when we could not compensate for inflation—and yet that was the year when just after the Budget, when Geoffrey Howe had made his Budget, it was the Observer Businessman of the Year Award, do you remember? Geoffrey Howe had done his Budget. It was a very sound Budget, but the taxation was higher than any of us would have wished. The interest rates were higher than any of us would have wished. We had taken a decision that nevertheless we could not have a very high amount of borrowing because, if we did, that would still keep interest rates higher in the future and it would keep inflation rising in the future. It was a very courageous year. It was a very unpopular year for that Budget and do you remember I came up to that Observer award at the Mansion House, I had looked at the press that morning and I really was pretty—I can't say cross, cross isn't the right word—pretty disgusted, pretty disgusted, because what really made me cross, you had people saying we've got to spend more on this, this and this and when the bill came in they hadn't the guts to foot it. And so I said, this is what sticks in my gullet, the very people who had been saying spend, spend, spend—they are mostly in the Opposition, sometimes they're on one's own side. They were the people who were prepared to run up the bills. When I said, this is what you've [end p3] had, this is what you've got to pay they didn't like it. So yes, I did get up and make that speech. That was the Budget that was critical. It was the one which some people weren't very pleased with. It was the one which enables us now, in this fourth year, to have made more reductions in income tax which has enabled us to take off more of the National Insurance Surcharge which has enabled us not to be in the position of some countries in Europe, nor the United States. We are not worried about the total Budget deficit because we tackled that two years ago and we've held on course. We're not worried about public expenditure going out of control. We tackled that then and it's under control. And that really was the critical year, the difficult year, but that was the one which means that we now have a sound economy, the right basis to go ahead. I see other Prime Ministers in Europe saying we've now got to get inflation down to 5 per cent. We've got it down there. I see people saying about the United States, the trouble is the deficit. We haven't got trouble with the deficit. So yes, there were problems and people thought, well, are we going to come through. Some of us thought if we do the right things we shall come through. If we do the wrong things we shall be in acute difficulty in the future. Let's have a difficult ride believing that that is the right thing for the future, and we did. And now of course I think most people realise that we probably have sounder finances and a sounder underlying economy than we would have had otherwise, and sounder than many other countries.

KH

Even some of your critics, who cannot but admire your achievements, even some of the critics though say, I don't think the Prime Minister would have done what she's done if she had known that four years after she had been in power there would be well over 3 million unemployed.

PM

Mr. Harris, there are 3 million unemployed here. There's a record unemployment in Germany, in France, in the United States, record in the post-war period. In Belgium, Holland they have even more difficulties than we have with unemployment. And some of those countries actually have military conscription so they have, most of them have, indeed all of them have in [end p4] Europe, that takes a whole generation of youngsters off the unemployment register for a year and yet they still have very high record unemployment, some of them just topping over hours. Germany sent about half a million of her guest workers home, she's still got some there and yet she still has record unemployment. We haven't sent any people home and we haven't got military conscription so our figures, yes, look higher than theirs. They didn't have the kind of overmanning that we had so we had those problems as well. We were all in that same boat and I can only say this, knowing that our difficulties were greater than theirs, first because we had this problem of overmanning, we had the problem under which we had constantly paid ourselves more money although we'd only produced about the same amount so we were overpriced. If I had not taken the steps I did then Britain would be in a very much worse position than she is now, we should not have had the big balance of [payments?] surplus that we did last year and we should have a very dim future because our industry would not be in a position to benefit from an increasing world trade which will surely come.

KH

That takes me to the other query which is registered about you, even by many people who rejoice in what you've achieved, they say, I wonder whether the Prime Minister would have done what she's done if she'd known the pound was going to be as low as it is today.

PM

The pound has been very high in my time. You remember we went through a period when the dollar was persistently weak and the pound went up to $2.40, $2.43, $2.50 I believe it almost hit at one time and that brought its problems. It wasn't so much the pound was strong, it was partly because the dollar was very weak. The dollar now is very strong against all European currencies. Indeed, during my time we've strengthened against most of the European currencies except the deutschmark and we've weakened against the dollar. Again, we weren't to know that the dollar would be part of its time extremely weak, or that now it would be very strong or, above all, or what seems strangest of all, put it that way, that it would be very strong for the worst [end p5] reasons. It's very strong partly because they've got a very big deficit so it's very strong because of an inherent weakness in the United States' economy and people know, therefore, that interest rates would have to remain higher than they would otherwise. So I don't think that makes any difference. You've go to do certain fundamental things. You've got to have control of your public expenditure, you've got to keep your deficit, the amount you borrow, within reason, you've got to do things which make your industry become competitive, you've got to get inflation down. Now all of those are things which you have to do if you're to succeed in the future. They are not enough, they are not enough. For example, you can do all of those things and still fail because you haven't got people who are enterprising and that's the other side of the coin, you've got to have that. But they can be enterprising and not have a chance if inflation is too high or because the Government runs things badly. Is that clear?

KH

Yes, indeed. And I'd like to go on from there, that you mentioned something that intrigues me. You said of course you've got to do, to try and do, everything including reduce public expenditure, and that reminded me when I talked to President Reagan just before he was elected in 1980, he told me that if he was elected he was going to apply in the United States very much the policies which Mrs. Thatcher was already applying in Britain. But he thought that he could possibly improve upon your performance because you were not making sufficient reductions in public expenditure. Now how do you feel about your reductions in public expenditure—a lot of people complain about them, but you may feel that you haven't done enough?

PM

I think we've got it about right. We do obviously have arguments each and every year in each and every department. But I think we've got the public expenditure, bearing in mind the background, about right. And we've constantly been looking not only for the amount but of getting better value for money and of saying look, do we need so many bureaucratic controls, and we've cut quite a number of controls out. That means you cut out certain functions, that means you [end p6] cut out the bureaucracy, that means you can have fewer people employed in bureaucracy. But we have nevertheless had to spend a good deal more, for example, on national insurance. I'm not sure whether many people realise that there are now 600,000 more retirement pensioners now than when we took office. This is part of the demography of the country. We're going to have an ageing population and it's going to on but it has to be borne on the national insurance contributions of those in work so it becomes public expenditure. That's something that you can't run away from, it just has to be met. We also undertook that we would not cut in real terms the expenditure on the National Health Service. In fact again we increased it, and so bearing in mind, all in all, I think we have it about right, I think we have it about right between the departments. Where we could reduce, where we could get better value for money, that we have done. Where we thought it would be destructive or unfair or unwise we have not but we have, at what ever level, we have controlled it and, can I just explain one thing you may wish to put in another question? When I was in Government before we did all our expenditure in what was called real terms, you know what I mean, you forgot all about inflation and you said we are entitled to so many schools, so many teachers, so many school meals, so many school books, etc., regardless of the price when it comes to it. So you did all of it in what was called volume terms and sometimes you could say, “Well look, if we're going to have this amount of increase in pay we shan't be able to have those number of books or buildings.” And they said, “Oh, don't be so absurd, that doesn't come in the Treasury calculations, we do it in volume terms,” and I was getting very unhappy then and I said well no-one in their sane senses says at home, “I can have three tons of coal, I can have twenty joints of sirloin a week, I can have so many clothes, regardless of the cost of those things.” You say, “I have got so much to spend and I have to have accordingly so much on food, so much on clothes, so much on holidays.” Now it's only just in the last two years that we have gone from that volume expenditure regardless of cost to, say, “Look each department, this is going to be the amount of cash you're [end p7] going to have this year and we can tell you for the next four years. We can tell you the amount we've built in for increase in pay, the amount we've built in for increase in inflation but because we're pulling down the amount of inflation you're not going to get full compensation for everything. We want inflation down.” Now we've moved to that. There's nothing, ought to be nothing, astonishing about this, this is the way every household has to budget, this is the way every business has to budget. But this is the way the Treasury never budgeted until now and this of course is much better control of public spending. Of course you have to have a contingency fund, just as you do at home. You don't spend up to the hilt of your income, if you're wise, you have a bit in reserve and of course there are some times when you have to dip from that. But there's one other factor. What has helped us to get public spending down is we got the interest rates down because when you have to pay a lot for the money you borrow that puts expenditure up. So we have, I believe, got the total amount about right but we've got the control much better.

KH

Why didn't the Treasury, Prime Minister, interrupting you, why didn't the Treasury behave in the past in the very sensible way you describe them behaving now?

PM

Because you see until about 1970 inflation was not really the problem it became. If you remember, we used to have a fixed exchange rate and that stopped Governments from spending much because whenever they spent too much the exchange rate fell and then because it was fixed they had to spend reserves to bring it up and you only had a limited amount of reserves so you had to stop spending. Do you remember, year after year we had stop/go and then we got inflation, I think world-wide, in Harold Macmillan 's time, the fifties and the early sixties, it was only about 3 per cent. Then the discipline went. It is an arguable point why the discipline went. I myself think politicians bear quite a lot of the blame because I think they took to followership and not leadership. I think they took to saying to people, “Look vote for me and I will give you what you [end p8] want.” And so, the promises they were making were more than could be met out of true earnings of the people and so they printed the money to make up the difference and for a time people thought, “Ah, we've got more money”, and it took a time to realise it wasn't buying any more. You also had the problem that you had the Vietnam war and undoubtedly America was financing the Vietnam war by printing money and inflation spills over from one country into another. And so we got inflation rising very sharply and I can remember in 1970 when we came into power and I can remember some of the wage claims, I can remember the …   . inflation 7, 8 per cent and the wage claims coming up 9 per cent. I can remember Reggie Maudling saying, “If it's going on like this we can pack up and go home.” And then we had the decade of inflation but even by 1971 inflation had killed the Bretton Woods system. You were getting variable inflation and no longer could you have a fixed exchange rate. When you lost the fixed exchange rate the only discipline that you had left went, and during that decade it was the decade of inflation. The Treasury system had been based on the fact that you didn't expect to get very much inflation so your volume and your cash were not that very much different.

KH

Very interesting.

PM

Inflation started to kill it but it still kept in with the old system. It was not until the end of that decade of inflation that we've now killed it and gone on to a cash basis and now we're getting inflation down. But you still need the cash basis because if inflation is down you automatically have the cash basis. But financially, in terms of world finance, and home finance, the decade of the 1970s and 1980s was devastatingly bad, thoroughly unsound, and then we were going to go to the IMF and the IMF are now doing with other countries what they were doing with us, except we're a creditor now and not a borrower.

KH

It's a very important matter. Very important. The Treasury changed its behaviour. Did it do it more or less spontaneously as a response to the conditions, the new conditions which you describe, or did you have to impose your will upon them? [end p9]

PM

No, I think the Treasury wanted to do it. Certainly when we came in we wanted to do it. It took quite a time to get it in and the Treasury thinks it a much better system of expenditure control, the Treasury much prefer it. But then you've got to go to each of your Ministers and say, “Look, we're going to go for this different system,” and they say, “Oh, oh, but that's going to make it more difficult for us,” and you say, “Ah, ah, yes it is, and that's why—you've got to be more economical. Just remember you're not just merely a Minister in charge of a Department, you are a 22nd fraction of a Cabinet which is a Government and we came in to do certain things and you don't forget all of those things merely because you go in charge of a Department.” And it would be nice and easy to say yes I want more money to spend for my Department. So you have then to sell it and to get it through your Cabinet. Yes, this means you've got to be firmer on control but you should be willing to be firmer on control. You should say, I have a duty to get top value for money, the best value for money, for the money which I take from the taxpayer's pocket. So you have to sell it, and you have a lot of arguments because they say, “Oh, but prices have gone up and I can't have such a big school or as many tanks and so on,” and you say, “But you have to bargain with your suppliers and you have to decide how much you can spend this year and you have to adjust.” And the cost of tenders has gone down because they have got to. We're getting bigger volume for the tenders because other people know they have to become more competitive. This idea that we have a hundred schools this year regardless of what they pay seem to me ridiculous.

KH

So the difficulty would be with the Ministers and the Departments.

PM

It always is when you are running a central Department. It is the central Departments that are responsible for the economy of the country but you've got your difficulties and then this is the purpose of Cabinet meetings. This is our objective. You are not just Secretary of State for something or other. You are part of a Government. [end p10]

KH

Would you say that's the main job of a Prime Minister as you would see it?

PM

Prime Minister, and Chancellor of the Exchequer, is to be custodian of the strategy of the Government.

KH

Excellent, if I may say so, excellent.

PM

Custodian of the strategy of the Government. Constantly to say that this is the strategy, this is the strategy on which you were elected. But don't forget we have had that cooperation, this is the point I wish to make. We have had that cooperation. Certainly we have the arguments but we have had that cooperation and it's because we've had that cooperation, because they realise this is the strategy on which we were elected, they've taken endless trouble with controlling expenditure within their departments, and we couldn't have done it without that cooperation. But it is a Minister triumphing sometimes over the advice he is getting from his Department.

KH

Excellent.

PM

Once you've got the decision, the Department will do always what the Minister insists, always.

KH

Now I've no inhibitions in asking you difficult questions because you've been so honest about it, but before you were elected and since you've made absolutely clear that Rome wasn't built in a day, that it would take many years for your strategy to succeed. So I've no inhibitions about asking you this. But how would you feel at the moment? Can you point to signs of your strategy succeeding even if you say, of course it's going to take a few years yet? What is the state of the nation from the point of view of the application of your strategy?

PM

Well, let's take home affairs first. I think there's, what can I call it, a general understanding among people that what we're doing is basically sound and had to be done. That doesn't mean to say that everyone likes it. But [end p11] there's a general understanding that basically it's right. That, I think, is greatly to our advantage and to our credit. On the strictly government financial level, I am not worried about our deficit as other countries are worried about theirs. I believe we'll keep inflation coming down—it will fluctuate, as you know it will fluctuate this year—but we're going to keep inflation coming down, I'm not worried about that and we can keep inflation coming down, I believe we can keep interest rates, get interest rates down further. I believe we have expenditure under control. Those are the financial things. I am very relieved that right at the beginning, having been talking about reductions in expenditure, you still have to have your priorities right, that we did decide to spend quite a bit more on law and order. Now that takes a time to work through. First it takes a time to recruit your extra policemen, then it takes time to train them, then it takes a time to get new systems working, with closer laison with the community, the people on the beat, and so on. That takes a time—thank goodness we did it. That, too, is working. I'm very glad that we decided to meet our NATO commitment for 3 per cent extra. That, too, is working. Because of all of these things Britain has gained respect in the world on a scale which she didn't have it before I came in. We don't go to the IMF now, we're creditors of the IMF, we help other nations out. We don't go to be helped out ourselves, we can look after ourselves. So that's on the credit side. Now, can I just pick up something I said before, the things which still have to be done. We still have, partly because of world recession, we've not been able to go as far as one would wish on what I call the enterprising side. How can I explain it? You can get your inflation down and still now have the spirit of enterprise. On the whole it isn't governments that create new products and new designs of fabrics, new designs of clothes, new designs of machinery, new inventions—it's people. If one were to say one of the great differences between, one of the great strengths, of the American economy, greater strength than ours, it is that they are an enterprising people, success by their own efforts is in their bloodstream. That's why they went there, not to rely on governments but to say if I work hard, if I get something, if I am successful, look, everyone will applaud me. [end p12] It's a successful, enterprising, thrusting, driving, vigorous, dynamic economy. It's a very, very professional economy. Look, they've just brought the Challenger down—fantastic, it's an invention, it's a driving, thrusting, vigorous, enthusiasm and if you get young people saying, “Yes I want to start up”, you say “Good, come on, how can we help? You've got a new product—we'll buy it!” That's what I mean by enterprise. It's a success-orientated economy. Now, and no-one feels any guilt about success. “Cheers! Look how well he's done. Look at his background, look how well he's done”—doesn't matter where you come from, what matters is where you can get that counts. And they're highly professional, highly scientific, I mean I watched the space thing coming down—marvellous. Now, I still have to get in Britain that same degree of enterprise, the will to success. There's always a bit of a guilt complex in Britain about success. Why, I don't know. We just have to get rid of it. It's coming. This is why we have put so much on small businesses—quite a lot, a lot but not too much, government assistance to those with new products in a new electronics. If they've got a new idea but can't get the finance, all right they can come to Government, one third of the finance to get a new product and to launch it. And we've had the inventiveness. After all so many of our people went to the States. Look, Ian MacGregorMr. MacGregor, I have to get back from the States but he's British. Silicon Valley, lots of people in the States but they're British. When I first went over to NASA the Space Agency, years ago in the middle 1960s, the person there in charge of I believe the Gemini programme was a person from my constituency. So we have the genius on science, the genius on invention, but we haven't got this enterprise to turn it into profit, to say I want to build up a factory, a business that will employ people and we'll all succeed together. That is what still has to be done.

KH

Do you think it's coming back?

PM

It's coming. I have now, just tiny little signs. [end p13]

KH

This is very exciting, and so interesting and so penetrating. But I don't want to catch you at a disadvantage. If I were to press that and to say can you give me some examples of how it's coming back, or is that too difficult off the cuff? Could you give me some examples, Prime Minister, of how this is coming back? You say it's got a long way to go but is coming back.

PM

The obvious and quick one is the Sinclair home computers and also he's doing a small pocket television set. But I went out, for example, to Japan. I knew I was going right into the heart of electronics. I thought, what can I give Mr. Suzuki, the Prime Minister? And I took with me a Sinclair home computer and I gave it to Mr. Suzuki in front of all the television companies—look, there we are, first with it. And Sinclairs flew out a man and we did a programme there—excellent. He's an obvious one. But, secondly, let's just look for example in Scotland now. There are more people now employed in new electronics than there are on steel and shipbuilding. So there it is happening, it is coming. You look at some of the people who've done extraordinarily well. Now, let's look for example at Laura Ashley, textiles. That was sheer good design; Jean Muir with her designs, really very, very good. One came across someone who after the marathon is absolutely marvellous in sports shoes. He's got a particular sports shoe that is extremely good. I come across companies who export, particularly in audio things, audio electronic things, to Japan. The new electronics is coming up really quite well, very well indeed. On small things, we took out some figures the other day, we now have a record number, an all time record number of, people in this country who are self-employed so they're becoming their own self-starters. We take out the number of births of small companies and note that the number of births is exceeding the number of deaths which is quite a relief. These things are happening, particularly now in the new electronics area and also, of course, with some very good designs. I will try and think of some more. I went to a factory in Peterborough the other day—Therm-a-Stor. They are doing some marvellous insulated windows and doors, [end p14] excellent, supreme design, toughened glass—they're taking on people. They reckon that they're challenging the world. So they're doing it. The point I'm trying to get, and I went to a factory, Blacks, that make things for Marks and Spencer, they make them up to a standard. They have replaced things which were made in Korea, Hong Kong, replaced those things with our labour and I'll just give you the details of the two, and they are making shoes, suitcases, bed linen, so much stuff that was imported. So the point is it's happening on two fronts: first, on new designs of old things and secondly on new products. So it is happening and we are doing as much as we can to help—you know we launched Information Technology Year and so on. Now, we are also trying to help with new chemical products. We are particularly good here with pharmaceuticals and of course it was we who did cloning here—that was a British discovery. We got a Nobel Prize for it, Milstein down at the Molecular Biology Lab at Cambridge. Unfortunately, this was just exactly a case in point. We were not fast enough to realise its full potential. People there published it in a paper and the process was patented in the States and on one of my visits to the States I went to a firm that is doing the bio-technology and I said, “But this was our discovery.” And there they had got a scientist, a scientist from university, a young one, and a young man who had been in finance together and they were building a new company. That's what I want here. We're getting it in science parks. We've got science parks near Cambridge and Salford University, I went round there, they are doing all sorts of new inventions.

KH

Formidable number of sciences.

PM

So it is happening. These are where your new jobs are going to come from. [end p15]

KH

Now if I were somebody who's unemployed, and been unemployed for a couple of years, I hope I'd be fair-minded enough to say, yes, I believe that and I can see that, but on the other hand, I am unemployed. I've been unemployed for two years. What's going to happen to me? Even with these successes being registered—I don't doubt them, good for the country—but what about me?

PM

Yes, and I can quite understand why you say that, because I think many people know and do wonder because in addition to world recession and in addition to the things which hit us harder than they hit other people, because we had overmanning, and because of this enormous pay we'd given ourselves for the same production, they also know a lot of new investment is displacing people who were previously employed in jobs. And this is always the problem with new technology at first. It displaces jobs, and then of course it makes possible all kinds of things that were never possible before. I mean we shall produce video recorders in this country. We shall. We're going to, but at the moment we import them from Japan. We shall produce word-processors in this country. There's a great demand for them. At the moment we import them. And pocket calculators—far too many imported. There are the jobs. They're not yet being produced here. Yet if you look in this country we take up these things. You know there are more home computers and more video recorders in proportion to our population in this country than there are either in the United States or in Japan. That indicates that we naturally take to the latest equipment. We naturally take to it. We're very quick at it, and somehow it's our institutions and customs and traditions that have stopped it getting into factories. We've got to cope with that. These are the things we are importing, and these are where the jobs are. And, where do the new jobs come from? If we regain for every percentage point of our home market that we can regain, we regain 80,000 jobs. If we regain a percentage point of export markets we get 250,000 jobs. And frankly we're well on the way to doing that but when you get people on strike in Halewood and British Leyland it doesn't help. But, what are we doing about new jobs? Can I go onto that? As we have a strategy for new jobs. First, We recognise that a lot of the new jobs will come from the new products, so we've got this scheme—£180m we've already had earmarked, and Geoffrey Howethe Chancellor earmarked another £185m for these new [end p16] products to help people to get them launched so they can go for that. That's one thing, that's the new products. Secondly, we know that we have not got the skills for a lot of these new things, so we've got this massive training scheme for young people which we're going to start in September, but it's not only that. Our technical education and our computer education is not good enough. It just isn't. When we went comprehensive I'm afraid we forgot about some of the technical schools and what people were learning there. And so we're starting this September.

KH

You're correcting that, are you?

PM

We're correcting that. We're setting out to correct that. And it's very exciting. We're starting with a pilot scheme of twelve new technical schools for young people from the age of fourteen to eighteen. From fourteen they can go to one of these technical schools where we'll train them in the basic science, basic physics, basic engineering, basic electronic engineering, for the jobs that are coming up. And many many young people are very excited about it because a lot of them work far harder when they can see a purpose to it. So that's coming, that's starting, and it was the, David Young and Norman Tebbit 's idea, the Manpower Services Commission. And they came to me and said do you think we can do it? And I said, if you can, yes, you must get Education in, do you think they'll be upset, the local education authorities? All of them wanted one. Now that is for youngsters fourteen to eighteen. So we correct that. Now we're not stopping there. A lot of the youngsters unemployed, on the streets, we're starting up computer centres for them. A hundred. So far we've got thirty-eight. Taking youngsters, unemployed youngsters, going there. They're being trained. It's a forty week course. Take Salford as an example. There's one there. Every single one of those youngsters has been offered a job before his forty week course is completed. Now. And I've got computer into every secondary school, and microcomputer into every primary school. So we shall not fail for lack of skill. Either general skills, the building, or the new electronic skills. So those are some of the things that we are doing, and of course as much help as we can to small businesses [end p17] to encourage them to start up. Some will fail, but you know you have to get people to understand this. If people are going to sort of start up, not everything will succeed. Some might fail. Alright, they'll start up again. But a number will succeed. So that's quite a lot. All for jobs of the future.

KH

And you said one or two things which revert back to something else that you said earlier. It's a question I haven't yet asked you, so I'll throw you back if I may. I was going to ask you when the recovery comes—you've already touched on this, but I think it might give it more strength if I put it to you again—when recovery comes, isn't there a risk that people will spend more on imports from abroad with their resources than what is produced in this country? For instance, if more people get back into work, they will spend their money on a flood of exports from Taiwan, Hong Kong, Japan and so on?

PM

But you see I gave you an example of factories in this country which are now producing for Marks & Spencers which actually have outdone some of the factories from overseas.

KH

You do not fear a flood of imports?

PM

To some extent people will because this is the essence of choice. But what I'm satisfied now is that there are companies in this country which can in fact compete with the Koreans, with the Taiwans, etc. But there is another factor. We have to take things from Korea, from Hong Kong, from Indonesia and we will have to take textiles, and people will buy them here because they are excellent value. But we're selling back to those countries engineering equipment, and in many of those countries—we actually have a balance of trade with some of them—because we are selling to them rapid transit systems, engineering equipment, transport systems, power stations, and so, if we don't take anything from them we can't sell anything to them. So we have to be able to compete the world over in the big engineering with the power stations and suchlike, with the rapid transit system, to sell, we sell one, and also to Hong Kong, and so we've got to have the best in that. And do you know, we did the Hong Kong rapid transit system, complete four months early. The Castle Peak power station there [end p18] which I went out to open. You know, from the time they had to blast the rock from the side of the hill to get it flat, to commissioning the first boiler and the first generating plant, four years. British generators, British boilers, a lot of British engineering. We can do it when we live up to our best. So yes, there will be quite a lot of purchasing imports, but equally the last two years we've done very well with exports. Never never forget this. British industry in parts is performing magnificently, and last year although we actually increased our share of manufactures in the world market. So that was very good. One other thing. Sometimes you have to, at the beginning of a period of recovery, you find that you are importing specialised machinery for investment—international specialisation—semi-fabricated things to put into finished goods which we re-export. And raw materials, so sometimes you do find your imports go up. We had a look at this, and we find that quite a lot of the imports are going to industry, but they are imports which they will have to make. But the answer always comes the same, we have to compete. And we have to learn to make those goods here like the videos, like the word-processors, like all the office equipment which at the moment have been made overseas. And we have to make—and I went to a factory, another one the other day—the Robotics factory where we're making our robots here specially designed for our factories. Do you remember that one? In the North West, not far from Preston New Town. It was on their estate, on their industrial estate. It's linked in with the Japanese one, but we are designing ours. So it is just the—how come we are a trading nation. We just have to get the idea and purpose and objective, we've got a good idea. Industry's the place to go, and success is what we want.

KH

Since unemployment is such a controversial issue, I suppose it's the only one major complaint that people could make against your four years, can you look forward to a reduction in the level of unemployment? Or will you say one can never tell?

PM

I cannot tell you when. Incidentally there's one think I left out of course. In every developed society you have [end p19] found over the last ten years—and places like the United States over a longer period—there are a fewer and fewer proportion of manufacturing jobs and a bigger and bigger proportion of jobs in service industries, including the whole of tourism, package holidays, insurance, computer software, all the amusements, all the leisure centres and so on. So you find that in any event. I am myself convinced that as in every other technological revolution—we are in a technological revolution now—so the end result, the final result will be to create more jobs. Although the initial one is substitute jobs by machines. But every technological advance has given more opportunities. Opportunities now. Look, you couldn't have come and interviewed me with one of these things ten years ago. But you see it's a Sony, made in Japan. Sony are producing here now, they have a Queen's Award for Industry for exporting from here. And the other thing we want is inward investment. I mean, you've only to look around at the number of things you have. The kind of watch you have. These days I'm afraid put many traditional watches out of business, but there are jobs in the new kind of watches.

KH

Now, given the economy, the basic things, a very good going over. I have some specific questions here—they're fairly specific. You've seen them. One about the trade unions, for instance, one about Europe, one about Anglo-American relations and so on, so shall we go on and tackle those?

PM

Yes of course.

KH

And then I want to come back to a couple of end questions. Rallentando. When you took office, one of the things that very much concerned you—and you've been very frank about it in your campaign—indeed in Opposition for several years—was that you felt that the balance of industrial power was—had been and was—far too tipped in favour of the trade unions, and you felt that something should be done about that. How do you feel that balance of power stands now? What have you done? Is there more that you want to do?

PM

We have as you know passed two Acts which have made a very good start. I needn't go into details—obviously you [end p20] know what we've done with the picketing, and the second one of course meant that trade unions were liable for certain acts which would have been illegal if they'd been done by a person. I haven't expressed that very well. Will you …   . Yes. I would put it this way. I think we have made a start. I do not think we have gone yet as far as we should. There'll be another Bill to come. As you know, we said that postal ballots can be paid for by the taxpayer, and we have a Green Paper out on whether ballots for union officials should be both secret—compulsorily secret. I believe myself they should be. I think that's the single most important thing. And I think that we'll need to go on and look at various other things. We'll need to have a look, for example, at how come that in almost all other countries in the world where trade unionism is strong, if trade unions reach an agreement, they're expected to keep it. But here, they say to an employer, we expect you to keep, but don't expect us to keep it. I mean that seems to me fundamentally wrong. Especially when it comes to procedural agreements. It seems to me to be fundamentally wrong, and we will have to look at those things, we will have to go further. I think in the end though one also has to do things by persuasion, as well—there's no substitute for doing certain things by law—by persuasion as well. After all I have been very very depressed about the strike at Halewood. Heaven knows the amount we've been trying to do for Merseyside. And there they have jobs, and then they just march off the jobs. And the number of strikes they've had—I think it was eight or nine last year unofficial strikes. Look, you've got jobs, you've got a good future. And you just walk off the jobs. And here the taxpayer tries to do everything for British Leyland. They had a good car in Metro, in Maestro, and then in Cowley. They will not do a thing which is done in other British Leyland factories. And I simply say to people look, you must be presumed to intend the consequences of your own action. So if you are going to do yourselves out of jobs, buy this because people are not going to buy your products—don't blame me for the unemployment, and don't bring the trade unions along in great big marches for unemployment. If they and the Labour Party are going to back strikes of this kind. I am constantly saying sometimes to the Labour Party, yes, you're the strikers' friend, because every time I'm abroad, trying to persuade [end p21] people to buy British, they say, look, we would buy more but you've got to get rid of your strikes. So you've got to do it by persuasion. The terrifying thing about those strikes is not only that they will do themselves out of jobs in the end, directly or indirectly, because people won't buy, they'll go to Germany, strikes help your competitors. Strikes put jobs into Germany and into Japan. But the frightening thing is not only do they put their own jobs at risk, but they put the jobs at risk of a lot of other hard-working people. Look at all the small businesses who depend on them, who work jolly hard, never go on strike. Do they get the components there on time, or they serve in the canteen, or they are doing some—every big firm has a lot of small firms supplying it—and those little people who've worked jolly hard and done everything right, they can find themselves all of a sudden without means of selling their goods. And it's the same sometimes when you get high prices in a nationalised industry. If some of them go on strike and demand higher wages because they're in a monopoly position, up go the prices, and then sometimes many a business which has managed to survive, all of a sudden the extra cost of a monopoly supply, whether it's electricity, telephone, is just the thing which puts their prices beyond reach. And this won't do. People act that way, then they must accept that they are responsible to some extent for the unemployment which ensues.

KH

You make a very interesting point. Rather, you bring up in my mind a point which interests me, and I know will interest many readers. You've said that it's very important in dealing with the trade unions to, as well as other things, to use the method of persuasion. Now, when you were elected, before you were elected, a number of people including some Conservatives were worried about what you would do as Prime Minister because they said, “I'm afraid Mrs. Thatcher will create a divisive attitude in the part of many members of our society,” which of course would militate against persuasiveness. Now do you think that you have created a divisive atmosphere?

PM

No, not in any way divisive. Merely because you say a man must be presumed to intend the consequences of his own action. Are they saying that's divisive? One must be responsible for one's own activities? Divisive? Good heavens, where has politics got to? [end p22] Nonsense. You can't run to democracies about self-government, and you cannot run with democracy without self-discipline and personal responsibility. But look, you see, the strikes are in but a small proportion of British industry. Certainly we have a lot in the public sector, and British Leyland of course in the public sector, but then you get Halewood. But in the majority of factories one goes round—the numbers I've given you—you don't have them. I don't have to sell or persuade people that what I'm saying is fundamental truth. They know it from their own experience. They know it. And they work together. We have the strikes in a few—quite a number of nationalised industries, but they're selected. You see, in the nationalised industries you have a lot of people who loyally carry on, and frankly, if they didn't we couldn't get through. Look, in water you had a number of people loyally carrying on. Days gone past, electricity, a number of people loyally carrying on. But it's a small thing. And I think part of it is that a lot of people don't want to go on strike but they, oh I still think some of them are afraid. That's why, you know, we tried to get in with the postal ballot and one's trying to get at it the other way. But they are only in a few industries and they tend to be very very big conveyor belt businesses. But don't forget in the vast majority of our factories industrial relations are good.

KH

Before we leave the trade unions, you've told us, Prime Minister, that there have been two chapters of legislation. There may be a third. You also want to use the method of persuasion. Do you have a conception of the role you would like to see trade unions play in this country? As opposed perhaps to a role they played in the past.

PM

Yes, there's nothing wrong with trade unionists in any way. The role. I don't look at them as a sort of fourth estate of the realm. It doesn't matter what factory you are working in. You've got to have some means of communication and cooperation between those who work on the shop floor and those who work in management. But to me, I view them as part of the same. You have to have some means of communication, whether it's a work's council. And I expect that the role, whether it's trade unions or a work's council or discussions of whatever kind … everyone's job is at stake. It's your future. You have to have a means of cooperation. The means [end p23] of cooperation there, I don't regard as great big conferences or fourth estate of the realm. It is on the shop floor. It is in the factory. That is where they cooperate. That is where they build the new designs. That is where the people on the shop floor say, or the managers say, look, if you have this arrangement will you be more efficient than the other? That is where the people on the shop floor should often say, look, unless we get the latest equipment, someone else will get it so we've got to allocate money for investment … (TAPE ENDED—NEW SIDE)

… you make a better living for yourselves by pleasing the customer. People often don't forget this. You only really make a good living for yourself by pleasing the customer.

KH

So in view of what you've been saying about the importance of the trade union role being exercised on the shop floor or in the factory, it wouldn't matter to you—I mustn't put words in your mouth—it wouldn't matter to you if the TUC for instance didn't exist?

PM

One hasn't thought about the TUC not existing. In fact quite frankly I'm not going to think about it, because it's not going to happen. So I'm not even going to think about that. It wouldn't matter to me, indeed it would please me immensely, if the TUC would not, trade unions were not a wing of the Labour Party. And the Labour Party in a way is the political wing of the trade union movement. That I must say I think is wrong.

KH

What is it about that that makes you feel it's wrong?

PM

Because people have all kinds of political views. It doesn't matter what their political view, the essential thing is wherever you're working, whether it be in commerce or in industry, you have got to have cooperation between, it may be your scientists, your designers, your salesmen, your technical people, your skilled and your unskilled and you are all part of the same. And it's the enterprise in which you are working which is the important thing. And its success, upon which depends your own success and the prosperity and success and your standard of living depends upon your company's success. And it's got nothing to do with whether the trade union [end p24] movement are Labour or not.

KH

That's a complete answer to my question. Prime Minister, when you think about the next term of office, I wonder whether you want to make, think there should be, changes in the structure of Government quite apart from politics? For instance the procedures in the House of Commons, the operation of committees, or arrangements in the civil service, the kind of civil service we have. How it's run. Do you feel that any of these help or hinder the way this country is run? Something should be done about them perhaps?

PM

I think it would be quite wrong for a government to try in any way to suggest to the House of Commons what should be done in the House of Commons. Rightly, it's very jealous of its own procedures. And we have to, we are accountable to the House of Commons and therefore we obviously try to cooperate in every possible way. We often have this, you know, Prime Minister's Questions, people get very dissatisfied you know with the open question, “What are the Prime Minister's engagements today?” and they sometimes get up and complain at the end. They almost complain to me as if I were responsible for asking the question. They can never find a different way. They look at me, and my job is to answer the questions not to ask them. So that we try to cooperate. As far as Government is concerned, at the end of the lifetime of this Parliament if it runs its full course, we shall have the lowest number of civil servants for any post war period. We are already the lowest number for fifteen years. That is because we have been one of the first governments which has been careful to look at management efficiency in the civil service. There's a long long way to go yet. People tend to be looking only at the amount they spend, with the numbers of people they employ, instead of looking at “Ought we to do this at all? Or is there a different way of doing it?” Now we've been looking at some of those things and we need to look at it further. I have not done massive reorganisations of government apart from getting efficiency in each department, and the Civil Service Department I didn't think was working at all well. It was becoming a thing apart instead of being really something which was giving guidance to all the departments and so we changed that. Apart from that I have not changed departments because I have seen what happens in the past when Prime Ministers come in and they do [end p25] a reorganisation. They put two or three departments together then the next one comes in and takes them all apart again. And do you know what happens? Do you know every one concentrates on the changes in organisation because they're easy to understand, and you order different paper and you print different things at the top and people get different carpets and different things on their door. I want them to deal with the problems and the actual organisation of departments and the organisation of my own office, as you know I have been trying to make certain changes, because the amount which a Prime Minister has to do today far exceeds the amount which they had to do ten or fifteen years ago. The amount of summitry is enormous, the amount of time the Prime Minister has to give to foreign affairs and to trade is terrific, because you get a Minister of Commerce over and it may well be that you want, that you're selling quite a lot to that country, and he comes here and he says “Well, I won't come unless I see the Prime Minister.” So we have a tremendous amount to do and I think we must be the smallest Prime Minister's office the world over. You know that I have been having one or two more of my advisers, the ones I've got actually assist the work tremendously. The Departments were a little bit worried at first, now they're not worried. They find that actually it assists the communication and they pick up things that I couldn't possibly know about before they get troublesome, so I would like to enlarge my own office to enable me to do the work the more easily and run down one or two other things.

KH

Can I ask you a question, Prime Minister, that has only come into my head now out of the words “I would like to enlarge my office” and explain why? Some time ago it was announced that Sir Anthony Parsons would come to No. 10 and there was some controversy in the newspapers, there was some controversy about it, but I couldn't understand it, because I've known for years that the Prime Minister has a representative of the Foreign Office, at least one in residence, so I didn't really see quite what people were complaining about even if people were complaining.

PM

One person just can't do it. My Private Office consists of Robin at the head, and then the Foreign Affairs Private Secretary, a Treasury Private Secretary, a Home Office, [end p26] who does most things at home, and the Treasury does industry and the Parliamentary one. And they work like trojans and so do I, and that isn't enough because they're doing all the practical work, but I want someone, I have to have someone of very considerable standing who could go across to the policy level, spot what was happening or pick up things. I pick up a lot of things from Prime Minister's Questions, a lot of things from the newspapers, that I didn't know was happening. What's all this? All sorts of things and now, I come straight away, now look, just go and find out about all that, this won't do. Why wasn't I told? Or, it looks to me as if that's going to blow up as a difficult problem. Or, in the Treasury, there are always things going on there. So straightaway I've got someone here and my private office goes on but I've got someone—my private office is very powerful—but they can't do everything now. So I've got to have someone as a link between the departments and to whom I can say look. My private office will get on to the Foreign Office, or the Treasury, if she wants information about this, this and this. I've got to have somebody to go across and says there's no earthly good palming the Prime Minister off with this, she won't take it.

KH

So basically you're adding to your strength, your numbers?

PM

That's right. Look, there's so much I'm afraid I have to do, quite a lot. As I say, much, much more in foreign fields than ever before and basically on the Treasury and industry and the economy, and I also happen to know a little bit about science which is quite interesting because Dr. Nicholson is over in CPRS and therefore you know one again picks things up and saying, look, what's happening here? But the whole thing really is kept going now, well, by fantastic energy on the part of each and every person and it just wasn't quite enough, so I now have Alan Walters, Anthony Parsons, and someone from Defence, and it is working really very much better. And of course we have a small policy unit and really one wants my advice from the policy unit enlarged slightly and less, smaller CPRS so we won't take on any extra people. But it means that sometimes they can come into you and see you and you know half an hour can knock off two-and-a-half hours' paper work when [end p27] you have to go through it all and spot it. You still go through quite a lot and spot it. It's not a Prime Minister Department, it's an effective Prime Minister's office.

KH

Very good, very good. I think you've brought that out very clearly and disposed of a lot of humbug about that.

PM

But you see where I have it, it works. There's always a little bit of fear, old people will go to the Prime Minister …   . good Lord … policy, good Lord, they always do. I just want the mechanics.

KH

Abso, lutely, yes. You've made the point beautifully. I tell you what's on my mind. The question is, you don't feel that in the kind of go-ahead society that you want, and which you've done so much to accelerate, the development of, that our whole Civil Service is somehow archaic? Many people of all parties say that it is—I would say it's fine.

PM

No, I don't think it's archaic. There are really two functions: there's policy formation and the people we work with at the top are outstanding in any society, in any background. You know, that's quite outstanding. Any member of my office here, my private office, could go out and earn far more outside, some of them have been outside, been outside as part of their training and come back in and they are here because they fantastically enjoy the work we do, the pace at which we work, the fact that we're having some impact and the speed at which we work is colossal, and they're here because this means more to them than a less interesting, perhaps more highly paid, job outside. But this is their calibre. Mind you I have the cream which is the calibre of policy formation, and then there's the management efficiency which is a thing which has not been given a great deal of attention so far but we are getting very, very much better at it now. But let me say this, the Civil Service will do, it's a professional, a highly professional Civil Service. We've just said goodbye to a very distinguished public service man, Douglas Wass, Sir Douglas Wass, and you know we called a meeting of Lords' Commissioners of the Treasury to do it which hadn't met for sixty years, sixty-two years. And a [end p28] fantastic public servant who had been head of the Treasury for nine years. All the best traditions are still there. If anyone complains that the Civil Service is not carrying out what they wish, it is because the instructions, the management, is not sufficiently clear and direct at the top of the department. Now there are times when we have strikes and things and there are some problems with some of the very ordinary avenues in the Civil Service, that is a fact of life. The Civil Service will do what the head of a department wishes to be done. All right, they go on strike and sometimes …   .

KH

Prime Minister, do you mean a political head of a Department?

PM

I mean a Minister, yes. The Civil Service is there to service the Minister. That is their prime tradition.

KH

Very, very interesting indeed. Very impressive.

PM

That is their prime tradition.

KH

Well, now Prime Minister. We've only just got three or four …   .

PM

…   . the Minister can't get into the detailed management. He can see that it's done.

KH

Well, if I may say so, Prime Minister, good for you. Good for you. Well, now I must try and get through these but we've done …   .

PM

…   . everyone makes mistakes, of course they do. You can't run an organisation which has 630–650,000 people without some mistakes being made, of course not. But then so do politicians make mistakes.

KH

Britain and Europe, Prime Minister. I need hardly tell you it looks as if it might come up as an issue, or be presented as an issue, at the next Election. Are you happy about Britain's role in Europe, vis-à-vis Europe? Should we continue to be a member of the EEC? [end p29]

PM

Yes. Two things I must say: we must continue to be a member of the EEC and we and the whole of the EEC must continue to be strongly allied to the United States, very strongly. That is the single, most important thing upon which will depend the future peace and prosperity of our children. You have three worlds: you have a free world which is devoted to freedom, devoted to human rights on a system of justice, on which people can enforce their human rights through an impartial system of justice and personal responsibility, you have the free world. The free world recognises that your human rights and your legal rights do not come from government but from some values that are greater than government. You have the free world, something really so precious that people should never take it for granted. You have a Communist world: a Communist world where people's rights depend on what the Government of the day will let them have and nothing else, where no-one enforce their rights in an impartial system of law because there is no such system, where they can't make their own way in life, where they are controlled, where they have an artificial system where they can't wholly elect their leaders and where they put a wall in to stop them getting out. So you have a free world, a Communist world, a controlled world. That controlled world is determined to penetrate the rest of the world and extend its system, its Communist system. Sometimes it does it by invasion, like Afghanistan, where it sees signs of one of its satellites trying to break free as in East Germany, Hungary, Czechoslovakia and now Poland, it will see that it doesn't, and it then goes by subversion, about prophesy [sic], all the time it's trying to extend. And you have the third world, the non-aligned world, some of which is aligned but called non-aligned. But you've got those three. Now I'm a passionate believer in freedom and justice, I don't need to dwell on it. I'm a passionate believer in it because I think it is the only thing that gives life its dignity and its meaning and therefore I think that is worth defending. When I think how other people live, when I understand why the things which other people in those Communist countries live, then I think the British people understand, now understand, where the thing that unites us all is the person who will say—he won't say, “I'll fight for social security benefits” or things like that—he'll say, “This is a free country,” and basically now understand it. But you have to keep it that way, and to keep it that way you know that people who wish to extend their empire, their power into [end p30] other countries, tend to pick those other countries off one by one. That's was Hitler 's technique. So we know that we have to keep in the free world absolutely together from the viewpoint of our security. Now, I've been a little bit concerned about anti-Europe, anti-America, and what I want to say is that that anti is tiny compared with the interest which unites us and we must always keep that in mind. In an uncertain world it is absolutely vital that Western Europe, free Europe, works together and we work much better in the Community. It doesn't mean to say everything is right in the Community. And that we keep very, very close to the United States, and the United States keeps close to us. Don't forget, the United States puts a quarter of a million of her soldiers in Germany, right up front because much of her weapons in Europe and with her own soldiers there, she recognises that we all have to stick together, and never forget the generosity of the United States, the Marshall care [sic], how marvellously generous they were, and how marvellously they worked with us during the Falklands—everything we wanted. She's fantastically generous, fantastically expert, and we must always bear this in mind, and that so many of her people were European anyway. So we have a natural thing together. That is the single, most important thing. Now the only other thing I want to say, I said about the third world, the other is kept together by force, we have to stay together by wish. Now that doesn't mean to say we have to agree about everything, or we don't have to argue, or we don't have to fight our corner, but never be misled by that verbal conflict we sometimes get. That's inherent in freedom. There will always be, good heavens, you get conflict inside this country, conflict in argument, debate, that's how you come to your decisions.

KH

Does it cost us much, Prime Minister, to remain in the EEC or are these accounts exaggerated?

PM

No. If we don't get a budget settlement, yes, it does cost quite a bit but nothing like what it would cost us if freedom and liberty flung apart, that of course is a matter for NATO. We will get a reasonable settlement from Europe, they know it, they'll argue because, like people, they like the benefits they get out of it and they'll argue, etc., etc. But [end p31] we shall in the end get a reasonable settlement. But it is important it stays part of this stability, and to me the idealism of the free world is what I must pass on to future generations. It was passed on to us, people fought and lost their lives for it. Now, there's one third thing—forgive me I did say three worlds—the free world, the Communist world and the non-aligned world. Very, very interesting. The non-aligned world. At first it seemed as if the Soviet Union felt that, you know, they were supporting liberation movements and so on in the non-aligned world because the arguments they were running are the old colonial, imperial authorities. Good heavens, we have in fact brought every place to independence who wants to come to independence and it's been our pride to do so, and the thing has turned turtle on the Soviet Union now, because they were running, “Ah, the Western countries, the old imperialist powers.” Now the non-aligned countries are beginning to realise the danger of the imperialism of the control does not come from the free world, it comes from the Communist world. And they are realising that, whether they are African states or Asian states. The non-aligned, I think, are beginning to realise that the countries in the world which stand up for the right of each country to decide its own destiny is the Western world. And the very idea that the Soviets were saying, “Ah, we're the old imperialists,” is now turning against them as the non-aligned movement knows that if each of them, whether they're Africa, Asia, Middle East, wants to be in charge of their own destiny as a nation, then in a way it's the Western world which stands up for that, and not the Communist world. Very, very interesting, but anyway I've said enough.

KH

You've made the point. Is there anything in the view, one hears this view from time to time, from Americans as well as British, is there anything in the view that somehow Britain has fallen between two stools? She's not wholly integrated for practical purposes in Europe. On the other hand, her old relationship with the Americans is no longer what it was. Somehow she's lost out on both sides. That's a view.

PM

It's a view with which I disagree. Certainly we have some differences in Europe but then so, good heavens, [end p32] France is a country that one always thinks of in Europe which has her own way of doing things. I wouldn't think—let me put it this way. We call them differences. Isn't it that we each have our own characteristics and part of the essence of the freedom of nations is that you keep your own characteristics, you keep your own variety? That's why I've always been saying that it is a Community of nine, ten nations. I don't think that we'll ever get to a United States of Europe. It just doesn't …   . I don't think that they were any different from any of the others. We each have our own characteristics …   .

KH

…   . or that our relationship with the United States has suffered?

PM

There is still a special relationship. There are closer ties between Britain and the United States than there are between most other European countries and the United States. Washington was after all an Englishman. The constitution of the United States was founded, was born out of the best they learnt from Britain. Born out of it, a system of justice born out of it, and the English-speaking peoples of the world have a role too.

KH

If the Labour Party tried to take Britain out of Europe, Prime Minister, would that be possible, or possible without immense disruption?

PM

The disruption would be enormous. Most of our companies now have geared themselves to exports to Europe. A lot of investment we get in this country is because it is a springboard from Europe, and I must say that, whatever they say, I do not think they would find it possible and I think they'll find a way to stay in.

KH

Do you think that nuclear weapons will be a prominent issue in the next Election?

PM

I think they will be an issue, I do not think that they will be anything like as important, not as important, as prominent as some other issues because the vast majority of people in this country believe in the NATO Alliance, the vast majority [end p33] of people in this country believe that nuclear weapons are a deterrent. They know that we've had peace in Europe than the previous generation had and they know that you keep peace by strength and not by weakness. So I think they will be an issue, I do not think that they will be so prominent as many other issues because, because of the views of the majority of our people.

KH

Rightly or wrongly, Prime Minister, a number of people wonder in view of the by-election results and the polls wonder whether it could be that a Party would be elected with a majority of seats in the House of Commons—your own Party possibly—but that in order to form a Government some kind of alignment or coalition would be necessary. Could you see the Conservative Party impregnated as it is with your ideas forming an alliance with any of the parties available?

PM

Well, I hope it would not be necessary because I've seen, working in Europe, I've seen countries who've had to form alliances. They're totally undemocratic in the sense that one very small section can determine the future, whether it becomes Conservative or Labour. That is totally undemocratic and I'll tell you what happens in countries which are compounded of a coalition of parties. The first thing they have to do is to compromise on everything they said in an election. The second thing is that when you get back, when you get to international conferences, they can't stand on anything. The government becomes a matter of argie-bargie and that's not my sort of government—horse trading, horse dealing.

KH

Does that mean that you would turn your back on any possibility of an alignment of that kind?

PM

I believe we shall win. I believe it's vital we do win with a good majority so we can have clear government, we can keep to it, I believe that Britain has gained self-respect, not only for the things we've done overseas but for its firmness. I think that is the right direction and I think that to compromise that or to sacrifice that now would be a tragedy. [end p34]

KH

I hope I'm not putting words in your mouth, Prime Minister. Does that mean, we'll drop it there if you wish, does that mean though that you wouldn't contemplate any kind of alignment—you've got to win outright?

PM

There are quite a number of instances where minorities have carried on for quite a time and so then each issue comes up and it is always open to Parliament to overturn a government if it has no confidence in what it does.

KH

Only three or four now, very brief ones, Prime Minister …   .

PM

…   . then you can carry on and do what you believe to be right and say, right, if you wish to overturn then we have another election. That is another way.

KH

Absolutely clear, absolutely clear. You've now had four years' experience of being Prime Minister. How do you find the media communication? Do you feel the newspapers give, well not just you personally, Prime Minister, but the Government, do newspapers and television give a fair do? Do they inform the people or do you feel sometimes they get in the way or even get things wrong?

PM

No, a free press is part of a free society. You couldn't have a free society without a free press. It wouldn't be free. What is more, if you ever tried to, in countries where they try and subdue their press, don't know about public opinion, don't know what's going on. No, of course in a free society you have people against you. Freedom is not freedom to say what the government wants people to say. No, no, I wouldn't be without a free press. I think I get a fair deal, but of course I've got people hitting out, horrid things are said sometimes—so what? It's infinitely better than not having a free press.

KH

Sometimes, newspapers haven't been very agreeable about Mr. Mark Thatcher or about your husband. [end p35]

PM

Look, it is acutely difficult for families of people prominent in public life. Life is unfair to them but life is unfair sometimes.

KH

We often read that your image on TV has very much changed. I must confess, Prime Minister, this rather interests me because the first question I ever had the honour of putting to you when you became Leader of the Opposition was to ask you how you liked being on TV and to tell you very bluntly how people saw you on TV and you dealt with my question very fully and very charmingly. Now, as I say, we read that your image on TV has changed, that you've taken professional advice about changing it. Now is this so? Have you had any advice or are you conscious of acting on it?

PM

I've never looked at myself on TV and I still don't look at myself now, but I do look at other people and I notice sometimes when they look messy and I notice when they don't. Obviously I translate that into my own life. It doesn't always work because sometimes I'm caught you know wearing a dress that doesn't photograph very well. But I tell you what I think is the problem with television. Most of the time that I am on I am being interviewed usually in a political interview and most of the questions are put in rather adversarial way. Haven't you done this? Or if you did the right thing, haven't you got the wrong motive, etc.? You have an adversarial style in this country and therefore you tend to respond sometimes in a very similar way and that perhaps makes you slightly more belligerent than you are. Now I think what's happened is that over the years, one has begun to say, oh, bother this chap, I can't stand that style. Isn't that ridiculous? You never get the best out of any politician in that way and you learn to answer in a more relaxed way and that partly becomes because at first you've learnt not to let his style dominate yours, and secondly, let's be frank about it, you learn that you know a damn sight more about the subject that he does, and that gives you quite a confidence. The other thing is that the television camera is very cruel. It can add at least a stone to what you are—at least a stone in weight, to your normal weight, so you do tend to become a little big larger than you are. [end p36]

KH

Well, thank you, Prime Minister. That's charming and a complete answer. Only a couple here. We've heard for centuries almost that power changes people, and you've had a lot of power. Do you feel in any way influenced by the responsibilities that you've had in the last four years—changed in any way?

PM

The confidence factor you do get, undoubtedly, and you get it not only at home but you get it overseas because I sit in Summits, European Summits, international Summits. I find that strangely enough I'm just one of the most senior leaders now. Not only do you know you can cope but you can cope whether it's a matter of personality, whether it's a matter of reason, whether it's a matter of argument, whether it's a matter of knowledge, whether it's a matter of foresight. And therefore, perhaps because you've got the greater confidence backed up by the greater experience, and the knowledge and I hope a little extra wisdom, I suppose it happens to us all, we all want to carry on. And I suppose one feels especially at the moment that when you've been responsible for a major change of direction in the field which you manage, for a combination of oneself and people of one's country to gain more respect, you really feel that it would be very sad if together you lost that. But I suppose that almost every Prime Minister would say that except that I do think we've changed things and we have done it as a matter of feeling that it needed to be done and we just had the guts to stick to it.

KH

This brings me to my last question, Prime Minister, though in a sense it's got two halves to it. Before you became, in fact immediately you became the Leader of the Opposition, you told us what you thought was wrong with the country and what should be done to change it. You expressed great faith in the British people. You were elected. Before you were elected you told us what you were going to do and you were elected and you've done it. Now in a sense you have changed a lot of things that were wrong. Now the moment may be coming when you have another term of office and people will be expecting you to implement a vision of society as it ought to be—not just a tidied up one, a reformed one, but a positive one. Have you a vision of what [sic] you would like to see Britain when you come to the next Election four years from now? [end p37]

PM

How it will affect people's lives, because you know the financial things have to go on because if we manage to get inflation right down, just think what a different kind of society we would have if people felt that the money they earned when they were say twenty-five would still buy the same amount when they were, say, sixty-five? It would alter people's ideas about savings and things like that. It would be an enormous difference, and you must carry on with sound financial policies. But that means—that I take it is automatic—then I hope that the enterprise of which I spoke will develop, it is developing, and that the extra prosperity will come from that. Now you come into the vision, assuming that we're going to get the extra prosperity and assuming that the man says go on, and assuming that we continue to give priority to defence and law and order—we must do that, there's a lot to be done on law and order still involving people. Then one hopes that—indeed it is one's purpose—that the money from the extra prosperity must be returned. People have earned it and it must go back into their pockets so that they—it is the essence of choice, isn't it?—so that they choose what they do with it. They'll spend it in many, many different ways. But I believe that when they have that greater prosperity, many of them, first they will want greater personal ownership. Now we've got a record number of owner occupiers now because I believe intensely that people, to be independent of Government, should have an independence, not only political but a financial independence, a property independence and I want a capital earning democracy—every man a capitalist. So we start on houses because if you're a man or woman of property you've got something. If you're a man or woman of some independent means, if you've got a pride and independence, and so I want the money to go back in their own pockets. Some will spend it on pop groups, some on music which soars to the skies, some on art, some on overseas holidays, some on making their home exquisitely beautiful, their garden, their education for their children or giving their children that chance they didn't have or enable them to learn languages, some looking after their own health, whatsoever. It is their choice. But it will give them a bigger role by virtue of their individuality and personal choice. But every man a capitalist, every man a man of property. It induces responsibility in society if you have some of your own. If you have some of your [end p38] own, and youngsters are brought up to it, you're much less likely to have vandalism of other people's and then if you have some of your own, most people, by virtue of their ordinary wishes, want to leave some to future generations. You then have the kind of society, and I find very much with young people they're interested in their roots. A background is a great conservation thing—I'm a conservationist being a conservative, conserve the best, you want to know the roots, great conservation, whether in buildings, the best of the buildings, the best of the wildlife, the best of our institutions—all conserving. But if you want to conserve, you interested in the past, you're really only interested in conserving because you see a great future. So I see a society—it's not a one-generation society, not a selfish wish for me, yes, I got something from my parents, from our tradition of a free country, sometimes help with the house. I want to pass that on to my children so that they have a better start. So I want the extra prosperity to go back to people, because the personal liberty, they will spend it as they wish. They will have a greater independence and a greater responsibility, a greater stake in society. I never wish to see a society where people are totally dependent on government, because when you are you are beholden to government and you find that societies which have human rights are societies which have property rights and unless you have this right of individual property, this right of ownership, you find that very soon your very freedom and justice becomes compromised. So that's the way I wish to go. And on the international scene I hope I've indicated the free world has to stand together and be prepared to defend us. That is the beacon of hope, not only for future generations but to those who do not have freedom. They know that we will defend ours.

KH

When you think back on, when you look at this country and towards the future, your own vision, we've heard about the welfare state in the past, we've heard about the consensus society, could you out of your description as it were put a label on the kind of society you would like to leave behind. You in this country?

PM

I think I can only do it by using two words. It's a free and responsible society—it's a free, just and responsible, because you can't have freedom without justice. And I believe [end p39] that the character of Britain is such—we are basically responsible people. We call it the responsible society.

KH

Thank you Prime Minister. Thank you indeed.