Clough
Prime Minister, we know since you've told us, that you hadn't thought about the election date until last Wednesday, your fourth anniversary in office. I take it that you have been thinking about it a little now, particularly since the local election results; you were discussing it today. Is it likely that today will see the resolution in your mind as to when the election is going to be?
Thatcher
No, I don't think so. Yes, I have been thinking about it, yes I shall be thinking about it. I shall decide the date in what I think is the national interest; I can't be hurried about it; I know the press are following me everywhere, but I can't be pushed around by that—it's too important a decision.
Clough
What criteria will you use in making the decision?
Thatcher
The criteria which one has already indicated, when will it be best in the national interest.
Clough
Well you've indicated in the past that you're [end p1] own inclination is to go to your full term. You've got a healthy, one might even say unassailable majority in the House of Commons, why then should there be any thought at all of going before you have to, before May/June next year?
Thatcher
Oh but I want and need much more than one full term.
Clough
You mean you might have a better chance if you go early?
Thatcher
I shall judge when I think it is the best chance to get the best majority that I also believe to be in the national interest because naturally, I believe that we have done a great deal in the last four years. We've restored self-respect and confidence at home, and we've found a new respect and admiration abroad. That's very important. I believe we've done it through the broad policies we've pursued. I pursued those policies because I believe they were right, so naturally I want them to continue for a very considerable time.
Clough
How do you think the recovery is going, thinking of what Mr. Biffen has said and what Sir Geoffrey Howe has said, that the recovery is not going to be in any way rapid … . maintain the gentle recovery.
Thatcher
If you get a sudden, swift recovery of the kind we've had before, it doesn't last long; it bursts in the end in a bubble of inflation that causes increased prices, it causes industrial inefficiency, it causes a new wave of unemployment. And I think the world over everyone's realised that you must go very very much more steadily, and you must try to keep your inflation down; you must try to get up your industrial efficiency; then you're much much more likely to have a steady, sustainable recovery, and that of course is our objective. I'm cautious … cautiously optimistic [end p2] I think is the right phrase. But also I know that every recovery is patchy. Some companies come to it more quickly than others, and some sustain it better than others.
Clough
No-one of course can deny that inflation has come down and down and down and you must be very pleased with the success you've had in that area. But it does seem that concommitant with that—the decline in the rate of inflation—unemployment has risen and gone on rising and is still going on rising.
Thatcher
The underlying trend in the last figures was still that it was rising. I believe that our policies are the right ones. Our policies are for long term employment by a mixture of having sound finance, encouraging industrial efficiency, and having access to world markets. That is the only way to get long term jobs—by working ourselves up, by our own effort, by good design products produced efficiently, delivered on time—that is the challenge of our times, and the task of government is to have the sound finance to enable that to happen, to help new business and new products to come onto the market and to cushion the effects of change. All that is within our broad, general strategy. Yes it is long term; it is for long term employment so that we do not get the stop-go policies which have bedevilled us for such a long time in the past.
Clough
But at what point in this slow, and one hopes sustained recovery, would you expect to see the jobs being created, the long term jobs which you so much want to see?
Thatcher
Oh but there are jobs being created the whole time. All the new electronics are new jobs. Just look for example even at video recorders—we don't produce many in this country yet, we're starting now, but even so, even the purchase of them from abroad has produced new jobs. There [end p3] are chains of retail shops throughout the country, there are people producing cassettes, people producing programmes; I think even those have produced something like 27,000 jobs. And in Scotland for example, there are more people employed on the new electronics than there are on steel or shipbuilding. So new jobs are being created the entire time; new services, new products—that's the way to get them, and it's happening.
Clough
Did you ever anticipate when you took office as Prime Minister that in the course of your government unemployment would rise to its present level?
Thatcher
No, I don't think anyone did because I don't think we had any idea of how deep this recession would be. It came upon us because as you know the second very sharp oil price increase came upon us before we'd really got over the first one. And to some extent the first one was cushioned by lending very large sums of money to underdeveloped countries, some of them which had oil resources; rather larger sums of money than they could afford to finance, let alone repay. So the second recession hit before the first one was over and was made deeper because of this crisis of lending which we have, and the crises of those countries not being able to meet their interest payments, let alone the repayment of principle. That I'm afraid, put us in the deepest recession since the 1930s.
Clough
But would you accept that the government must take a certain share of responsibility for the increase in unemployment? I know of the world recession clearly, but could it not be that the policies you've pursued have contributed to the rise in unemployment?
Thatcher
The true choice one had was this: one could have pursued very inflationary policies immediately. For a short time—a very [end p4] short time—that would have produced a few more jobs. By now it would have produced even more unemployment than we have because if you pursue inflationary policy, very soon all your prices are right up, way above those of your competitors, you don't get the overseas business, you don't get the home business. So the real choice was: do we go for short term jobs, knowing that the price would be long term unemployment? Or do we go right from the beginning trying to do the fundamental things: sound finance, industrial efficiency, helping new products to come to the market. If we do those things right from the beginning, this will give us the best prospect of long term employment, of flourishing enterprising industry. That was the challenge of our times. The question was whether we have a government that was prepared to rise to that challenge, even knowing that there would be short term problems.
Clough
It's clear I think from the polls today, inasfar as polls ever make anything clear at all, that when the election comes—whenever it comes—unemployment will perhaps be the biggest single issue. Can we expect to see any modification of policy, any modest reflation perhaps, coming as part of the Conservative election campaign?
Thatcher
The real route to jobs is successful, prosperous, efficient industry—let's get that absolutely clear. It's no earthly good having a jobs policy just saying all right I can create another couple of million jobs by putting them all into the public sector because all of that will have to be carried on the costs of industries which have products to bring to the market. So the real thing if you really genuinely want long term jobs as I do, is to pursue policies which have successfuly, enterprising industry and commerce. Now that's what we're doing. Now it's no earthly good pursuing a policy—what do you say?—as inflation, that's what the Labour Party are doing. They have made inflation a policy—absolutely disastrous. Look at what it does to the savings of everyone in the country— [end p5] it just plunders them. Look at what it does to industrial costs—it puts them up above competitors. Never, never run a policy of inflation; that is a policy of dishonest money, a policy which leads to lack of confidence; that would be disastrous. There is only one way to get efficient industry and that is to pursue sound government finance, to make certain that management can manage and get the co-operation of people who are working for that management, that management has to make the decisions, and keep world markets open. There are a lot of jobs in export, and we have to export 30%; of our national income. That is the only sound way to go. If you're genuinely interested in genuine jobs, genuine prospects, and if you are capable of rising to that challenge instead of saying “oh no, we can't, let's take the short term route”.
Clough
And those are the policies that you will be advocating at Williamsburg. Are you going to Williamsburg?
Thatcher
Oh yes, but those are the policies we're advocating now, those are the policies which I think were advocated very much at Versailles because we all pointed out that in order to get recovery you must keep … the conditions that government must ensure are to keep inflation down, and also to try to pursue policies which keep interest rates coming down. So those were already concluded at Versailles, and of course I believe we shall continue that at Williamsburg, and I have to be at Williamsburg, I intend to be at Williamsburg.
Clough
Will you be able to fit in the Washington visit as well do you think?
Thatcher
Washington visit is just really on the way to Williamsburg; I hope to do both. They very kindly asked me to accept the Winston Churchill Peace Award, and it's a great honour and one that I would [end p6] like to accept.
Clough
So on the broad economic strategy the approach remains resolute. Could I ask you about …?
Thatcher
Oh it's more than resolute, it's right. It's right.
Clough
I'm sorry, I take your slogan—the resolute approach. Could I ask you about some other policies that might appear in the manifesto when the manifesto appears. Ratings system. In 1974 you were very keen to abolish it. It's still with us. You're now talking I think about some radical reform. What kind of reform would you like to see in the manifesto?
Thatcher
Well I think to do we should wait for the manifesto to come out. In 1974 far less was paid in rates than now, and really the rates burden has become enormous on industry and commerce. If you remember in 1974 what we said was exclusively to the domestic rating system. Since then, enormous increases in local expenditure have led really to intolerable burdens on industry and commerce, and that's stopping jobs. I mean I went up to Sheffield the other day. The colossal burden some of them are paying between £1,000 and £2,000 per employee in their rates, and of course they're trying to move out. It is really damaging job prospects. Now you must wait and see what comes out in the manifesto. It is not possible immediately to abolish rates because there is enormous extra expenditure, public local authority expenditure, and if one were to go in for abolishing the rating system now, the extra burden on the other taxes would also cause immense problems, so you perhaps will very kindly wait until the manifesto comes out, and I cannot yet tell you when that will be. [end p7]
Clough
Well could we look perhaps for something like a single person rebate so that we don't have the rather curious position that we have at the moment where …
Thatcher
Well now you're trying to probe a little …
Clough
Just a little.
Thatcher
… I'm not saying that I think … I naturally expect you to probe, of course I do. Please will you wait because we've now realised that we had to try to deal both with industrial and commercial rates as well as domestic because jobs are important, as you say. It is important to keep industrial and commercial costs down, and so we have to address ourselves to that question as well. And also of course in politics … politics by its very nature is about alternatives, and you can't just say we're going to cut out just a whole tax without seeing what you're going to substitute. What you can say is we're going to try to pursue policies which get much more effiency into local authorities, and I believe that there's quite a lot of scope for cost-cutting there as well.
Clough
I'll ask you another question which I think you will tell me to wait for an answer for. Do you intend to make strikes in certain parts of the public sector illegal?
Thatcher
Well strikes were made illegal in war time—it didn't work; they merely became ‘unofficial’. So it is not … if you want to try to solve the problem I don't think that that is the answer. I mean do you remember war time?
Clough
Just a little. [end p8]
Thatcher
Well I remember it a little, and one has read about the history of some trade union matters, so I don't think that that is the way. We shall in fact be having another trade union bill. We shall puruse the policy we've been pursuing of steadily reforming trade union law, and keeping with us the vast majority of trade union opinion …
Clough
Would you like to see …
Thatcher
… because they're very very encouraging on everything we've done. It's the overwhelming number of members of trade unions have been with us, and we want to keep it that way.
Clough
But would you like to see that trade union bill come onto the statute books in the course of this parliament, or would that be one saving up for next time?
Thatcher
I can do it either way. If we go ahead with a new legislative programme for next session there could be a short bill, there could be a longer bill, or it could be a bill for a new parliament.
Clough
This visit to Washington in a way underlines the special relationship you have with President Reagan. I know that he has a great admiration for the way that you're running Britain; you have an admiration for the way he's running America. Would you like to see him going for a second term; he'd probably like to see you going for one?
Thatcher
Oh that's a matter wholly for him to judge; I can't venture an opinion on that.
Clough
Is this special relationship in any way jeopardising our EEC relationships? [end p9]
Thatcher
No.
Clough
The Labour Party's committed to taking us out of the EEC. What consequences do you think that would have?
Thatcher
Disastrous. Absolutely disastrous. So much of industry is geared now to EEC; so much investment we get here comes here because people realise that we are a springboard to having markets, free markets, in the whole of the European Economic Community. And much of the investment that comes here comes here on that basis. To suggest that we would be coming out first would restrict all of our markets, and it's vital we keep world markets open; secondly, would stop investment coming here which means it would stop new jobs—absolutely disastrous. I think it would be disastrous in another respect. You know that I'm an idealist, a very strong idealist, I have very strong convictions, and I believe passionately that the democratic countries which practise freedom and justice must be seen to work together, work together in peace, as well as being allies in defence. And that really is part of Europe. Absolutely cheek by jowl with us is an alliance—the Warsaw Pact—which is kept together by force. When any of them try to shake themselves a little bit free, the tanks roll in or they get military governments. We're next door to them. We've kept peace in Europe for thirty-eight years; we're free democratic nations; we're a voluntary association; we must be seen to work together. But we go beyond Europe, so it's important to stay together in the Economic Community in Europe, and to me peace matters more than anything else in the world. Peace with freedom and justice. … So we have to keep it in Europe, and we also have to stretch it to other countries which believe the same thing, and that is across the Atlantic; and Europe is part of America's defence, and America in Europe is part of Europe's defence. Do you now see the passionate idealism which I feel that it's not only peace, it's peace with freedom and justice. [end p10]
Clough
I can say that because listeners can't see you that the passion of idealism has brought you literally to the edge of your seat as you've moved in on that one. I'd like to talk in a little bit more detail about nuclear defence and so on in a moment, but could I ask this: are you satisfied that as far as Britain's relations with the EEC are concerned, that we are going to get the right kind of budget structure?
Thatcher
I think we'll get a reasonable deal for Britain. That's always been my objective. I've always wanted an equitable budget structure, indeed I sometimes say to my colleagues in Europe … we talk about equity … when you make contributions to any club, or contributions to any country, you do it on an equitable basis, and equity means fairness.
And sometimes I think that equity and fairness are British concepts and they don't always go across the Channel. But nevertheless, they did give us a reasonable budget solution in the interim; the interim turned out to be too short and I must have another interim arrangement which is fair and equitable. I think in the longer run we've got to have a different method of raising finance from the one which is there already in Europe because the present one leads to two countries financing the rest. Now that's not fair and it's not equitable. I haven't got very far with persuading them because some of them liked the system as it was already; they benefit from it, and people who take benefits rather like to have it that way even though they know it can't endure. Now they have to look at it because the present one isn't producing enough income for their expenditure. That brings a new necessity—they've got to look at it and they are looking at it. I can't wait for them to look at it because this year we have to have a reasonable settlement. I'm satisfied we shall get a reasonable settlement because they know two things. If any of them were in my position they'd fight—they understand that. They know that I shall go on fighting until I get a reasonable conclusion. Yes we shall have to fight our corner, but we shall. [end p11]
Clough
Do you think you might get that settlement at the Foreign Minister's meeting at the end of this month, or are you going to have to … . on the 6th of June to bang heads together?
Thatcher
I would like to think that we should get it without the fierce verbal battles we've seen before. I think we might have to go through those fierce verbal battles again.
Clough
I said just now Prime Minister, that I wanted to ask you about nuclear matters. Does it seem to you that since the death of President Brezhnev there has been any significant change of approach in the Soviet government, that Mr. Andropov, although the offers he makes may not be very substantial, seems to be trying to change things a bit. Are we making the right kind of response?
Thatcher
I see no change at all, nor do expect any. Mr. Andropov is the former head of the KGB, first time we've had a head of the KGB as head of the Soviet Union. He has never set foot in a non-Communist country; he doesn't begin to understand what a free society is like; he doesn't begin to understand what it's like for a people to be able to go to a just law to enforce their rights. I think the only thing that has begun to move him has been the resoluteness of the free peoples to defend their freedom, and not to be moved, not to be deluded by some of the things which he's said. What he is wanting to do is pursue a policy which will keep all of the Soviet weapons—all of them—intact, and by so operating on public opinion in the West to get us not to deploy the ones which would make us equally balanced with them. I think he knows now that he's not going to succeed. A tremendous milestone was of course the election in Germany. I think another milestone will be the result of the election in Britain. That too will be very important. But what influences the Soviet Union is the determination and the resolve and the capability of the free world to defend [end p12] itself; nothing else will influence them at all.
Clough
Is it entirely unreasonable for Mr. Andropov to ask for the British and French nuclear weapons to be included in the talks? After all, if you're a Russian sitting in Kalinan, it doesn't matter a hell of a lot to you whether the missile that in the end hits you is British or French or American.
Thatcher
No, but you've put your finger on it. What is totally unreasonable is for him to include our last resort strategic weapons in talks which are really about modernising the intermediate weapons. What he's trying to do is include our strategic weapons without putting in any of his. He's got far, far more than we have, so what he's expecting us to do is to try to give up ours while they keep all theirs—something like 2,000 strategic weapons. That's absolutely ludicrous … .
Clough
But isn't it the case that on both sides there are so many weapons that four fifths of them wouldn't be needed to destroy everything in sight.
Thatcher
You will change your argument. There are talks about strategic weapons between the United States and between the Soviet Union. It is absolutely ridiculous for the Soviet Union to expect us to give up our last resort deterrent weapon, and yet for them to keep all their submarine-based weapons, for them to keep their really big land-based strategic missiles, so they keep everything in that respect intact, while we're expected to count ours with the intermediate ones when we haven't even modernised our intermediate ones. There are discussions about strategic weapons; we are going the right way about disarmament; we want to get the number of weapons right down—no freeze, that's not the way to get the number of weapons down. If you really hate nuclear weapons as much as I do, you really want to get [end p13] them down on all sides, but you've got to do that by balance, you don't do it by saying now look, we're going to give up our weapons, now we'll start to negotiate with you—only a fool would do that. Yes I do want them down. We're proposing all the time but we're not getting much response. Can I put it this way: the West has weapons to defend a distinctive way of life so that we have peace with freedom and justice. We don't have them to attack anyone; it's not we who've gone into Afghanistan or attacked independent nations, it's the Russians who've done it. We only have them to defend, not to attack anyone else. The Russians have used theirs for offensive purposes; they rolled into Czechoslovakia, they rolled into Hungary, they rolled into Afghanistan; they use them for offensive purposes, and it almost seems as if being the country that they are that there's some kind of national virility symbol in having big armed forces. We have them to protect our way of life. If we can protect our way of life and our security at a lower level of weapons and expenditure, that is our wish and objective, but still to keep our secure defence we must get the weapons down on the other side as well. We really are the true disarmers and the true peace movement, and our policy of course—never forget this—has kept peace in Europe for thirty-eight years. We mustn't in a dangerous world risk abandoning it now.
Clough
Prime Minister, today you're meeting your colleagues perhaps to talk about an imminent election. This time last year in this House you were meeting your colleagues to talk about the conduct of a war which is now over.
Thatcher
Thank goodness.
Clough
Reverberations … .
Thatcher
Whatever problems I have now, they're not as great as those I had a year ago. [end p14]
Clough
Do you think there is any hope at all that the initiative of Mr. Perez de Cuellar, the UN Secretary General, can bring together Britain and Argentina to talk in any terms about anything?
Thatcher
Certainly not to negotiate on sovereignty. Sovereignty is not negotiable. Those islands are British sovereign territory, they are peopled by British stock; those people did not displace any indigenous population; many of them have been there for far longer, their families have been there for far longer than many of the Argentinians have been in the Argentine. So there's nothing about sovereignty to discuss at all. They're British sovereign territory and the people have the right to self-determination to live in freedom and justice. Certainly one would wish to talk about restoring services to the Argentine mainland, restoring the right of British air services to fly through Buenos Aires, and for the Argentine to fly through here on a reciprocal basis, to restore trade on a reciprocal basis, and we've tried to do that—it's not we who won't have it, it's the Argentinians. And indeed, they haven't even said that their hostilities have permanently ceased yet.
Clough
Can sovereignty … I know how strongly you feel about it, but can it really be maintained that the massive cost of the … simply the cost of supporting the fortress Falklands?
Thatcher
Yes. Next question.
Clough
When's the election going to be?
Thatcher
Ha, ha, oh, we're coming back to that. You're full of guile—of course I expect you to be. Can I just say the election will be when I think it's best in the national interest to have it. I'm not [end p15] going to be pushed around however much I'm asked, or however much the press may follow me around—I expect them to do that, but I have a very important decision to make. I shall make it in my own good time, when I think it's right for Britain to have an election, and of course when I believe there is the best chance for this government to continue for one or more terms.
Clough
The Prime Minister. And now perhaps they can get down to lunch at Chequers …