Speeches, etc.

Margaret Thatcher

Speech to Conservative Trades Unionists Conference

Document type: Speeches, interviews, etc.
Venue: Colston Hall, Bristol
Source: Thatcher MSS (THCR 5/1/4/39 f25): transcript
Editorial comments: Around 1200.
Importance ranking: Major
Word count: 3666
Themes: Conservative Party (organization), Defence (Falklands), Economic policy - theory and process, Employment, Industry, General Elections, Monetary policy, Privatized & state industries, Pay, Public spending & borrowing, Trade, Labour Party & socialism, Science & technology, Social security & welfare, Trade unions, Trade union law reform

Mr. Chairman, ladies and gentlemen, I think that at one time this last week you might have been worried that I would not return in time for your conference. I was in fact determined to do so. Because I would like you to know how very much importance we attach to the work that you do in the CTU. Not as you yourselves, in your banner, so rightly point out, to put more politics into the unions, but to make it perfectly clear that the unions contain people of all politics and and to be attached to no political party. I'm also very pleased to be sitting under your chairmanship, and how glad we are, Mr Chairman to see you back in harness and presiding over this conference.

Now some of of you may have seen a recent article in one of the newspapers which divulged what took place at a lunch which I was very brave to attend because it consisted of all economists, save me. And it was reported that there, one of the economists said to me: “I'm afraid you chose a bad time to become PM” qq;. It was also reported that I retorted, “Well, it was rather an important time for me to become PM” . And I think that those two things show both the anxiety and the world economic situation, that, yes, it was a difficult time to become PM. But also the hope that we can come out of this stronger if we tackle things in the right way. Look ing back it was time that we embraced once again the fundamental truths and tried both to practice them and to propound them. It was very interesting if one looks back over the last thirty or so years, that there came to be a feeling that things such as full employment, stable prices, rising standards of living and rising welfare standards should somehow be guaranteed by government It was, of course, a ridiculous thought, if you think about it, because in the end our standard of living, the standard of welfare which we can afford is dependent also on the sum total of our personal striving, on<??> personal enterprise and on prudent spending by governments. And so if we want to enjoy a highe r standard of living, if we want to enjoy a higher standard of education and to look after our old people better, and for them to have savings of their own and for people to have houses of their own, we have to look not only to protesting against governments but we have to look at the striving of our own efforts and the way in which we are prepare d to work together—management and workforce alike. [end p1]

And so that period went on for quite a long time. People's expectations, I remember very vividly—I was a Parliamentary Secretary at the Ministry of Pensions in my first job—people somehow had the expectation that growth would continue, that that would produce the revenue, that that would produce both a higher standard of living and governments could go on spending more and more. And for a time Mr Chairman, as you know, it did. At the end of the post war period our country and other countries were starved of consumer goods, and had to rebuild an economy. Also, many economies of the world had been smashed. So we were indeed in a sellers' market an d we did well. Then gradually the other economies rebuilt, and gradually the newly developed countries came in with their goods. And our people, our housewives who have always had an eye for a bargain began to buy ‘best value for money’. And the world became very much more competitive. And the expectations nevertheless, our expectations went on, even though the growth did not continue. There became a habit of meeting those expectations. First, by paying wages which were not matched by increasing output and productivity. By governments nevertheless continuing with increased spending as if we had had increased output. The result was, oh yes, we had more money in our pockets. The result was, oh yes, governments went on spending more money. But that money did no longer have the value it should have had. And if you pursue policies that print money you simultaneously devalue the value of every pound that you have in your savings accounts, in your bank accounts, or anywhere in government securities that are not index linked. Now tha t is the background. Inflation I then began to say is not really normal to governments, because I got rather worried, as some economists were saying inflation was something we must learn to live with. No person, no pensioners who put their money into the post office savings or into any savings bank many years ago, or who had insured a certain amou nt for their retirement would have said that because inflation is the thief of savings. There were a number of people saying that “Well if we can't defeat inflation we must learn to live with it” . It's a very defeatist and totally wrong policy. So what you saw was the inflation of the 1950s to 1960s which was small, about 3 per cent, going up to 5-10 per cent in the later 1960s going up from 10-20 per cent in the 1970s to 1980s, and it would have gone on like that in this country had we not stopped it. But our standard of living would not have risen it would steadily have fallen because there are other countries who had learned to run their economies better. At that time some of us said [end p2] look this is a cheat on people who save, certainly it helps people who borrow and put their money into property and goods. They keep their value but those who lend it don't. This is a cheat and we really must stop it. What is more, our goods will not be competitive with those in other countries. One or two of us began to say if you look back over history you found that periods of inflation were unusual, they were an aberration, they were not normal. One of my economic friends very kindly sent me a graph of inflation going back over seven hundred years. He traced the fall in value of money over that time and an astonishing factor emerged. The fall in value over a period of seven hundred years from 1281 to 1981, 95 per cent of that fall had occurred in the last forty-five years. So we can run our economies better and we set about running them once again in a sound way. And that really was the opportunity presented to this government, and we said other people too had set out when they came into government to try to run the economy in a sound way. When it got difficult then about half way through, they changed and went back to inflation. We are not going to, and that's the difference.

It's known as the resolute approach. I had to come in here through a demonstration, I expect you have seen them before. A demonstration outside. And I can only say this. Nothing could make us sturdier in our belief to do the right thing as a demonstration.

Now gradually against the background which I have painted, things in this country in some industries have become very much more competitive. We have some very sad things happening through a world recession, and of course it is not enough for goods to be competitive they must also be of the right design and attractive enough for people to buy. And that of course is the task of management.

But then of course management had got out of the habit of managing during a period when there were so many controls that they were not able to take the decisions, and you found the governments tended to deal not with that group of middle management, so vital to any industry but with the top people and the shop stewards, and the whole of middle management got out of the the habit of managing. They've got back into it now so we are on the way to achieving very much more efficient industries.

Mr Chairman, that's all by way of introduction. And I want therefore, to talk just about two things against that background and then if there's time I must just say a word or two about the Falklands, [end p3] not to you as Conservatives but as citizens of our country.

But I want first to have a word about two features of present policy. One, Norman Tebbit's Green Paper that came out last Tuesday and its purpose, and the second, I might say just a little bit about what happened to the sterling market in my absence this week.

Now it wasn't by chance that our previous union reforms were called employment acts. Because they are part of a continuing resolve to clear away the obstacles to employment and new jobs. Obstacles such as secondary picket lines, union labour only rules, and the inefficiency and the tyranny of the closed shop.

And Tuesday's Green Paper fits directly into that pattern. I don't think anyone can doubt that the political activities and obsessions of some union leaders have damaged the interest of their members and the interests of the firms in which they work.

And the insistance of some of them on excessive pay claims and their reluctance and refusal to accept new working techniques have added to industry's costs and have added to industry's unemployment. I refer to the rate at which wages have gone up. During the 1970s wages went up by nearly 350 per cent. While the increase in out put was held back to a miserable 15 per cent, in fact wages rose twenty times faster than output. Now those who are responsible for that must also accept some responsibility for the rise in unemployment throughout the 1970s and into the 1980s.

Now I believe that most union members understand this. I believe that they don't want their unions to play politics; I believe they want their unions to represent them soberly and sensibly.

Those union members have a right to a say in the running of their union, in defining its objectives and electing its leaders. And the purpose of Tuesday's Green Paper is to enable them to do precisely that. The hope for more jobs in the future rests, in part on the course of the world economy. I say in part, because, even if t he world economy does not improve, we by greater efficiency and more attractive goods should be able to recover a larger share of our own home market and a large share of the world's exports. [end p4]

But that rests on our success in improving productivity, in cutting costs, in beating production schedules, in improving quality and delivery. And in designing attractive goods to satisfy old and new customers. And the growth of new jobs would come from management and employees working together to beat foreign competition and to regain lost markets both at home and abroad.

Ladies and gentlemen, we can do it. Wherever I travel I am constantly reminding people that we are a most scientific inventive and resourceful people. Most new inventions, or many of them have come from Britain. We have sixty-two Nobel Prize winners in the sciences. We live in a decade when we have industry as science-based. The new industries are science-based industries. The technologies are science-based. The only thing is, unlike some other people, we haven't yet learnt to put our excellence in science and our excellence in invention, we haven't yet learnt to turn that excellence into good industrial profits. Now that's all that's wrong, and we have got to do it if w e are to get those new jobs, and we can do it—I say that is all that's wrong, that's a part of what's wrong—but we can do it. And when we have learned to do it we shall know that the growth of new jobs will come from management and employees working together—a point which I have just made. And the process is already under way. British pro ductivity as you know lagged behind in the 1970s. Now we are regaining lost ground and as a result new jobs are being created all the time.

Now, I want to give you a few examples. You've learned, and know a lot of the disappointments. Let's look at some of the things which are an encouragement. Just let's have a look at the car industry as an example. You've heard of the occasions on which large numbers of jobs have been shed. But have you heard in the last few we eks of the record production figures at Jaguars? Or the dramatic increase in the sale of British Leyland cars in Europe? Or the end of short-time working at Talbot in Coventry? Or the promise of further new jobs by producing Renault trucks in Dunstable? Or the 1,100 new jobs being created at British Leylands Cowley plant? Or the extra jobs at Vaux hall's plants in Luton and Dunstable? Well, let's then give them a bit of praise for what they are doing. [end p5]

Forgive me, I caught a cold, I'm not sure if it was in the Falklands or travelling back or back here.

But it's not putting me off at all.

There is in fact a lot of progress being made in the British car industry which really receives insufficient credit or publicity. Now let's have a quick look at the construction industry too. The signs of improvement there. But of course we have to remember that the old industries will never again of themselves provide sufficient jobs for all o f our people. And we have got to look to these new science-based industries. Thousands of new jobs have been created in the new technologies. Already in Scotland there are more people working in the electronics industries than in the production of steel and ships combined. Now that shows that we are creating new jobs. And there is hope for our you ng people that are going to get into those new industries and be competitive with overseas countries.

But we are still not creating jobs as fast as they are being lost. The fact is Mr Chairman, that during a world recession no responsible politician can promise a swift end to high unemployment. We have got a severe problem of long-term unemployment. But let us remember that in 1982 some three million people left the dole queue s for a job. Sometimes I think people have the idea that once you get onto that dole queue you haven't got a hope of getting off and getting a job. That is not so. Some people go on, most of them go off again. Three million in 1981 left the dole queues for a job. And, in contrast to many other countries, the number of vacancies has also been risin g slowly but steadily. We can't promise instant jobs for all, but for our young people there is a solid promise that from September onwards no young school leaver will be without either a job at work or training for work, and to that programme we owe a great deal to our former Secretary of State for James PriorLabo ur and our present Norman Tebbitone.

We shall continue to tackle the long term problems that have hindered the creation of new jobs and the Green Paper is one more step in that process, one more reason why millions of trade unionists and many unemployed, in their own self interest, will continue to support the Conservatives. [end p6]

Now, I know that your conference is devoting its main attention to Norman Tebbit 's Green Paper. But I know that you are also considering the wider economy and the issues which affect our prosperity. And again against that background, I want to say just a little about the Foreign Exchange markets. Sin ce October the overall value of Sterling has fallen 12 per cent as part of the realignment of major currencies which has been taking place. In terms of the Deutschmark and of the Yen, Sterling has fallen about 13 percent and 21 per cent respectively. The Yen of course had been very weak indeed. Although Japanese industry was very strong and German industry was very strong.

Now these adjustments are in part a reflection of the fact that over the years, Japanese and German industries have been improving their performance more rapidly than we have in Britain. But devaluation of our currency is not a substitute for improving the efficiency of our industry. And it never will be.

Currencies will go up and down with the markets; the efficiency of one's industries should be lasting and a lasting improvement. Now, over the last two years productivity in Britain has been growing rapidly—over the last two years—and is now at record levels. But despite this continuing improvement o ther factors have been at work. There has been a tendency to move out of Sterling into other currencies, including the dollar and [sic: in?] response to uncertainty about the date of the next election, and certainly about the disastrous policies advocated by the Labour party.

And their mischievous prescriptions have undoubtedly influenced investors preferences and have put Sterling under strain. Now we can't stop such mischief, although the Labour Party could if it wanted to. We must certainly not allow it to deflect us from our determined purpose. Now that purpose is to conduct our financial polic y steadily and consistently for the long-term benefit of Britain and already we have established the essential foundations for a sound economy. Let me just enumerate some of them. In Britain public spending although still too high is under control, Second, Britain is one of the very few, perhaps the only country in the OECD, that does not have the problem of a large budget deficit. Many other countries would like to be in that position, they could have been if they had been as prudent as we have. Thirdly, this year public borrowing [end p7] will be lower than last, it will be below budget forecast and we will stick to that strategy. Fourthly, the balance of payments after a record surplus in 1 981 still shows a healthy surplus. Fifthly, inflation at 6 per cent is the lowest for ten years and, sixthly, monetary growth is within the target laid down by the Chancellor. That is the harbinger of low inflation for the future.

Now all of those things are essential conditions for success, for lasting success, and they are the foundations for sustainable recovery and they are things which will ultimately affect the value of our currency. Now we mustn't be deflected and shall not be deflected from sound money and honest finance by the false prescriptions of the Labour P arty nor by the fickle fears of those who should know better.

I hope therefore we made it clear we are on to sound financial policies, those in the long run will give us a chance of a higher standard of living, for better welfare services if we pursue them and if we, each and every one of us, and each and every company and industry, take advantage of those opportunities.

Now that's the end of the press release, you probably gathered when I went on it. I wonder if you would just as citizens of our country like to hear a little bit about the journey one has made recently, to the Falkland Islands. Those people have of course had an experience that we have never known. The traumatic experience of occupation by an alien power that does not know the freedom and justice that we take for granted.

It was very moving to talk to them. To know that they never doubted that we would rescue them from that power. Never once. Their gratitude to our Armed Forces is boundless. And their devotion to our way of life is endless. And I must say, I think they have the fastest bush telegraph of any I have ever encountered.

It was of course a great relief that we managed to keep something secret. Had we labelled the documents ‘top secret’ they would have probably leaked. As it was we got there without anyone knowing, but of course once we had stepped foot on the air-strip, news travelled extremely rapidly, aided and abetted by the island's radio [end p8] service and long before I got back to the Governor's House, I'm sorry Rex Hunthe's a civilian commissioner but I still tend to call him the Governor, people were out on the streets welcoming me merely as a symbol of what the United Kingdom had done for them.

We found the same reception wherever we went, whether it be in the town of Port Stanley or in the settlements. Where they do everything that we hold in high regard. Extremely hard-working, very economical in their use of their resources, and marvellous savers. And freedom and justice are second nature to them. It was wonderful to talk to the pe ople in, for example, Goose Green, where they had been confined in the Community Hall for three to four weeks. And did not have very good food during that time. Marvellous also to see that wherever I went, and where people had fallen in battle and are still in the place where they fell, they said to me, we will look after them, and they had, and t hey will as a perpetual memorial to the liberation of those islands.

I also talked to them about the future. They were adamant that they do not want negotiations with the Argentine on any question of sovereignty, and I told them not to worry, they were talking to the converted.

Of our Armed Forces, as citizens of this country we cannot speak too highly, they are marvellous. The work they are doing is outstanding, the amount of construction they have carried out both on the airfield in accommodation for them and in every single respect is a marvel. They've built small power stations, they've got the water going, they'r e getting accommodation up, they've done wonders. And of course they are brothers of people who work in our industry who also did wonders when we sent the troops down there and a full effort by everyone was needed. So the same people, we can do it. I talked about the future of those islands to those people; and they are very much aware of the sacrifices that have been made for them and they said to me we have together to build a better life on these islands for our children, so that that better life shall be itself a memorial to those who died in battle that we might live in freedom. [end p9]

Mr. Chairman, that too is part of the resolute approach. But the interesting thing to me is that when you set out to do things right you strike a chord in the hearts of people everywhere.

Because they know that those things are true. Economically, the resolute approach will give us the opportunity, no government can do more than that, give us the opportunity to build a better future. What the Falklands taught us and taught everyone is that if you are to be able to defend freedom and justice, you must have the armed forces and th e equipment ready and at hand to do so.

Mr Chairman, as we came through the end of last year, and as we face this coming year we have reason to be proud of what we have achieved in laying the foundations for a sustained better life for our people. That is the way we shall continue: in that way lies hope for our future.