Speeches, etc.

Margaret Thatcher

Speech to the Institute of Directors

Document type: Speeches, interviews, etc.
Venue: Albert Hall, South Kensington, central London
Source: Thatcher Archive: speaking text COI transcript
Editorial comments: MT began her speech at 1515 then took questions. She left at 1600. A COI transcript of the questions follows the text of the speech. The original draft was by Robin Harris, with contributions from Ferdie Mount, Alan Walters and Nick Owen. It was then extensively reworked by John Vereker at the No.10 Policy Unit: THCR 5/1/5/189.
Importance ranking: Major
Word count: 5572
Themes: Conservatism, Economic policy - theory and process, Employment, Industry, General Elections, Monetary policy, Privatized & state industries, Energy, Pay, Taxation, Trade, Foreign policy (Asia), Foreign policy (Central & Eastern Europe), Labour Party & socialism, Local government, Local government finance, Religion & morality, Science & technology, Social security & welfare, Trade unions, Trade union law reform, Strikes & other union action

Your Royal Highnesses,

My Lord President, Director-General, Members and Distinguished guests.

Introduction

I understand the Director-General made a very powerful speech this afternoon. I believe that he fears that this is the moment when the Empire may strike back.

Well, I suppose there's no better place than the Albert Hall.

But, ladies and gentlemen, you can put away your light-sabres. I am no Darth Vader, and you don't have to defend yourselves from me. [end p1]

Running a business and running the country have one or two things in common.

The cynics say that a successful director, like a successful politician, is one who delegates all the responsibility, shifts all the blame and takes all the credit.

Not surprisingly, I look at it differently.

I note, Director-General, that you've given the Government broad hints of one or two things which still need to be done. I could add my own.

But let me comment on yours. [end p2]

First, rates. Yes, I agree—we still need to reform the rates. And the burden of industrial rates that your members carry is a measure of the difficulty of financing local authority expenditure.

One of the answers, of course, is to persuade local authorities to be as efficient in their use of their manpower as you have had to become with yours. And to adjust their expenditure to reasonable levels of rates rather than adjusting their rates to the levels they want to spend. [end p3]

As for the abolition of GLC and Metropolitan counties: living in London, I can understand your feelings. Especially when sums are donated to causes which have no possible connection with the role of local government. And on Trade Union reform, yes, more legislation is needed and we shall continue the step-by-step approach on which we are already embarked.

I would also like to thank you for your recognition of what is already being done, for example on energy costs.

And let us take credit for one or two other things. Like substantially reducing the National Insurance Surcharge—thus cutting the burden on the private sector by one and a half billion pounds. [end p4]

Like doing justice to management, whose vigour and initiative are the key to success—by reducing the top levels of tax on earned income to 60 per cent. It happened some time ago, but it took a lot of courage to make that change in the envious society we had become.

Like halving the rate of inflation, so that it is now lower than it has been for thirteen years. And that was not just chance: it was thanks to steady and sound policies pursued by Geoffrey Howe and his team over the last four years, despite all the pundits who said it could not be done. [end p5]

Like abolishing controls on pay, prices, dividends, where to build factories, where to site offices, how much to lend for hire purchase and—for the first time in forty years—there are no controls on foreign exchange. The decisions are yours now and can be taken on grounds which are best in order to build sustained success for industry and commerce.

Like privatisation. We have at last begun to roll back the frontiers of nationalisation. Already it's quite a long list—British aerospace, the National Freight Company, Coventry Climax, Gleneagles, Britoil, Amersham, Cable & Wireless, [end p6] Fairey, Cambridge Instruments, Associated British Ports. And British Telecom is now going through the House of Commons as well.

And like what we have done for small businesses. There we have fashioned the best range of aids and incentives in the world, and especially in the new technologies.

Small businesses are crucial to our future. They are the true test of the health of the free enterprise society.

Not a bad list for a start. It will be longer still in five years time. [end p7]

My Lord President, you have taken as the themes of this conference: free trade, and free enterprise. They each represent something deeper, which is embedded in the character of Britain.

Freedom is in our blood.

Only in freedom can enterprise prosper. Only in freedom can responsibility and initiative develop.

So the history of free enterprise is not just the history of enterprise, but also the history of freedom. [end p8]

But let me remind you of the belief that inspired so many of the old socialists. Their theory was that socialism would enlarge human freedom.

They believed that men and women would work harder and with greater dedication for a nationalised industry or service, because they would be working for the public good.

That was the way to a caring society, or so they honestly thought That was the theory.

ABUSE OF POWER IN THE PUBLIC MONOPOLIES

But try telling that to a commuter stuck on a draughty platform in a train strike. [end p9] Try telling that to a patient who is turned away at the hospital gates because a trade union official has decreed he or she is not an emergency case.

Try telling that to the pensioner who has to queue at a standpipe in the middle of February.

What went wrong with the Utopian dream?

I will tell you in a word: Monopoly—monopoly power. That's where the root of the evil lies.

The customer has nowhere else to go for something that may be vital to the means of life. [end p10]

And the worker who does not want to strike risks his job. And he has no other employer to go to, unless he leaves the industry.

And so again and again, we see whole groups succumb to the temptation to exploit that monopoly power for selfish ends.

And the victim is always the captive customer.

Fortunately, there are still plenty of people in the public monopolies who retain the old ideals of service and who continue to work with very great dedication—and we owe so much to [end p11] people like that who keep the service running during strikes and emergencies.

But all too often they have been shouted down and told their attitude is out of date.

Well, I believe it is the shouters who are out of date.

Because if the past ten years have taught us anything, it surely is that we cannot afford the self-indulgence of industrial disputes. [end p12]

We cannot afford to talk about “the two sides of industry” when profits and jobs are so inseparable.

We know that if labour gets too expensive, people will use less of it.

The greater the specialisation in a modern society, the greater the power of a handful of people to damage the lives of their neighbours—often of their fellow union members.

I wonder whether trade union leaders ever stop to think how many of the unemployed could now be in work if their unions had not clung to [end p13] restrictive practices nor demanded wage levels way above what our competitors were paying themselves for the same work.

Sooner or later, those who have taken more out than they have put in find that there is nothing left to take.

Of course you expect me to say something about the water settlement, which has been so variously reported this morning.

First, the Water Council calculated that the increase will be equivalent to about 7.8 per cent over twelve months. [end p14]

Second, the inquiry has rejected the main part of the unions' claim, which was comparability, and it has accepted the main part of the employer's offer, which was the increase on basic rates.

I note that those who led this strike are claiming to be pleased with the outcome. But I wonder whether their members will be pleased when they reflect that it will take years for the little extra they have won by striking to make up for the five weeks pay they have lost. [end p15]

My greatest concern, of course, is the effect of large wage increases on jobs. We have seen again and again that in the community as a whole big pay settlements mean fewer jobs.

It is no good the unions demonstrating against unemployment if by their deeds they are helping to cause it.

In this situation it seems to me ironic that it is private enterprise that socialists want to make “accountable” . [end p16]

But which is more genuinely accountable to the public—a private firm which has to satisfy its customers, or the nationalised monopolies, where it sometimes seems that the customers have to satisfy the demands of the producers? [end p17]

Hardly the ideals of the early socialist reformers.

The Marxists say we are living in the “late capitalist” stage of history.

But it's clear to more and more people all over the world that, in reality, this is the age of “late socialism” .

In fact, it's so late that it's time for a post-mortem.

Look at the freedom of choice on offer in any Western high street. [end p18]

No monopoly there. When did you last see a whole high street on strike?

Look at the painful shortages in Eastern Europe—and the drab queues.

My Lord President, surely it tells us something when the surpluses of corn and butter all flow East, and the refugees all flow West—or would if they were allowed to. [end p19]

We may have our problems with surpluses, but how much better to have such problems than to be confronted, year in and year out, with the desperate problems of scarcity.

Political and personal freedom are impossible without economic freedom.

Some of us learnt that principle a long time ago.

Now it is impossible not to see with our own eyes the stark contrast between the results of capitalist freedom and the results of socialist coercion. [end p20]

Centralisation and nationalisation mean less freedom, worse service, less choice and lower standards for every customer.

In other words the like-it-or-lump-it society.

We want good public services—health, schools, care for the elderly and disabled—and we want them to give maximum value for money, and to benefit those they serve.

But flourishing public services depend on a flourishing private sector.

It is not public expenditure which leads the way to [end p21] greater prosperity: it is private enterprise.

It is the tragedy of socialism to have got the argument the wrong way round.

How painful it is to recall now the easy assumptions of the Fifties and Sixties that miraculous, endless growth would automatically provide everything that was needed in the social services

Those who held out such hopes were often well-meaning and sincere.

But they forgot to look back and see how hard-won the improvements of the past had been. [end p22]

Like Kipling's monkeys sitting chattering on the branch; they were too busy

“Dreaming of deeds that we mean to do all complete in a minute or two—something noble and grand and good, won by merely wishing we could.”

We know that it is no use having good intentions about distributing wealth unless you first pursue policies which will create wealth. [end p23]

ECONOMIC OUTLOOK

My Lord President, you will expect me to say something about the prospects for the future, and the way in which recovery will happen.

The world recession has been long and painful. But I believe we can look to the future with cautious optimism. Cautious, because many problems remain and recovery could be less rapid than after previous recessions. Optimism because a number of factors responsible for the deep and prolonged recession are at last beginning to fade.

Let me take just four of them—oil, lower inflation, world recovery and industrial efficiency [end p24]

OIL

The first is oil. A modest fall in oil prices should be an important factor helping world recovery. For the oil importing countries, which are the great majority, it reduces costs and adds to spending power.

But for some oil exporting countries, especially those whose economies are dominated by oil, the drop in price will, indeed, cause problems. Some had already made their plans in the expectation of continuing higher oil revenues. They will now have to adjust them. This could affect those of our own industries who have gained good export markets in those countries. [end p25]

If the fall in prices were to be both large and sudden the speed of change and uncertainty could be harmful to the world financial system.

As far as Britain is concerned, a modest oil price fall is good for us. Because we are close to self-sufficiency and because oil is less than 5%; of GNP, direct effects are smaller than for most other oil producing countries. [end p26] As a trading nation and a big exporter, we should benefit from an expansion in world trade and, provided we take full advantage of the opportunities, that benefit would offset any decline in our oil export earnings.

INFLATION

The second factor pointing to recovery is lower inflation.

Over the past year we have seen that, as inflation falls, consumer spending tends to rise. Savers, it appears, no longer have to put aside so much to maintain the purchasing power of their savings; indeed the savings ratio has fallen from 16%; to 9%; over the last two years. [end p27] That is good news for the High Street shops and for those who produce consumer goods.

Lower inflation also improves the prospects for investment. It reduces interest rates, thus helping cash flow and making it easier for companies to service loans. And by easing the burden of mortgage interest it helps both house buyers and house builders. That is good news for the capital goods and the construction industries.

Reduced interest payments also cut the Government's bills, and I hope local authorities' bills too. [end p28]

In addition, lower inflation, by taking up a smaller proportion of the money supply, leaves more room for output to rise, and all within prudent financial policies.

WORLD RECOVERY

And it is not only in Britain that we expect to see the benefit of lower inflation. In the United States inflation and interest rates have fallen sharply and the first clear signs of recovery are emerging. The two classic indicators are increased house building and increased car production. Both are happening there now. And in Germany too there are signs of increased orders in the domestic market. [end p29]

The United Kingdom should benefit from world recovery. During the past year there has been a significant increase in our domestic demand but our overseas markets have been weak. In the period ahead, with inflation remaining under control, we should see not only continued growth of markets at home but a revival of markets abroad.

EFFICIENCY

The fourth factor pointing to recovery is the unmistakable evidence of a more efficient economy; and I congratulate those in this hall on their splendid efforts in bringing this about. [end p30] Labour productivity in our factories has jumped and average wage settlements have continued to fall. It is through better productivity and better performance, not through devaluation, that we gain real and lasting economic strength.

Germany and Japan did not conquer world markets during the 1960s and 1970s through devaluation. They did it by excellent design, reliable products, delivered on time and properly serviced. That is the route to success. [end p31] It will not be a smooth upward path. That will not surprise you. Smooth recoveries only happen on graph paper.

But the opportunities are now there, and I am confident that you will take them.

THE WAY AHEAD

The human and social consequences of the world recession are severe, especially on the young who are without jobs. Recovery from recession will help. But it is not enough. We must also acquire new skills and greater adaptability. [end p32] From this Autumn the Government will be spending 2 billion a year on training and special employment measures. The aim is that every school leaver will either be in training or in further education or in work and that unemployment will cease to be an option.

The task of the world leaders is to ensure that recovery is allowed to gain strength and does not peter out in renewed inflation.

To do that, sound financial policies must be maintained. They are the bulwark against inflation. [end p33]

The budget deficits of the major countries must be set on a declining path.

In the United Kingdom we have done this already. We are not going to let up. We have not struggled to reduce inflation this far merely to throw away everything we have achieved.

In any event, the British people know full well the importance of honest finance. They will not be taken in by a hatful of vote-catching tricks, wizard-wheezes or funny-money. [end p34]

I am sure you will like to know about next month's Budget. Well I will tell you it will be a sound, responsible Budget, like its four predecessors. That will be the Budget of 1983. That will also be the Budget of 1984, 1985, 1986, 1987 and …   . well I can count higher, but no higher than I can count on you, the British producers, to make all this possible. [end p35]

PERORATION

My Lord President, the aims of this Institute are the aims of this Government.

And they are the aims which the whole community must share if the nation is to prosper.

I believe that the last four years have witnessed a great advance in the achievement of those aims.

The comfortable illusions that accompanied our gradual decline have been shattered. The nation has woken up to the reality of the need to earn its place in the world. [end p36]

Let us pledge ourselves never again to let protection replace competition; collectivism replace individuality; or the state replace free enterprise.

Let us pledge ourselves to build a nation strong in its defence, its commerce and its standards. To build a nation in which free enterprise and free trade will flourish. To build a Britain that competes with the best, and wins. End of speech [end p37]

Beginning of Question and Answer transcript.

Chairman

Prime Minister, we have had a most interesting collection of speeches during the day, but yours has proved to be the most fitting climax to a fine programme for today. We are almost grateful to you for managing to bring so much humour into what is a very serious subject, and also being able to deal so clearly and concisely with the very complicated matters which surround you and your Government.

Ladies and Gentlemen, as you know, the Prime Minister has agreed to answer questions and I have spent most of the lunch hour sorting out the very large number of questions that were sent in and grouping them. She has also said that although it is practically four o'clock now, she is quite happy that we should carry on, so we will be able to have a little bit of a Question Time. Most of the questions, understandably, relate to economic subjects, local government and so on, and so, if you are ready, I will read out the first question. The first one is a composite question on the water workers: [end p38]

THE PRIVATE SECTOR VIEWS WITH ALARM YESTERDAY'S CLEGG-STYLE WATER SETTLEMENT. WHAT EFFECT WILL IT HAVE A) ON INFLATION: B) ON OTHER PUBLIC SECTOR WAGE AWARDS LIKE POWER WORKERS: AND C) ON THE DATE OF THE NEXT ELECTION?

Prime Minister

Can I answer quickly the three aspects of those.

First, I think one of the significant things about those findings was that they clearly rejected comparability, I think very wisely. Comparability is a bad principle. The principle that should govern pay is what the industry can afford and still remain efficient and keep its prices within what people can pay for the services, and I believe that the Chairman of that Inquiry followed that principle.

I have not the slightest doubt that it was a higher award than the employers felt able to offer, but I think they have indicated that they will now have to struggle to get greater efficiency, so that they do not pass on the increased cost to the consumer; because most of us would say our water rates are already high enough and they have already gone up enough. (applause) In fact, they did have a very considerable increase in efficiency last year. Indeed, if you look at the total wage bill, it did not go up anything like the increase in the wage award last year. The total wage bill went up only by 2%; and that says a great [end p39] deal for the management of that industry, which really struggled to get increasing efficiency, and I imagine that, particularly because of what they have learned through the water strike, they were able once again to get greater efficiency.

Now, what was the other thing? Oh yes! What effect will it have on the power workers? I, again, have not the slightest shadow of doubt that once someone has got a considerable wage increase, it affects others. But again, I repeat—and indeed, I almost plead with some of those who are making wage claims—do think about the effect on jobs elsewhere! (applause) You put up enormous wage increases that are passed through to prices, and it just might be the last straw on many smaller companies—or even larger ones—which are struggling to keep going, waiting for the recovery and trying to bring it about. If wage claims are not contained within productivity, they can be the mechanism of actually increasing unemployment. I think we must put that to the Unions very forcibly indeed. (applause)

As for the third part of the question, what effect will it have on the date of the next election? None! I do not know when it will be and I am not yet going to decide. Next question. (applause) [end p40]

Chairman

The next question is also a composite and it is really about the plight of the middle class!

A LOT OF ATTENTION IS PAID TO DIRECTORS AND EXECUTIVES AND TO THE VERY OLD, THE NEEDY, AND THE UNEMPLOYED: BUT WHAT STEPS IS THE GOVERNMENT TAKING TO IMPROVE CONDITIONS FOR THE STRUGGLING MIDDLE CLASS?

Prime Minister

I do not think it is a very good question, as a matter of fact, Mr. Chairman. I really do not! (applause) That is all right. Sit down!

But I am used to answering not very good questions sometimes in the House of Commons (applause) and so I will answer it!

The main weapon which Government has is the taxation system. You are quite right: we have not been able to reduce taxation as much as we would have wished because of the world recession, and I do say this to all people, whatever class, whatever background. It is no good just sitting back waiting for world recovery to come to your door; you have got to go out and fetch it to your door, to get the increased growth out of which we can in fact have the reduced taxation.

When you were talking about private health and private education, I did particularly mention in my speech the very courageous reduction of tax on top earned income which Geoffrey Howe made. It was a courageous thing to do at the time and I [end p41] do not think we have had nearly sufficient credit for it. But when we get the extra growth—and I will tell you quite candidly—I believe that the extra resources must be put back into the individual's and into the company's pocket, because that is where I believe it will prosper and profit best. So you give me the extra growth and then I may be able to tell you about what the Budget would be! (applause)

Chairman

I hope this one will be a better one! It is from a retailer and it is about retail trade:

WILL THE GOVERNMENT NOW INSTITUTE AN INQUIRY INTO SUNDAY TRADING AS IT IS CLEAR THAT NOT ONLY IS PUBLIC OPINION OVERWHELMINGLY FOR SUNDAY TRADING, BUT—AND ALL SIDES OF THE HOUSE ARE AGREED—THE LAW AS IT STANDS IS IN NEED OF AMENDMENT.

Prime Minister

Thank you. I quite agree, the law on Sunday trading is in a mess, a great mess, and they have had a go at a Private Member's Bill in their Lordships' House, as you know my Lord President, and also in our House, and neither of them have got through. Indeed, I most certainly will look at the suggestion that we should have an inquiry, because when [end p42] we come to these matters where there is a good deal of split and a number of people take different views on conscience on these matters, I think an inquiry would possibly be a very very useful way to get certain things cleared up and to clear the way for legislation, so I will certainly have a look at that suggestion. Thank you. Now, next question! (applause)

Chairman

A good deal has been said about rating of industry during the day and Derek Wiggins has asked the question:

WHEN CAN THE GOVERNMENT HELP INDUSTRY BY REDUCING THE BURDEN OF INDUSTRIAL RATES? THE OLD SAYING OF NO TAXATION WITHOUT REPRESENTATION SEEMS TO BE FORGOTTEN.

Prime Minister

Yes, even when they had representation the rates were still too high. That is to say, when business had a vote in local authorities. I do not think myself that that, of itself, would have stopped what happened.

We are still looking at rating reform and I am very conscious that we must have a package before the next election, but that may give us quite a bit of time—one cannot tell! I am very conscious of this, because the [end p43] fact is—I will be absolutely candid about rates. Rating is not a good system of taxation, either on the basis of valuation, either for industry, for commerce or for the domestic rate-payer, and, of course, it is taking burdens of taxation that it was never intended to bear. So it is a bad system. I need hardly tell you the difficulties. The difficulties always speak for themselves. It brings in something like £11 billion of revenue and the question is how to replace those or part of those revenues or how to replace the growth in revenues in future.

We are looking at this urgently now and we are looking not only at domestic rates, but also at commercial and industrial rates, because I think we need to look at the whole system.

You see, in Scotland, you have industrial de-rating and I can tell you exactly what happens. The burden is then borne to an even greater extent on commerce, which actually puts up their costs of living, and particularly on private householders.

So, I cannot give you an answer except to say we are looking at this urgently and I expect to have a package before the next election. That will be within eighteen months! [end p44]

Chairman

Janet Lennon thinks that the Government has done much to promote information technology and her company is one of the country's leading computer software houses and she just feels that her very success in business is sometimes at the expense of obviating people's jobs by replacing them with technology, so she says to you:

HOW DO YOU SUGGEST WE SHOULD FACE THIS MORAL DILEMMA?

Prime Minister

Well, I do not think it is a moral dilemma, because you see, in the long run, technology produces more jobs. That has been the history. I mean, just supposing that half a century ago, when 50%; of our people were working in agriculture or domestic service, those who now produce complicated agricultural equipment had said: “Well, we will not produce it because we have a moral dilemma!” We should not, in fact, have an efficient agriculture. Or just suppose those that say: “Well, we will not produce cars because after all it will replace horses” and etc. But, in fact, the new technology brought new jobs. Indeed, who could have said ten years ago that in Scotland today there would be more people employed on the new electronics than there are on shipbuilding and on steel? You have got to [end p45] get right into new technology to keep our present jobs in companies that are producing things which they are selling overseas, and also, right into new technology to make new products possible that were never never possible before.

The effect of technology is twofold:

First, there is not the slightest shadow of doubt that it does displace some jobs in some industries.

The second effect is to enlarge production by creating new products. That has always been what has happened throughout history, and it will happen in the future. Indeed, the irony is that the country that has been first to embrace new technology, Japan, has in fact that the lowest level of unemployment the world over.

So the moral dilemma is this: if you do not get into new technology, someone else will outdo you in competitive price and you will lose the jobs you have got, and if we do not get into new technology other people will beat us in export markets!

So I do not regard it as a moral dilemma in the sense that we ought not to get into it. I regard it as absolutely vital that we do get into it, so that we can have the jobs of the future. Thank you. (applause) [end p46]

Chairman

Two more and then we are through! This one is about trade with Japan.

BRITISH COMPANIES WITH COMPETITIVE PRODUCTS INEVITABLY FIND “ARTIFICIAL BARRIERS” PUT UP WHEN THEY COME TO EXPORT THESE PRODUCTS TO JAPAN. THESE COMPANIES FIND IT IMPOSSIBLE TO OVERCOME THESE BARRIERS. WHEN WILL THE GOVERNMENT TAKE STRONG POSITIVE ACTION TO REMOVE THESE ‘NO ENTRY’ BARRIERS—From Derek Bell-Jones of Deco PLC.

Prime Minister

Well, we do! The problem is that there are all sorts of barriers that you cannot define, but which in practice exist.

When I last went over to Japan, I had to say that we could not take any increases, even on numbers, in their exports of cars to us. Indeed, I thought they were already on the high side. We had taken action on commercial vehicles and while I was over there we took action on some types of numerically-controlled machine tool, because quite frankly, their increase in imports to this country was meaning that we had little chance to let our own industry prosper and build up its own trade to give it a good base, and so we set in motion then an agreement which has now taken effect on limiting the supply of numerically-controlled machine tools that could come to this country from Japan. I [end p47] also had to tell them that they must limit the fork-lift trucks that were coming in.

We have a whole range of voluntary agreements. We deal with these things by voluntary arrangements industry-to-industry, backed up by Government, which helps in the negotiating. We cannot cut out everything because it is new and it is good and it is competitive, because if we did, we should soon have backward, cossetted industries here and we should not get the export markets we need.

But we tackled those things one by one in Japan. The real problem, I think, is twofold in Japan. Can I explain the first aspect of it:

While they have highly efficient manufacturing industry and, if they will not mind me saying so, highly inefficient distribution, and we have had less efficient manufacturing industry but highly efficient distribution, what happens is that their efficient production plugs into our efficient distribution and they get all of their goods all over, whereas ours which, let us face it, until now there has been less efficient production, has plugged into less efficient distribution and that makes it doubly difficult to get your products on sale where you would like to get them on sale in Japan. That is one inherent difficulty and we are constantly mentioning it to them.

But the other one is this: It has always seemed to me that the Japanese culture is, if they see a new product, [end p48] they will not say: “Ah, we like that! We will buy it!” They say: “Ah, we like that! We will make it!” Now, it is a difference which goes a long way back into history.

We have an imperial past. We have been used to trade going out, to goods coming in, and the British house-wife and the British workforce buy on value for money. They do not have this thing about “We are not going to buy unless we are British!” Now, it is very very difficult to overcome and, as I say to our Japanese friends, it is no earthly good telling me you are going to reduce tariffs by 2%; or 3%;, because quite honestly, that does not amount to a row of beans, not at the level they have some of their tariffs. But, we have in fact been saying to them they have to correct the imbalance of trade either by ordering major capital equipment from us like aircraft or, if they are going to get the trade and business in this country, they will have to think about inward investment.

We are also negotiating through Europe, which is the first time, and they have come to an agreement that is no better, actually, than what we have got.

I can only tell you that every time we get the Japanese undermining some industry here, one of us goes straight out and says: “Look! We have got to limit what you are sending in!” and this will happen progressively more and more, because we cannot have them undermined. But [end p49] it only gives a breathing space, because in the end we have got to be as efficient as they can, and do not forget, we are a highly inventive people and, as I am constantly saying to almost every audience, do not forget we have sixty-two Nobel prize winners in the science and technologies, which is a higher proportion of our population than any other country in the world. Your job is to convert that into industrial profit. I hope you will get on with it! (applause)

Chairman

Now, the last question which, while it does obviously have some bearing on another election, is nevertheless I would have thought, one you will find it easy to answer, and it is a very good question.

AS THE PRIME MINISTER IS NOW CONTEMPLATING A FURTHER FIVE YEARS IN OFFICE, COULD SHE INDICATE HER TOP PRIORITY FOR THE NEW TERM?

Prime Minister

Yes, we shall carry on exactly with the policies which I have indicated. We shall have honest and sound money. I hope, when we have got growth, we shall be able [end p50] to have more incentives in taxation. I hope we shall be able to privatize far more nationalized industries. We shall be able to do a further slice of trade union reform, and basically, the whole philosophy, the whole Conservative philosophy has always been to try to make people independent of Governments, whereas I reckon the opposite philosophy is to try to make people dependent on Governments.

I have not the slightest shadow of doubt which is best for Britain and which has led to the typical British character.

It means, therefore, cutting your public expenditure as a proportion of your gross national product; it means getting more and more property into the hands of the people. When I hear people talk about one nation, I believe I am much more likely to be able to produce a feeling of one nation by getting house ownership and property into the hands of everyone, so you get every man a capitalist—than any other philosophy is.

So we shall carry on. That way, I believe, we really shall be able to achieve the essentials of a free society with a just law—and they are inseparable—strongly defended with a sound currency. Got it? A free society with a just law, strong defences and a sound currency and an independent people! (applause) End of transcript.