The Prime Minister
Welcome to our first press conference, our regular press conference of this campaign. This morning we have planned for the Geoffrey HoweChancellor of the Exchequer to give an opening statement about the economy. You'll be aware that there are rather important figures coming out later in the morning. Then I will ask Patrick Jenkinthe Industry Secretary to make his comments, and then we're open for questions, first on the several statements and then fully open on any subject. Chancellor of the Exchequer:
The Rt Hon Sir Geoffrey Howe QC—Chancellor of the Exchequer
I'd like to start by drawing attention to a vital issue in the campaign, that is exactly how much the Labour Party's promises are going to cost. Mr Foot agrees on the importance of that, and last night he said that not only had they been costed, but that it would be quite wrong for any Party to go ahead and campaign on promises that it couldn't cost or fulfil. And he said, and I agree with him, that to do that would be a cruel deceit and in the foreword to Labour's manifesto, he does say that the emergency programme they set out there which is designed to be launched in Mr Shore 's first budget, has been costed. Now that is only a small part of Labour's programme for a full Parliament. The manifesto contains a multitude of other measures, which will be coming forward in second and subsequent years. Mr Foot and Mr Shore, if Mr Foot is to be believed, must have the full and detailed costing for those other measures. For, as Mr Foot says and who are we to doubt him, that no Party in Opposition has ever stated its intentions so clearly and comprehensively. Now if that's the case, I'd like to challenge Mr Foot and Mr Shore to publish full, detailed, clear, and comprehensive costings of the longer-term promises in Labour's manifesto, because on what he's said already, they must exist, it is entirely reasonably for us to ask him therefore to publish them soon. I suggest he ought to be invited to publish them by Monday, because if he doesn't do it by that time, then we're prepared to do it for him. One other point, and that is the basis on which the campaign is being conducted as far as the economy is concerned. Virtually every figure that has appeared since the beginning of this year shows that there is taking place an improvement in the condition of the economy. Manufacturing production, construction production, industrial production, with or without North Sea oil. The CBI survey for future business optimism is also at a very high level. Last year our economy grew by one percent, the first time for many years that we were growing, when the rest of the world was still moving backwards. This year we should grow twice as fast as that. And the important thing is that these expectations of growth rest upon secure foundations, greatly improved manufacturing productivity, lower unit labour costs than most of our competitors, improving productivity and interest rates at least 6 per cent down from their peak. And the most secure foundation of all is our success against inflation. When we came into office, inflation was going up fast. In five years of the Labour Government, prices more than doubled, today, prices are going up more slowly than for fifteen years. It is that success against inflation which is actually transforming our economic position. It's on that basis and the others that I referred to, that our manifesto makes it plain that we've laid the foundations for economic recovery.
The Prime Minister
Thank you. Patrick Jenkin: [end p1]
The Rt Hon Patrick Jenkin—Secretary of State for Industry
I find that as I go round that the support for the Government from industry is as stronger or stronger than I have ever known it, because they recognise that the policies that we've been pursuing have enabled them massively to increase their efficiency and to do those things which many of them will confess they ought to have done before, including productivity, modernising their production and getting their operations more competitive. Competitiveness has actually increased output per man hour. In manufacturing it's increased 14½ per cent since the end of 1980 and many firms can report increases in productivity several times that, and they recognise that the contribution of the Government has made to this in lowering inflation and making it possible once again for managers to manage effectively and that this is what they want to see continuing, and I find in all the Labour Party's attacks on us, for what we're supposed to have been doing in industry, no echo at all from among those who actually have to make and sell goods and services in the markets of the world. They want us back and they are terrified at the prospects, if it were likely, of a Labour Government, and when one looks and sees what they would be faced with, with massive new nationalisation, when every industrialist will tell you that if we had an achilles heel, it has been public sector costs and prices. It is comprehensive planning agreements to be imposed on companies, a new bureaucracy which is absolutely staggering—forty-two new or reconstituted bodies are listed in the Labour Party manifesto—a massive increase in bureaucracy, the reimposition of exchange and foreign investment controls, a vast extension of trade union powers and privileges, Government borrowing on a massive scale which can only force up inflation and interest rates, higher taxes, higher local rates, and savings to be taken from pension funds and other institutions and directed by the Government, and with the threat of nationalisation of the banks or whoever if they're not prepared to co-operate with that. And when industrialists look at that, they really see a recipe for utter disaster and that is why I find industry very strong in its support for the re-election of the Conservative Government.
The Prime Minister
Now Ladies and Gentlemen, can we have questions first on industrial and economic matters? Yes Mr Mathias.
Question
Can I ask Sir Geoffrey …
The Prime Minister
You will have to please speak up because we've got such a battery of noise in the front row. Do you think you could hold off while they're asking questions? Keep it going while we're giving the answers, if you wish.
Question
Can I ask Sir Geoffrey, what is the level of inflation to expect to be announced later this morning and what is the Treasury forecast now, exactly how much it will rise later in the year?
The Rt Hon Sir Geoffrey Howe QC—Chancellor of the Exchequer
Well the forecast, the figure to be announced this morning will surprisingly enough be announced this morning at 11 o'clock and not before. I spoke at the time of the Budget of a possible figure for the autumn of 6 per cent, in fact there are signs in that respect as in others we may be doing rather better than we'd expected. And what is certainly clear is there is no reason whatever to expect an upsurge of inflation at the end of this year or at any time thereafter. The trend on inflation [end p2] will remain downward, and we intend to keep it so.
The Prime Minister
Next question on the economy, on finance, on industry. Yes.
Question
… . I find that last answer of Sir Geoffrey's rather surprising when he said that the trend in inflation would be downwards, when in your Budget suggestion you said that it would be 6 per cent … a number of independent … 7 per cent. I don't understand the point about a trend … .
The Rt Hon Sir Geoffrey Howe QC—Chancellor of the Exchequer
Well, let me make it absolutely clear. If you look at the documents published at the time of the Budget, you'll find there reference to other measurements of inflation apart from the Retail Price Index and it is there made very clear in documents published at the time of the Budget, that the underlying trend will remain in a downward direction. What I've added to that this morning is that there is some reason to believe that the Retail Price Index figure of 6 per cent in the autumn which I mentioned at the time of the Budget, may be slightly on the pessimistic side. But quite apart from that, the underlying trend as I made clear at the time of the Budget, is an will be in a downward direction, provided we secure the return of a Conservative Government not uncommitted [sic] to policies which take us in exactly the opposite direction.
The Prime Minister
Thank you. Next question.
Question
Does that mean, Sir Geoffrey, that after whatever the autumn ‘blip’ of 5½ or 6 per cent is, that you would expect a downward trend to resume at perhaps 4 per cent in the course of 1984?
The Rt Hon Sir Geoffrey Howe QC—Chancellor of the Exchequer
It's not possible to make forecasts in detail as far ahead as that. What we've said in our manifesto is that in the course of the next Parliament, we shall endeavour to secure a further reduction in the rate of inflation and that the long term objective for a stable society is a stable price level.
The Prime Minister
Yes.
Question
A Question for you Mrs Thatcher. We now know that your advisers are able to give you accurate forecasts for the current level of unemployment as long ago as 1981. Could you tell us what they're forcasting for 1985, now?
The Prime Minister
I think your referring to this CPRS report. You will know that the CPRS report itself made no forecasts whatsoever, it recorded a collection of forecasts by other forecasters, which had all been published. In addition to those, there was an MSC forecast. The MSC used two private university forecasts, both of which were below 3 million. I believe that those private university forecasts were also published, so the CPRS report made no forecast whatsoever of its own and the forecasts to which it referred where already known and in the public domain. I'm very grateful to you for giving me the chance to clear up that point. You'll also of course recollect that there was a forecast as long ago as the 21st November 1975 or 1976, in the Observer, by the Labour Correspondent, 2½ million jobless by 1980 is forecast. I do not remember that being admitted by the then Government at the time. The CPRS does not make its own forecasts. [end p3]
Question
… between unemployment and crime, particularly among young people, do you also now …
The Prime Minister
May I give you reply which I have frequently given in the House of Commons. There was a document, a work produced, not by Government, but by the Social Science Research Council, called Crime, unemployment and the police. It is published in January 1983. It was drawn up by Roy Cahill and Nicholas Stern, Roy Cahill being the research sociologist of the MRC medical sociology unit, and Nicholas Stern, the Professor of Economics at University of Warwick. That considered all of the figures and came, and either [sic] the words I use are not mine, but they are the conclusions of that totally independent report. The conclusions are to be found on page 8 of that report. They are these:
There is no significant association between increases in recorded crime, and increases in unemployment.
It goes on, I can read out quite a number of conclusions if you wish. It gives four conclusions and then says of them:
This puts increases in crime and their possible relation with increases in unemployment in a very different perspective from that associated with the comments presented at the beginning of this note.
Comments of a kind to which you refer. It is quite wrong to pretend that there's a well-tested relationship. Those are not my words, that is the latest thing from the Social Science Research Council.
Question
You're subscribing to that rather than the Think Tank report then?
The Prime Minister
I have given you an independent assessment. The Think Tank report said:
The effect of youth unemployment in terms of opportunities for crime is uncertain.
Those two words ‘is uncertain’, I believe were left out of certain reports. It then went on to say:
But it is undoubtedly a matter for justifiable concern.
Their conclusion was the effect of youth unemployment in terms of opportunities for crime is uncertain. I can give you many other reports that will have similar conclusions. I think it best to give you and, indeed, I'm sure you would welcome any report from the Social Science Research Council, the conclusion of a totally independent study. I trust independence appeals to you.
Question
Within the report I think what many people have taken exception to is the motive or tone of cynicism occuring in the writing, you must … we have some political imagination in that we are willing to take steps to salvage something, albeit second best and the sheer waste involved. Could you agree with that quote in the paper … cynicism about unemployment? [end p4]
The Prime Minister
No, No, no-one in this Government is cynical about unemployment, in any way. All of us are pursuing policies to reduce it and may I refer you to speech I made last night, it was fully press released, to what I said abut unemployment, and how one pointed out that the best thing you can do or one of the best things you do to help unemployment is to get inflation down and to pursue policies which get interest rates down, to get rid of the concealed unemployment in the overmanning, to in fact stimulate the growth of new products and research in new technology. That is the response of the Alvey Report and also to stimulate the growth of new businesses, for which this Government has the best set of policies and measures, I think the world over. The immediate response to the report to which you're talking about, was of course the enormous one year Youth Training Scheme. It has taken some time to get ready because we had to go out to industry and commerce to get some 460,000 places. And the whole idea behind that, and I've mentioned it many times in the House of Commons, was, that young school-leavers or at the age of sixteen or seventeen have a choice. They can either go on with education, into further education, or they, many of them get jobs as you know, or they can go into a year's training, but the whole point and the whole response is that it is terrible for young people to be doing nothing, and therefore we started up that immense Youth Training Scheme so that when leaving school, employment is not an option. That I think is, I hope what one might try to call the silver lining in the dark clouds of the world recession, and no one has worked harder at it than this Government because we believe that one of the worst things that can happen to young people is to have time on their hands. We've also, as you know, got job-splitting schemes, which help some of them to be working at any rate part of the week, so they really have a purpose and an interest. But the, the Youth Training Scheme, I think is the most go-ahead and exciting scheme we've ever introduced in this country. There are other things as well, but I won't go on, perhaps I'll say those in answer to another question. Yes, Mr Oakley.
Question
Do you want a landslide victory …?
The Prime Minister
I want as many Conservative candidates to win as we can possibly get. I believe that we're fighting the most extreme manifesto, that's ever been placed before the electorate of Britain. It is State-Socialism rampant. I believe it would set out to change the whole of our society, I believe that people do not want that change, and I believe the best way to indicate that is to vote Conservative, for every Conservative candidate. I think I could handle a landslide majority all right. I think the, I think that the comment you're referring to was a natural Chief Whip's caution. Francis PymEx-Chief Whip's caution. You know there's a club of Chief Whips. They're very unusual people. Mr Waller.
Question
I wonder if I could ask you a more personal question, Prime Minister, whether you've got any comment on the report in the Financial Times, this morning of a concern among senior Conservatives over your technique for your election campaign …
The Prime Minister
None at all. I am, we haven't really started the campaign, Mr Waller. I find it an astonishing comment that it comes before the actual campaign has commenced. [end p5]
Question
… a point Mr Steel made very strongly this morning, what appears to some people to have been a rather abrupt, that the Foreign Secretary on …
The Prime Minister
I heard no comment at all from the Francis PymForeign Secretary of any kind, of any kind. I really would rather have thought that the people there assembled had not sufficiently picked up his reference to self-determination, as it is the critical thing in our policy towards the Falklands. I did think it quite right to underline it. And Mr Waller I don't think you'd have picked it up unless I had underlined it, I'm so glad my intervention achieved its purpose. Mr Dimbleby.
Question
What do you say to Mr Prior, when he urges you that resolution and determination are not enough, and in his words, using the verb ‘urges’ you along the road to growth …
The Prime Minister
That we are resolute and determined to pursue policies which are already leading to growth, and if you really want growth, and if you really want a better economy, and if you really want an efficient industry, and that's the only thing, you'll remember I carry round with me the 1944 White Paper on Employment, which right at the beginning you'll remember I've commented, says no policies will work unless we get a rising standard of industrial efficiency. If that's what you really want, because that's the only way in which we're going to get a rising standard of living, and reducing unemployment, you have to be both resolute and determined in pursuing those policies and you have to stick to them. So yes, they are the right policies, we are resolute and determined in sticking to them, and I believe they are the policies which will lead to a rising standard of living and to falling unemployment because they are for greater efficiency, new products and new services. I think I have said enough to indicate my views. Yes, Mr Emery.
Question
Prime Minister you said at Perth that it would be the final irony for votes for the Alliance … at this stage of the campaign, who do you think the Alliance will take the most votes from, from Labour or from you?
The Prime Minister
I wouldn't venture an opinion. In any way, I think it will differ from one constituency to another. What it could do, is quitely easily by taking sufficient votes from Conservatives in vital seats, it could in fact make the Labour Party the biggest Party. And you will be very, very fully aware that most of the people in the SDP come from the Labour Party and as far as the Liberal Party is concerned, that they went into a pact with the Labour Party and in fact kept them in power when they had already increased the powers of trades unions, had a colossal battery of controls and they chose deliberately to support the Labour Party, and I believe that they would do so again. Yes, I will come back to you in just a moment there's someone at the back.
Question
Prime Minister, on the Falklands, can you tell us, on the Falklands, can you tell us why the bodies of Scots Guardsmen brought back from the Falklands are still lying in unmarked graves? [end p6]
The Prime Minister
I'm sorry, then we must look into that immediately.
Question
The Army have said that they, that the headstones won't be put in place for another three months?
The Prime Minister
Oh well, I think that there might be very good reasons for that. I don't think that one should make any comment. They are in their proper resting place, it seems to me, of what is the best time to add the headstones. There are of course other ways of marking them until the headstones come. But if the people themselves are concerned about it, then of course one must look into it immediately. May I say that normally any of these complaints do come straight to me. I have received none. Yes.
Question
Prime Minister, four years ago, at your first campaign you had a lot of fun when I asked the question about the possibility of riots. I mentioned the words, and you thought it was very funny. Now two years later I was a war correspondent at those riots in Brixton. Do you still think that question about riots was so funny, because it was your Government under whom they took place, and do you still think there is a possibility of that recurring if unemployment rises, no matter what the statistics say?
The Prime Minister
I think that those riots cannot be put down to unemployment, wholly to unemployment. Well, I rather thought that that was the linkage that you were making in the question. Those were as you know, in Brixton themselves in a very, very limited area, around Railton Road, and Toxteth they were indeed, in Liverpool, in Toxteth in Liverpool. I hope that the relationships now between the police and the locality is such that we will not get a recurrance of those riots, and I believe that the police are now much more closely integrated with the community, and I think that the policy of putting the police back on the beat was a correct one. Mr. Jenkin.
The Rt Hon Patrick Jenkin—Secretary of State for Industry
I just want to make one point that is perfectly clear from the court cases that followed, that the great majority of those who found themselves in Court for offences against a breach of the peace actually had full-time jobs. There was clear evidence particularly in Brixton of political activists stirring up the trouble, and the fact of the matter is this was not in any sense a product of unemployment, and I think that Sir Kenneth Newman 's response in the light of the report that followed it and the new policing methods in the inner city areas of London are already beginning to show significant results in the reduction of street crime and violence, and I think they deserve every possible support.
The Prime Minister
Thank you. The gentleman standing at the back.
Question
Mrs Thatcher, how soon after your re-election will unemployment fall to 2½ million?
The Prime Minister
Neither I nor any previous Government has been prepared to make specific forecasts, and I'm not going to depart from that. I repeat that our policies are the best policies for getting down unemployment, because they get down inflation, they get down interest rates, they stimulate small [end p7] businesses, we've given enormous help to the development of the latest products and the latest technology, and we have the best, most go ahead training scheme of all time. We also are trying to cushion the effects of change, and where we have industries which are in temporary difficulty, giving them help to rationalise, such as special steels, so that we can finish up with a viable and significant industry. Would you like to add to that?
The Rt Hon Patrick Jenkin—Secretary of State for Industry
Well, I will only add one figure which I think everybody ought to bear in mind, one fact, that in the last fifty years every single Labour Party campaign, election campaign has promised to reduce unemployment. Every single Labour Government went out of office with unemployment higher than it was when the came in, and when that was put to Neil Kinnock, who we're told is now a figure of some substance in the Labour Party, he was … broadcast in March, he was forced to concede that that was right.
The Prime Minister
I should of course, also add that we have in this country approximately the same proportion of people in work as in Germany and a higher proportion of our population in work than either France, Italy or the Netherlands, that is so in the European Community. Yes.
Question
… I think your election tour actually avoids going to the parts of the country with the highest unemployment rate. Can you tell us why you're not going …
The Prime Minister
I am not aware that that is so, we have recently, we have been in the North East, I remember a visit to Northern Engineering Industries which is doing extremely well, and which has just announced an extra order for £70 million in Singapore, one with which the Government was very active in helping that company to procure. We are going where we can see most people.
The Rt Hon Patrick Jenkin—Secretary of State for Industry
I was in the North East the weekend before last.
Question
Do you intend when you go to Williamsburg, Prime Minister, to put forward any proposals to restimulate world economic demand …?
The Prime Minister
The best way to stimulate world economic demand is to run each economy soundly. Now you've already seen the effect of trying to recycle the oil country revenues, and one of the reasons I think why this recession is actually deeper than the last, is, not only did we get a second oil price increase before we'd absorbed the first one, but because the recycling of the revenues was done into the lesser developed countries in a way which gave them more than they could afford to borrow, more than they could afford to pay the interest on, let alone the principle, so in fact that one was been tried, if I might put it that way, and has already landed us in some considerable difficulties with which we're not through yet, and the only way, and I think it was the way set out at Versailles, in what we both thought was a very, very good communique, is get inflation down, deficits down, to get interest rates down. And to pursue what one would call generally sound financial policies because we have tried everything else. [end p8]
The Rt Hon Sir Geoffrey Howe QC—Chancellor of the Exchequer
If I may add to that——
The Prime Minister
I think Geoffrey Howethe Chancellor should add, because he will also be with me.
The Rt Hon Sir Geoffrey Howe QC—Chancellor of the Exchequer
If I may add to that, this point. You talk about action to stimulate the world economy, when the manifesto lesson of the last few years is that the way, to use your word, to stimulate renewed growth is to secure further success against inflation, to secure an effective reduction of public sector deficits. Its the lesson that came out very clearly from the communique at Versailles last year, and I think the interesting thing is that one of those present who was most emphatic that we should emphasise the need to reduce public sector deficits and get on top of inflation, was President Mitterrand himself. And this is why, I think we regard the Labour Party's promises and suggestions that they can by embarking on a reckless policy of reflation, reduce unemployment as a hollow sham. The central falsehood of the Labour Party's case, is that promise to reduce unemployment by massive reflation. Of other countries throughout the world it is the experience on which we have all agreed at successive meetings of international statesmen. And it's one of the messages we'll certainly be putting forward again at Williamsburg.
The Prime Minister
Yes, please.
Question
Prime Minister because of the high rates … how many industries have closed on the high street, how soon can we enjoy an increasing rate?
The Prime Minister
Who's going to answer this one? I'm quite prepared to do it … would you like to do it?
The Rt Hon Patrick Jenkin—Secretary of State for Industry
The Conservative Manifesto has promised vigorous action with legislation to curb the rates of the highest spending local authorities. If you take out of this year's rate increases, the fifteen top spending authorities, everyone of them Labour, there would have been no average increase in rates this year, at all, include those fifteen and the average increase has come out at over 6 per cent. Therefore, we are taking, promising action, an early Bill in the new Parliament which will give the Government power to limit the rate increases of these spending authorities. There will be a second back-up power to take a general power to impose a figure for the rate increases of all authorities. We hope that that will not need to be used, that the response to the initial power will be sufficient to make this second one unnecessary. But it will be there, it will be in the Bill, and that if it proves to be necessary it will be used. The burden of rates particularly on industry and commerce has soared, it is the biggest single tax they pay. Industry pays 60 per cent of the total burden of rates. It has become a source of real difficulty and adding costs to industry, adding to the problem of unemployment because if the rates go up, then they simply have to cut their costs in other ways, and we are now pledged to take firm and immediate action in the new Parliament.
The Prime Minister
Last question, Mr Rutherford. [end p9]
Question
(Inaudible).
The Prime Minister
Geoffrey HoweChancellor——
The Rt Hon Sir Geoffrey Howe QC—Chancellor of the Exchequer
As we've made clear, many times, we have no policy to secure a given level for the Exchange Rate. The Exchange Rate is determined by what takes place in the markets of the world. Of course the change which took place from last Autumn until the Spring of this year, on one statistical analysis did improve competitiveness. But we believe that it is far more important to be improving our competitiveness by actually improving industrial performance. If you take a theoretical view, during the 1970s, simply looking at Exchange Rates, German and Japanese industry faced declining competitiveness, which is absurd. They were getting more efficient, strengthening the value of their currency and getting richer. We are setting out to do the same. The fact that we have secured an improvement of productivity of 16 per cent over the last two and a half years, the fact that our unit labour costs are rising lower than the rest of our competitors, the fact that our inflation rate is down, all those things are the real way to improve our performance and to improve the prospects for jobs. Everyone of those things would be put at risk, seriously at risk and soon by the election of a Labour Government.
The Prime Minister
Thank you very much, we meet again on Monday morning, thank you.