Interview for Time and Tide

BC

Would you like to name me three or four things over the last four and half years that have really turned out the way you hoped they would, and have really contributed to what you wanted to do when you first came to power?

PM

I am not necessarily taking them in the order of importance but in the order in which I … First, people no longer expect that the Government will bail them out regardless of what they do. When I came into power there was a feeling that no government could ever let any company go, it would have to have a subsidy. There now is some corollation between your own efforts and success. Second, we have pursued sound financial policies, that means that we are one of the few governments in the world that is not in difficulty because it has a high deficit and in addition to that we have managed to contain public expenditure, not to reduce it as we would have wished, but to contain it, and also we have got inflation down. All of those are very good foundations for the future, very good, particularly the low deficit and the low inflation. Third, we have reduced regulations substantially. For the first time in forty years this country has run simultaneously without incomes control, prices control, dividend control and exchange control, and therefore managers are now able to manage. These are some of the regulations we have reduced and they are only examples. Thirdly, we have the lowest Civil Service ever, the lowest Civil Service since the War, sorry. Fourthly, we have a strong defence and we strengthened the Police and people now begin to understand that everyone has to be involved in fighting crime, it is not just being left to the Police. Next, we have started to sell off a lot of state property to the private sector. That has been so as far as council houses are concerned where the tenants can buy his own house and also you have the biggest sell-off of nationalised industries back to the private sector that has ever been known. We've got a long way further to go; but I would ask one other thing which I think is terribly important to success. We have reduced the top rates of tax from 83%; that they [end p1] were to 60%; and that has made a fantastic difference to the spirit of enterprise and the risks people are prepared to take in this country. So that is quite a number of things to start off with. Can I add one more thing which is very important indeed. We have changed trade union law, but even more than that we have changed attitudes, and that is very important indeed.

BC

Just to complete the cycle of the last four and a half years, any one or two things which you would dearly have liked to have achieved, which haven't yet come off?

PM

I do not yet believe we have got on top of the management of the Health Service. It employs one million people, it is an enormous organisation, it is not properly managed and everyone knows it. I do not believe that we have yet got fully on top of waste, there is still too much of it. I believe that in the public sector we still have too many people. Part of that may be that we are doing jobs that we ought not to be doing, part of it is that we are still not working as efficiently as we might and I think that both of those are very big problems. I would also add that although the spirit of enterprise has improved we have still not got it up anything like to that which exists in the United States, and it is extremely important we step up the incentives here and, that we are able to reduce tax both on individuals and on companies, both of those things.

BC

That is leading me into the next point that I wrote down … With this declared intention that you have always had of reducing taxation and reducing public expenditure the plain fact is that if the figures I have mean anything at all, public expenditure has gone up too over the four and a half years from 107 million to 126 billion, and a higher proportion of GNP is taken in tax than when you first came to power. Now this is Sisyphus putting a stone uphill is'nt it? When do you break the log-jam, when does the break-through come?

PM

I think that was inevitable, bearing in mind that when we came into power, almost simultaneously as we came in, there was another [end p2] sharp increase in the price of oil which put the world into a second recession much deeper than the first. It is not possible to cut back your public expenditure as rapidly as you go into recession. And indeed the fact of recession itself can put up your expenditure, as you know. First you have to mitigate some of the tragedies that occur and, although I have said we do not automatically bail things out, we in fact … enormous problems with nationalised industries which cost a great deal of money. And then, of course, we had the problem with the number of people who are unemployed, and had the problem that your industry is not as flourishing as it otherwise would be, so you haven't had the revenue. So inevitably there is a situation which you get when you go into a recession, I am afraid. Now, the battle and, as you know, we have really had a battle to hold public expenditure even so; the battle now is to see that we hold it in the future so that the increases we are now beginning to get in growth, in expansion which we are getting used to call it, enables us to get that into the private sector and to ensure that it does not go into increasing expenditure in the public sector. That is why I get just a little bit concerned when people do not realise the purpose of constraining public expenditure. It isn't a love of cutting public expenditure, it is because of the fundamental belief that people want to have more of their own earnings in their own pockets. They need that incentive to work harder, and that also of the growth we are getting, if we are to get further growth, it is vital that the extra money you are getting is ploughed back into productive industry to produce more productive industry. So it is two reasons. First, the philosophical reasons—people are entitled to more of their own earnings. Secondly, it is an observation and human nature reason that if we are to get the extra jobs we should get it by shifting the money to those people who can create that extra wealth rather than by absorbing it into the public sector.

BC

The unemployment problem, you have mentioned it yourself. This is the one dark cloud on the horizon. This is probably clumsily phrased but you are perfectly well aware Prime Minister that there are a number of theorists who go around saying “3 million unemployed, this is costing us 6, 7, 8 million/billion pounds a year [end p3] whichever set of figures you happen to take”. Is there no merit in the idea of looking at these figures and saying well, all right, if we get half a million unemployed off the books, that is so much that we don't have to pay them in unemployment pay, even if we had to add something to it in order to get them occupied and employed and busy in public works, roads in housing; do you give consideration to this thorn at all?

PM

If what you are saying is to solve unemployment by taking everyone on the public payroll, of course you cannot. The moment I say it that way you can see. You could if you could get all of those things done for what unemployment is costing you and the people who are unemployed have the necessary skills to do those things. Now, first, the things you want done do not match with the people who are out of work. Secondly, that they would not work for the amount which they get in those jobs, they would not work for the amount which they get in unemployment benefit. Thirdly, even if they would, you would have all the extra materials, the supervision, so that way is not open, it is not open. Although I have had people from underdeveloped countries asking for more aid and I have said “why”, and they have said “well, we have no unemployment benefit, and we have to sort out our unemployment by putting everyone on the public payroll”. That really is what you are suggesting, you could get derelict sites cleared for things like beautification of our cities if all of those people who are on unemployment would work for precisely the amount which they are on now. First they would not, and then the unions would kick up a terrible fuss. So in the end what you have got to get is not a swollen public payroll, but you have got to get more, you have got to get the growth into the private sector, that is where people are producing marketable goods and services, that is the genuine creation of wealth. Now we have more self-employed people actually, we have a record number of self-employed people, that is very good because people are going to create their own jobs and we have a lot of small businesses starting and a lot of new business. It doesn't [end p4] show quite so much in the unemployment figures yet because we still have redundancies in some of the old industries and those will go on; and, of course, we still are able to produce the same output with a smaller number of people because of the increase in technology. That also will go on. So we are going to have problems. I hope this year will sort them out but we are getting the new small business, new opportunities and we want to get them faster so it will provide new opportunities for our young people. But you get them by the genuine creation of wealth and not by a swollen public payroll which has in the end to be paid for by the private sector, by the marketing sector.

BC

Three and half per cent growth this year, even the economists are reasonably unanimous in their predictions, with unemployment coming down. And then they say “well, you know 1985 with in-growth down a bit, unemployment up a bit, it is'nt the millennium is it?” Where is the log-jam? Is industry at fault in not responding to the conditions that you say that you hope …

PM

Well, if you have not got world trade growth then you can only get greater prosperity by getting a greater share of the market by producing something for which there is a demand. And also the classic case is video recorders. The Japanese have produced something which no-one else have produced and there is a demand for it. You have got genuine growth. People were prepared to buy it and people were prepared to work harder to buy this new thing and were able to sell what they made in order to pay for the video recorders. In the end wealth is created by each of us producing something which someone else will buy in return for something which they produce which we will buy. And if you look at it like that there is plenty of work in the world and the job of industry and business and free enterprise is trying to arrange it so that we are able gradually to increase our production of these things. If you look in the last ten years what we had was this very tenfold increase in the price of oil and that meant that extra we had to pay for oil was withdrawn from the purchasing power of people and, therefore they haven't got that money to pay for other goods and services. We are just beginning to come out of that; just beginning [end p5] to get used to that and just beginning to start to grow again, to buy goods and services from one another. With that enormous withdrawal of purchasing power for the things you and I buy it is not surprising that some factories had lower production, lower output and some went to the wall. If was, of course, looked at another way, a colossal redistribution of the world's income between the oil-rich countries, particularly those which had very small populations and those who were … and the rest, whether they be industrialised or lesser developed.

BC

… in your judgement. You travel around so much. Is there a sluggishness on the part of industrialists or manufacturers in this country to respond?

PM

Our productivity is very much better than it was, as you know it is an all time record. We still have some overmanning and we still are in the position of every other industrialised country that we shall replace jobs by machinery. That is not a new phenomenon in industrial revolutions. After all the beginning of this century I think you will find that certainly a third or quarter of our people were engaged in agricultural domestic service. They would have said that supposing our jobs are no longer there because of machinery … where are the new jobs going to come from? They could not possibly have foreseen the development of the car industry which would have created all these jobs, the development of aircraft, the development of tourism, the development of radio, the development of television, the enormous expansion in periodicals. The enormous improvement in standard of living that that would give rise to, and therefore the enormous expansion in your household furnishings and the general standard of living. Yes, they have an enormous increase in technology, that is in the efficiency of machinery replacing jobs, that was the first effect, it was to displace jobs. The second effect: to create all kinds of activities and machinery and services which were unthought of before. No, we invented the computer in this country and yet we did not make maximum [end p6] use of that invention in expansion of our industries. We had the first nuclear power station but we fell behind. Clothing was discovered in this country; we have not been the first to put it to use and to maximise it. And our weakness is still that we produce these fantastic new inventions, the basic scientific discoveries and new technology and yet we do not translate them into wealth-creating industries as fast as other people take them up.

BC

An observable phenomenon, we all know this. Have you any idea why?

PM

I don't know. There was a kind of snobbery in this country that it was better to go into the professions than it was into trade and industry. That at last is going but it has been a struggle. And you know as I know many people … first we have had a colossal first generation of success in trade and business and the next generation went into the professions. The professions are very honourable and we need skilled people but above all in this country now we need people who have an aptitude and an ambition to build something up which will sell things and employ people. We need more Nuffields, more Wolfsons, more Marks and Spencers, more Sainsburys; go back further more, more Arkwrights, look at the fantastic courage of the people who built the first railways, immense courage, or those who built the first aircraft—really bold, vigorous—and long before you could get subsidies from the Department of Industry. We are getting back to it, getting back to it. And we are getting universities and industries much closer together. We are getting science parks as they have in the United States, we are getting venture capital. So we are going in the right direction. And naturally I would like us to go faster. But the creation of wealth and the people who can do it, and they are rare birds. And can I just say one other thing. There has often been a feeling in this country that people havn't welcomed success in industry as they should have done. You know, there has sometimes been a little bit of feeling of “well, I wonder how he managed to do that, he exploited someone to do it”. [end p7] Now you would do it in the States and everyone says “three cheers, we need that kind of guy”, we have not quite got the same attitude towards success. We have had too much envy, too little applause for success and too much envy of success. Now at last we did take the top rate of tax down to 60 per cent. We have got to make the taxation environment in this country such that we will get and retain the top hundred people here, the top hundred to two hundred who really have the illuminating ideas that can enrich our whole way of life and our whole standard of living.

BC

The skilled are doing rather well …   . employment are ahead of inflation but then you have this very large number of people particularly in the urban conglomerations, I suppose some of the ethnic minorities, who are doing less well. What do you say to the people sitting below the slat to cheer them up?

PM

I say, first, on the whole governments do not create marketable commodities which is where the work comes from. The people do. So I can give encouragement to those in the forefront of the new technologies, I can put some facts to encourage them start up, we already do that. We can give advice and loans to small business to enable them to start up, we already do that. So it's new scienced-based products and new business in all kinds of products. We already do both those things. I can train people, we already have the biggest training scheme the world over. We can do much better technical education in schools, we've started that, from 14–18. As you know, a lot of it was damaged when we all went comprehensive, we've started that up again and we have a computer in every secondary school and primary school so that youngsters are used to using it, we are already doing that. So I can train people, I can help the able to start up, I can help those who have enterprise and business in their blood. All that we are doing. We cannot ourselves start up in business, although as I say to some Members of Parliament who ask me about creating new jobs, “if it is so darned easy, you go out and build a business”. What we can do we do. [end p8]

But there comes a time within a free society, you say, look, it is my belief that if we think things out, there is enough enterprise, inventive resourcefulness in our people for them to start up new businesses. And it is a partnership between a government with the true role of government and the people with the true role of enterprise. Government has to be very strong to do the things which only government can do. If it is going to do everything for the people the people are going to have a low standard of living and the government will only do it by taking everything away from them. I see in Communist countries a much lower standard of living and much less freedom and much less prosperity.

BC

Politics, are you in any way … by what would appear to be dissolute voices within your large majority on one side or the other?

PM

Only if you have a large number of very able people, one is bound to have differing views and we come to policies by working out those views, by arguing them through. You do make policy by discussion. I don't mind ever working by clash, argument, we must always be able to persuade people of the rightness of the policy we have chosen and the reason for it. So there is a strong philosophy and a strong reason for everything we do and we have to be able to convince people that what we are doing is the right way to go, particularly that we are looking in the long term. I will not have expedient policies which suit the hour but which do not suit the morrow.

BC

Your first administration, if one could give a description to it, was I suppose more of a coalition of various trains of thought and opinion in the party than I would suggest is the present one. Do you feel more strongly in control of your new team of your second administration than you did with the first one?

PM

I would not wholly agree with you. In the first administration we went boldly in a different direction. [end p9] And we stuck to it. We are still sticking to that direction because it is a direction which is based on freedom and responsibility and justice. You can't have freedom without being prepared to take responsibility. You can't have either without having a strong system of justice. If you ever have anything in this you have a strong enterprise in the hearts and minds and activities of your people. There is every bit as much need to be bold and decisive and to go in that same direction now as there was. Yes, there are always people who would prefer to take what appears to be the easy way today, but I think that most people have learnt that the easy path today leads you to the thicket tomorrow, and you don't want to go that way.

BC

Is it as strong and effective an administration in terms of the people in it as the first one?

PM

Oh yes, very much so.

BC

That is the end of that question, isn't it. Tell me about your opponents.

PM

Well, I am not concerned very much about them. I am concerned about my job.

BC

But you have to keep an eye on the opposition.

PM

Well, yes, I …   .

BC

What sort of shape do you see the opposition taking during your next four years of office?

PM

We are still having a fundamental philosophical battle because the people do not like socialism. The people expect a reasonable standard of public services, commensurate with having enough of their own money left in their own pockets. That is the balance that we have learned. They do not want everything to be run by the government. [end p10] And they are quite right. And therefore they do not like the over-weaning kind of government that socialism preaches. And there are still two parties within the Labour Party; one basically a Marxist party and the other saying “no, we have got to be satisfied with a mixed economy”, and they haven't decided which is on top yet. At the moment it still seems as if the Left is on top although they are trying to play it as though they are not. Trying to play the public image as if they are not because they know it is unpopular. It's not in tune with British character either.

BC

Do you expect them to emerge as your main challengers at the next election or do you see the Alliance edging them out?

PM

It is very difficult to know about the next election. But the fact is that there are a considerable number of seats which will vote Labour, have traditionally voted Labour and will continue to vote Labour, no matter who is put up or what his views. And I think that that will be so; therefore I think that they have quite a large number seats to start with at the next election. And I said this during the last election but people didn't people believe me, but I still think it will be true of the next election. It may be a smaller number than they have got now but it is still quite a big number.

BC

Do you regard the Alliance as a really serious factor in British political life?

PM

I find it very difficult to judge their future. So many of them were, in fact, part of the Labour Party, then the Labour Party increased the power of the state and increased the power of the unions. And many of them have a natural affinity with the Labour Party. I find it very difficult to judge a party which has not a real philosophy, very difficult. It becomes an opportunist party. I would say we have lived with that for quite [end p11] a long time now because the Liberals are similarly split. Some whose natural affinity was with the Labour Party will never forget that the Liberals kept that most socialist of all socialist parties in power by choice and others could just as well have been a member of the Tory Party, Joe Grimond for example writes things which could just as well have come from my friends. So there is no difference between some of the things that he writes and some of the things that I say and write. You have got that kind of party in the Liberal Party. But then the SDP didn't even join the Liberal Party. So you've got another one similarly placed. And so I find it very difficult to judge. I think if we are successful we have a very good chance of continuing, quite likely for another parliament and possibly one after that. I mean two more. By that time the whole face of politics has changed because I mean, one of the reasons I think why America will come out of recession more quickly than we can is that there is a colossal spirit of enterprise in that country and there is no socialist party so no-one fears that socialism will take over. So they are free to go ahead with the spirit of enterprise. If we can get to that here then we have not only done a good job of government, then we have changed the whole face of British politics. And released it, in my view, to go in the direction which I think is wholly in tune with the character of the British people.

BC

We started to talk about the trade unions. Do you expect them to accommodate themselves to the legislation which you are passing? And what do you read into the truly remarkable intervention of Mr. Murray in the NJA dispute?

PM

I believe they will accommodate themselves to the legislation because I believe that the majority of trade unionists believe that that legislation is right and the majority of them want us to go further. A lot of them would like us to go even faster. So I think that we are going in the right way for the overwhelming majority of trade unionists and they know that what we are doing is right. And they themselves did not like the power of the trade unions over individual members. And they don't like the closed shop either, and that's what the NJA thing is about. It wasn't about reinstating [end p12] six people. It was about using intimidation and mass picketing to compel a closed shop on a workforce which had voted against it and didn't want it.

BC

Do you read the NJA thing on Eddy Shah as an absolute sea-change in their attitude? Is the litmus paper changing from red to blue?

PM

No, I think it is a litmus paper, but I think the litmus paper always was blue when you put it in the liquid. And that is why we believe that the majority of trade unionists are with us in what we are doing. The majority of people you know, without the restrictive practices and rule book, prefer not to have a closed shop and they prefer not to have restrictive practices, and they prefer to do a jolly good day's work with a jolly good day's pay. No, when our people go overseas away from some of those constraints they are the best worked people ever. And so many people tell us that. When a business starts up afresh without some of the old constraints of some of the old trade union practices they do very well.

BC

The French and foreign affairs was my last sort of block here. Are you worried about the apparent increase in the body of opinion in this country worried about the possession and deployment of nuclear weapons?

PM

Am I worried about it? I recognise that everyone is worried about nuclear weapons, I wish they didn't exist. But they do exist and I can't disinvent them. I can't, even if we all of us gave them up we could not put out of our minds, I can't think of the right word, divorce ourselves from the possibility that if there were ever another conventional war you could manufacture a nuclear comparatively quickly. I went round the War Museum recently and looked at the Doodlebugs and the rockets, both of which Hitler had in advance of us. Doddlebugs were the non-nuclear cruise missiles, the rockets were the non-nuclear polaris etc. So you cannot put out of your mind the fact that someone who started war, now they have been invented, could manufacture them. And the fact is that you have therefore got to have a strong deterrent to prevent that from happening and to prevent its use. And I think [end p13] when we get down and explain this people are on our side. I wish that they hadn't been invented but they have. I remember how much further Hitler was, and do you remember those raids when we had to go and bomb the heavy water factories?

BC

Only too well. Do you expect to have to deal for some further time with the difficult and bellicose Soviet Union? Do you draw any conclusions from the apparent stand-off between the two super powers at the moment, and do you feel that there is some initiative could or should be taking to get things moving again?

PM

I do not think there is much point in setting out to change the Soviet Union, it is I think the most rigid system I have ever known, the Communist system. It has an in-built rigidity which precludes change and adaptation to change. And I think there are quite a number of people who know, including at the top in the Soviet Union, know that their economic performance is abysmal and know one of the reasons is that they do not allow sufficient freedom for people to produce on their own. They would like to do it but they know that if they give the people that freedom necessary to get the extra prosperity that will be the beginning of the end of the Communist system. And that is their dilemma: how far can they go with increasing freedom and still stay Communist? I don't believe they are interested in the ideology of communism or believe in it at all. It's a failed, morally bankrupt policy, and they know it. But it is the only system they know. It's a system which put them in power, it's a system on which those who operate the Soviet Union will survive. Now they have therefore got a fundamental dilemma. I do not see it changing very much. I do see it changing a little because I think any system has to change. And, I think that they have educated their people and you cannot educate people without them thinking thoughts which may be unwelcome to the government. And I think some of them are beginning to say—why do we not perform better; are beginning to demand a better standard of living. That [end p14] is good. It will help us all. Because it may be that we will need the Soviet Union not to go on increasing its expenditure on arms, and we are the first to reduce ours if they will reduce theirs. And possibly they might wish for a period of stability when they can turn their thoughts to what they can do to increase their economic performance. Now what is the initiative? We just have to talk more to one another to understand one another. Now I do not expect to get massive converts by talking to them, any more than they could convert me to communism by them talking to me. But I do think we have got to know one another to understand what the other is likely to do, and to have some sort of confidence that if things are getting sticky anywhere in the world we can instantly talk to one another, because we both have a mutual interest in that kind of war never happening again. A conventional war or nuclear war never happening again. And that really would be the approach that I would say is right for this year and the following year. Don't go and think that you are going to change their system suddenly—no, we are not. What we have to learn is they have their system, it is rigid, it will go on. And we have ours, but we have to live together on the same planet. And we had therefore better learn to talk to them and we had better learn to trade together for mutual advantage. Let's understand one another and take the measure of one another.

BC

Given the year with a presidential election campaign coming up in the United States, with the suggestion that the Soviet Union perhaps even prefer to back-off until they know which way the American political jumps. We can't really live with a year of nothing going on, can we? Would you feel compelled to do something about that?

PM

No, we are not living with a year of nothing going on. We never do. Indeed in 1983 we had the Madrid Conference, the Security Conference which ended by proposing the Stockholm Conference which was in January, it started in January. So we are not out of [end p15] contact. And, of course, trade goes on the whole time. And of course one meets and they are prepared to meet in international fora, and we do and I think we want a little bit more than that now. And, therefore, I think we should increase contact with their politicians and I am very anxious for that. We travel a lot. In the Western world we are used to travelling a lot. Sometimes we go behind the Iron Curtain. I wish sometimes they would travel as much among our countries as we travel, so that they saw much more of the wider world, and as you know some of those in their satellite countries do travel quite a bit.

BC

Europe.

PM

But you see my point is this. We cannot have terrible things happening because we misunderstand one another, and therefore if you meet a good deal more and have more talking, that is your only way of fully comprehending their viewpoint or making an assessment of how they are thinking. And of letting them make a full assessment of how we are thinking. Don't go away with the idea of rose-coloured spectacles and all starry-eyed: it won't do you any good and it will do your own people a great disservice, but go into it in the way that I have indicated. … one of the things we should understand that it is in our mutual interest to get down the level of armaments, in a balance, so that there is security for each of us. We both want to increase the standard of living and to be doing more trade with other countries of the world.

BC

Europe. I have to take you a little bit forward because this won't appear until 1 April, by which time presumably you will have had your March Summit and then there is the June Summit. The trouble is that there is something fundamentally wrong in our relationships with the other European countries within the EEC. I mean, looking quite a good bit further forward, do you see that becoming better, do you see a better atmosphere? [end p16]

PM

We have reached a kind of watershed. The way in which the system in the European, in the Rome Treaty, has developed cannot go on. There is nothing wrong with the Common Agricultural Policy in the Treaty. The CAP in the Treaty, if you look at it, says that you should have a reasonable deal both for producers and consumers. When the CAP was started it was thought that it would be self-sufficient because it would give both a good deal to farmers, producers in the Community, but that would be paid for by levies on food coming into the Community. No-one thought that we would produce the enormous surpluses that we are producing. It was never intended for that purpose. But that is the way it has developed, and because it developed that way it has put enormous tensions on the Budget. It could go on that way because there was still money for it to go on that way, until we got up to the limit of what the Budget permitted, which is one per cent value added tax for the levies which we operate now. … and many of us are not prepared to go on in this senseless way. It is ridiculous. And it can't go on because there is not enough money, so some of us are simply using the opportunity to do the thing everyone knows ought to be done. But often you know … when it is obvious that you have got to do something about it. What they would like is to say, “all right, well, we will just increase the resources of the Common Market and carry on as we are”. Those of us who are paying in and there are only two of us, Germany and ourself, we have got to sort it out. We have got to. We simply can't guarantee however much a certain producer produces he will get a guaranteed price for it regardless whether there is a market for it. And good heavens there are plenty of manufacturers who would love that system; productivity in every industry would rocket. You would have mountains of surplus stock all over the world and not be able to pay for them if things didn't collapse. All right. Do we want to tackle these things? And I'm not prepared to increase any resources. I only want to get rid of the surplus production and we cannot do it by passing on the problems to someone else. And many people would like to say we will finance the extra surpluses by virtue of extra taxation or taxes on things coming in or by extra protection. No. That won't do. It would have a devastating effect on the trade elsewhere in the world [end p17] and on a number of our great political friends—on their economies—and we really must not sort out our own problems at the expense of creating very bad problems and bad blood elsewhere. So, yes, they are great problems and are not going to be easy. But we're going to solve it and we can't go on with the same amount …

BC

Some hiccups in Anglo-American relations—Grenada, Lebanon, your own voiced worries about the way they are running their economy and the effects that it might have on us and on Europe. Are things on an even keel, or are you still exercised about the way the Americans are running their affairs?

CASSETTE CHANGE

PM

I try to solve things in other ways first. So there was a difference of viewpoint but the United States puts a different perspective on Grenada from the one that we have. And now our own concern is to try to get democracy restored in Grenada. There's no point in dwelling on differences. It's a small island. It was a small problem. But the people there were very welcoming and now the thing is to try to … the United States are in a very big problem as part of the Cuban influence through the whole of its sphere. There's a difference in perspective. And I accepted a difference of perspective. On the deficit, I think if you run an enormous deficit year after year after year it's not Keynesian. And Keynes said ‘Taking one year with the other you have to be in balance’. But Europe's going to run a deficit year after year after year, so you're adding to your debt enormously and therefore adding to the interest you have to pay your debtors year after year and you're storing up problems for the future. Therefore, I went the other way. I said “I'll tackle the difficult problems at the outset, of getting the deficit down, and leave the goodies to come later, which is getting some of the taxation down”.

BC

But what the Americans are doing is not harming the economy here? [end p18]

PM

By keeping interest rates high I'm afraid it is harming. It is harming us all. And, of course, high interest rates stop the construction industries and they make it very difficult for small businesses to start because you have to pay too much on the money you have to borrow. So, yes, they are in that sense. But I think ultimately they will harm the interests of the economy in America. And the American economy, you always have to remember, is a tremendously strong economy, much stronger than any other in the world and have never been more able to take it. But just look at the increasing deficit and the increase in interest payments which will add to their public expenditure, which will go on adding to their deficit. It won't just be solved by expansion because there are two halves to a deficit: one is due to recession; the other—I think the larger part—is due to the fact that they have the real structural deficit.

BC

I hardly need to ask this question …

PM

That's a matter for them. I mean, it's causing us problems.

BC

I wrote it down. All I've got to do is to look at you but it looks like a silly sequence of words. You're obviously feeling no strain at all from …

PM

Oh no. Why should I? I mean, you're sort of right in the habit and in the ribbon and … good heavens, no strain.

BC

There never comes a moment when you say ‘My goodness, I'd love to do nothing for a solid month?

PM

Good heavens, no. I should be bored to tears in about two days.

BC

And the eye problem is over?

PM

Eye problem over. I wear glasses to read small print but not to read normal things. [end p19]

BC

Well, that's it. I'm going to put in one last question. As you know, I keep a very sharp eye on your clock. I've got two minutes, haven't I? He said ‘Put in a last question which you didn't type out”. He said: ‘Ask the Prime Minister if, because of the context of this particular thing which is looking forward—What do you hope for for Britain?’

PM

The kind of society I try to indicate—a society where there is both more power and financial—more power and finance—in the hands of the people than in the hands of the Government. That means a society where we have people willing to exercise responsibility as a condition of freedom. A society where you have to have very strong government, very strong indeed, to do the things which only governments can do—defence, law and order, the stability of the currency, a framework of law in which industry and commerce can operate as a safety net for the people and strong enough to leave the rest to the people. So it is a society of a very strong government, strong enough to do what it has to do and strong enough to leave the rest to the people operating a system of incentives and having faith in the character of the people and that will produce both the dignity and the standard of living and the faith in the future, which people want and which they can achieve.

BC

I love talking to you. Thank you very much.