Sir Alastair Burnet, Thames TV
Prime Minister, are you and the Coal Board insisting on a written surrender by Mr. Scargill before any talks about the coal strike can begin?
Prime Minister
No. I think what we are insisting on—having been through seven rounds of talks already—is a clear basis on which the talks can start. There are a lot of people interested in these talks. I am anxious that if they are entered into they should be a success. We have got the interests of the working miners to consider, 78,000 of them; we must not let them down. They have not let the industry down. We have got the interests of the striking miners to consider, many of whom are only still on strike because of intimidation. They will have an eye to those talks. Seven times they have broken down—on the same point—for the leadership of the NUM has said uneconomic pits must stay open, they must not close. That is absurd! It is [end p1] fundamental. We cannot go into talks again thinking that they may break down. We cannot go in arguing what each side means or each side says. Let us get it written down, and let the words be clear from the face of what they say. I want it dead straight, honest and no fudging.
Sir Alastair Burnet, Thames TV
But if the Union has said that it would like talks—it has written tonight to the Coal Board to say it is prepared to start negotiations without pre-conditions—does that not mean to you that Mr. Scargill has dropped his pre-condition about the closure of uneconomic pits?
Prime Minister
No, I am afraid it does not, because when that phrase came out yet again last week-end, it was followed almost immediately by Mr. Scargill saying that he had not changed at all, that uneconomic pits would not close. Now, I looked at what he said and it did not seem that that emerged from the words, but that was his clear meaning, and that is why I do not think we should argue about either what the National Coal Board means or what the National Union of Mineworkers means—let them write it down clearly. I have a horror of fudged words, fudged settlements. They never work. I like to be straight. I like to be clear. I like to be honest, and I do not understand why they are shying away [end p2] from writing down exactly what they think. They know the point on which the talks have foundered. I do not want them to founder again.
Yes, I do want a settlement, but the National Coal Board has to manage. The National Coal Board has to close uneconomic pits. It always has. It has to make a decision. That must be clear from the outset.
Sir Alastair Burnet, Thames TV
Nevertheless, the view was expressed in the House of Commons today, at your Question Time, that when the Coal Board man spoke to Mr. Peter Heathfield of the Union, that this written guarantee was not included in their talks then. Have you now upped the stakes?
Prime Minister
I do not know what went on at the National Coal Board between members of the staff and Mr. Heathfield. I do not believe anyone does, and really, you make my point for me. I do not want to argue about what went on or what did not. I want to have it clear what the National Coal Board means on entering the talks—and it has written it down. I want to have it clear, from the writing, what the NUM means. Clear from the writing. Not to argue about it. That way, we will get into a muddle. That way, we will get into a fudge. Yes, I want a settlement. I am going to be loyal, as [end p3] a Government, to the working miners. The National Coal Board will be loyal to the working miners. I want, as a Government, to give hope to the striking miners. They were not ever able to ballot. They have suffered terrible privations, and they must be worried to death about their debts, so I want it to be clear. I am not doing the negotiating. The National Coal Board does the negotiating, with the National Union of Mineworkers. No fudges, no cynicism, no false meanings, no arguments. Clarity, honesty, straightforward negotiating.
Sir Alastair Burnet, Thames TV
But the point is about uneconomic pits. What is an uneconomic pit?
Prime Minister
Well, if as a taxpayer, you pay £1.3 billion, that is equal to £2 a week for every old age pensioner, £1.3 billion subsidy to the National Coal Board, it is because there are an awful lot of economic(sic) pits and you do not need to argue about the definition. They are heavily loss-making pits. The worst 12%; cost £275 million a year! You do not need to argue about them.
Sir Alastair Burnet, Thames TV
You want to shut them down? [end p4]
Prime Minister
You have to go through a procedure—with the National Union of Mineworkers—and they have to be shut down. You cannot go on investing in new investment, the latest, best, safest pits, the best working conditions for the miners, without shutting down the old ones. Every independent inquiry said that. Mr. Daly, when he circulated the NUM with a colliery review procedure, made it quite clear that, of course, uneconomic pits would have to close. So there is not much doubt about what they are.
We want a very prosperous coal industry, good working conditions for the miners, very good working conditions, and reasonable-priced coal, that can be sold to electricity here and can be sold overseas. That is what I have in mind, but you cannot do it by failing to invest in the new and by clinging to the old and having high-priced coal. That is not fair to other people.
Sir Alastair Burnet, Thames TV
But there has been a lot of dispute about what is an uneconomic pit. Now, take the people at Cortonwood where this strike began. They were told one week that this pit had five more years of life and men were actually invited to go and work there. The next week they are told that the pit has no more working life. Now, what is that? Is that management? Is that a definition of uneconomic? [end p5]
Prime Minister
The management there said that they thought the pit should close, because there were very good opportunities for the men elsewhere in longer-life pits. It is accepted that Cortonwood has a limited life. They tried to invoke the standard—it is called the colliery review procedure—they tried to invoke that and the National Union of Mineworkers refused to follow through the standard procedure, and that is where it all began. But when I tell you that the worst 12%; costs in subsidy £275 million pounds, there is not much doubt about a large number of pits which are clearly uneconomic. Some of the pits, it costs four times as much to get up coal as some of the others. You do not go out and buy suits at four times the cheapest price, merely to keep people in work. You say: “No! I have to use my wages and salaries to the best advantage. I must buy best value!” There is not much doubt about which are the real uneconomic pits, but they must go through this procedure.
The National Coal Board has never never reneiged on that procedure, and wishes to continue to go on with it and even to improve it, by adding towards the final stage an independent advisory body—not decisive—advisory, so that the National Coal Board will have done its consultations, will have taken advice, and then will decide; but at the back of all this, Sir Alistair Burnet, Thames TVSir Alastair, the taxpayer—when he has paid for his coal and electricity—is also paying £1.3 billion in taxation, and [end p6] many many many of those taxpayers would like to have the sort of good offer that the miners have had—many of them would jump at it!
Sir Alastair Burnet, Thames TV
But have you not said in the past five minutes that most of the pits in South Wales, a number of pits in Scotland, some in Yorkshire, and the pits in Kent will have to be shut down? Is that not what Mr. Scargill has been saying through this dispute?
Prime Minister
I am saying that we must come to a prosperous coal industry. There is coal for a prosperous coal industry, in good pits, good seams, good machinery, safe conditions. The people who pay for coal are entitled to have reasonable-priced coal when it can be obtained. That does mean that the older, uneconomic pits have to be closed down.
The Labour Party, when it was in power, brought in legislation. They spoke in that legislation, brought in by Mr. Benn in 1977, of the elimination of uneconomic pits. I do not go as far as that. I said we must start on closing, or continue on closing, because the Labour Party closed thirty pits a year when they were in power. We must continue to close the uneconomic pits. We must think about the people who are put out of work. If a man is, say, forty-nine, and been working in the industry all his life, he would get £30,000 in redundancy money. [end p7] If he was fifty—forty-nine, he would get well over £30,000 redundancy money. When he is fifty, the terms change to £20,000 in capital plus £78 a week. That is not perhaps enough to give hope, and so the National Coal Board has set up an Enterprise Agency to help to bring new jobs to those areas. Sir Alistair Burnet, Thames TVSir Alastair, those are the best voluntary redundancy terms ever offered in any industry, and for people who wish, nevertheless, to continue to work in the industry, they will have to move—but a job is guaranteed.
That seems to me a reasonable deal. It seems to me having consideration for those who are put out of work; having consideration for those who want to go on in coal-mining, with all the comradeship and companionship that it has; and having consideration for the consumers who buy the coal.
Sir Alastair Burnet, Thames TV
But none of that seems to have impressed the people who buy and use Sterling. When you came into office, the pound was worth two dollars. Now it is $1.11 cents. Is that a success in six years of government?
Prime Minister
Can I divide the question into two:
First, as you know, the dollar has risen sharply against all currencies and currencies such as the Deutschmark, the Swiss Franc and the French Franc and the Yen all had a record low against the Dollar at the same time as we did. [end p8]
Sir Alastair Burnet, Thames TV
But we are also down 11%; against … .
Prime Minister
I am also going on to the other one. So, in one respect, we are all in it together, and we have all gone down, and that is the surge of the dollar, which one day will stop, and when it does stop, I hope that it will not be too difficult, because it could fall quite sharply.
In addition, yes, we have gone down against the Deutschmark. We have gone down against the other European currencies in some respects, let us face it. German inflation is even lower than ours—2½%;—we are 4½%;. That counts in your currency. German efficiency is undoubtedly greater than that of our manufacturing industries; it has been for years. They never had the hidden unemployment that we had. They never had the restrictive practices, the overmanning. Yes, so they are more efficient, so, yes, we have gone down against them.
In addition to that, we have this very strange factor that we have oil and oil prices are falling. Now, I want to make one thing clear. Sterling is undervalued at the moment. Look at our economic performance! We have the highest gross national product ever. We have the highest investment ever. We have the highest retail sales ever. For those in work, we have the highest wages ever, and I regard oil on top of that as a bonus. As a matter of fact, it only accounts for 5%; of our gross national product. I have indicated how the rest is [end p9] working. Only 5%;. And I think people are undervaluing Sterling very considerably. I regard oil as a bonus. Coal is a bonus; and so are the working miners who are gradually going back to work. So I think it is undervalued.
Sir Alastair Burnet, Thames TV
Now, you say that, but the international community has given the thumbs down to that, and given the thumbs down to your running of the economy.
Prime Minister
It is, if I might call it, speculating on Sterling and the Dollar. One day, speculators get their fingers burnt. What they are doing is not justified by the underlying performance of the British economy, by the firmness of the Government in holding public spending and holding down inflation. It is not justified and one day they will realise it.
Yes, we are going through a difficult period. No-one is more worried about it than I am, but the underlying performance is good and oil is a bonus and I hope people will soon realise it.
Sir Alastair Burnet, Thames TV
And yet, to keep the pound at $1.11 cents, you have had to put interest rates up to 12%; minimum, with all the consequences for investment, for industry, for householders. Is that really six years of success? [end p10]
Prime Minister
Yes, I hesitate to put up interest rates and did hesitate. The great United States, whose virtues you will extol and whom I will extol, has had high interest rates for a very long time, and at 12%; we had to go up to their long-term rates. I did not wish to do it. I did not wish to do it, but you have to consider several things at any one time. You also have to consider the level of Sterling, and considering all things together, we had to put up the interest rate and if we had not confidence in Sterling would have fallen because they thought we did not care about it falling. I do care about it falling. I care very much. There are only certain things we can do. Those things, we did, and they are undervaluing Sterling now.
Sir Alastair Burnet, Thames TV
Lord Stockton, who has also spoken very forcefully about the American example and President Reagan 's example, has said why don't you follow President Reagan? You are meant to be in touch with him on economic policy; why don't you follow his policies?
Prime Minister
Do you know, in some ways, I wish I could. President Reagan has a much lower proportion of public spending in relation to the national income than we have. When Harold Macmillan was in power—and he gave me my first ministerial job—when he was in power, the amount which public spending took of the whole national income was about 33.1/3%;. That is [end p11] what President Reagan takes now of his national income. The amount which public expenditure is now—because it has been very high for a long time—is about 42%;, and it is jolly difficult to hold it there. You see some of the problems we have. You see in the House of Commons all of the time the Opposition is saying spend more, spend, spend, spend, and I am saying: “Look! You do not get a prosperous nation by taxing highly and spending more of their money!” I am having difficulty in holding it. We are holding it. We are going down slightly.
So, yes, I would love to follow what Harold Macmillan did in power—33.1/3%; of public spending—but I do not think he or anyone else at the moment would thank me if we slashed public expenditure like that, and we would not get it through the House. We should have a much more thriving economy, but I do not think I should get it through the House. Nevertheless, I observed what he said and I agreed with quite a lot!
Sir Alastair Burnet, Thames TV
Do you agree with him that Britain is in danger of becoming the slowest ship in the convoy?
Prime Minister
No, I do not think we are the slowest ship in the convoy, because we have been getting a good deal faster on productivity. After all, the wealth of a nation is how much you produce per [end p12] person—what is your productivity per person. Our productivity per person is now—and it is one of our strengths—15½%; above its previous best. That also is the strength of the economy, but while we have been moving, for the first two or three years we were catching up. Now, the others have also been catching up, so we have to watch too our productivity. We have to watch efficiency per man. I am sure Mr. Harold Macmillan knows a great deal about it, because he is in the printing industry. He will know a lot about that!
Sir Alastair Burnet, Thames TV
When you became Prime Minister, unemployment was 5.3%;. It has now more than doubled, and you have put forward schemes about it, but do you think that you and your Ministers care sufficiently about the unemployed? Do you think the way in which the problem is being addressed actually shows a knowledge of everyday life among everyday people?
Prime Minister
Oh yes, of course it does! Of course it does! You do not think that any government wishes to have unemployment high? It would be absolutely crazy if it did, politically, but quite apart from that, no-one wishes to have young people without work or older people looking after a family without work.
You know, too, that unemployment has afflicted Europe. In Germany it is high, in France it is high. Yes, we are slightly higher. We do not have conscription. They do, fifteen to eighteen months of it. Germany was able to send back quite a lot of [end p13] her immigrants. Ours are British citizens, so they have a problem too.
If you are going to take on new technology, yes, you have a problem. You cannot solve it just by shuffling round the shekels, taking your wealth and just spending more of it—you were wanting me to spend less a few minutes ago—take more of it and just giving artificial jobs. There is only one way to tackle it. If I might say so, it is the way the United States and Japan have tackled it. It is by being more enterprising; it is by starting up more small businesses; it is by encouraging those who can start up on their own; it is by having a tax system which encourages them and also which keeps good managers here.
If you want more jobs, we have got to win more customers. There is only one way to win more customers—good design; we have got some very good designers. Competitive prices. We are getting better.
Our exports—you constantly remind me about the performance of the British economy—11½%; up on volume on non-oil products from last year, but we are competing with highly efficient people, with the Germans, with the Japs, and you have got to run jolly hard to keep going.
We had a lot more jobs last year, a lot more. They did not come from people on the unemployment register. People took them, many many married women. Why? They are very good workers, they work at the times when employers need them, and you can take on two or three and you have part-time working. So we are creating more jobs, but unfortunately, not all are [end p14] coming off the unemployment register.
Sir Alastair Burnet, Thames TV
Nevertheless … .
Prime Minister
… yes, of course, one wants more jobs, and one does everything possible to try to get more.
Sir Alastair Burnet, Thames TV
But while you have been Prime Minister, Britain has become a country which no longer exports manufactures—it imports manufactured goods. Are you really running the economy in a way which can go on for the next ten years?
Prime Minister
I cannot run every industry. I do not try to run every industry, but we only get the customers here provided our wages compared with output are not higher than those in Germany or Japan. But it is not wages as such—it is wages compared with your output—and if we want to get the orders against Germany, the orders against Japan, and if we want a German standard of living, we have to have a German standard of work. I cannot manage. We cannot design those products. We cannot manage, but we can say to people: “If you want the orders and if you want the jobs, you must be competitive. That means you have got to look at wages not just as wages but wages in relation to what you produce!” I can only go on saying these [end p15] truths. There are many many industries which are very very successful. The electronics industry is, the chemical industry is, part of the textile industry is, and so on, many of them getting good orders. I cannot make them thrive. They know that if they are overmanned, if they take too much out in relation to the work they put in, they will not get the orders. That is for those companies.
Sir Alastair Burnet, Thames TV
But don't Germany, America and Japan have a higher proportion of public spending in investment compared with the gross national product than we have? Should we not be spending more?
Prime Minister
Well, we have an all-time record on investment this last year, all-time record. I am so grateful to you bringing all these things out. £55 billion. That for us was an all-time record.
I saw a presentation by CBI the other day. It was very very interesting. What has been happening in this country is that people have been taking higher wages out of industry's profits.
Sir Alastair Burnet, Thames TV
But the CBI want you to spend more!
Prime Minister
No, no, no, the CBI want more in investment. £55 billion. [end p16] But the CBI … let me carry on … we are getting higher profits in industry. The point of their presentation to me was this: if you take and graph the profits in an industry, one year, and then you take next year's investment, you find that next year's investment in that industry is almost the same as the profits were last year; very similar; the curve is the same.
Now, if you take those profits out in wages, you do not get the investment, and I said to them: “Well, you must see that you do not give more wage increases or so many more that you reduce your profits!”
No, Alastair, we had last year an all-time record in investment and CBI expect it to continue this year. That is good! Don't run it down! Just try to talk Sterling up! Not down! That is good!
Sir Alastair Burnet, Thames TV
I am not running it down. I'm …
Prime Minister
Good!
Sir Alastair Burnet, Thames TV
I am merely saying that manufacturing output is now below what it was when you became Prime Minister.
Prime Minister
If you have oil—and we have oil—then you have people who are in oil earning a lot of money. They are either going to buy British goods and export some of their capital abroad— [end p17] and some of them have exported capital so we have got a lot of overseas assets—or they are going to buy foreign goods. Now, whether they buy foreign goods or British goods, depends upon the performance of British industry. Let me make it quite clear. Politicians do not know how to run industry and it would be a jolly sight better if more of them realised it!
Sir Alastair Burnet, Thames TV
But do you know how to galvanise industry into doing what you want them to do? You have not yet, have you?
Prime Minister
Oh yes we have! Oh yes we have! Record, record, record, record investment last year. Profits coming up. Highest earnings for those who are working, ever. Exports up 11½%; last year.
Sir Alastair Burnet, Thames TV
But you have devalued the currency as Lord Stockton said!
Prime Minister
How have we done it? How have we done it? First, by making jolly sure that managers were kept in this country by not being taxed more highly here than overseas. The Socialists still complain about it, but we have kept them here, and by giving those involved in enterprise plenty of incentives and the figures are showing record output, record investment, record sales, record incomes, low inflation and so on. [end p18]
Sir Alastair Burnet, Thames TV
Thank you very much, Prime Minister. That is it from TV Eye tonight. Goodnight!