Call them British, not ‘boo-jhwha’.

Bruce Anderson talks to Mrs Thatcher about inner cities, defence, and universities. She exhorts Peregrine Worsthorne…

We are the only party that represents the whole nation. In every region of England, our share of the vote was higher than Labour's average for the country as a whole. Even in Scotland, our percentage was higher than Labour's in several of the English regions.

“We have a solid basis over the entire country - and our position will strengthen further as property ownership spreads, because we regard people as individuals to be treated with respect, and not as bacteria on a culture controlled by inner-city socialists.”

When I saw her in Number 10 on Friday, the Prime Minister was eager to rebut the notion of a North-South divide. Indeed, she was irritated that her opponents had failed to raise the matter during the Queen's Speech debate: she had had her figures ready.

But what about Scotland, I asked: surely the position there was causing her concern? “Oh yes, obviously we want to win more seats in Scotland.&rdquo

Patrick Jenkin has argued that the Scots are suffering from “grant-itis”: in other words, they have come to believe that their only hope of economic salvation lies through the State, and have lost confidence in their own efforts. Did the PM think that was the problem?

“It would be most ironic and most regrettable if that were so, because surely the essence of Scotland, the essence of the Scottish character, is hard work and self-help. The Scottish people are known the world over, not for “grant-itis” but for initiative, effort, and the willingness to seize opportunities.

“Of course, public expenditure per capita in Scotland has been significantly higher than the UK average: there have been plenty of grants, but grants only work if they elicit the right response from firms and workforces. Their purpose is to stimulate enterprise, not to replace it.”

It has been suggested (I went on) that Thatcherism might stop at the border in this Parliament.

“Oh no. Certainly not. The policies that we have are the policies that are right for the country as a whole, and they are working. Scotland's future depends on initative and enterprise: we have the policies designed to encourage those qualities, and they are showing results.”

Was devolution on the agenda?

“It was not an issue during the General Election. I do not think it was on the agenda at all. I do not think that it is the right way to proceed, for any developed government in Scotland would inevitably become the focal point for a separatist movement. That is why the Scots were so unenthusiastic during the Referendum.”

I asked her why our inner city problem was the worst in Europe. She blamed the problems of council-owned housing, and pointed out that nowhere else in Europe has a municipal housing system on anything like the British scale. But although she also mentioned the fact that we had been the first nation to industrialise, the Prime Minister put much of the blame on the unions.

“Our trade union movement is totally different from any other that you will find in Europe. They have been monopolistic, wedded to over-manning and restrictive practices. They have killed or driven away innercity businesses - and, of course, the period when they were at the zenith of their power was also the period when the extreme Left's influence on the unions was at its greatest.”

Mrs Thatcher's overriding objective was to transform the atmosphere in British industry, and to introduce a new realism to industrial relations, not by a sweeping legislative fiat, but by giving union members rights that they could and would use.

“That is why I am so keen on postal ballots, because the foundation of my political belief is my conviction that the overwhelming majority of the people of this country are sensible, decent and honourable. It is vital to give them a chance to express themselves, to give them the power rather than allow the union bosses to have power over them. We could never have achieved what has been achieved in British industry over the past few years without doing that. It is called trusting the people - and we have. The whole atmosphere has changed - though not, I regret to say, in some of the public sector trade unions.”

She concluded by saying that it was necessary to exercise constant vigilance to combat intimidation, and referred back to the coal strike. “The essence of the coal strike was that, despite intimidation, in spite of the most appalling behaviour by some of the strikers, so many people were prepared to stand up and be counted, to get through to work, and to support their families. That took the greatest courage: it was the greatest outward and visible sign that I have ever known of everything that is best in the British character.”

I moved on to foreign policy, and to the problems of arms control. Did she think the Americans were sufficiently aware of the realities of the European theatre? Mrs Thatcher smiled. “Oh yes, yes. They have been very good about having consultations. And, of course, I get my maps out regularly. They are now fully aware.”

But there was a hiccough at Reykjavik? “Yes. There will not be another hiccough [that said with formidable emphasis]. That attack was stopped. The hiccough at Reykjavik occurred because of SDI - but in any event, everything that happened there would have had to be worked out in much greater detail later - and had it been necessary, matters could have been put right then.”

I then raised the question of the EEC (the PM goes to Brussels tomorrow). Was there not a danger that some of the founder members of the EEC will wish to move in the direction of federalism: is it not inevitable that our concept of the European community should be more limited than that of some of our partners?

“I do not think so. I know that a whole Euro-jargonese has developed, but when you actually get down to the nitty-gritty, no. There is a lot of talk - but let's face facts: France is and will always be France, and don't let anyone try to tell me that that could ever change.”

I concluded this brief tour d'horizon by asking her about South Africa. The Prime Minister remains totally opposed to sanctions: “They will not help anyone. In my view, the amount that has been done has actually retarded the very process we wish to see accelerated. I think that there is a general awareness in South Africa that things have to change: the only question is how, and how fast can one go?”

I asked her if she had thought of visiting South Africa: “Not at the moment. There might come a time when one might be able to do something to help. I do not think that time is now.”

Readers of The Sunday Telegraph will be aware that the phrase “bourgeois triumphalism,” coined by our esteemed editor, has dominated political debate for the past fortnight or so. I put it to the PM, who sparkled with amusement: “Dear Peregrine WorsthornePeregrine. Why does he talk about [here she affected an exaggerated French accent] “boo-jhwha.” Boo-jhwha? Why can't he find a plain English word for the plain people of England, Scotland, and Wales? The boo-jhwha live in France.”

She then switched from humour to exhortation. “The danger is that all this talk about bourgeois triumphalism will be used to cast discredit on the common sense, the voluntary spirit, and the generosity of the British character. British, not bourgeois. For a generation, the middle class was made to feel guilty about climbing the ladder of success. But if you down-grade the most able, then you also down-grade the least able, because this country can never be strong unless the most able are allowed to contribute to the full.

“How are we to explain this British guilt-complex? Perhaps it is a misplaced non-conformist conscience - a misunderstanding of people like John Wesley.

“This country owes an enormous amount to Wesley, who was of course a High Tory [Mrs Thatcher was a Methodist by upbringing]. He inculcated the work ethic, and duty. You worked hard, you got on by the result of your own efforts: then, as you prospered, it was your duty to help others to prosper also. The essence of Methodist is in Matthew 24 - the Parable of the Talents. You have a duty to make what you can out of your talents, and to assist others.

“All that helped to build up a middle-class in this country - a middle class with a conscience. That conscience built churches, hospitals, schools, abolished slavery, founded Dr Barnardo's. That was the essence of Britain - nothing to do with bourgeois triumphalism.”

All right, I replied, but what about the City - plenty of triumphalism, but is there enough social duty?

She conceded that there was a small problem; “We are dealing with a new phenomenon, caused by a great deal of competition for the services of a very small number of people. They are not the whole of Britain - not even the whole of the City. Anyway, when we want to raise money to preserve and clean buildings or to send the English National Opera overseas, it is precisely those sort of people who contribute.”

Earlier, talking about the upbringing of children, Mrs Thatcher had expressed her fear “of people living their lives in horizontal age groups, rather than as part of a family spanning the generations, with a continuum between the past and the future. If that happens then you are missing part of the rich tapestry of life - you only see one horizontal thread, but it ought to be lots of horizontal threads woven into a tapestry.”

So I put it to her that all this talk of tapestries sat uneasily with her apparent hostility to institutions: why was she at war with so many of them?

“I am not at war with institutions. They may be at war with me, but I am not war with them; I have not declared war on anyone; who am I supposed to be at war with?”

I suggested the Churches and the universities. “I am not at war with the Churches I go to church. I am not at war with the universities. There are, of course, people who simply say: ‘We have a problem. We want more money.’ That is not, in my view, rising to your responsibilities when the amount of money you are receiving has increased substantially.”

The Prime Minister would not be drawn on fourth terms, or fifth terms. She seemed much more relaxed than she had done during the election - but it has emerged subsequently that for part of the campaign she had an abscess on one of her teeth.

There was certainly not the slightest hint during the hour I spent with her that she regarded her task as approaching completion. She quoted a 19th-century Russian: “Socialism is the feudalism of the future,” and said that for many of those in the inner cities, “socialism has become the feudalism of the present.” However, it was clear that the Prime Minister has other plans for the destiny of our cities.