A very few words because I think you are mainly here for questions. Can I welcome you to No 10? As I embark on the third term of office it is a particular pleasure, especially on that account, to see you here again. The main focus of your interest is no doubt my trip to see President Reagan on July 17th and my purpose is to have a more extensive discussion than possible at Venice with President Reagan on major international issues now that I have won a third term and before the recess. The main items will be East West relations and Arms Control and the prospect of a Summit. It is important that we take stock at this stage on Geneva and on the prospects for achieving what every reasonable person in the world wants: security at a much lower level of weaponry. We hope for an agreement by the end of this year. I expect we shall also have a thorough exchange on the Middle East where of course we want with the United Nations to bring an end to the Iran-Iraq war and to encourage Arab and Israel towards negotiations under the helpful aegis of an international conference. I also expect we shall look at the international economic situation against the background of the Venice Summit. Our aim must be to maintain steady non-inflationary growth and to keep protectionism at bay. However, the [end p1] real value to you of these occasions is your questions so will you fire away?
Prime Minister, President Reagan has often stated a goal of making nuclear weapons obsolete and you have talked about nuclear weapons keeping the peace in Europe for forty years. Is President Reagan 's goal impossible or how do you square the two?
I think a world without nuclear weapons is a dream. I think a world without crime is a dream. Doubtless they are both things that we would like to have but certainly I do not think they are realistic, the one just is not realistic at all, the world without crime as I say is a dream; it is not going to come about, and I think it is very difficult to imagine a world without nuclear weapons when the knowledge to make them is known; you cannot disinvent knowledge and therefore there is always a danger that someone will have them and therefore there is always a need to deter that danger.
There was a poll that was published in The Independent this week that was a cross European poll …
Oh dear, I am no expert on that sort of poll. I concentrate on the other sort. [end p2]
And have done rather well by it I suppose—what it showed was that by 3 to 1 West Europeans think that the Soviet Union under Mr Gorbachev is doing more than the United States under Mr Reagan to slow the arms race and among Britons 38%; thought the USSR was doing more as opposed to 13%; who thought the Americans were; I just wonder whether you agree or disagree with the opinions expressed in this poll and if you do not agree, why do you think the opinion in Britain and in western Europe has moved this way?
Well, I do not agree. Let me just give you one very clear example why I do not agree: we removed chemical weapons in the late 1950's unilaterally. The United States did not modernise her chemical weapons for many many years and now she is wanting to do a little research on them. But the Soviet Union has not only been stockpiling hers but has been modernising them to the very latest ones and adding to them enormously and stockpiling them. Now those are very very dangerous weapons. You can hardly say that she had done more for disarmament when she has in fact modernised and increased that number of weapons—and that is just one item. Conventional weapons are enormously superior to us. Whether you take it in almost every sphere, whether it is nuclear weapons, conventional weapons, chemical weapons, the Soviet Union in fact tends to have more than the Western world. It may be a perception but I do not think it is an accurate one, and also do not forget she still occupies Afghanistan. [end p3]
If I could ask you why you think that is the public's perception and perhaps go on to say what you think the West can do about it?
Well, I do not always believe these polls or even take very much notice of them. I think it might be typically Western, typically democratic not to—I want a word that I simply cannot find at the moment—not sufficiently to praise what your own country is doing and hype up what another country is doing. I am afraid that tends to be one of the characteristics of democratic countries. It may be that the character of democratic countries being far more freedom of speech, tends to be far more criticism than praise and the characteristic of a closed society tends to be far more praise than criticism. Perhaps that is not surprising.
Mrs Thatcher, the Senator from my home state of Massachusetts said earlier this week that “Allied bashing is now in vogue in the Congress” ; is that a prospect that alarms you and have you felt any effects of that?
No, I do not think so really on either side because if there ever were trouble the relationship is so fundamental that I do not think it would ever crack and it is like really the relationship of [end p4] a family—yes you do not always agree on everything, yes sometimes you express your differences very forcefully within a family but I think the fundamental relationship, the fundamental realisation that the future of freedom depends on the United States and Europe holding fast together; that is known, it is realised, it is understood. Again in a free society the criticisms get perhaps out of proportion but please see it always against that fundamental, very deep felt perspective.
Prime Minister, General Bernard Rogers resigned last week as NATO Commander saying that the INF deal in the works is a bad deal which could jeopardize the security of Western Europe. Is it a bad deal and what do you think about his comments?
On the intermediate? No, I do not think it is a bad deal. It is not only the intermediate ones; it is the longer short-range ones as well and I think General Rogers was worried about what a number of us would be worried about is if that zero intermediate and the zero on the longer short range ones were to go down on a kind of ‘salami zero’ to get rid of all nuclear weapons—American nuclear weapons from Europe, which I do not think would be in the interests of the NATO doctrine of flexible response. If you have a doctrine of flexible response you have got to have the weapons to have flexible response with and to deter at every stage, but I think we are very much aware of that danger and indeed as you have seen from the last communique, I think we have got over that danger and I [end p5] think it would be a good thing if we get a signing of zero zero intermediate. Now as you know, we stand for global zero intermediate, we think it is much better than European zero with a hundred on each side in the far east part of the Soviet Union and in the United States and it looks as if there is a possibility of that coming about. You can imagine the problems of verification of themselves with a global zero are difficult enough. If you have a hundred on either side, the problems become enormous and I would hope that global zero can eventually be agreed.
Prime Minister, with President Reagan being embroiled in ‘Irangate’ and your own re-election victory and now being the senior leader of the Alliance, do you think that your role has changed in terms of the Alliance?
You mean because one becomes the senior member?
Well, you know antiques get more valuable as they get older.
Are you taking on any specific—perhaps new—responsibility in dealing with East-West relations because of your relationship [end p6] with Mr Gorbachev?
I think one undoubtedly is fortunate in having struck up that relationship at a comparatively early stage before Mr Gorbachev held the position he does now. He visited the United Kingdom, I had very long talks with him. Immediately we got on very well in a sense that we could debate very freely, very easily and very frankly. That is of enormous use. You do not have to agree with someone on everything in order to be able—in the famous phrase—to do business with them but certainly there was a relationship of ease of communication and frank communication. Both those things are very very valuable indeed and I think are particularly valuable in the position which the United Kingdom holds as being doughty upholders of freedom as has been proved on many occassions, as having a fundamental relationship with the United States which is there and I believe will always be there. I mean here you are today. This house is almost as much your inheritance as it is mine. We made one very bad decision here; we quarelled with the American colonies. As I said last night, it would not have happened if they had had a woman Prime Minister at the time, but there you are! But it is valuable also to be welcomed in the Soviet Union by the ordinary people as I was. May I just say this? There are historic and courageous things happening in the Soviet Union under Mr Gorbachev 's leadership. Those things should, I believe, have the support of the West because every enlargement of liberty of discussion, every increase of initiative and enterprise is of a fundamental nature in human rights and that we must welcome and hope that this courageous [end p7] plan of Mr Gorbachev 's will indeed succeed. It is not only in the interests I believe of the people of the Soviet Union, it is in the interests of the whole free world.
Prime Minister, in the Persian Gulf there has been this difference between Britain's and America's response to the security issue in the Gulf. Britain has been for some time offering protection to non-naval ships, quietly, consistently over a period of time, whereas America now is putting into the situation not just increased naval power but also a noisier rhetoric that goes along with it, drawing more attention to the situation, making it more of a question of principle rather than practicality; are you comfortable with that American approach to the situation and its differences with the British approach?
America is a more powerful nation than the United Kingdom. Everyone looks to the United States for decisive and clear leadership. Over this matter Ronald Reaganthe President has shown decisive and clear leadership. That is very important for the West and for the United States in that part of the world. We have had the Armilla patrol for some time and when things have got difficult, the ships of the Armilla patrol escorted our ships up the Gulf if need be and we have been escorting about five a week. That has been known, it is a practical effect. I believe that what the President has done is right and, as I say, decisive leadership was needed and it is specially valuable in that part of the world, you must keep a [end p8] main sea highway of that open to freedom of navigation; very important.
I believe you attributed much of your success in the 1983 election to the extension of home ownership and the sale of council houses. Do you think there was a single such significant factor in the 1987 election?
I think a number of things in the 1987 election but just let me start with two—not necessarily in the order of importance, I think perhaps they are both equally important. One you have identified. It is not only home ownership, it is quite clear to everyone now that the philosophy of this Government, its policy, its programmes and its results are for the extension of home ownership, share ownership, capital ownership, extending that ever more widely is actually happening and to that kind of society; a home-owning, share-owning, property-owning, capital-owning democracy, socialism with its class warfare has no relevance whatsoever. People are ambitious for their own children; that is the great driving force of human nature and with the home ownership it helps—it is the centre and core of family life is the home—the share ownership gives you a stake in your country and a stake in technology that you might not otherwise get from the particular job which you have. The ownership of savings demands from a Government that you keep inflation down because you are not entitled to expect or want people to save unless you are prepared to say there is the other side of the bargain that [end p9] we will do our utmost to see that your savings keep their value. All that is the great motivating power which drives the greater economic machine, and it is the great motivating factor which gives the people an interest in future generations as well and it will bring about a transformation of this country when you think that very few people two generations ago had any expectations that their parents could leave them anything. As we come up to the end of this century, most people will have some expectations because that is the kind of capital-owning, property-owning democracy which we will have achieved and that is one very very important thing and it is one thing which says, as you have said in your country, it does not matter who you are, what your background is, it is what you have got, what you have got to contribute, what you can do by your own efforts and then we run the sort of system which enables you to keep the lion's share of your own efforts; that is quite a transformation.
The second thing is this—and I am sorry they both take a little bit of time to explain which is why that one did—when we came in in 1979, this country had had a very vigorous long taste of socialism which finished up, as you know, with major strikes, strikes in hospitals, strikes that even the dead could not be buried, strikes in communications, strikes all over the country, the country being dominated by the trade union bosses until at one stage people thought they were more powerful than the Government and it was brought to almost a state of collapse, it had previously been in financial collapse and had to do as the IMF said; now, but people had nevertheless got used to having an incomes policy, a prices policy, exchange control, no free movement of capital and we took [end p10] over with a totally different philosophy—a philosophy that is for the Government to do what only Governments can do: the defence, a strong law and order, sound financial policy and a basic safety net social services and then to liberate the rest so that people could get on with the enterprise, the initiative, so we got rid of the prices control, we got rid of the incomes control, we got rid of the exchange control, we got rid of many development certificates which stopped you from developing where you wished. We got rid of a good deal of red tape. We privatised many industries which should never have been in Government's hands. Governments are not good at running industries and we did tax incentives and we tried to contain expenditure so we had some leeway for tax incentives and we reduced tax substantially on people who are likely to build up businesses: great scientists, great engineers, great managers, great people in entertainment who are of course great income earners. Now we had to do all that as an act of faith that when we had done it the things, the qualities, the talents that had built this country, the enterprise, the inventiveness, the resourcefulness would still be there and actually would come back into operation and for the first six years I wondered whether they would because this other—entrenched “We have a problem, it is the Government's problem to solve it” —was so entrenched in our society. Well, you see by the time we were coming up to the end of the sixth year and the seventh year and the eighth it was quite clear it was working, and it was producing an economic strength and an economic growth that was bringing about a higher standard of living and a higher standard of social services and a higher standard of confidence which said not only are we having a higher standard of living but what was in [end p11] Britain which took it first into an industrial revolution and first through it, is still there and it is still working and now it is extending its influence and that I think people realised and that was another reason why all of a sudden, as it came up in the last week of the election, they thought “My goodness, we do not want to lose it, with this Government we shall have sure defence, they are surely behind law and order, we will be able to work and have lower taxes and yet the economic growth that we are producing will still give us better social services and we do not want to go back to that control of socialism” . I was very interested looking back through some books on the early socialism and through some of the books on the—you know—early writings of the early Russian thinkers and philosophers and you look back over Dostoevsky, what happened to the Soviet Union … it is all there, but you will find one little quotation, it is used by Robert Conquest in one of his books, in 1880 the quotation: “Socialism is the feudalism of the future” and you look at some of the inner cities under tight extreme left-wing control and that is what people did not want to go to and that is one reason why they voted us back into power quite decisively so those are the two things. But if I were just to say to a property-owning democracy, economic strength, it would not indicate the depth of the change or the fundamental belief in the change that we have and the determination and the resolve to bring it about and the faith that it would happen—but it did. [end p12]
Prime Minister, can you give us your views on the outcome of the recent European Community Summit, where the blame was attributed to you for the lack of members being able to reach agreement?
Can you tell us how confident you are that the issues can be resolved and what possible implications this might have on trade relations with the United States?
Let us take one or two fantastic successes of that European Summit, of which not only was I a vigorous supporter but quite a leading protagonist:
First: the oils and fats tax was blocked. Absolutely vital that we sent a message to the world over and to the United States that protectionism is bad. It will be bad for world trade and if it is bad for the world it is bad for each of us. That was blocked. [end p13]
Yes, one took a leading part. Yes, they came back and re-discussed it four times—four separate times—but it was blocked. That is a fantastic success. I was horrified that anyone should want to put one on.
Second: there are great parts of the Statement of the Eleven with which we not only could agree, but in which we had led the way, in trying to get financial discipline, without which no country—and certainly no community—can have confidence or trust in one another.
The background is that last time at Fontainebleau we agreed to increase the amounts of money given to the Community on condition that we should have a financial discipline, particularly in the Common Agricultural Policy, and expenditure on that should grow at a rate which was smaller than the increase in the resources of the Community. We were not able to get that embodied in the Treaty, which I wanted. We were only able to get it embodied in a Minute of the European Council to which we all agreed. I am afraid it did not come about. It was not honoured.
Now, they are asking for more money, because the extra money of three years ago has been used up, used up on extra structural funds, used up enormously on the Common Agricultural Policy. Let me tell you, the entire budget of the European Community is 33 billion European Currency Units; 17 of that 33—just over [end p14] half—goes to storage of surpluses and disposal of surpluses created by the Common Agricultural Policy as it operates now. That is crazy! It cannot go on that way and if we give them more, they will put more into surpluses, and it does not make any sense—it does not go to this year's farmers—and so long as you are putting those vast sums of money into those surpluses, they are not unlocked to go into other things which will be job-creating. Putting it into surpluses, the money is not there to spend on goods and services.
So therefore this time I stood out, quite rightly, and said: “Last time, we had a Minute to which we all agreed a Resolution. It was not honoured. This time, before we agree to any increase” —and do not forget there are three net contributors to that; there are nine who take out of the Community and there are three who put in; we are one of the three; we are number two. So you have got nine people saying: “Please, we want more!” and you have got three of us providing it, and I said: “Last time, we agreed that we would get financial discipline in expenditure in each and every sphere. You did not do it. This time, before we have any increases, I want to make certain that that discipline is enforcible. I am not going to be taken for a ride again, otherwise it will still go piling into agriculture!” So that is point number one. [end p15]
It resolved itself into two points.
Firstly, we were all going to agree, without any discussion mind you, to a new measure of how much money the Community could have, which was a vast increase on what they have got now. Of course the nine wanted it; the other two were prepared to agree to it; I was not. So I said: “We have simply got to discuss it!” Some of the others were worried about it, so they said: “Well let us study it!” I said: “What you have got in front of you says ‘Let us adopt it!’ I am not going to agree to adopt anything as fundamental as that without any discussion! Please can we discuss it?”
“No! We can agree to it!”
I said: “I am sorry, but the United Kingdom does not do things that way and that is why this Community is in financial trouble!”
The second thing was: when you are going into the future you have to decide the base of your agricultural expenditure. This year we are in difficulty with agricultural expenditure. The fall of the dollar has meant we had to spend a good deal more because of its impact on world prices and on the subsidies. We have had to depreciate the stocks because they have been there so long that their book value does not represent their actual value and there have been a number of measures of enormous high subsidy of disposal of stocks. [end p16] For example, the disposal of stocks to Brazil at one-tenth of their value of what it cost to produce them.
Now, that blows up your agricultural budget and I said: “We are not going to have that bloated base to start for the future because it just does not make sense!” and they would not even discuss that.
We do not do things like this and it is because we do not do things like this that we have got a sound financial policy and we want Europe to have a sound financial policy, and I would not adopt either of those things without discussing them, and had we actually discussed them I think that our views would have held.
So that is why we had the problem.
Prime Minister, what are your views on how the West might end the Gulf War and at the same time confront the possible threat of Islamic fundamentalism throughout the Arab world?
I wish I could give you an easy answer. If we knew how to do it we would have done it. That war has gone on longer than the Second World War II.
There is, as you know, a concerted effort going on now in the Security Council in the United Nations to get a Resolution, I think stronger than we have ever had [end p17] before, with the possibility of being followed up by further measures to see if we can bring influence to bear on this terrible war, which has resulted in so many killings. And it is young people, you know, who bear the brunt. When you get a war, it is the young people who bear the brunt of it.
But if we knew how to do it we would have done it, but each time we have to go back and there is a really concerted movement this time among the members of the Security Council to make a new effort to do it. How far it will succeed, I do not know.
Excuse me. How do you perceive the threat of fundamentalism in the area? That seems to be a growing threat as the months go by.
I think the threat was always there. I am not sure that it is a growing threat. I think the threat was recognised right at the beginning. It is of the Shi'ite fundamentalism and how it could spread not only through the Gulf, but goes well beyond that into other countries as well. Yes, I think it is one of the problems. [end p18]
Prime Minister, your last two trips to Washington, when you went specifically to visit with President Reagan, were with very specific purposes in mind, and you emerged both times with specific agreements that were looked at on this side of the Atlantic at least as great successes.
Could you tell us what you would hope to emerge with this time, how this meeting was initiated? There does not seem to be anything to straighten up after the fact, as there were the last few times.
Would you be interested, for example, in trying to straighten up the arms control situation before an agreement is reached or to perhaps press for a Middle East conference, to push the United States closer to a conference?
What would you like to get out of this meeting?
First, it is to demonstrate once again the commitment of this country to the Atlantic relationship between the United States and the United Kingdom. At the beginning of a third term, I feel I should go and talk these matters over with Ronald Reaganthe President.
There are these great big issues happening and I believe that the prospects of an agreement by the end of the year on arms control are good, and also the [words missing]. [end p19]
I am satisfied with the last NATO communique which set out the position, on which we all worked extremely hard consulting, and I believe we got it right.
Of course, we will take stock of what has happened at Geneva and as you will realise from what I said before, it is you talk not only about nuclear arms control; it is important that you have to keep defence security at every stage of arms reduction. It is important, of course, therefore, that we get the Soviet Union to reduce its chemical weapons, hopefully to destroy them, and also make it clear that they must have reductions in conventional weapons, because they are greatly in excess of ours.
So there is the larger defence issue as well.
Also, as I indicated earlier, I think it is quite an historic time, because of the things that are going on in the Soviet Union. I usually get Mr. Gorbachev 's speeches in detail. The last one—I am not quite through this one yet—as far as I have gone … if you have not read the whole thing, if you do not read them in full—do!. They are very informative and you realise, I think, the enormity of the resolve and the courage and of the change that is being brought about.
After all, they are saying that for seventy years the system which was to solve everything has not done it! We are not surprised, because we do not believe a communist system can, but they are having a real effort [end p20] to turn it round and the words that are being used: “initiative” , “responsibility” , “discussion” , “openness” , “less state control” are familiar to us, but it is happening there, and so this is also a very important historic time and Ronald Reaganthe President gets on very well with Mr. Gorbachev, and it is therefore very good that I do and the President does and it, I think, makes for a very much better, more rounded East-West relationship.
Yes, you are right; we must also discuss the Middle East. We always discuss the Middle East when I go there, because the idea of an international framework to a Middle-Eastern conference is developing. I believe that it is the right framework. It is the thing which would give confidence and an international stamp to direct negotiations between the two—Israel and King Hussein with the Palestinians. It is an international way of saying: We will have this framework, because we think the time has come really to resolve this issue and it can only be resolved by direct negotiations, but the international framework gives it the confidence and the stamp of approval that the time has come for those negotiations to start. And I think that that is important.
We are also very much aware, you know, that when you come actually to the election period in the United States, things tend to get help up a little bit and [end p21] therefore you want to move everything on.
There are very great big issues in the world. It is a fascinating, most interesting time and you really do not want to lose any opportunity of getting these two really big things moved on. By that time we shall know what has happened in the Security Council on the Iran-Iraq War.
Those, I think, are the really big things and also the world economy again. We did discuss it at Venice.
There are, as you know, enormous surpluses in some countries—one in particular—and also in Germany and it did say in the Venice Communique that we have something more to do to open up Japan, to open up the surplus countries, for them to get greater demand for goods and services among their own people, so that the greater part of their production may go to their own people and also it offers opportunity for a greater part of our exports.
We simply must keep the markets of the world open, and it is my purpose to try to open them up more. Once you start on a protectionist road, it will escalate and world trade will slow down and the hopes of the Third World to get a better deal and the hopes of other countries to have a higher standard of living will go.
So that is quite a lot, but they are really big issues at the moment and we really want to focus on them. [end p22]
I think the United States Administration is on record as supporting dialogue with the Soviets on conventional and chemical weapons as the next step.
Would you like to see a further commitment to that, perhaps even in the form of wording of a treaty?
If there is an arms control agreement that some wording in it would dedicate the super-powers to having that.
I do not think it is a question of a treaty. I think it is a question of actual negotiations. If you want to do it, there is the forum to do it.
We have been involved in Geneva in the chemical warfare negotiations for quite a long time, the chemical weapons.
I think actually the interesting thing is now that there is a wish there to get arms reductions; there is a parallel wish to have defence security at every stage. One must understand that: at each stage of reduction, you have got to safeguard your own security. [end p23]
I do not think an actual treaty. A treaty is no more than intent. When you have got the actual forum to do it, you want to do it there.
Two quick questions, Prime Minister.
First, do you think President Reagan was as sharp at the Venice Summit as he had been at past summits? Much has been made of the fact that he may have been slipping a bit.
Secondly, as soon as the election was over you turned immediately to the inner cities question. I am wondering what is the reason for that and, specifically, are you concerned about civil disturbances as occurred in 1981 in Brixton, in 1985 in Tottenham, and this sort of thing in the inner cities? Is that a specific concern you have?
No. I was at the Venice Summit and we got out the main international communiques while I was there and we all had a very vigorous and lively discussion over the first dinner, in which Ronald Reaganthe President played a very full part, as you would expect.
Then we had a good discussion the following morning on the economy and we all said just exactly what [end p24] we felt and thought and then I had to leave, and then I had an hour's talk with the President over breakfast and certainly he took a very full part while I was there. I left after that. I had other things to get back to!
Inner cities? Our whole approach to the inner cities is that there have been an enormous number of grants to various things in inner cities, but you know, sometimes, in spite of all the grants that pour in, they do not go to the right things or somehow they do not seem to get the inner cities out of the difficulties.
In some inner cities … . you will find a quotation by Robert Kilroy-Silk who is one of the Liverpool members: some of the real left-wing councils are hostile to the private sector. They are hostile to private enterprise; they do not want it in, and every time you try to get companies to go there there is this hostility and if they are hostile to private enterprise you do not get the jobs.
So what we tried to do in some of them is to set up urban development corporations. I do not know whether you have been down to have a look at London Dockland. It really is worth going down to have a look at now. For years, that fantastic span of land lay derelict and was not used, not redeveloped, because massive numbers of local authorities could not agree how to do [end p25] it, so we took it over, formed it into an urban development corporation. The building is going up now, it is just wholly redynamised, it is fantastic.
We have now got, I think, four more just before the election. We shall have to create some more. It releases up the planning and many people will come to an urban development corporation outside the control of the local authority that would not otherwise. That is one aspect of it.
We are going to target some of the grants directly to things that we wish to see done, rather than through the local authority, but the real thing is something you have not got in your country and something for which there is no parallel in any major industrialised free country in Europe—massive municipal council estates. You have not got them. Thirty percent of the houses in this country are council houses. They are not scattered about the community. They are in, as you know, these great big tower blocks, and lots and lots of council houses built in great big estates.
We are going to try to break up those estates first by saying: “You can buy them!” so that you do not get all council tenants living the same way in these estates. We have got a million of them sold to council tenants, and you get a different approach. They can then decide on what they do with their own houses, how [end p26] they extend them, how they improve them.
But then you come to the next stage: what about those who are going to stay in rented property for the rest of their lives? They may not always wish to be tenants of a municipal landlord, so we are tackling that one. We can get housing associations, we can get building societies, they can choose to be tenants of another landlord, so we will break up the monolithic nature of the estates that way. They will have to be approved landlords. There is no question of going to those who are not approved. That gives them an extra choice.
We have had a look at some of the education in some of the inner cities. In some it is bad. It is not proper education at all. Education is controlled by the local education authorities, as I think probably it is in your country, and not by the state government, although we again set the framework.
The parents are paying heavily in rates and taxes for that education. They are not getting the sort of education their children want. It is how to give them an extra choice, so the schools, the governors and parents, can opt out of that local education authority and they will get the money to educate their children directly from the central government and they will run their own schools, up to certain standards. They have to have that. [end p27]
These things that we are doing for housing and for education are meant for the whole country, but also particularly to give a choice and a different way for those who live in the inner cities.
The urban development corporations will enable private enterprise to go into housing. It gives an extra choice. The education gives an extra choice, and we hope that that will increase jobs and just give them a new way of life which they have not been able hitherto to have, but it is nothing to do with riots or anything like that.
Prime Minister, the National Health Service is forty years old next year. Life begins at forty!
Is there a solution to the dilemma, which is not British—European as well—of the restricted, at least not unlimited resources, and the increased costs of medical treatment?
They are not restricted resources. You will have heard my comments in the election many many times. The year in which the resources were restricted was 1976/77 after the IMF, because the Labour Government spent all the money. There was not any more and they had to actually have restrictions. [end p28]
The day I came in here the tax-payer was affording £8 billion to pay for the National Health Service. The day I was reappointed for my third time, the tax-payer by that time was affording up to £21 billion pounds for the Health Service. There is no way in which you can go from £8 billion to £21 billion and call it a “cut” . It is a very considerable increase in real terms.
I was thinking of the increase in costs.
Well, because of the increased costs you get an increase in resources but obviously you have to have priorities.
There was a Commission, an Inquiry, into this in 1977. One of the things they said was they had no difficulty in believing the National Health Service could take up every penny-piece of the national income, but clearly it cannot, and therefore you do have to have budgets.
What we are now concentrating on is trying to get much better value for money, because as we compare work done with the money from region to region, it is very varied indeed, and so we are getting the comparisons and for the first time we are getting far better management [end p29] in the National Health Service. There was no management. It was done by consensus, which meant that nothing could be done unless everyone agreed, which is not a way to manage anything.
Under Roy Griffiths now, we are getting far better management than that. There will be increased resources, but also it is getting far more out of the resources that are being used at present.
Sorry to insist on the subject, but can there be a combination of insurance and National Health?
There is in a way. We all pay for the National Health. Five million people have their own private insurance.
There are regional health authorities, or district health authorities, who will say: “Look! The list is too long. We will allocate some money for hip operations to be done in a private hospital!” or in Wales, for example, they used between the private sector and the public sector various kidney dialysis units and one would be very pleased if they would set dogma aside and do that more often, because the main point is to get those waiting lists down. We have just allocated £50 million specifically for waiting lists and asked [end p30] hospitals and areas to bid for them, because obviously we wanted to allocate in such a way that would get the maximum number of operations done and that is working quite successfully.
Prime Minister, the Ulster Task Force yesterday, the Loyalists, suggested interest in discussions on an acceptable alternative to the Anglo-Irish Agreement.
Could there be an acceptable alternative in your mind and if not, what would the discussions be about?
The Anglo-Irish Agreement will continue. It was passed through both Houses of Parliament—the House of Commons, the House of Lords—registered under the treaty provisions of the United Nations and the Anglo-Irish Agreement will continue.
I should be absolutely delighted if the Ulster Unionists would come and talk again. The offer has been on the table since I first made it and will remain on the table and I hope they will come and talk. [end p31]
Do you remain opposed to the entry into the EMS despite the supposed strength of the UK economy at the moment and also the pressure from other EEC ministers to join?
The matter is reviewed from time to time and we expect one day to join, but I do not have anything different to say on it from what I have said many many times: the economy is strong and it will go on getting stronger … . I must point out that we have no exchange control and free movement of capital; so does Germany; so does Holland. No-one else in the Common Market countries does, and I am often saying to them: “If you all ran your economies in this way it might be very much easier to get closer in certain matters.”
We are different currency from any other currency with the exception of the deutschmark which is also a very big reserve country—so are we and we also have oil which sometimes has various effects—but it would be quite a major step and, as I said, it is reviewed from time to time. Beyond that, I have nothing further to say.
I hope we shall get liberalisation. Liberalisation of capital is one of the original objectives of the Treaty if you look in the original [end p32] Treaty of Rome. It has not yet come about and we are way ahead of almost all other Common Market countries, with the exception of Germany and Holland, which is … . close to Germany.
Prime Minister, do you plan to meet anyone else in Washington beside President Reagan and do you hope to … . on the possible terms of verification for a chemical weapons agreement?
I doubt whether we will reach a specific agreement on terms there. Those are being negotiated. The particularly difficult things are chemical weapons, verification and how to verify. That is being negotiated at Geneva. We shall have something to say about it.
I will hope to see Mr. Shultz and Mr. Weinberger and I hope to see Vice President Bush.
How long are you staying in Washington? [end p33]
I shall be in Washington only for one day. It might be 24 hours, it might be 36 hours, but in effect is one whole working day.
Prime Minister, do you nevertheless feel about the British economy that it is still fundamentally weak in many respects?
I am wondering if you can give an explanation for instance why, after your election, foreign money did not pour into this country as was expected on the Stock Exchange and why we are still having these difficulties with the qualitative brain drain? Why are people still moving away because they do not think this country is able to provide the research and development they need for high-tech?
The Stock Exchange, I thought, is very high. It is continuing very high.
You asked me why money did not pour in. I would think that on the returns that one is getting now the Stock Exchange is high. That is a judgment which people make. Sterling is strong. The Stock Exchange is high. The reserves are good. [end p34]
Sterling was expected to go higher.
Well you created that kind of expectation. Do you think you were right? (laughter) What was the second one?
Research and development, the brain drain.
Did you have a look at the Report of the Royal Society? There is a brain drain both ways. The brain words, in the words of the “Financial Times” is a trickle.
Yes, we do lose some good scientists. Some go that way and some go this way, and I think we would have lost more if we had not actually taken down the top rate of tax to 60%;, but obviously, when you have taken down your top rate to something just under 30%; and when you are a wealthier economy than we are and therefore very distinguished scientists can get excellent facilities and yes, there is a temptation to go and if you want to work on space then you do go to the United States and if you want to work on some other subjects some of your facilities are better than ours; some of ours are very [end p35] good. It is happening both ways as the Royal Society Report showed.
There is a strange thing in this country. You know, if you take top tax down on top people there is a fantastic amount of criticism which I do not share. I believe that your export scientists, engineers, managers, people who create wealth, are the people you want to keep in this country and therefore it is a factor that we did and one day we shall have to look at again.
We actually spend quite a big proportion of the national income, through the taxpayer, on research and development in this country. Certainly, if you take both civilian and defence, it is a bigger proportion certainly than Japan. It think it is bigger than the United States, as a proportion, and bigger than Germany.
What I think we would like now to see and I hope we will be developing is more spent on research and on technology as well and development by the private sector. That is not up as much as it should be and I hope the confidence of another period of office will increasingly mean that more goes into that as well.
The Royal Society Report was interesting; it was both ways and certainly there is more going out than coming in. [end p36]
Prime Minister, on the Middle East you made the point that the idea of an international framework is developing.
Are there now better prospects of valid negotiations? What form would they take? And what form will the international framework take?
This is still a matter of discussion and, of course, it will be a matter not only for discussion between members who constitute the international framework, but also for those who would do the negotiating and those consultations do go on and I really would not want to lay down very much more than that, except to say that I do advisedly use the phrase “international framework” .
It is not anything that could be a mediator or have a veto. It is a framework which conveys confidence to those negotiations and which says the international community thinks it is time that this fundamental problem was solved and solved comprehensively, so I think that language would indicate the more general structure that I think it should have. [end p37]
Mrs. Thatcher, when the Iran and Contra scandal broke late last year, you were quick to voice your full support of President Reagan. In the meantime, there has been a long procession of hearings and revelations have been coming out.
In those six months or so, have you at any time re-assessed your opinion of the President's handling of this affair which is so important for us?
I said what I had to say when I was over there and I have nothing further to add. I made my views clear.
My views now are these. I have nothing further to add on that.
There are enormous issues—we have been talking about them—to get on with. It is absolutely vital that the United States addresses those issues and shows the kind of leadership which it must if the Free World is to thrive and flourish. It is to those issues that I am addressing myself, my efforts, and on those issues that I shall be talking to Ronald Reaganthe President.
Mrs. Thatcher, the last campaign was particularly presidential in its style and you personally came under quite a bit of attack for allegedly failing to [end p38] communicate your feelings of care for the underprivileged.
Are you comfortable with the trend towards the more presidential-type campaign and how do you explain your critics charges?
I do not have to explain my critics charges. They have to explain their charges!
I was very satisfied with the result and so we must have some confidence and the attacks clearly did not succeed.
Every time we are told it gets more presidential, which is very interesting. I did not appear myself directly on any party political broadcast until the last one. I kept all of my television appearances by design for the last week, because I know what is important in an election campaign is the record which you have, which was good, the future plans which we have, which are far better, more interesting, more radical, more progressive, more exciting than anyone else, all laid out; and that you finish well. We had the best record, we had the best plans for the future, and we finished well. We must be quite good, don't you think? [end p39]
Prime Minister, I would like to come back to the Persian Gulf.
As you know, there are a number of people in Congress who have been critical of the role that the allies played there. It has receded a bit recently, but if it comes up when you are in Washington, what will your answer be?
I will say that we have played a very full role. France also has a navy in the region. We have played our role fully and decisively, as we usually do.
I do not think we could allocate more resources to it than the Armilla Patrol, but we have been quietly escorting our vessels.
I do not think they can possibly have any criticism of us nor of the amount we put into the defence of the Free World.
Prime Minister, how will you cope with the increasing opposition in both parties to the poll tax? [end p40]
We fought the election, our campaign, on a community charge. A poll charge [sic] seems to indicate that it is the same for everyone. A community charge will of course vary according to expenditure of the local authority and some of the complaints are that the expenditures of local authorities are very high. They are, and that is why their rates are also very high and why we had to change.
What I think has not got across is that just as your rates can be rebated if you are not very well off, so the community charge can have up to an 80%; rebate and for those who are on what we call supplementary benefit, which is wholly on state assistance, … the other 20%; an amount is added to the cash payments which they get, which will be the average amount of all community charges, to enable them to pay the other 20%; and I do not think that has got across.
The other thing that has not got across is the alternative. Rates are based on the valuation of houses or businesses. The last revaluation was in 1973. The normal rule was you got a revaluation every five years because they are revalued on the improvements in the property, whether there have been any extensions or improvements within and of course, new houses have been built since that time and they have been valued, each of them in accordance with the year in which they [end p41] were built, so it is in a mess.
I, in my life as a Member of Parliament, have been through two revaluations. Never again! They caused more trouble, each of them I think, than the community charge will ever cause.
I stopped the revaluations when I came into office because I had been through two of them.
Scotland had a different law and had a revaluation recently. When Scotland got that revaluation the results were so appalling that we got a major revolt and the Tory support in Scotland went down to 13%;. It was only after we passed the law to get the community charge, which was just got through before the election, when support went back up to 24%;.
The alternative to what I am proposing is a revaluation, not after five years, not after seven years as it was in Scotland, but after seventeen years and believe you me, the result that would have would be absolutely horrific to imagine.
The only other alternative would be to go to capital valuation. That would be quite devastating to pensioners in view of the property movements that we get in this country. In my constituency during the election campaign, I was talking to a group of people; one of them said to me, he was just retired, not very old, mid-sixties. “You know, when we bought this house when we were first married we bought if for £2000. It [end p42] would now go for £150,000!” and if you go to capital value it hits all your pensioners, all your widows living alone. That too would be horrific.
In politics, life is a question of alternatives and you have got to define those alternatives and all of this I think we have not perhaps got across but we will try and get it across.
Do you think that will satisfy the critics?
I think it will satisfy the required majority to get through!
I may say, under Mr. Heath 's leadership I was Shadow Secretary after we lost the election in February 1974—Shadow Secretary for the Environment. It was under his leadership that we first gave a pledge to abolish rates! Interesting?
Returning just briefly to the Northern Ireland situation, could you just give us your overall appraisal of the situation there and whether you feel that the recent election could be a watershed encouraging the parties there to move onward? [end p43]
When we made the Anglo-Irish Agreement, I felt that we had protected the position of the Unionists so that they could be reassured that there would be no change in the status of Northern Ireland without their consent and of course without also, in addition, the Westminster Parliament and the Republic accepted that and I hoped that they will find that a reassurance and a reasonable basis for the rest of the Agreement.
As you know, they did not and were rather fearful of it. I felt that those fears were not justified and that we had carefully come to the Agreement, put it through Parliament, got it ratified and had it accepted and welcomed internationally.
I would hope now that some of the Unionists are beginning to feel that their fears were not justified and that they know that their position within the United Kingdom is safe and therefore that that is perhaps one of the reasons why they are thinking of coming back to talks. I hope so.
In these matters, one has to be both very patient and also very firm and I think that we will bring both of those qualities to bear in this situation and I hope very much that they will come and talk. They have been in the House of Commons recently, which means that perhaps they might be thinking of playing a more active role in Westminster democracy. [end p44]
Prime Minister, I have a question about Irangate which does not go to the substance of the issue.
There is a great deal of talk in the Congress now and in the political community in Washington that this entire matter has sapped President Reagan 's domestic political vitality and his vitality on the international stage.
As a long time friend and ally, does that worry you?
I cannot speak of your domestic situation, only you can speak for that.
I do not think that it has had that effect on America's international standing and I believe that the way in which the arms control negotiations are being dealt with, which is perhaps the most important issue this year, together with the things that are happening in the Soviet Union and the fact that one never talks to the Soviet Union only about arms control; but it is a much more total relationship than that, and the need to have both an agreement and I hope a summit this year would reaffirm the leadership of the United States as well as the authority of the President of the United States, and I cannot overstress how important it is that the authority and leadership of the United States of the [end p45] Free World should continue to flourish. It is important for us all and I do everything I can to see that it does flourish and to uphold it.
Prime Minister, about America's leadership, we know your often-stated views about President Reagan.
What are your views about the American people as a whole? A lot has been said in the press here about America in decline, people having a crisis of confidence. What are your feelings about America and what the future holds for our country?
I love the American people. I think they are the most generous people the world over and I wish the world more readily recognised their fantastic generosity. I think deep down they do. I think deep down they know that America is the country of free enterprise and it is a secure country and it will continue to be the world's leadership in freedom.
I think you also have to remember its history. Everyone went there for opportunity and to be free and I think that that approach still informs so much of what goes on in the United States.
Believe you me, at most of my election meetings I would say: “This Party, this People, believes in the [end p46] United States and a strong alliance between the United Kingdom and …” and before I had got to there a whole round of applause would have broken out.
There are a whole lot of people who think that freedom of speech is freedom only to criticise. It is not. It is freedom to uphold the great alliances and the great constitutional issues, the great constitutions, the great institutions, liberty and justice. Freedom is not only a matter of dissent. It is freedom to uphold that very, very freedom of speech and the institutions which enable you to operate.
But inevitably the criticism makes the news, but there is a thing you have got to do—and it gets easier to do when you have seen and been around quite a bit—is to keep things in proportion and to keep what matters in your sights and go for those things which matter.
Prime Minister, given your personal travel to Mr. Gorbachev, are you likely to be telling President Reagan anything on arms control he does not know already?
I should not think so. What we do is discuss very thoroughly. I think these things have to be talked through very thoroughly because what you have to [end p47] watch the whole time is that at each stage of disarmament you keep your safety and that means keeping the deterrence and making certain that you are strong enough so that no potential enemy would ever attack you.
To me, that means keeping a nuclear deterrent, and I believe that a nuclear deterrent will certainly be necessary up to the end of the century and as far as I can see beyond, because as I said, you cannot disinvent the knowledge and other people may get it.
You have to watch in arms control negotiations you do not just concentrate on one class or one group of weapons, because where you have got a potential aggressor there is enormous superiority in conventional and where you have not got an effective chemical deterrent your only basic deterrent to that is nuclear as well and at each stage you have got to look at the mix to see that you have got it right. But then of course that is done extensively at Geneva but myself I do go through with our advisers sometimes the mix, the mix of weapons, and it is the mix on land, sea and air that also matters. It is very very complicated, believe you me. You must know that; you have some experts among you. [end p48]
Prime Minister, you told Bert Anderson [Bruce Anderson] that Reykjavik was a bit of a shock and you did not imagine that the shock would happen ever again. Certainly, as you know, the French have been very upset about the double-zero proposal, the German Government has been split; it has finally come to … . but after a great deal of difficulty the French and the Germans are talking more about a joint European responsibility for defence; people in your own defence departments are talking about the need to have a nuclear defence in Europe, whether the Americans are part of it or not.
Do you think this is a healthy trend in Europe and is it one that you would encourage?
Reyjkavik would have been a shock had that agreement, I think, just taken effect. In any event it did not and in any event it would have to have been worked out in Geneva and also in consultations with the NATO allies, so it did not go through. You know my views on it: that I do not think we can get rid of intercontinental ballistic missiles and replace them with something else. I think you need to retain those and they are being retained. So it did not go through.
I have not found the French concerned about the zero-zero intermediate. The French, of course, have [end p49] not stationed any Cruise or Pershings because they are not part of NATO. Certainly, I have not found any problems about it.
The problems come with some of the bilateral weapons. I personally think that it is absolutely right for the Pershings is, which are as the result of a bilateral agreement between the United States and the Federal Republic, to be out of this agreement. They happen to be unique. It happens to be a unique bilateral agreement. They happen to have a unique significance. I understand that significance, I understand the need for it.
Europe on its own. The defence of freedom requires the alliance between Europe and the United States and I think it requires the presence of United States forces on the frontier of freedom across Europe, not only for the defence of Europe but for the defence of the freedom of the United States.
I will try to be really fast! Your Government has said many times that it prefers a political to a military solution in Central America. The two predominant political efforts, President Arias ' initiative and the Contradora initiative, both seem to have collapsed somewhat lately. Since this is one of [end p50] the more divisive issues in the United States and one of the most distracting for the Administration at a time when, as you say, there are very important issues to concentrate on, is it now time for the Europeans and perhaps those among them who are special friends of the United States to be more forceful or more public or to express their views more strongly on that issue?
I understand and have always understood the concern of the United States if a second, what seems like a Marxist base were being created in that part of the world. You have got Cuba. I have always understood it. One of the reasons that we keep our own troops in Belize is to protect democracy there. When Belize became independent, we thought we would not need to keep them there for more than two years. They are still there and I usually say to our American friends: “You do realise that, all right, we are a very small world power, but our contribution to helping that you do not have too much trouble is that we keep our troops in Belize” and there are training operations there too as well, so we are very conscious of the importance of that part of the world to the United States and we always have been. We have always been very conscious right from the beginning of what was happening in El Salvador, [end p51] So I think that we do not fall under your criticism.
The view we take is that there is not a military solution to the Nicaraguan problem and from time to time the Contradora process does come into life again but it is not easy and you know, I never conceal my views. There was a new constitution in Nicaragua. It was adopted and then suspended within a matter of hours, and I am one of the first people to say this, and as you know some of the newspapers which were the voice of freedom were stopped and some of the church radio stations. I am one of the first people to say this, in the House of Commons, but I do not think there is a military solution to that problem.
In the short term, do you see any hope for the release of Terry Waite and other western hostages in the Lebanon?
I wish I did. We know nothing about Terry Waitehis whereabouts or anything more than you do. It is one of those deeply concerning things but I have no news for you at all.