Karen DeYoung and Leonard Downie Jr., Washington Post
With the President due in Moscow soon and we are being told in Washington now that this administration is very pessimistic about being able to have a START agreement to initial and on top of that, there is some doubt that the Senate may finish ratification of the INF treaty in time to sign those ratification instruments in Moscow so there is some concern about the content of the Summit there.
I wondered if you were similarly concerned about what progress might be made at this Summit and what you would like to see happen there?
Prime Minister
I think it would be very disappointing if you do not get the ratification of the intermediate treaty in time, very disappointing, because it will to some extent - or could - undermine the new feeling of rising confidence and rising hope and you do not want to undermine that because there is genuine rising hope, and I think Mr Gorbachev is determined to go on with the reforms and also he is withdrawing from Afghanistan and it seems if he is quite prepared for withdrawal of Cuban troops from Angola as far as he is concerned, and when you are getting that amount, not merely of speechifying but [end p1] of actually actions happening, then I think you need to think very much, “Now, how can we reciprocate?” because bearing in mind always that the reason which I have welcomed these things so much is that I do see a new era opening up if they succeed.
But at the same time I continuously said the reason we are able to welcome this is that our own defence is sure and we will continue to ensure that it is certain, because if everything went wrong in the Soviet Union and unfortunately they got someone who did not have the same views, then we are still sure in freedom, liberty, rule of law.
So I would like very much, I just hope that people will think, “Well now, shouldn't we help the image of the United States in the Soviet Union with the Ronald ReaganPresident going there?” because it is a great event for the President of the United States to go to the Soviet Union. It is a great event in itself and you want to do everything you can to boost it.
You will not get a START agreement signed I am pretty certain, because it is the most complicated arms control agreement there has ever been and I think it will be a mistake to rush it. I think it would be a mistake from the viewpoint of both sides because with arms control you have to make certain that it is satisfactory to both sides and both sides still feel secure in their defence.
I am sorry that is a bit long but I think it has got most of it in.
Karen DeYoung and Leonard Downie Jr., Washington Post
You had said earlier that you were concerned that there was not an adequate verification proposal on the table and that is [end p2] something you have talked about a lot as one of the most important elements of the treaty. Do you see any progress in that direction?
Prime Minister
I think it is still one of the most difficult things because you are dealing with different - although they are all strategic weapons - you are dealing some from the air, some from the sea, some from land and therefore it is the verification which is one of the most difficult things, and you always come to a tricky time in these negotiations, because you can never get things one hundred percent absolute, but there comes a time when you have got to say, “Well now, can we afford to be satisfied with that or are we putting something at risk?”
Now I am not a person who ever put our defence at risk but it is both complex and you have to have a willingness but I think they want to get this agreement but I think both people are aware that it is much more difficult than the previous one.
Karen DeYoung and Leonard Downie Jr., Washington Post
You mentioned the air and sea launch. Europe seems to have been, not left out of this START process, but obviously since it is strategic weapons between the United States and the Soviet Union, there is not space for Europe to participate. Do you feel that since Britain in modernising its own forces wants to modernise its air launch capacity and in terms of the retasking of NATO, of US nuclear forces over here perhaps increase the sea-launch capacity that it has assigned to SACEUR?
Do you think that perhaps Europe ought to be providing more [end p3] input to the talks, that in fact these issues could touch on European defence, and particularly on British defence if there are limits on air-launch missiles?
Prime Minister
Look, there are a lot of questions in there. Let us tease them out.
First on the strategic missiles. The whole Europe is under the American umbrella for strategic missiles save for the French independent nuclear deterrent and the British independent nuclear deterrent, because we certainly have been a nuclear power right from the beginning.
Now our independent nuclear deterrent really is at the minimum to have a valid believable independent nuclear deterrent, therefore it cannot go down any further. Ours also is seconded to NATO but will have no part in these discussions because we are at the minimum necessary for effective deterrence and that will be so even when the 50&pcnt; reduction agreement between the Soviet Union and the United States is signed because the increase in strategic weapons in the Soviet Union has been such since 1970 that when you get their 50&pcnt; down and ours up to Trident, the proportion of our deterrent after the 50&pcnt; in relation to the Soviet Union will be the same then as it was in 1970 when we first had Polaris against what the Soviet Union had. So as far as strategic weapons are concerned, there is no particular reason for us to be in on our own independent, which Mr Gorbachev recognises and NATO has been consulted and very clearly backed the Ronald ReaganPresident on what he is doing on strategic. So that is that one. [end p4]
Now you are going on then to something else which is not strategic but was intermediate. … to talk about air-launch and intermediate sea-launched so we have no agreement about intermediate nuclear weapons on sea or in the air. The only agreement that has been signed by the United States, by the President and Mr Gorbachev and which is waiting to be ratified is intermediate land-based nuclear weapons and it therefore follows that you have a bounden duty if your defence is to be sure, that you disposition the rest of your forces to sea and modernise the rest of your forces so that your defence is sure.
You do not in fact have a sure defence with obsolete weapons. That was the argument we had - not the argument - the discussion we had at the last NATO meeting. You do not deter with obsolete weapons. Of course you do not. So you have to put them into the programme of modernisation. That we managed to achieve.
Also of course, you have to look to say “Well now when the intermediate land-based go, what is the best disposition of the forces that we have in order to keep again an effective deterrence right across the piece?”
So of course you look at redeployment of yours, so indeed, if you read of what the Soviet Union is doing and what they are saying and you find two things in the NATO speeches that I did, two speeches of what their military people had said. Of course they are doing that. So or course we shall be doing that. So there is no problem really when you sort of analyse the difference between the strategic negotiations and the intermediate land-based which is all you have got at the moment. [end p5]
Karen DeYoung and Leonard Downie Jr., Washington Post
But in the START talks they are having discussions on limitations on the number of air-launched and sea-launched Cruise and I wondered if you thought at some point that could impinge on NATO plans or British plans?
Prime Minister
Yes, you have got, I think, to keep the long-range - they are talking about strategic. But for air-launched, if you are going to modernise them from the free falling bombs to the air-launched from the aircraft, that is short-range. I say it is short-range; it is 400 kilometres. It is within the short-range and we have no agreement about that. Now some of your Cruise will be in the short-range - about 600 kilometres - they are pretty nearly short-range but they are sea-launched and as you know we have not got very long-range Cruise ones.
Karen DeYoung and Leonard Downie Jr., Washington Post
Talking about NATO, something that has surprised me from my Washington vantage point is the WEU dimension, strengthening the European pillar of NATO and moving its headquarters to Brussels. What do you envision in the role of a strengthened WEU with its headquarters in Brussels? What is its role within NATO? What is its purpose?
Prime Minister
I wanted it to be in Brussels so that it is seen to work clearly with NATO. The important thing is to keep the whole structure of NATO going and there must be no suspicion that by having various European things that it is doing anything other than working as part of the NATO mechanism. Now certainly it may help [end p6] with people, who although they are politically members of NATO, do not have their military forces integrated into NATO although it is my belief that more and more those who are not members of the military NATO are nevertheless seeing to it, in their own self-interest, that their military forces are exercised bearing in mind the NATO exercises, because you have military forces to defend your country, defending your country in Europe means that you may well have to take part in defending someone else's as a means of defending your own. That is why we are on the front line. That is why you are on the front line.
So it makes sense that although they are not fully militarily integrated they exercise much more with NATO exercises and I think that being part of WEU may help that, but I always have the condition that it must work with NATO, it must not weaken NATO, it must strengthen NATO.
Karen DeYoung and Leonard Downie Jr., Washington Post
So what kinds of things could WEU decide? What kinds of things should be discussed in that forum?
Prime Minister
We mostly discuss the political things. Obviously we mostly discuss greater cooperation. But the actual military updating and so on has to be done in the NATO forum.
Karen DeYoung and Leonard Downie Jr., Washington Post
Is there a WEU dimension now in the Persian Gulf, the coordination of the mine-sweeping operations?
Prime Minister
There is cooperation. There is cooperation with people whom [end p7] we have worked with.
Karen DeYoung and Leonard Downie Jr., Washington Post
Just informal?
Prime Minister
Yes, informal. Actually because we do work together, our navies, very much in NATO. The military structures aren't NATO, the decision taking is NATO and will continue to be.
Karen DeYoung and Leonard Downie Jr., Washington Post
The United States seems to be constantly pushing for increased multi-national cooperation in the Gulf even to the point of desiring to have a multi-national force. Do you see that happening?
Prime Minister
No, it is not. I do not see anything in the United States wanting a multi-national force at all. What we are having is cooperation between the navies which are there. Now if you are getting increased cooperation between ourselves and the Belgians and the Dutch, because some of them are finding it difficult to keep the number of minesweepers and the necessary frigates or destroyers there, so we are much more ourselves, the Dutch and the Netherlands [sic] cooperating under one command but we are used to starting to do that in NATO in the channel. So that is using the NATO structures of coordination for out-of-area purposes and we are used to doing that and of course we have been coordinating with the United States. Again they are used to coordinating.
But I know of nothing that says a single multi-national force and I think it would very difficult to operate. It is, I think, [end p8] what we are doing to a much greater extent which has been on the cards for quite a time, it looks as if we are going to be more responsible for one area and the United States more responsible for another. That does not mean you keep the whole thing absolutely clear; it is a very big sea.
Karen DeYoung and Leonard Downie Jr., Washington Post
And that is obviously not worked out under a single commander?
Prime Minister
No.
Karen DeYoung and Leonard Downie Jr., Washington Post
The United States has announced these new rules of engagement where at the discretion of the local commanders without prior announcement, United States military might come to the aid of ships other than those under US flags. Are you comfortable with that? Does Britain contemplate a similar change?
Prime Minister
Well, we can do it on ordinary humanitarian grounds already and I think that is probably the way the United States has taken it. I do not think any of us could agree that we could escort all vessels up because we just have not got the naval forces there to do so and just remember, that is the practical limitation on what you can do so of course you are there first to protect your own. If you see someone else in difficulty, you can on ordinary humanitarian grounds go and help and they have been doing it but there is no way in which we could agree to protect all shipping from other nations because we have not got the forces to do it. [end p9]
Karen DeYoung and Leonard Downie Jr., Washington Post
Do you see any other role for diplomacy in the Iran Iraq war at the moment? All that seems to be stalled.
Prime Minister
The real relevant diplomacy now is in the United Nations heavily because it is the role of the United Nations that while there is just a slight lull in activity is to start once again to do everything it can to get the Security Council resolution implemented.
And the need for it is not only heightened because of the length of time this war has gone on. It has gone on longer that World War II.
Karen DeYoung and Leonard Downie Jr., Washington Post
And killed millions.
Prime Minister
But also it is particularly worrying because of the use of chemical weapons and that is an added reason for trying to do everything possible to get a truce because we have not had that, you know, for a long time and it has a very far reaching and fearful implications.
Karen DeYoung and Leonard Downie Jr., Washington Post
But Britain's very strong effort in the United Nations to get this resolution through seems to have stalled in the past couple of months. Is there anything else that can be done? What pressure can be brought to bear?
Prime Minister
I think before what we called the “missile war of the cities” [end p10] we were really trying to implement, to enforce the original resolution by having the arms embargo on the nation that did not agree with it. Then we got the war of the cities and it really altered the whole balance. The war of the cities now seems to have stopped. There has been, I am afraid, a bit more mine-laying in the Gulf, but there appears something which is not quite as active at the moment and that, I think, is the time we are going to try and go back and try and put it very strongly as between the five members of the Security Council. If we do not take this opportunity - and it requires the five of us - then we might get it starting up again to the disadvantage of all of us.
Karen DeYoung and Leonard Downie Jr., Washington Post
Do you see a sign that the Soviets are more willing for an embargo?
Prime Minister
Well again, coming up to a Summit, there is a chance that they would be.
Karen DeYoung and Leonard Downie Jr., Washington Post
That that may be one of the things that is discussed in the Summit …?
Prime Minister
Yes, if you have a look at everything: you are soon going to get the first withdrawals in your troops from Afghanistan. Now in the Middle East, bearing in mind the Arab Israel negotiations are not making much headway but I think the initiative must be kept because it is serious. It really again heightens the need to take advantage of every opportunity on the Iran Iraq and all we can do is [end p11] go - and we do, are very active in the United Nations - and see if there is just a gap now in which they could possibly get a truce. It will not be easy although they have got, as you know, within that resolution, they have got the procedural means of deciding who started the war, etc.
Karen DeYoung and Leonard Downie Jr., Washington Post
You mentioned earlier the importance of Reagan's trip to Moscow and a successful Summit in helping Gorbachev with what he is doing inside the Soviet Union. Are there other ways you think the West could be supportive of that?
Prime Minister
I think when one has been pointing out in no uncertain way the sharp disadvantages of communism both as an economic system and in that it does not offer the same liberty and human rights as others, I think that when you find someone wanting to both alter the economic system, not alter the system but alter it in the direction of more personal involvement and personal responsibility, I think when you find too that person in the year when it is 1000 years since Christianity went to the Soviet Union saying, “Look there is going to be much more freedom of religious worship”, and when we have been saying, “Look you are an occupied power in Afghanistan, you are coming out”; you really have got to say, “These are moves in the right direction and we welcome them”.
Yes, there are other moves to be made, but I think you have got to be openly encouraging of things that are moves in the right direction, because when you know that people are struggling to have a historic change and when you know from all your own experience that [end p12] there are many people in any country who resist change because they have vested interests in the present system continuing so that you know the process of change will be difficult but you believe the change is going in the right direction. I think you have got to be openly encouraging. That is the view which I have taken.
Karen DeYoung and Leonard Downie Jr., Washington Post
What else is there that can be done? I mean, what do you think the best way is for the West to be supportive?
Prime Minister
Well, I think the way we have been. I have been quite open. I was the first I think to say that this is good and the West should support it and I say, as I indicated right at the beginning, that I am able to do that because I believe that freedom is only defended by a sure defence and I think the time limit, the time span for new weapons and for production of weapons is such that you can never afford to make a single mistake in keeping your defence sure.
Now I think we are going about it in the right way and I think that the visit to the Soviet Union could really be a great plus for the West indicating that the reforms which Mr Gorbachev is starting are very much, not only to the benefit of the people in the Soviet Union but I think to the benefit - what is the right word? - every enlargement of freedom helps the rest of the world, helps the cause of freedom itself and the cause which most of us believe that there are certain fundamental human rights which do not come from the state. They are God-given not state-given and therefore it is not for a state to take them away. [end p13]
Karen DeYoung and Leonard Downie Jr., Washington Post
So this is something that conceivably could help him before the big meeting there in June, it could give Gorbachev [sic], even if there are no agreements signed?
Prime Minister
Yes. You see at the moment, let us look at it. From the viewpoint of the people of the Soviet Union they have seen the Soviet Union become one of the two world Superpowers. That to them is fantastic. But it has become a world Superpower because of its military strength and because of some of the scientific work it has done in space which has mostly been done for its military strength.
But the Soviet Union is a Superpower because of its military strength, because it has spread communism by the creed of communism, which is that you either spread power by your military strength or by subversion or by proxy. But it has not become a Superpower because of what it has done for the standard of living for its people - because it hasn't - or being ahead in technology - because it isn't - nor for, bearing in mind its creed, having the best social services - which it hasn't.
So in everything else but its military prowess it has not succeeded, and I think that at a time when there is no way in which you can stop ideas from the outside world percolating into the Soviet Union, no way that you can stop them from knowing that other peoples have a much higher standard of living, no way in which you can stop them from themselves observing the difference between communist rhetoric and what they have seen from their own experience inside. [end p14]
But I think that at this time it is remarkable and highly significant that you have a Mikhail Gorbachevperson wholly brought up in communism, wholly steeped in it who has looked around and said, “This will not do and what is more I believe that sooner or later the Soviet people will see that it will not do and therefore we have to set about changing it.”
It is very difficult, which I think he knows, that when your whole thesis has been that the state plans everything and the individual counts for virtually nothing save to obey the dictates of the State, it is an enormous change to say to factories, to say to people at work, “So far you have been told what to do and you have not been able to do anything unless you are told it and you have taken no responsibility; now things are going to change, you have got to do some of the decision making, you have got to decide what you produce, where you buy your raw materials, how many people you employ, what you pay them, the price and where you are going to sell it”. It is such a change for people that have no previous experience of having done that.
If you do that in Czechoslovakia, they have known what a free society is like. They have got some experience to revive and therefore it is an enormous, one knows they are going on the right course but in politics it is not only the direction which you go but how you get there and, to get from where you are to where he wants to be is going to take much more time in a country that has not got any past experience of personal involvement and a structure that mitigates against it and a whole bureaucracy that is there, not on [end p15] merit but because they are members of the communist party.
So yes, it does need - when you see boldness and courage like that - you do want to increase the contacts, you want to do all you can. Some of them come over here and I say come and look and see how we do it. But it is in the interests of the whole world that it works.
Karen DeYoung and Leonard Downie Jr., Washington Post
If we can turn to British affairs for a little while.
People in Washington I think were very impressed when after the last election you seemed to rededicate yourself to continuing the changes that you were making here and have proposed some things that are still quite radical after all these years in office. It also seems to have run up against more opposition, at least within your own party than we have seen in the past.
Are you reaching the stage where the changes you want to make now are much harder than they were in the past and, if so, why do you think it has come to that?
Prime Minister
First, on the way in which you have financed local government. This has been a running sore in the party for the last twenty years. As you know, we finance it by a property tax and the property tax and the way it is done is very unfair and it means that some people have to pay a lot because of the house they live in or because they have modernised it or added onto it or put in central heating. Everything added to their property taxes and other people did not contribute even though their wages, their salaries, were quite high, because they were not householders did not contribute [end p16] to financing local government through the local taxation system.
Now everyone is agreed that it was a rotten tax, the rating system, and it had to go. The difficulty was to get people to agree to what should be put in its place. So in the end of the first election 1983, I could not get agreements so I said, “Right, we are going to put a limit on the amount which local authorities can raise from this property tax”, because otherwise they are saying “We can spend more and we can put it all on people who own: householders.” And it just was not fair and it was having very strange results so we put a limit upon the amount they could do and our rate-capping as it is called has had a very considerable effect on some extravagant local councils. We have only been able to do eighteen or nineteen every year.
Now I knew it would be a battle to get a change and what we have got is a community charge now as a way of paying for local government which is a personal charge and it is the same for everyone unless you cannot afford it, when you can get up to 80&pcnt; rebate if you cannot afford it, and if you are really poor and on social security benefit you get a sum added to your social security benefit which is the average amount that would be left after the rebate and you hand it over and you would be given the amount.
Now for those it is the average amount you get because it is over the country, so for those, I am afraid, in high spending local authorities the average amount they get is not enough and those in lower spending local authorities they are in clover because they have got an extra amount. But the point is, it is the local authority that determines the community charge, not the Government and so if [end p17] people are discontented that they are spending too much of their money, they will make that known to local authorities so you actually get democracy working.
The other thing which I think people did not realise and I have to say it over and over again, is that this community charge only meets one quarter of local government expenditure. Half is met by the taxpayer, in other words by central government giving a big grant to local government. It is taxpayers' money. Taxpayers' money is raised on a progressive system. And the other quarter, so you have got a half, a quarter, the other quarter comes from business so it is really a fair system, and the difficulties we have had had been sorted out by very marginal changes because when you make a sudden radical change it is not really always possible to see the precise effects at the margins on some people until you get right up to it and it was such.
For some people the change was too sudden and so we have done, extended what we call the transitional protection which is a means, as you know, of making certain the change comes in gradually. And so for some of the people on social security benefit, we keep up their cash, the amount of cash they receive even though under the new system they would not be entitled to much. So we have done some modifications but I think it has sorted out that one.
Karen DeYoung and Leonard Downie Jr., Washington Post
Does it concern you when something like what happened in parliament last week when you get a large percentage of your own people, despite a very strong whip, voting against a government proposal? Is that a source of concern? [end p18]
Prime Minister
If we had only about a majority of three, they would have all been there supporting us on the night. But we did not. We had a larger majority and we made a very modest change. We went from spending £5.2 billion which is a lot more dollars to spending £5.3 billion and that sorted out some of the things.
But you know it is very interesting to me to see how people's ideas have changed. What they were saying was which no-one could have possibly said when we first came in, that even though you have an owner-occupied house, so you own your own house unencumered by a mortgage, even though in addition to that you have £6,000 in the bank and of course everyone will have a basic pension because that has been so for years. Even though you have all of that: your owner-occupied house, £6,000 in the bank or in stocks and shares, quite a lot of chattels of your own in the house that you should still be entitled to help on local authority tax. That is remarkable isn't it? Don't you think it is remarkable?
We could never have thought of doing it unless we had massive increased prosperity brought about by the things we believe in. So we put it up to £8000!
But what you see you have got to think about too is that on this particular thing where you help people with their housing costs which includes your local rates or your community charge, what you have got to think of is, who is going to pay for that help? And a lot of the people who are paying for that help will not yet have paid for their houses; they will still have a mortgage, will not have £6000 in the bank, and you have got to try to get some kind of [end p19] balance.
Now what was happening, I can tell you was, I had people getting all the letters from those who had saved and said “Look it is not worth saving unless …”
But you know when you target help, first on the poorest and then because you do not suddenly like to come out of that into no help at all and then you get another group, when you withdraw that benefit you always get problems. That arises from drawing a line and they thought we had got the line drawn not quite right. So we put in another £100 million which has to be found, not by Government as I am saying. The extra £100 million is found by working people, people of working age and so we modified it and really the thing has gone through structurally, in exactly the same way because it is structurally sound.
Karen DeYoung and Leonard Downie Jr., Washington Post
As you look ahead with these large majorities in your very secure position with the voters, does this mean there is a change in the dynamics of British politics for a while where the opposition - accountability if you will, politically - comes not from the opposition party but from within your own party? Is that what we are seeing beginning to happen with these …
Prime Minister
No, I don't think so. I remember Iain Macleod saying that when we had a hundred majority in 1959. No, I have never thought that. If you go and listen to questions on Tuesday and Thursday there is such a row that you will know there is plenty of opposition. Now it is not necessarily, it is noisy opposition [end p20] rather more than reasoned opposition, but also it is opposition based on thoroughly old-fashioned doctrine and it is opposition based really on the creed of socialism which deliberately wants to take a bigger part of the earnings of people because they believe that politicians can manage people's lives and plan them better than people themselves can.
Well good heavens! Even Mr Gorbachev is coming away from that. But that is what socialism is, particularly in the big towns, and where they have power, because we have something that you do not have and not many other western countries and I am not sure it is always an asset. We were so anxious to get housing back after the war, to build extra houses that we have nearly 30&pcnt; of our housing stock in the hands of the local authorities. That means they can decide what the rents are and they can put the rents up happy in the knowledge that the taxpayer would have to have the rebates of rents. They can decide what the rates are knowing that hitherto was a rate rebate of a full 100&pcnt;. That is why I have taken the rate rebate down to 80&pcnt; but giving the extra amount to the really poor and there you see socialism at work!
Yes! They did want to be able to determine the rates of people and the rents of people living in council houses. Yes, they did deliberately want to keep them low if it suited socialism to do so, while the rest paid. Now that is not my creed at all.
My creed is that every single person, if you believe in the freedom which you enjoy, you must take, you must also believe in both the responsibilities towards your local authority, the civic responsibility and in national responsibility and, in so far as you [end p21] take the freedoms, you are given help. Of course you are, if you are unfortunate, if you positively cannot get a job, if you are really ill, or you are too old to work, but you are not given help to have the choice whether you should get the same amount unemployed or working if you can go and get a job, and there were undoubtedly people who were taking what was meant to be a really good thing: help to the unfortunate and manipulating it as a kind of entitlement society.
And we are saying, “You are entitled if you are unfortunate, but you are not entitled to manipulate it”, and you know, you get so many rules and so we have found some people were manipulating it.
But underneath there is a fundamental difference and you have found it on the vote in the last budget.
We believe that if you are to keep the engine of prosperity going, you do it by incentives and you do it by people who want in fact to do better for their own families and want to profit from their own effort, and unless you allow them to have the lion's share of their own effort - the greater part of their own effort - they cease to make that effort. If they cease to make that effort, you do not get the wealth and this is why under our system, incentives, sound finance, lower taxation has produced more wealth and higher social services and a higher standard of living whereas under socialism, who said, “Ah! We believe in higher taxation,” higher taxation produces less wealth and cuts in the social services, so ours is seen to work and they cannot stand it. They hate it but they are still after - they voted last week that there should be higher taxation. [end p22]
One week they are saying the nurses, the teachers deserve more. The next week, we having had the means to put up those wages, they are voting they should be taxed more highly. Isn't it silly? It is ridiculous! It does not make a coherent cohesive policy.
Karen DeYoung and Leonard Downie Jr., Washington Post
How much further do you think you have to carry this in order to break through to those parts of the country and strata of society where so far this has not reached? Parts of the north.
Prime Minister
It has reached! Look Scotland the earned income per head in Scotland is the third highest in the United Kingdom. London is the first, south east the second, Scotland is the third.
Karen DeYoung and Leonard Downie Jr., Washington Post
They do not vote Tory; why is that?
Prime Minister
They profit very much in what we believe in but you know 50&pcnt; of those people are still in local authority housing. We still have not yet got a release from the local authority up there that we have got down here.
Karen DeYoung and Leonard Downie Jr., Washington Post
So you are saying they see it in their vested interest to continue with …
Prime Minister
Not yet. I think they have not yet realised that the increase in prosperity that they are getting comes from Tory policies and to some extent you still have some local authorities up there who still prefer they have more control over the lives of [end p23] their citizens, and it was we who started to say, “Right you must sell them their council houses if they wish to have it.”
Now in some respects, if I might say so, some of the people, the trade unionists in Scotland are way ahead of the trade unionists elsewhere - some of them. Scotland won Ford. Labour lost it. Labour lost it because of the out-dated ideas of trade unionism that they wanted the same thing socialism wants: they wanted to keep restrictive practices, they wanted to keep several unions negotiating and they are still wanting to preserve the methods, the jobs of yesteryear.
Some of them like Gavin Laird - right in the future. So it is coming. But it was the traditions of Labour trade unionism that lost Ford for Dundee and they know it. So it is coming.
But still you see, when you get difficulties with ship building - we all have it - even Japan has difficulties with ship building because it has gone to South Korea, there is a feeling well you have got to pile your subsidies there to keep it and one has eventually to say, “Now look! If you are going to have to pile in help anywhere, it is far better to pile in help to create the industries of tomorrow.”
“But oh!” they say. “Where do the jobs come from?”
Now I was up in Scotland just a few weeks ago and I was helped enormously by the tour I did. I went to the IBM - fantastic factory - in Greenock - right in one of our difficult parts. There are new jobs that did not exist twenty years ago: all the electronics, all the personal computer systems, so I was able to say, “This gives you better working, this gives you a more secure future because it [end p24] is an industry of the future”.
We then went down to a ship-building area down to an old engineering area where they have not yet got the new business or the new attitudes, so all right, we create an enterprise zone there.
An enterprise zone means that if you will set up in that enterprise zone as a factory, you can write off your capital immediately in any profits you make, you do not pay a penny piece of tax until you have written off all your capital against it. You can in fact get planning permission quickly and easily and you do not pay local authority rates for a certain number of years. So that is deliberately to attract new industries to that area, so there we were helping with that and I think we shall help and then we went over to Dundee from Greenock: very interesting. I was able to announce that the new private enterprise factory is setting up its medical diagnostics in conjunction with some of the work done at Dundee University which will employ about three hundred so they were getting new jobs there but jobs of the future: new pharmaceuticals which made diagnostics easier.
And there we opened a new hotel in Dundee right on the river: a really top class hotel. Now you do not have top class hotels opening unless there is money about, so it is coming.
Karen DeYoung and Leonard Downie Jr., Washington Post
The big difference obviously one sees between your economic policies and achievements and those of the Reagan administration are the very sizeable American deficit and the relative fall of the value of the dollar. Do you see a threat in that to your economic recovery, to the American recovery? Is there something you see that [end p25] needs to be done to correct it?
Prime Minister
Now, two things there.
First, a country of our size, even with our fantastic reputation has to run its finances soundly. That is part of the confidence you get into the future and I could never have afforded, nor would I ever have run a deficit. Sometimes I have not been able to get down public expenditure as fast as one would wish but because we have a different system from you; we have a majority in the House, the view that I have taken is all right, if the House will not agree to get down public expenditure as far as we would wish then we must at least finance it honestly because there is no way in which we could have got the amount of money coming in to finance it for the United States and so we have steadily got our deficit down and down and down so I have not got that problem at all.
This year, we have had increased expenditure of about £4 billion on programmes, we have had tax cuts of about £4 billion and we have cut our debt by about £3½ billion so we have had the tax, the increased expenditure, a reduction in tax and actually repaying borrowing so I have got that safely. It is a sound financial background which is there for all to see. As long as we are there they know it will go on.
Karen DeYoung and Leonard Downie Jr., Washington Post
So do you think the United States government needs to do more then to accomplish the same thing?
Prime Minister
I think the United States is the big free enterprise country [end p26] of the world. Its people are naturally self-reliant and enterprising. We could not have run the deficit the United States have done and financed it.
Now it has meant certain, which is the second part of your question, that everyone has been able to export to the United States and what you are worried about, and what I am worried about, is that you have had a big trading deficit on the part of the United States of which the mirror image is the Japan export, Germany export, with high value - Japan do not forget, still exporting with a very high value currency.
Let no-one say that high-value currency stops your exports. If you have got the right product it does not. Now this is all the mirror image. And what you are saying and what we are saying is that if the United States trade deficit is going to come down then the surplus of Japan and Germany has got to come down because they have got to be prepared to import more.
At the moment we are being prepared to import more and we are constantly saying that no country has the right so to run its internal economy that it expects to have a strategy of a continuing high surplus of trade.
Now Japan in fact is beginning which we all know about: that she is setting up, investing in other countries so she is helping to meet the financial deficit because the money goes in in private investment and then of course, some of the components that are being made there possibly, or some of the finished goods, are possibly being re-exported back to Japan.
Japan has still not opened up enough. I think culturally she [end p27] is not so open to opening up as we are, and we do sometimes say to Germany, “You are not opening up your economy enough because you are being slower about tax reliefs”, and we really must not necessarily say, “Well, we have got a high balance of trade, we want to keep it that way regardless of the effect on your neighbours”.
Karen DeYoung and Leonard Downie Jr., Washington Post
To go back to the American budget deficit. You have said in the past you think it is dangerous, that you think a government, as you say, as your government did, has to be willing to raise taxes when …
Prime Minister
I think that some time in the early days of the new administration I expect someone will think - I hope and believe - something wise to cope with it because just for this reason: if you have gone on borrowing enormously, borrowing has a cost. Financing the borrowing is becoming one of the biggest factors in public expenditure. That means if your whole policy was to get down public expenditure you do not run a deficit policy which puts up public expenditure. Because it does, you can see the reason. So the whole theory of it was that you want to get down public spending, this is what the Ronald ReaganPresident wanted: to get down public spending but if Congress would not, then he was not going to put up tax.
But unfortunately running a deficit, a big deficit for a long time actually puts up your public expenditure because of the cost of financing the deficit and that, if you go on, will get a bigger sum and therefore the possibility that it will become more attractive and more sensible not to let it go on rising by making adjustments [end p28] to your indirect taxes.
You see, we have been able to get down direct taxes. It is not for me to say, but that I think will be the way in which people are thinking.
Karen DeYoung and Leonard Downie Jr., Washington Post
Do you feel like you will have as much in common with the next President of the United States as you do with President Reagan?
Prime Minister
I hope so. I hope he has as much in common with me because I believe passionately in the things that I am saying, what I do. Government has sound finance. You get the right framework of law, you enlarge opportunity. You enlarge opportunity for the spread of capital and you enlarge opportunity for education and you get your taxation system fair and then having put the ball at people's feet, there is enough enterprise in them for them to kick it.
And as I have said - perhaps you have read my saying before about the first six years I was here, which got us past one election because people believed in what I was saying and did not like the alternative I used to wonder, I used to have a nightmare: “Supposing I get it all right, supposing the government gets it all right. - I have had two marvellous Geoffrey Howe and Nigel LawsonChancellors of the Exchequer, that we get the sound finance, which we have, that we get the right taxation with incentives, which we have, that we get inflation down, which we have, so people can see that we are a country where the government gets things right, and supposing that socialism had so killed the spirit of enterprise and it isn't there any longer!” I used to think, “Well, what shall I do then?” [end p29]
And then I used to think, well it would be even worse if you add socialism in that because there is a possibility that the whole economy would go down and down; at least there is a possibility of it going up.
And then about eighteen months before the last election, you know, the place began to smile, the confidence began to return. Industry, all the things we had done with trade unions, you began to see it was working. It began to spread all up the country to the north.
I think if we had taken an election a year later that Scotland - Scotland unfortunately at the same time she was getting increased jobs but of course got the fall in the price of oils so she had a bad patch as far as the north east was concerned - I think had we taken the election a year later, we should have held more seats.
But you see the faith was justified.
Karen DeYoung and Leonard Downie Jr., Washington Post
You know George Bush quite well because he has been the vice-president. Have you ever met Michael Dukakis? Do you know Michael Dukakis at all?
Prime Minister
I read a great deal about Michael Dukakishim, but then I know there are some things that I read about myself are not always sort of accurate, so I just do not know how to assess them.
Karen DeYoung and Leonard Downie Jr., Washington Post
I think the American press does not feel it knows Governor Dukakis very well yet either, so we shall try to discover more during the campaign. [end p30]
I think if we could just finish up on a personal question: you mentioned things that you read about yourself in the press and I will not ask you the question of “Does it hurt to be considered uncaring?” because I …
Prime Minister
Look, I would not have gone through everything I have gone through if I did not care passionately about the future of my country and its people. I would have opted out.
Karen DeYoung and Leonard Downie Jr., Washington Post
What do you think you gave up for thirty years of just being right in the centre of it?
Prime Minister
I don't think I gave anything up. I think I have got one of the most fascinating jobs in the world. I do not think I gave up anything.
Karen DeYoung and Leonard Downie Jr., Washington Post
Time with your kids? Travel more on your own?
Prime Minister
Well, fortunately we have been a fairly closely knit family and have remained so although we are not always home together but you know we are great contacters of one another just to see that things are all right, and Carol ThatcherCarol rings up or we ring one another up because it is easy. But if I am having a difficult time then Mark ThatcherMark will ring up immediately and Denis ThatcherDenis is absolutely marvellous so we are a family. And yes, I think the children have missed some things, but I am always the first to say - and I am afraid it may also have relevance to some of your American women who would otherwise come [end p31] into politics - things bounced right for me and you never know quite why and you are always grateful when they do.
My husband worked near London, I got a constituency just on the borders of London and Parliament is in London and I am the first to say that when my children were small, although I have taken a passionate interest in politics as a single woman, when my children were small, had I been 300, 400, 500 miles away from London and our home had been there I do not think I could have found it in me to come down on Monday, leave the children and not get back until Friday morning, because I would have felt I was not carrying out my fundamental wishes as well as duty towards my children and I would have felt that they were missing me - at least I would have hoped they would have been. And so it has all bounced right for me but you know this is still a great problem for women and it must be.
I think this is the reason why you do not have so many younger women in Congress in the United States because they must feel the same thing.
You either have to bring everyone - because we tend to go home at the weekend, you tend to be in your constituency, or you go home at weekends. You cannot upstick the whole lot and come to Washington and then back so it is a great restraining factor. It all bounced right for me and therefore I was able to see the children and the children have grown up as part of the political scene. They are used to politics and it is fascinating.
I do not read articles about me now.
Karen DeYoung and Leonard Downie Jr., Washington Post
One of things that … [end p32]
Well, in the Walden interview you said …
Prime Minister
I have not read Brian Walden’s interview but Bernard says it is all right.
Karen DeYoung and Leonard Downie Jr., Washington Post
You said sort of disdainfully that men think it is a compliment to say that a woman thinks like a man.
Prime Minister
That is right!
Karen DeYoung and Leonard Downie Jr., Washington Post
And I just wondered how you would characterise the difference between the way the two think?
Prime Minister
I do not think like a man, I think like a woman.
Karen DeYoung and Leonard Downie Jr., Washington Post
What is the difference?
Prime Minister
I have no idea. I think like a woman because I am a woman and I do not necessarily think it is a compliment to be told I am thinking like a man. I do not know what it is like to think like a man.