Interviewer
This has obviously not been a great week for you, the Budget, the by-election, are you in trouble?
Prime Minister
No, let me say this, this has not been a great week. It was a super budget, by a very fine John MajorChancellor, and I think the Party thought that too. So I would not necessarily share your view that it has been a bad week, it was a super budget by a very fine Chancellor and a budget and a Chancellor that will stand us in very good stead, both of those.
Yes the by-election was a disappointment and so was Crosby, as was Ryedale, and both of which we won back. We had quite the best campaign, we had quite the best candidate and quite the best policies. [end p1]
I understand why people voted against if they have got a high mortgage and they are fearful about inflation. I think that, as I have thought for some time now, is the overriding reason and the things which matter most of all to deal with.
So am I in trouble? No. As I have just indicated, look at the times when we have recovered from things like this.
Interviewer
But if a couple of years ago you had known that interest rates were going to be 15 per cent and there would be no tax cuts in this budget, would you have thought this a good year to introduce the Community Charge?
Prime Minister
You cannot forecast like that, we do not have crystal balls like that. Two years ago, in October, we had the Black Monday and we were very very fearful then that we were going to go into a recession and that unemployment would return and we were starting to bring it down very well, as you know, in 1987. That was the immediate problem that we had to cope with then and we thought and believed we were coping with it in tune with our broad money supply policy. We could not have known just exactly how strongly, quite how strongly the economy was growing and it really was and still is. It is slowing down now, it is just beginning to have an effect but it has taken longer than we thought. [end p2]
Interviewer
Do you think that the question of your own leadership of the Conservative Party can be resolved in good time for the next election?
Prime Minister
I do not quite see what there is to resolve, Bruce AndersonBruce.
Interviewer
Well, there obviously are some Conservative back benchers who grumble from time to time?
Prime Minister
Good heavens - are you suggesting that is new? I have been in the House for thirty years, are you suggesting that is new?
Interviewer
No, but there is one danger perhaps. You are an immensely positive politician and the government's achievements are associated with you in the public mind, hence Thatcherism, but now that the government has hit rough water perhaps its unpopularity is also associated with you, everything is personalised about you?
Prime Minister
Let me point out, as I have said many times before, inflation is 7.5, going up as we know, 7.5&en;8 per cent, it is high for us. It was low for Labour. So what was an aim which they [end p3] made for because it was a nice low rate of inflation but for us it is unacceptably high. That is the measure of the difference. I think people had assumed that we had dealt with inflation and once dealt with it would stay dealt with. You know life is not like that. As I have said many times before, you have to fight inflation week after week after week, otherwise it will get out of hand and at least it has served to remind them that inflation can always return.
I think at the last election they thought it had been dealt with for good and all. There are some things you have to go on fighting every week, every month, every year, and that is one of them.
But, for example, there are four million more houses that are owner-occupied now than when we came in, the policy is still going forward. The ones who are worst hit, for whom I feel very strongly, are those who bought recently at the top of the market, a combination of buying at the top of the market and interest rates at a level they had not expected is hitting them badly and it is not surprising, therefore, if they show their protest, of course it is not.
Interviewer
But are you yourself satisfied that it is reasonable for inflation to reach these levels? [end p4]
Prime Minister
I do not think one would ever say it is reasonable for inflation to go up. It is too high and that is why we have to bring it down. There are two levels, as you know, there is the RPI, which people judge by, but we are one of the few countries that has the mortgage rate, I think there are only two of us that have the mortgage rate in the RPI, and if you take that out it is of the order of 6.2&pcnt;. The Community Charge in fact will put a bigger amount into the RPI than people are actually paying because I enquired, what goes into the RPI is the actual Community Charge of each authority and of course as you know that is modified to the tune of about £3.5 billion as people in fact do not get that bill but a much lower one if they are in need or if they get transitional relief. So the Community Charge will put an artificially high amount, unfortunately, into the RPI.
But there it is and we have to live with it until a year hence that will come down, in my belief, because of the safety net and because I believe that many local authorities have taken a lot in now hoping to coast downwards in future years.
Interviewer
But your own hatred of inflation is well known, it is one of your strongest political beliefs.
Prime Minister
Yes, it is. [end p5]
Interviewer
I think many people feel that you yourself might not be altogether happy with the government's record on inflation?
Prime Minister
I am never happy with inflation this high and as you know, because on the RPI scale it will go higher although on the underlying scale not so high. I am never happy with this, Bruce AndersonBruce, and therefore that is why we have to have a policy of the only way to get it down, the only one that has worked in the past and will work in the future, which I am afraid is interest rates.
Interviewer
Do you think the government is to some extent to blame for inflation getting a little out of control?
Prime Minister
We have to take responsibility for what has happened, of course we do.
Interviewer
A couple of years ago you and the Chancellor disagreed about certain aspects of the trade policy, this was almost unprecedented, in retrospect was it such a good idea? [end p6]
Prime Minister
I am not going into anything of that kind. We share the responsibility and that is what being in government means.
Interviewer
Going back to the question of the leadership, are your main reasons for wanting to stay on in office positive or negative? Is it because there is still an uncompleted agenda or is it that you want to stop certain developments once you are no longer in No. 10?
Prime Minister
They are positive, there is so much more to do and therefore I want to get on and do it. Every day we sit down and look at things, we are thinking up new plans and I am afraid that next year's legislation programme is already full, although not quite as full as this one, and the year after that. So it is really carrying things on. Look, we have got rid of the most debilitating things in this country but we still have got other things to do.
At 68 per cent in England, home ownership is still not enough. We still have to bring a lot more opportunity to young people in education. Some of the fundamental education reforms that we are doing have still to work through but the main ones are beginning to come through but we have, for example, more grant-maintained schools, we have the whole Health Service reforms to go through. But they are all of a piece, Bruce AndersonBruce, you know, they are all of a piece of devolving responsibility as near to the point of decision as you can. [end p7]
And so on education you try to devolve responsibility to the school, the grant-maintained school and the personal budgets. They are going well, you are getting much much more interest. The same thing on the Health Service, trying to devolve responsibility to the hospital where the action is.
Beyond that we have new training schemes which will come out shortly. Because in the past we have spent a packet on training, both government and companies, and they are spending a great deal. But I think our policies, for very good and obvious reasons in the past years have been geared to keeping people off the unemployment register. So we have had a Youth Training Scheme up to two years and so on, and we had a Community Scheme at one time and now we have got Employment Training.
We really are looking much more actively at training now in the sense that we have got to train for the new technologies. Now the new technologies, I keep in touch with them and I keep in touch with research, I keep in touch with environmental things, are running very very fast and so now we are going to schemes where the responsibility for training is going to Training and Enterprise Councils, they know the vacancies, they know the jobs that are there for which they cannot get people and it is going to be a much more active training programme, training for the new technology and for the jobs of the future, much more active. And we had a seminar here of industrialists and people involved in education and commerce, really to get their views before we fashioned it and there will be a statement coming out fairly soon of a new experiment that we shall be carrying out. [end p8]
Now all of this is opportunity. There are still more things to do to get some more public sector into the private sector. A lot of it, and even one could say most of it has been done. There are enormous things on environment and on planning still to do. We still have not solved the problem of how you are going to build enough houses in places where people want to have them and in ways in which they will fit in with the environment for the children who are coming up and needing them. That is a real planning conundrum.
There are masses and masses of things to do. We must get the share ownership wider. We have started in this budget to give another big boost, both with the PEPs and also with savings. Look, I have had a dream for years that people could save their own capital out of their own earnings. In my whole lifetime, in the whole history of this country it has been practically impossible to do that. We can now begin to do it. Look at the difference it means to people's lives, look at the difference it is meaning now people own their own houses, so many more. Great grandma can leave her house, maybe it skips a generation, maybe not, it may be used to provide a deposit for great-grandchildren. It means that everyone has something to look forward to from previous generations which they can pass on.
We did another speech on the environment yesterday which has quite a number of new thoughts in it. There are fascinating things happening in Europe. There are still two main big things to do there and elsewhere. First, our security has been attached to NATO and also the European Community, NATO - defence, the European [end p9] Community - the development. First, obviously we are looking at NATO, we have to look at it together and we have to make arrangements really for a transitional phase because we cannot see where everything is going to finish up and so this is why we are having a look at the effect of the unification of Germany and the new situation on NATO. So we have to provide for that transitional phase. The transitional phase in Europe will be as we shall make association agreements with Eastern Europe.
Now beyond that we are looking to the structures of tomorrow. The structures of today have served us quite well, the present NATO, the present European Community and the present Helsinki Accord, not a Treaty. We are now beginning to fashion the structures of tomorrow, assuming Mr Gorbachev continues, and therefore we shall have a different kind of Soviet Union which is very difficult to bring to birth.
Interviewer
Do you think he will be able to continue?
Prime Minister
Yes I do, I think he has the personality, I think he has the foresight, I think he has the skill and I think he has the dominance to take them through the difficult period to come to a much better world. Although often, as you know, when you start to change course the difficulties come out first and the other things come out later. [end p10]
And even then, as I was saying this morning because I saw a whole lot of Japanese people, a Japanese-British thing that we have which comes over here in alternate years, and they were saying that some of the changes have not yet reached the Far East. No, because the new democracy has not yet reached China, but I do not think it can be confined to our land mass at all, I think gradually it will extend.
Oh but it is a very exciting time but it is a time which does require very positive policies, very positive policies.
Interviewer
I would like to come back to foreign affairs in a moment but on this wretched leadership question, it might be thought that if you were to decide, it seems extremely unlikely, that you had had enough, it seems possible that Michael Heseltine might …?
Prime Minister
Look, I am very fit, I have lots of stamina, I have firm fundamental convictions, we know the way we are going, it has been enormously beneficial to Britain, from time to time it has caused problems as will any and every positive policy. Look at the birth pangs of bringing democracy to birth in Eastern Europe and the Soviet Union. I wish to carry on because I wish to take this thing a stage further. [end p11]
Interviewer
Whenever you do hand on the torch, I presume you would not like it to be to Michael Heseltine?
Prime Minister
It is not for me to say who my successor will be and it would be absolutely fatal for anyone whom I wanted to succeed me, to say he or she was my candidate. That is for the Party, it is not for me.
Interviewer
Some of even your most devoted supporters from time to time say: “There is only one problem about the old girl, she really does not like a quiet life, she always needs to be near the eye of the storm. As long as she is in charge of the plane, we will never be able to take our seat belts off. There is something about her, she is a storm cloud. If only we could move into calmer waters. There is something about her personality.”
Prime Minister
Now what are we in - storm clouds or calmer waters or seat belts? If you are flying high, you need your seat belt on.
Interviewer
But you can understand that perhaps some of the more traditional Conservatives would wish a period of calmer weather and sometimes think they will never have it as long as you are in charge? [end p12]
Prime Minister
Oh, I think we have had quite a period of steady, calm progress. We have got problems now for the reasons you indicated: inflation, mortgages and the introduction of a different tax. They are no worse as far as the tax point goes than the problems we would have had if we had done a rating revaluation of domestic property after seventeen years and get something like business have got, eight times the revaluation. I have been through two revaluations. It was shortly after the last one, when in opposition, we gave the pledge to get rid of rates. It has taken a long time to do it.
But certainly when we came back to power in 1979, remembering the turmoil, the row, I think even worse than the on-coming of Community Charge, when we had rating revaluation and you had a position whereby 35 million people have the vote for local authorities and only 17 million people pay rates and of that only 12 million people pay rates in full, no-one could claim that was fair and rates have not a single friend.
So had we had that we should have had just the same storm, perhaps even bigger because it would have been very unfair.
Interviewer
Whenever the Conservative Party runs into any difficulties, lots of Tories say: “Why is the government not better at politics?” And maybe there is a criticism that you have a Cabinet of very able mon but they are perhaps of a more technocratic stamp. [end p13]
Prime Minister
No, they are not.
Interviewer
Are there enough street fighters, are there enough grandees, perhaps at different levels you miss both Willie Whitelaw and Norman Tebbit, a grandee and a street-fighter?
Prime Minister
I wish we had both still. William WhitelawWillie, as you know, suddenly had this heart attack and just had to give up. He was a great loss, a very great loss. Norman TebbitNorman is a great loss, he just has a way of putting things which none of us can imitate. There are still quite a lot of us street-fighters there.
Interviewer
But even again even devoted supporters might feel that to allow an excellent budget to be over-shadowed by this silly little flap about a Scottish rebate, I mean either that problem should have been anticipated and a concession made beforehand or else it should have been anticipated and the government stood its ground?
Prime Minister
Look, there can be no question in a budget where you are making major new concessions, covering four income support things - your housing benefit, your Community Charge, family credit and income support - of having anything legally retrospective. [end p14] There never has been. Many is the time I have had to reply to people who have had a tax problem which in a way we have corrected in the next budget and they have said: “Now can we have it?” and we have said: “No, these things are not retrospective.” So there could be no question of it being retrospective.
Now when it comes to Scotland's budget, you know as well as I do that Scotland has a much more generous budget than we do in England and so it came to having could it be an ex-gratia payment which Scotland could have, without a penny-piece extra coming from the budget. In other words could it be a rearrangement of their expenditure to give an ex-gratia payment because they had Community Charge, nothing to do with housing benefit? All right, they have not got a penny-piece extra, they can switch their £4 million to do this but no-one can claim it as a right, it is an ex-gratia.
Now really, do you not think you are blowing it up far too much? Do you not think this was a small thing to say to Scotland: “Look you have your budget, you have a good deal of freedom of administration, all right go ahead and do it.”
Interviewer
I think the whole thing was a nonsense, I am not even sure they should have had the £4 million.
Prime Minister
They would have spent the £4 million somehow. [end p15]
Interviewer
Yes, but the politics of it were not all that well handled though. If the concession was to be made it would have been better if it had been signalled straight away?
Prime Minister
But the concession is not a penny-piece in money, we could not possibly have done it because we would have had enormous problems with other parts who would have said: “Look, this is not fair.” So they have a good deal more money per head than we do in England, if they wanted some latitude to spend that money in a different way, without getting an extra penny piece, that is what they have got. But no-one can claim it as a right so it cannot be legally retrospective, so it has to be ex-gratia. I think we got the right answer.
Interviewer
Switching to foreign affairs, you are seeing Chancellor Kohl next week.
Prime Minister
Yes, very much looking forward to it, at the Königswinter Conference at Cambridge. [end p16]
Interviewer
What about German unification? A few months ago you seemed to signal large-scale doubts and some Germans felt you were being a bit ungenerous in your attitude. Are you worried about German unification?
Prime Minister
No, German unification has been in every NATO Communique I have had anything to do with. What I was worried about was that they seemed to be going ahead without sorting out all of the enormous external consequences and those external consequences and those external arrangements are arrangements which have kept stability and security ever since NATO was formed in 1948 following the Berlin Airlift.
All of them could be foreseen, the consequences to NATO, what happens, what is going to happen with Soviet troops, what is going to happen on the inner border? All of them but all of them with NATO could be foreseen and therefore it was possible to start talking and start to get them worked out. The problems with Poland could be foreseen, of course they could, because the Oder-Neisse border is not formally recognised by Germany, could be foreseen. The problems with the Community could be foreseen, the Common Agricultural Policy, the Common Fisheries Policy - how in the world are you going to monitor trade coming in from East Germany, which is basically a communist organisation, no costs, no prices, all subsidies, you do not know where you are, you cannot have that coming freely into Europe, how is that going to be monitored, what about the structural fund? [end p17]
All of that, if you are going to unify, could be foreseen and they were not, any of them, attempting to tackle it. So yes I was nattering and nagging away and yes I did start to get it tackled and it was not I who moved towards them, it was them who moved towards me and so we had a Four Power Conference at official level and then we had one the other day plus the Two, and then the Polish Tadeusz MazowieckiPrime Minister was here and we undertook to support him, to have a treaty to guarantee his border. Eventually after some battle we got that. We are working hard on the European consequences and so now is the Community.
But Bruce, all of it could have been foreseen, all of it but all of it. And it was not fair and it was not right, or not right and not fair, to go ahead as if none of these things mattered.
So yes we did complain bitterly that these things must be looked at and we were very firm in complaining in every forum. And we got it in the Strasbourg Communique but in very general terms that all the external aspects must be looked at and yes we agree the unification of Germany but so long as it is done with all the external aspects looked at and sorted out and in agreement about it.
It has not been easy and we have not done any more than start to get it solved, but we have started on the problem. Now they are going to have German unification and I must say that a few months ago we did not know about Article 23 and neither did anyone else I think. [end p18]
But they will find that it will take a bit longer than they thought and so we have still got a little bit longer to work it out. But look, how are you going to stop, in effect, communist goods coming across from East Germany, heavily subsidised, if you have not got an inner German border through which to monitor them? The problem is staring us in the face but we have to work it out. [end p19]
Interviewer
Another problem is bound to arise and that is there will be pressure on the EEC to pay for some of the costs of German unification.
Prime Minister
As I have just indicated that is one of the problems. What about the Structural Fund? They have been yattering away about that for quite a time and I think most of us have said: “Look! We would never have taken in East Germany had it been a separate country because it is neither free, nor has it got a free market economy, it has not yet got a real democratic structure or yet a rule of law or a free market economy” Plugging into Germany makes it easier, but it is not the sort of country you could have taken in.
Its environmental problems are enormous, its infrastructure problems enormous, so most of say we would not have taken it in but for the unification of Germany. If the unification of Germany has to come in, the Federal Republic will pay. [end p20]
Interviewer
So you would resist any move to increase the British contribution to pay …
Prime Minister
Most certainly! We should not have taken in this country had it normally been in the queue because it does not fulfil the basic conditions - that it has a full democracy and that it has a market economy - and therefore we have to make transitional arrangements and have derogations and those are now being thought about.
Interviewer
Switching to the question of NATO and continued German membership, do you think there will be British troops in Germany in the year 2000?
Prime Minister
I do not know. We shall obviously be looking at that in accordance with the reductions that America is making on the Central Front but just let us recall for a moment that that came about with the 1955 - I think it was the Brussels Treaty - when it was absolutely vital that we station troops in Germany with the Western European Union and it really was thought that without that the Treaty of Rome would never have gone ahead because people were looking at that time for more reassurance. That was part of the reassurance; 55,000 army plus 15,000 air force. [end p21]
Clearly, if we are going to have considerable reductions on the Central Front, then we shall want to be part of those reductions. What again I have said is we are not going to do it piecemeal. We shall never keep a defence policy if people say “We'll take that up! We'll take that up!” It has to be done under the umbrella of NATO but obviously, as we have been the most loyal, devoted defenders of that front, if there are going to be reductions in the numbers required in accordance with the negotiations now going on, we shall wish to be part of those reductions and obviously, it has to be done with NATO but obviously we have to have a part of the reductions as much as anyone else.
Interviewer
About the EEC and enlargement, many of the Eastern European countries will be pressing for some form of associate membership, even to full membership, as rapidly as possible. One gets the impression that you are much keener on that than, say, Jarsquoues Delors is.
Prime Minister
I am very keen to have an Association Agreement with each and an Association Agreement is not a kind of standard Table A like company law - it has to be tailored to each one of them. It is going to take quite a time for them ever to come up to an ordinary [end p22] free-market economy and to get rid of their subsidies and so on, so it is not possible for them to come in but they could each have different Association Agreements and also, one of the problems - let us face it - is the things they will want to sell to us and have a special trading agreement are often things we have got in surplus. We have found that already. We got a trading agreement with Hungary but we did it because it was vital, it was important politically and how important we have seen.
I am keen to have Association Agreements with each. I think that if we have one, we shall in fact help them the more. I am very pleased with the amount we are helping them now and some of the help is going in the form of grants because some of them are up to their eyebrows in loans - they do not want any more loans. Poland was hungry; we have food; it was silly not to get it there.
All of a sudden, you come across things that they want. They just do not have the most elementary syringes sometimes - we sent a million to Romania - and we help through our own budget directly, we help through the European budget and we help through the Economic Summit Seven, so we will be giving a good deal of help, but I think they will want a lot of contact as well and a lot of friends and also, when you have a lot of contact and a lot of friends, you begin to know their problems and how they see things and it is fascinating to me that once the oppression goes, up comes all the feeling of patriotism and nationalism again. It never went and it would be [end p23] quite silly for Western Europe to think that it could go in Western Europe - it does not. It is there. You have to be loyal to the smaller unit as well as to a larger unit like Europe.
So having the trading agreements and the Association Agreements is part of the new cooperation - and it is a new cooperation the world over. I would not necessarily say that the Association Agreement should lead to full membership. That is our agreement with Turkey. That is the classic Association Agreement and it is not due to us. We have not fully operated that Agreement. Certainly there had to be derogations because after the transition period, Germany did not want more Turkish people going in there so that had to be extended and then Turkey was due to have some money from the Community and when I went there I said: “We are perfectly prepared to help with more money!” - Turkey is quite a poor country and needs some things doing - but that is not fully operative that Agreement.
Turkey applied to join the Community nearly two years ago and then Austria applied recently and both have been told that with the 1992 Common Market coming up, that and all the other things on our plate - and this was before the unification of Germany was on the cards, it was done at a Paris evening meeting that President Mitterrand called together - that we have enough things on our plate as the European Community with the Common Market and the other changes in East Europe and we cannot take in any more countries at present. We are having to take in East Germany but that is a unique position. [end p24]
Interviewer
Aren't you attracted perhaps by the idea of a wider and looser Community?
Prime Minister
In some respects, yes, because I think it is getting too bureaucratic, but I think people tend to talk in too many generalities. If you took a quantum leap, you would obviously be looser because you could never get agreement among those numbers, but I am not certain that joining the Community is a necessity for those East European countries.
And one just has to look at another factor which some of you are already on to: that if the European Community becomes a bigger bloc, that is not going to give a lot of confidence to the Soviet Union. Indeed, if we are going into a world of “blocs”, I do not think that that is necessarily right. I am quite happy to go into a world of various free trade areas because each of them is a move on the way to coalescing the free trade areas through the GATT. You will have now a free trade area for Canada and Australia but you do not need a big bureaucracy attached to it and we will have one in Europe by the time we get to 1992.
But then I find people coming in from Japan saying: “Oh, we have got to have our bloc!” Now that was not the purpose of having a European Community - that we had trading blocs with barriers round - not at all. It was an example to others as to how to get more barriers down, not to put them up. [end p25]
Interviewer
But what about some idea of a Common European Home, perhaps even including the Soviet Union?
Prime Minister
We are talking a little bit in generalities. I agree with you that you need a looser structure for that and I agree with you that we need to build and I think I said earlier that we have to build the structures of the future and we are feeling for them at the moment - we have got NATO, we have got the Community and NATO will be in the transition and we have got the Helsinki Accords, they are not a treaty. They do say that we agree not to change any borders except by peaceful agreement.
I think that we will have to have some looser and more extensive structure. We would say use the Helsinki Accords to develop it; President Mitterrand says confederation. I think when you have got an existing thing - which is the Helsinki Accords - you develop from that because you have got certain secretariats, certain meetings, certain familiarities with that. But I am sure that to keep the peace and to keep the extension of democracy with a proper rule of law - do not forget that is the biggest lack in these countries, proper rule of law and commercial law - you have got to have an organisation, a structure, which includes the United States and Canada and includes the Soviet Union and some of the countries of Eastern Europe, so that would seem to be the Helsinki thirty-five. [end p26]
Interviewer
Do you think that CSCE might then come to replace NATO in time?
Prime Minister
I would not go as far as that at the moment. I do not think we can see as far as that. We do not know where the next challenge will come from, you never do. You only know that you have just got to have sufficient defences, both individually and collectively, to defend your freedom from whatsoever quarter the challenge may come and we must not be so absorbed in East&slash;West problems that we are forgetting some of the Middle-Eastern problems because the Middle East is vital - … vital to one another. The Middle East still is the main centre of the fossil fuels such as oil and the biggest reserves are there and so we must have obviously a relationship with them and it is in our interests that those problems there are peacefully resolved.
Interviewer
But you said NATO was in transition. Do you think it really has done its work?
Prime Minister
I cannot at the moment see when it will have done its work. There are too many unknowns and I do not depart from a known structure which has worked so well until we are certain that a different one is right and we have that different one in place. [end p27]
The transition to which I refer is the reduction of forces that we shall get. They have got those reductions still to make a coherent defence, that is to say, when we have gone down in our forces and some of their equipment, you have still got to have your navy, your air cover, your army, all the requisite equipment which constitute a cohesive defence and in our case to be sufficient for out-of-area activities which we must not forget and which are not only important defence-wise but are also an important diplomatic arm. We are in thirty-one countries training their people, helping by request because we are trusted, because our system is trusted and because when the army goes and does that training and gives that advice and the air force and the navy go round the world, they are respected.
Interviewer
What about the special relationship? There have been suggestions that President Bush seems less keen on it than President Reagan was.
Interviewer
I would not say that. I think I have seen George BushGeorge quite a lot. I saw him between his election and his Presidency when I went over both to see him and to say goodbye and farewell to Ronald Reagan. I have been across since then. We went across before he saw Mr. Gorbachev. He is coming halfway to Bermuda - we are having a talk again. That is before the European Special Meeting in [end p28] Dublin. I think I talk to George on the telephone even more than I talked to Ronald Reagan. George does quite a lot of work by telephone. He likes to get on the telephone and talk to quite a number of leaders.
I think that it is there and it always will be there and it is very important. It is the same language, the same kind of inheritance. Straightaway you can sit down and get down to business in a spirit of fundamental friendship. It is just there. Like the air you breathe, it is there.
Interviewer
On the subject of business, I imagine a visit to South Africa might now be on the agenda?
Prime Minister
I have thought about that. I think it is a little premature. I think we shall see President de Klerk here and obviously we will talk to him.
I think it was absolutely right for Douglas HurdDouglas to go into South Africa and enjoyed it and they enjoyed seeing him and they all met together, a whole load of them, in Namibia, which is one of the plusses of these great occasions, but I think it would be too soon for me to go. There would still be too many people who would try to say that I was pro-apartheid - totally wrong. I think we have probably done more to have a highly prosperous South Africa come into the inheritance of a new non-racial government than any other country. [end p29]
Interviewer
What form should that government take?
Prime Minister
We cannot decide that, Bruce AndersonBruce, we just cannot. When we talked about it at Nassau, we said it is not for us to decide what form it should take. It is for us to do everything we can to get the negotiations going so that they can decide.
If they want advice about the many different constitutional forms of government, they have only to ask and we can give it, but we would not dream of foisting our opinion on them - they each have their own views.
Interviewer
Would you favour one man&slash;one vote in a unitary state?
Prime Minister
We have never signed up to that. We have signed up to one person&slash;one vote, not necessarily a unitary state. It is not for us to say - that would be pre-empting one of the decisions which they will have to make.
Interviewer
Switching back domestically, are you confident that inflation will come down in good time before the next election? [end p30]
Prime Minister
I am confident that we shall get inflation down in reasonable time before the next election. I am not quite sure when the next election will be, but I know that it has to be by July 1992.
Interviewer
Looking les good for 1991, one would have thought!
Prime Minister
Because many people look at our inflation as the RPI, yes, as John MajorJohn indicated in his budget.
Interviewer
I suppose even if the economy was still a bit shaky, even if there still was this problem of inflation, you could always fight the next election on the basis of saying: “We have made some mistakes, but we are still so much better than the other lot!”
Prime Minister
Bruce, inflation for us is too high; a figure that was low for Labour is too high for us but you say the economy is shaky. With respect, I would not say it is.
Manufacturing output went down under Labour - you would not think so to hear them talk about it, but it did. Manufacturing output has hit new records and investment is still going well. That [end p31] is important. The amount of money people have to spend, you have only to look at all of the figures, it is there, they are spending it. If the John MajorChancellor and I have a wish, I think it is if we could persuade more people to be savers at the moment, but I hope they will.
What has happened is that what comes into the national accounts as spending is to most people a saving, that is namely purchasing your own home, but nevertheless, the main thing we could do with now is an increase in the savings ratio. It would help us through. If you look at countries which have good trade surpluses, they have high savings - Germany and Japan - of course they do, because they are not spending the money on goods so the money is available for external investment. They are not spending the money on goods so they are the kind of people who do get a trade surplus. We are spending as much as we have and borrowing some more, which is not very helpful.
Interviewer
But you are confident that you are still the best person to lead the Conservative Party into the next election and win that election? [end p32]
Prime Minister
I believe so, but the way you put it, it sounds as if one is boasting. I am not a boaster, as you know, but I believe that that is true. We have had to be very firm at times to keep things going forward on the same path. I believe it has been right to do so. I believe it has been a tremendous advantage to British industry, commerce, the standard of living and to the reputation of this country. One is known all over the world - it is known what we have done - and that is good for Britain.
Interviewer
I saw Lord Liverpool on the wall as I came up - a shade under fifteen years. If you pass him, you move into third place behind Walpole and &dubellip;
Prime Minister
That is quite a target! A nice target to beat!
Interviewer
Yes, I suspect Parliament met for about four months of the year or something!
Prime Minister
It is a very different world but you know Professor Norman Gash on Lord Liverpool; it is fascinating some of the problems he had to cope with. [end p33]
Interviewer
A lot of us were delighted when Norman Gash turned up in the Honours just about eighteen months ago. He was getting on a bit, I think he had been overlooked. I suspect you might have had something to do with that.
If you had one objective for the rest of your Prime Ministership, what would that be?
Prime Minister
It is difficult to tease out one objective. I do not see how you can have one objective because things are much too inter-dependent.
If I might put an international objective, because foreign politics are not foreign any more - they affect home as well - it is really to get democracy together with the free market economy that goes with it from the Atlantic right to the Pacific. Russia goes to the Pacific; I do not believe myself that China will be immune from that for ever, but that is the prize which is within reach.
In home affairs, obviously I want to see the kind of freedom backed up by economic freedom, backed up by every man a popular capitalist really entrenched because it is a whole way of life under which freedom and the responsibility which comes with it can only be held in perpetuity with people owning capital, the ownership of private property. Where there are no private property rights, [end p34] there are no human rights and it is keeping that system, whereby the wealth has created more wealth than ever before and spread more widely than ever before but under a system of a free economy and freedom of responsibility and that has also done better for the poorest in our population because if you concentrate on distribution of wealth, you will soon find it is not being created. If you concentrate on the creation of wealth, you will soon find that with people of character like ours it is being very well distributed.
If I might finish up, I am always reminded of one of Wesley's sayings when people say that money brings materialism, “Do not impute to money the faults of human nature!”