MC
Prime Minister, there must be many who remember four years ago you outside No.10 Downing Street, a tremendous moment for a Prime Minister, when you were about to take over as the Leader of the Government for the first time, and they will remember you quoting St. Francis of Assisi: “Where there's error, may we bring truth, and where there is doubt, may we bring faith”. Now in these last days there has been considerable speculation about the fall in the value of the pound, and more speculation that you might wish to put an end to the uncertainty and the doubt by having the election earlier than you otherwise might have wished. What do you say to that?
PM
Two comments. One, the one you've just made, and the other that if you do such a thing … . Of course uncertainty is something which you just have to take into account. I don't think it really arises until well after the four years, and we haven't done four years until May. But it is a thing that bothers me. I've been through many vicissitudes with the value of the pound and the dollar. Remember in my first two years the dollar was very very weak, and so the pound was very unusually strong which had its own problems, and now the dollar is very strong, and really the pound is I think a little too weak against the dollar. The dollar's strong against all European currencies. It will change. The dollar will go weaker in due course of time. In the meantime we have to live through the interim. When I come to decide—may may I make it quite clear—I have not really addressed my mind to it—uncertainty and what that means for our country will be a factor uppermost in my mind.
MC
Mr. Foot, I thought yesterday, appeared to fire the first shots in the election campaign with what's been characterised as a rather bitter personal attack upon you. “She represents the competitive system in its most callous latest manifestation.” What do you say to that?
PM
Competition has been very good for the consumer. Look at the high street. The housewife will tell you that you can go from one shop to another—Marks and Spencer, British Home Stores, [end p1] the Littlewoods, and so on. And many many small businesses—competition puts us all on our toes, and it gets the best profit. Good heavens who would have suggested you could have sport without competition?
MC
Do you think the election campaign is going to be a rather bitter personal one? Has Mr. Foot set the tone for it, would you say?
PM
No, I won't let Michael Foothim set the tone for it, if that's the tone. I did a speech to my own Conservative people on Saturday, and all of a sudden one of them after the end of the speech said to me, “You didn't mention Mr. Foot at all.” I said, “Well, why should I?” What I was trying to do was put our constructive policies, and that's the way in which I'll tackle it. But I remember vividly during the last election—I was determined to tackle it that way. Put our fundamental principles and the policies which emerged from them, and show how it all hung together. Because a Party is not a miscellaneous collection of ideas—it's things embedded in deep conviction. So I started off—the first ten days—stuck to it absolutely. And then I found that the Labour Party for the first ten days had done a total attack on us—nothing constructive. A total attack—and were putting around some things that just weren't true. And raising people's fears in the most outrageous way. And so in the middle week I remember I had to turn round and reply to that, and maybe it'll be the same this time. My general approach won't change, and it's our job to put our policies for the future, and I will hope to keep it very much on policy.
MC
This country's success depends, doesn't it, upon its economy. The CBI, who you criticised for being too gloomy, I think, last year about their forecasts of what the prospects would be—but who turned out to be right then—now say a recovery has begun, but are you prepared to say, Prime Minister, that this is that sustained recovery which you made the objective in your policy?
PM
I believe it's much more likely to be that. You'll find that a cautious answer. Yes it is a cautious answer because the [end p2] worst point in the recession for us was the mid-point of 1981. We went into it earlier than the continent, and you're coming out earlier—just the beginning of 1982. And it looked as if you were going to get a recovery then, and we were all optimistic. Then I think that wasn't a true recovery, first because it was people re-stocking where they'd run down their stocks. But secondly there was another factor. The recession hit the continent, in particular Germany, and because it hit them it rebounded back on us. And therefore we weren't able to sustain that although last year we had an increase of 1%; in GDP. It's very very small. Now why I'm a little bit more optimistic this time is a number of things. First, I think the fall we've seen in oil prices will help in general. It causes problems for some countries, but on the whole as far as we've gone now it's helpful. But secondly, you're getting signs of recovery in a number of countries simultaneously. And in the right things. In construction for example—always a classic sign. You're getting it in the United States, you're getting it in Germany, you're getting it here. And so if several of us are coming out simultaneously, then I think that is good. So it is the lower oil prices which is good, and there are several signs of recovery which we're getting in other countries, and we're all making a very considerable effort to keep interest rates down. And inflation is lower. Now that's good. So I am a little bit more optimistic that this will be sustained.
MC
But how can there be that sustained recovery, given the unprecedented loss of competitiveness of the British economy? 25%; or so less competitive still than it was in the period up to 1978, despite a substantial improvement in the last eighteen months?
PM
You're taking the averages and the general figures which have been quoted. Can I put to you the reality? As distinct from the statistics. The reality is that we had a record year of exports. Now that doesn't tie in with the statistics. … in the recession. World markets are very highly competitive, and so yes although you might find averages, you'll find a number of companies doing extremely well, highly efficient, the latest [end p3] products, very good marketing, excellent services. We should never have got that fantastic balance of payments surplus, and the excellent performance in exports during a year of world recession, and during that period when world trade was falling we actually increased our share—particularly manufacturing exports. Now that doesn't tie up with average. A number of companies who are doing extremely well. And we expect we'll have a balance of payments again this year.
MC
I must put to you though what the pooled intelligence of all the western industrialised nations, and Japan, the OECD report says, and it says this—it's unlikely that a marked recovery in output could be achieved because people will import rather than buy British goods.
PM
Again, if you break down the imports, yes, some of them are consumer goods, and of course if you're a very, very big exporting nation, you also have to do a certain amount of importing as well, and you do have to compete. But, a lot of the imports have been raw materials and semi-manufactures, and a lot of that of course is to make goods which will be re-exported again. Now I believe we're in a much much better condition to compete both in our home market and in exports. Certainly the change in the value of the pound helped in this. Because other countries have been revalued upwards—the mark for example, and the dollar—then our manufacturers here can compete with them much better in our home market. We should be able to get back a good deal of our home market.
MC
But how can we if we're 20%; less competitive?
PM
That does just plain not hold good for all things. Certainly for example in things like cars, you're absolutely right. We're not yet as competitive as some of the overseas manufacturers, and that of course you see when people go overseas and buy a car and import it cheaper. We're still overmanned in cars—you see [end p4] that when you compare our factories with those on the continent. We're very much better than we were. It's not only overmanning, we're very much better on design. Don't think it's competition only in price. It's in design, quality, after-sales service. If you've got a really good product you can sell it. We're very much better. Frankly the movements in exchange rate have helped enormously. We still on some products have a long way to go. Let's look at what we've done, And what none of the pundits can get over is our actual performance on exports. And that doesn't tie up with their analysis of statistics.
MC
You've spoken often, haven't you, about a new mood—attitudes are changing. I think that's a drum that you've beaten very consistently, particularly more recently, that given the very first signs of recovery, there are strikes now at Halewood and Cowley—what message do you have?
PM
I find this thoroughly depressing. There they have good jobs, prospects of, good bonuses, good models, both of them excellently designed cars, designs that people are buying, and they put it all at issue by going on strike. If they and their unions have a death wish, there's very little I can do about it. There are hundreds and thousands of people who'd love to have their jobs. What they're doing is ridiculous, it's absurd, it damages them, their families, their products, their company, their country. Now, I just urge them to go back to work for their own good, for their companies, for their future, and for their country. What they're doing is ridiculous.
MC
When you reflect upon your own performance and that of your Government in these last years, what mistakes are you prepared to acknowledge yourself in your management of the British economy?
PM
Goodness me, it's always a very difficult question to ask. I am sure we have made quite a number. I don't think I could just suddenly say what they are now. I can remember what I think the difficult decisions were and what, if I might put it this way, the strong points were. We had a very, [end p5] very difficult second year and what has given us a very good financial basis—I know this is the opposite of what you're asking, but it's the thing that I remember vividly—what has given us a very, very good financial basis now, a small deficit, control of public expenditure, low inflation and good balance of payments is the fact that we had to have a very, very tough Budget during our second year and I remember vividly the press the morning after that Budget, very tough Budget which the Geoffrey HoweChancellor of the Exchequer and I and the Cabinet agreed that we had to do it to form the basis for the future.
MC
Do you think you overkilled then, looking back on it?
PM
No, no, no. That was the foundation; why inflation is right down now; we've a small deficit, public expenditure under control—I haven't got any of the problems in the United States; I haven't got the problems of France. We laid the basis of a sound financial future, why we've been able to repay some of the overseas debts the past Government left us with. That was a very difficult thing and I know that was done right.
MC
But the Government certainly brought down inflation, and no-one can deny you that. Can you say that you would have adopted the policies that you did at the outset had you known then that the unemployment figures that we now have were going to be as devastating as they are?
PM
I don't think any of us realised the depth of the world recession that we were going to encounter. I am sure they didn't on the continent of Europe. And in some countries of course the level of unemployment is higher than ours. In others, if you take into account the fact that they have conscription, military conscription, which of course takes a whole generation and puts them into conscription for fifteen months, if you take that into account and you take into account the fact that Germany sends a lot of her guest workers home, then their level of unemployment is not very different from ours. [end p6]
But can I just answer your question directly having given that as the background. If we had not taken steps which made us more efficient in industry, we'd be in a very much worse position for the future than we are now. It was difficult to do it in the recession and yet it was the more important that we did, because everyone else was doing it too.
MC
Prime Minister, what ordained that we should have a recession worse than anybody else? I asked you whether you would have adopted these policies if you'd known at the outset that they would have produced these very high unemployment figures and then I must quote to you the OECD report. After all these are the statistics which the Treasuries of all the Western industrialised states—they say the fall in output is severe and greater than that initially envisaged by the authorities. Now that's down to the Government in the way it managed the economy.
PM
Not wholly. But let me say why. Let's look at the things in common and then the things which are different. The thing in common—world recession has hit us all, new technology has hit the whole of the Western industrialised world. The first effect of new technology is to displace people with machines but the later effect is to create the new products. But the first effect is difficult as far as employment is concerned. The third thing that has hit us, but it has a different impact, is the development of the whole of new industrialised countries, the Taiwans, the Hong Kongs, the Japans, the Koreas, the Singapore. We used to export to them. Now they export to us. They export to our traditional markets. That's a whole new pattern of trade. It's hit us all, but it has hit us I think particularly badly because we used to export quite strongly to those markets. So that's hit us. The thing which has hit us in particular which has not hit the rest of the world is our overmanning which was worse I think than almost anywhere else in the industrialised world; the overmanning in steel, we're still overmanning in cars: the overmanning in our traditional industries: [end p7] overmanning and restrictive practices were the characteristic of British trade unionism which you did not have elsewhere. We had to get rid of it to compete. That I am afraid meant that a lot of people came out of jobs—If only it had been done ten to fifteen years ago. … Please may I finish because it's terribly important. If it had been done when world trade was improving we'd have been in new business and new products. I had to do it during my time. It had to be done to be able to compete and the other thing—a characteristic of this country is that we paid ourselves more in relation to our output than either Germany or Japan, or our competitors. People thought if they had more money in their pockets it would mean something. It didn't; it meant bigger inflation. Those two things, the restrictive practices and overmanning and the colossal increase in pay without increase in output, particularly in the last decade, hit this country and are things which I've had to cope with in addition to other things.
MC
All right, Prime Minister, but how does unemployment on this huge scale help the economy? It's costing the Exchequer £5 billion a year, a very substantial part of the North Sea oil revenues which were £7 billion odd last year? How does that help?
PM
It doesn't help any of us. Of course it doesn't. But you don't just create jobs by saying that. That's the sort of stuff I listen to in the House of Commons every Tuesday and Thursday, but not one of them has any idea about how to create real genuine jobs by creating new products which you can sell. It doesn't do any good just to merely put all of them back into bureaucracy. Who pays for that? The successful companies who've had loaded enormous overheads on them. And they'd go out of business because they couldn't compete. So we have to create to solve the unemployment problem by creating new businesses, new technologies, new services. And that's the only way to get out of it. If people would bend their minds to doing that rather than pontificating about the level we've got over the Western world, if some of them who think they know everything could actually go out and build [end p8] up the new businesses and services it would be marvellous.
MC
Well, Helmut Schmidt, the former West German Chancellor, somebody whom you admired, he makes the charge, and made it only a couple of weeks ago, against the British Government that there were excessive cuts in public expenditure and the policies which you had adopted perpetuated the recession. You see that is the argument I'm putting to you, that it's worse than it might have been. OK, there's a world recession but we had it unnecessarily harsher than others did.
PM
I've given you the reasons why it's harsher. Helmut Schmidt, for whom I have the greatest possible admiration, never encountered the things which I did. He did not encounter the overmanning or restrictive practices or our structure of trade unions. Indeed, we set up his structure of trade unions in the post-war period by learning what had gone wrong with ours. Secondly, he always pursued policies which kept inflation down. If you pursue policies which keep inflation down you have much healthier industries, which he did have, and therefore was able to ride the recession better than we did. But even his policies ran into very considerable unemployment because of world recession. He always kept his public expenditure under control: I followed him and kept ours under control. He always kept his deficit under control and because of that Germany rode the recession better than we did, but he still, nevertheless, had very considerable unemployment which last year rose more quickly than ours did. And of course I said he sent nearly half a million Gastarbeiter home, which we couldn't do, and he's got compulsory conscription which takes a whole year of young people off the unemployment register. So, yes I get on extremely well with Helmut Schmidt. My policies and his were the same. I followed him, very considerably. Therefore I got inflation down; therefore we've got public expenditure under control. It does not help to have more public expenditure. What that does is put heavier taxation on the backs of industry and that is a burden and not an asset to them. [end p9]
MC
But where are these new jobs that you speak of and where are these new industries? You've begun to emphasise the necessity to get out of the old industries and into new ones, but where are these new industries? Where are the new Rolls Royces of Britain? Where are the new BSAs?
PM
Unfortunately I can't give you a new Rolls Royce but we've got the new Maestro and they're on strike as you pointed out. That's not my fault, that's theirs and one of the things which has knocked this country very badly is its record for strikes. Whenever I go overseas they say, stop strikes and we'll buy your products, and that I just can't stop. We've ridden some of our public sector strikes, and quite rightly, and people must understand that if they go on strike and they do themselves out of a job that's their fault and the unemployment and the reputation Britain gets because of it is their fault; that is their responsibility. Now, where are the new jobs? Just let us take Scotland for example—well, the whole of the North Sea oil is new jobs, the whole of the back-up industries are new jobs, all of the technological industries backing up with new jobs. Do you know in Scotland now there are more people employed in the new electronics than there are employed in steel, in shipbuilding? New jobs are taking over. But there are many, many new jobs and products which we should produce and don't.
MC
The very point I put to you is, you see, that Silicon Valley is in California, not in the Rhondda. There is no big robotics, industry in this country, there is in Japan. We are spending over three years what the French spend in one year on robotics but your general posture is that the Government can't really do much about this—towards the private sector.
PM
Not quite right. I entirely agree, Japan has embraced new technology faster than anyone else. But she's embraced it in putting a tremendous amount of effort into the new products, and what have I been advised to do here by many who oppose me—pour money into the industries of yesterday. Look at the money we pour into—do you know we still pour a fantastic amount into [end p10] steel; when I came in the money going to steel output was £1000 million a year. Years ago we invested colossally in steel, put billions in boosting it up, and now we're having to put billions in, I'm afraid in bringing it down to a reasonable size. We put great subsidies in too, British Leyland is in fact one, but we're trying to get into a size where it will be effective. But, we have the first home computer and the most successful one and I was able to present it when I was in Japan because we beat them to it—to the Japanese Prime Minister. So some of our industries are doing extremely well. I made out last Saturday—it didn't get any publicity because it was constructive—the strategy for jobs. The third point of that strategy was the amount which Government can do to fund research and technology into the new products. One of the things, for example, some of the up-beat industries, the new technological industries, can do is to go to the Department of Industry and say we've got this latest development, this new product and they can get a grant of thirty-three and a third per cent to bring it to launch and marketing. That's one of the things we are doing—£180 million has gone on that and we have allocated another £185 million. We are marvellous at new inventions, but we are not so good at turning them into profit and industrial advantage. I wish we were. That is the weakness of this country. Two things.
Look, cloning—in the whole of the new world biotechnical industry, invented in this country. We've got Nobel prizes for it. We didn't translate it into industry. That is our weakness. We've got to get closer cooperation between our quite brilliant scientists and technologists in university and in industry, doing everything we can to encourage that. We've got to get better technical training in the schools. We want the new jobs here. We don't really want to buy the products of overseas technology.
MC
But you see the Government has cut university grants at the beginning of its term of office which would have provided the necessary skills for some of these new industries.
PM
Now steady on. What we've … [end p11]
MC
I was just going to put one more thing …
PM
I'm so sorry you finish first.
MC
You talk about the new micro-chip in industry it was not started by private investment, it was started by INMOS, a state institution …
PM
Oh now, now—
MC
… which had to fight for a £50 million grant at the beginning—and got it only with very great difficulty in 1983.
PM
Look, may I say the new micro-chip was started by private enterprise. The other side of the world certainly and a lot of our young scientists were involved in it. In Silicon Valley in the United States, a lot of our youngsters went out there because there was great opportunity, there was a spirit of enterprise. That started with free enterprise and some of our youngsters went there because there was the atmosphere of free enterprise. Now they got ahead of us and so they did in Japan. INMOS, all right, do you know what happened to the first £25 million of INMOS money, do you know the way it was set up by the Labour Government? I will tell you. I had to inherit it. The first £25 million. And only now, after £100 million, are we just getting something coming to Newport. I would never have set it up that way. Nevertheless the business is starting up in this country because we've tackled it and approached it in a totally different way, and I would never have set up INMOS in that way. I think it totally wrong to set up the thing in a way which got extra jobs in Colorado Springs. We can't afford to do that. We should have put it into here. I have tried to put more of it into here and we're getting it here. Now universities. You put a lot of background information into that question. There are, in fact, more of our age group coming through with first class—I don't mean first class honours degrees—with graduate degrees than there are in most other countries. That's the acid test, not how many going in, but how many coming out [end p12] with degrees. But then you have to look not only at the number that have come out with degrees. What we have been trying to do is alter the balance. Yes, I admit it. We want a bigger input into science, particularly into the engineering, technological sciences. And, I must confess, less into some of the arts subjects, not what I call a disciplinary art, but some of the arts which won't find it easy to get jobs. So we are trying to do that and we're succeeding. And don't forget there's the whole of the polytechnics—they are meant to be vocational training. Yes, I want more engineers; that's what we're trying to get.
MC
To what extent do you believe, though, in the mixed economy? Conservatives talk about clawing back and denationalisation. To the Labour Party it means more nationalisation. How is it possible to create the climate of confidence for the necessary investment if the mixed economy is split between the two of you like this. Now to what extent do you a actually believe it?
PM
I don't believe in monopoly of any kind. Monopoly to me is bad. It means that whoever is in charge of a monopoly and the unions have the customer captive and can hold him to ransom. It is bad for the customer. It is bad whether it is public monopoly or private monopoly. I do everything possible to break it down. We have laws against private monopoly. We have no laws against public monopoly. Yes, I am trying to denationalise things because it is bad if you have a great big nationalised organisation with big unions who can then hold the country to ransom. Most of them now are not doing so in the same way that it was possible to do so before. And there are many, many people working in this industry who will not pursue that policy. But monopoly is bad. And also you will find that it is not run commercially and in fact absorbs an enormous amount of money. Those sums of money have to be found from the taxpayer, or from other industry. Now, do you know for example oil provides a lot of money in tax? We get oil from beneath the North Sea under the most inclement circumstances and it puts money into the Exchequer, which we can use for education, for health services, for helping to fund new industries. …
MC
Unemployment benefit … [end p13]
PM
Coal which is below the ground in this country, still makes a loss, something like £400–500 million a year, so we have to pour money into that. We're trying to get back at its most efficient, so it doesn't make a loss, so it can put money into the Exchequer instead of taking it out of the taxpayer. That's a nationalised industry.
MC
Do you plan to, in this Britain with the balance restored, if you had another term of office, do you contemplate the planned run-down of those sectors of the economy which have been such a drain on its resources? I mean Sir Michael Edwardes said in his new book that is published that you were only persuaded with very great difficulty the need for the scale of financial assistance to BL. I mean would you do that again?
PM
Let me start, there's a great future for coal. We have excellent seams. We've poured investment into it under this Government into the pits which have a colossal future. We are always looking to the future. We've got to have railways. We want really efficient railways. We look at those. You've got to have a very efficient electricity industry. We are always going for efficiency whether public or private. When it came to British Leyland, a tremendous amount of the whole of the West Midlands was dependent upon British Leyland. We set out, with the cooperation of Michael Edwardes, to make British Leyland efficient because in the end if Ford and Vauxhall and Talbot can stand on their own feet without a penny piece of subsidy, except what goes to the regions in any event, so can British Leyland? They must rise to the challenge and must not sink back into subsidy. So that has been the spirit. And Michael Edwardes and I set out, and yes he did set out, to increase its efficiency and has done so. And we did set out to give money for good design and he got the Metro and he got the Maestro. But those people who work there must not think they have a constant line to the British taxpayers' pursue. They must say, if Ford, Vauxhall, Mercedes, and Rolls Royce can do it, so can we and it should be their pride to do it. Yes, I would have done it again with British Leyland. But when the British taxpayer has put that much faith, both in those who run British Leyland and in those who work there, then I do think they [end p14] are entitled to expect some response from the people of British Leyland and they should not just go on strike at one plant because they refuse to do what happens at other plants. In some ways it is repaying. Jaguar is doing extremely well. It's risen to the challenge. That's the most important thing.
MC
Among your critics within the Conservative Party, in the way you pursue this objective of the Britain with the balance restored, are people like Sir Ian Gilmour, who suggests that for a Conservative you and your colleagues have become unhappily and uncharacteristically doctrinaire. Now you can pray in aid of that argument, what was it they said of Pitt?, That he was far too practical a politician to be given to abstract theories, universal doctrines. He was always prepared to sacrifice any amount of theory rather than make of his policy a single needless enemy. Now if that's representative of … it remains to ask you whether your great predecessor would have nominated, in the present circumstances of very high unemployment, Ian MacGregorMr. MacGregor, however excellent and necessary his talents you believe them to be, whether he would have not asked somebody like Mr. MacGregor to rationalise the coal industry at this moment?
PM
May I just say that you've put a fantastic amount into that question and I would just almost like to take out each and every point? First, I am a passionate believer in personal responsibility, personal liberty, justice and I believe that people who pontificate are often the biggest theorists of all. They're the ones who make a career pontificating rather than a career of going out building and creating a business for themselves which will actually employ others. I wonder why they don't do it. Is it because they can't? So that goes for many, many commentators. If they could do it they wouldn't need to be professional commentators. If they could build up and create jobs, why are they holding from us their superb talents to enable us to settle and sort out some of the problems which we face, and Sailsbury was a firm believer in all the convictions and principles in which I believe. Most people know that the new products, the new goods, don't come from the brains, either of politicians or bureaucrats; they come from the creativeness of able people in industry. They know that politicians on the whole are not renowned for being [end p15] able to manage industry and solve problems on the spot and politicians should have the wit to know the depth of their ignorance on these matters and put things over to people who can do. I went to visit Felixstowe docks the other day—marvellous—private enterprise, people pulling and working together. I wish we'd got it up and down the country in one enterprise or another. That's the thing I want to encourage—not to knock on the head. Who are these people who say we're all made of the same human clay—ordinary people aren't capable of running their own lives and building their own businesses themselves—whereas we the politicians who are made of the same human clay know so much we cannot only run our own lives but everyone else as well? So, yes, I do believe in principle and I've yet to be told of a theory which I've stuck to through thick and thin and not adapted where it needed adaptation. And don't say monetarism. Monetarism is a neutral weapon. What it means is that you actually keep the supply of money in line with the output of goods and services. You can do it in a Communist country, you can do it in a Capitalist country, but all it means is honest money. Now quite frankly I've not a lot of time for theories. I'm very practical sort of person. I believe staunchly in principles. Thank goodness I do, I wouldn't like to be the politician who didn't.
MC
Prime Minister, not the least of the concerns about the future is the one being voiced by the campaign for nuclear disarmament. Given the large demonstrations which are planned over Easter, can you say confidently that you're winning this battle for public opinion?
PM
I think we are. I think there's a deep understanding in this country that we have to defend everything we believe in. That we can't do it alone. Therefore we have to do it as part of the NATO Alliance and we must stand together. That is the lesson which my generation, our generation, have learned and which I hope we'll never forget. So I believe in the 90%; support for the NATO Alliance. I think there's also a deep understanding that things are very, very sophisticated these days and if ever you let down your guard you will be totally vulnerable for a period and it would take you years and years to get back up, so you have to keep the latest technologies and there's also an understanding [end p16] that the bully attacks the weak, he doesn't attack someone who is as strong as he is. Therefore you have to keep as strong as your potential aggressor in all kinds of weapons. Now that means you have to keep nuclear and therefore I think they understand the way to go about having that security in a less expensive way is to get down the amount you spend on armaments on all sides simultaneously, equally, and in a way you can verify. And I think that's the great undercurrent, the great undertone which dominates everything. And I think that's the great undercurrent, the great undertone which dominates everything. And I think some people are absolutely fed up to the back teeth with some of these protestors, the way they do their protesting and the mess they leave, the terrible mess they leave; the amount of time they require from the police, a time which they could put to far better use tackling crime. So I think we've got the broad understanding belief and policy with us and we should not be taken in by the organised protest.
You can have a very small minority making an enormous fuss but I don't believe that really in the end it cuts very much ice with the British people.
MC
You must have had many reflections upon the significance of the campaign in the Falkland Islands both for yourself and for the country. How do you see it now?
PM
It was the acid test wasn't it? Absolutely. And today, this day a year ago, was the day when, it was a Wednesday, 7 o'clock in the evening, all of a sudden the intelligence reported to me that the Argentine fleet was on the way and it looked as if their destination would be Port Stanley. It was the acid test. We talk about freedom, justice, democracy. Were we going to defend it? Even though it was 8,000 miles away? Yes, we did. I never had any doubt. Cabinet didn't have any doubt. The British people never had any doubt. But it was extremely important, not only for Britain but for the rest of the whole free world. When it was challenged, will you defend it? And the last time we did was on the Berlin airlift. We all rose to that. The Berlin airlift, South Korea. Since then, the Americans tried to keep communism out of Vietnam but they were not successful. But since then, it was Britain who once again came to give the lead. [end p17]
MC
… .
PM
You asked me on a particularly poignant day and of course we have been reliving days this week and it's come … .
MC
I can see it as I look at you now. You obviously feel it very intensely. And I think it's possible to admire your own courage and resolution, as I think a great many people did, and to hold the greatest admiration for what the British forces achieved there. At the same time, it is still possible to wonder what on earth you are going to do with the Falkland Islands. We can't, can we, afford to stay there? We cannot afford to incorporate them.
PM
Incorporate them? I don't understand your words. Incorporate them? We cannot afford to incorporate them? We have to defend them. That's exactly why we went down there. Those people are of British stock. Many of their families were there … . We have to defend them. They are British sovereign territory. The people are British stock. And we have given them the right to self-determination. And South Georgia is British sovereign territory, and of course is strategically very important, the gate-way to the Antarctic. And the Falklands have been important in our history many times. The same thing happened in 1770 when the Spaniards tried to turn us off the Islands and the task force was sent from Britain and we got them back. They were important during the First World War when the battle of the seas round the Falklands was absolutely vital to enable us to help eventually to win that war because control of the seas mattered then. It was important in the Second World War where EXETER and I think AJAX went in there to be repaired after the great battle of the River Plate. And they have a great strategic importance. Because we have to defend them. They are British sovereign territory. And I get most alarmed when I hear people talk in that way—what are we going to do with them, as if we can't defend them. Those people there, you can understand how it will alarm them if we talk in that way. We have to defend them and we shall defend them.
MC
Prime Minister, the Labour Party feels we should be out of Europe, but what is Conservative policy about Europe? What is it, other than keeping us in and getting our money back? [end p18]
PM
Conservative policy about Europe is this. Europe is an enormous force for stability and democracy in an uncertain world. Next to a Warsaw Pact, a Soviet dominated area which is an area of compulsion, we in Europe can show that we can live together in a close alliance; live together and work together in an uncertain world. This is a tremendous thing which we can do. The whole of the future of freedom, justice, democracy in the world and show those who still live behind the Iron Curtain, give them a beacon of hope that one day that freedom and justice might extend to them. So it is for the ideal of democracy, freedom and justice that we must stick together. Within that ideal we work and fight Britain's corner. We've just got a Common Fisheries policy which depended for a great deal on British leadership in getting that. We now have to get a just Budget settlement—we got a temporary one, we want a permanent one. We shall win on this because they know we have a case. No-one wants to give up money if they don't have to. But we shall win, we shall fight, we shall battle hard and win like last time. But it's really the big things. It is really ideals that do count and they count for future generations among other things. We're getting a lot of investment from overseas countries into this country which means jobs because we are a spring board for exports into Europe. That will go if we pull out of Europe.
MC
If your election can be seen in some important degree as due to the failure of the consensus established in this country after the war, initiated by Attlee's Government, failure of that consensus to stop Britain's decline, do you consider when you measure the opposition to your Government that you've been able to lay the foundations for a new consensus in this country?
PM
I think that ideal at that time really consisted of domination by the state of most industries and of course in the end it meant too much domination and control of the lives of individuals. I do not think that that is right for the future success of our industries. And of course we look at freer countries;
I think they've been more successful in developing their industries than the controlled ones have. Nor is it right for the British character. I think we now realise that. And therefore what happened was that the centre got pulled much too far to the left. [end p19] As someone said to me in the last election, we're going to vote for you Mrs Thatcher in order to pull the centre back to the middle. And I think that we have in fact pulled the centre back to where it is much much more in keeping for future prosperity of our industries based on enterprise, for the future development of our country, based on personal responsibility, property ownership enlarged to far many more people and independence of people from Government. I think, yes, we have pulled it back to the centre. I think that was a very good thing to do and I think it means that we're going to lose the past, not to live in it, but to rise to the challenges of the future.
MC
I wonder if I should then end on an inconclusive note and wonder whether you've been able to do enough in time to do that.
PM
There's a lot more to do, we shall carry on and do it. And I think that prospect is most exciting.
MC
Thank you Prime Minister.