Int
Prime Minister, you have always said that you didn't enter politics in order to be popular, but why are you so unpopular in Scotland?
PM
Well, I don't think I am necessarily the right person to answer that but I wouldn't entirely say it was true. Whenever I am here people say, “Come back soon, come back more often”. Last evening we had a marvellous reception and a very large dinner. So I wouldn't necessarily accept that. What does please me is that Scotland is taking advantage of all the policies which is right, because I regard it as a very great honour to be Prime Minister of Scotland.
Int
After the European elections last year when you lost your two remaining Euro seats in Scotland, one of the losers - James Probin (phon) - said you were seen as a hectoring lady in London who has not achieved any popularity in Scotland at all. And people on the doorstep said, “We're not really against the Tory Party, it's just their leader.” Do you see yourself - and do you accept the fact that some Conservatives in Scotland - think you [end p1] are a liability to votes?
PM
Nevertheless we have in the United Kingdom as a whole won three elections so I don't think that story can be wholly true, otherwise we should never have done that. Nor have achieved the rising reputation which Scotland now has to my great delight. Nor have done the things we've been able to do in Scotland, which took a certain amount of courage and they weren't easy to do because sometimes, you know, a policy that's right in the longer term has very difficult immediate effects in the short term and so one always thinks about it very carefully and grieves over the short term difficulties, but long term it is working and to the great benefit of all of us in Scotland.
Int
Very early on in fact, when you are talking about introducing policies, you introduced the Parents' Charter, you introduced Council House sales, these were embraced by people. You introduced school boards more recently. And yet if these policies are right - and you say they are right - isn't it a puzzle to you that you don't return more of the votes in Scotland?
PM
In some ways yes. Because some of those policies have been vigorously opposed by the Labour Party, that wins quite a lot of votes, but grasped with both hands by people in Scotland. And the school boards for example, according to my philosophy I believe passionately that parents and people should take a much bigger say and much bigger responsibility in education. We were criticised, [end p2] but in fact they are wanting just precisely those school boards - and they are in fact I believe very popular - so the policy was right and they have grasped it.
Int
But nevertheless these policies you say are right, and you say people are grasping them, but nevertheless after eleven years your own personal rating is the lowest in Scotland it's been - according to the MORI poll this week - you are not turning in votes because of these or despite of these policies. What is going wrong?
PM
Well, I think we're not yet coming up to a general election and I think that when people have seen the kind of success and prosperity that has come to Scotland - and it really has and it's a great joy - they will have to decide then whether to risk losing those policies and losing the prosperity that's come with them, losing the good reputation that's come with them - or not. Now in democracy that's a decision for them to take. I sometimes think that the decisions that you have to take in my job as Prime Minister, if a man took them they would be - goodness me - great leadership, courageous, just what we expect of a leader. Somehow they don't always expect that of a woman, but nevertheless women have to take them. We have taken them and I think we have probably been able to do more throughout the United Kingdom than others might have been able to do.
Int
Indeed you talked about having won an election throughout [end p3] the United Kingdom in the last three elections, but in fact the Tory vote has consistently gone down in Scotland in each election.
PM
Yes, and I hope that it will go up in the next one, because I think we are going to win - and need to win more votes in Scotland. I was very perturbed at the last election that we in Scotland hadn't quite had the full benefit of the increasing number of jobs that there were. It seemed more difficult to get it for us here and I think we had only had two months of unemployment falling. Now we have had over twenty-four months and the policy has really taken off. And there are more companies wanting to invest here, and we have had very good news this week. I sometimes wonder if we had taken that election a year later, if it might have been very different because all the benefits are now really coming through. And I hope that that will tell. People should think very carefully. I believe that it's for them, before they throw those away.
Int
We will come on to a more detailed look at the economy at the moment, but let's deal first of all with the community charge. In the 1987 general election, you said the community charge would be fair, it would be simple to administer and easy to collect. Critics even within your own party - and indeed there are rumblings today of nervousness in the Cabinet - people within your own party say it's none of these things.
PM
Look, I have found no nervousness in Cabinet at all. I think [end p4] we have the most united and cooperative Cabinet I think that I've ever had during my whole time, so please don't believe any of those stories. Community charge is very much fairer than rates. You know full well that over half the people paid no rates at all. That is, they paid nothing towards their local authority as a local tax. But the other half did and paid a very great deal. Now that first was very unfair. Secondly you know, the services that local authorities do are mostly the expensive ones to people. Their education - to people. Their social services, particularly to elderly folk or ill folk. To people. They are mostly services to people and it doesn't make any sense to have a charge on property. Because one house can have five grown ups in it and another house a single widow and yet, under the old system, those would have paid the same rates. It didn't make sense and the present system is fairer. And what is more, after we had had the revaluation which under our law in Scotland we have to have, more frequently than they do south of the border. There really was an outcry, one of the biggest outcries I have ever known and people were coming to me and saying, “We can't have it, you just have to do something about it”. Now we immediately took steps to relieve it, because we couldn't have that amount of difficulty. And then people demanded, people here demanded a change …
Int
… Indeed, you made that change Prime Minister
PM
… we did indeed make that change and it's much fairer and it's now working. [end p5]
Int
When the community charge was introduced in Scotland, you refused to compromise, yet …
PM
One moment, I don't understand what you are saying. What do you mean? When the community charge was introduced, it was a much fairer tax.
Int
Prime Minister, when the community charge was introduced in Scotland you didn't make the same compromises that you have made in England and Wales. Transitional relief, capping, only now have changes come in for example for things like Alzheimer's Disease. Doesn't this underline the belief that Scots views are not taken into account?
PM
Absolute nonsense. We brought in community charge in Scotland because the demand to do it was there. And Scottish people were insisting that we should, particularly those who were very adversely affected by the revaluation and also particularly for business, which really was being charged enormous amounts. Now it's up to the Malcolm RifkindSecretary of State for Scotland whether he chooses to use his rate capping powers, now his charge capping powers. He chose not to do so. He didn't think it wise to do it here in Scotland but he could have done so …
Int
… He also said of course that councils have to be accountable and that voters - the electorate - would then decide [end p6] whether or not they wanted higher charges or not. But in England and Wales you are going to cap authorities that you think are charging too high a poll tax.
PM
There are two points. One which applies to us in Scotland just as much as it does elsewhere. That is that the government of the day has a duty to save people from excessive charges. Excessive charges. Now Malcolm RifkindMalcolm chose not to do that. The second point - that applies all over the United Kingdom - the second point is this. The community charge in England pays a bigger proportion of local government expenditure than it does in Scotland. Your community charges are coming out higher and in particular your Labour authorities, particularly the very Left-wing Labour authorities are coming out with community charges and the counties are the ten top spenders in England, the counties are ten Labour or Liberal authorities and the Districts are coming in. They are coming in with community charges of £500, £550, nearly £600.
Int
But the forty-seven most marginal seats in England - Conservative marginal seats - of the forty-seven, forty-five are over community charged by some way. These are Conservative seats.
PM
But the top ones, the top spenders, the ten top spenders in counties are none of them Conservative, and the top Districts are not Conservative, and many of the Conservative Districts are coming in much lower - Westminster £200, Wandsworth £146, the [end p7] other side of the road from Wandsworth will be Lambeth. They are talking about £650.
Int
… but your own backbenchers, Mrs Thatcher, are saying. These are English statistics. If I could just bring you back to the politics of it. Your own backbenchers are saying that the community charge is a political cyanide pill and it will cause deep hatred and division. Now these are your own backbenchers.
PM
I have never heard the expression you have used before.
Int
Tony Marlow and Hugh Dykes respectively …
PM
I did not hear what was said at the 1922 Committee but if that is so, I don't believe that their judgement is correct. I think you will find that what will happen down south is the same thing that has happened to us in Scotland, the second year the community charge is beginning to work really well because it is making councils account to people and the increases you have this year, the increases we have this year in Scotland, are very much less than when the charge came in. You always find when you change a tax - and I am afraid that some people take the opportunity to put up the charges, they did, not so this year - and you will find that our Conservative councils in Scotland are coming in with a lower charge. Now that is very good.
Int
The Rate Support Grant, or the poll tax support grant this [end p8] year in Scotland is more generous than it was last year.
PM
The changes you have in Scotland, as the changes further south, the changes we have here are helping industry very much indeed. It is a change all over the United Kingdom. It's a change that could only be associated with community charge. The business pays rates, the business has its rates revalued - but I must say to you that Labour authorities were piling a lot of high costs onto business. That doesn't help jobs and so, yes, we have changed it and it is working much better in Scotland and it will also work much better in England so that they all have a similar rate poundage over the whole of the United Kingdom when the thing is fully working. It is, I repeat, much fairer. Much more accountable. Much better for business and much better for jobs.
Int
… Is there any circumstances under which you would withdraw the community charge?
PM
The community charge has gone through Parliament. It is now in operation here in Scotland. It will soon be in operation south of the border. It is much fairer than any alternative - and one does get a little fed up of people saying we simply couldn't have the revaluation on rates, which we couldn't have, then criticising the community charge which is much fairer, and then having no effective alternative to put up. The alternatives I have heard of a roof tax, which in effect charges people on the capital value of their house whether or not they own it, with all [end p9] the ups and downs that would bring and a local income tax would be infinitely worse. So of the present alternatives this is by far the best and the legislation has gone through Parliament.
Int
If your senior backbenchers came to you and said “Prime Minister, the poll tax is going to lose us the next election,” would you drop it?
PM
I would not believe their judgement.
Int
That can't be much comfort to Conservatives in marginal seats, both in Scotland and in England.
PM
I would not believe their judgement, because at the moment they are looking at some of the charges that have been set. They are totally ignoring that one in four community charge payer has a rebate. A rebate of up to 80&pcnt; and then an addition to income support. That is paid for wholly by the taxpayer and over and above that where the change on a household from the old system to the new system is very great, the three years of transitional relief, those two reliefs are wholly paid for by the taxpayer and they will massively alter the community charge position on many many people. That has not yet been taken into account.
Int
So you are hoping that by the time the next election comes around that community charges all over the country will have dropped to an acceptable level to the Conservative voters. [end p10]
PM
I believe that the community charge makes local councils accountable to their community charge payers. If they spend very heavily, it is their community charge payers that will have to pay the increase. Then their electorate will decide whether they want that higher charge or not. But it is a matter for the electorate and the height of the community charge is very much a matter for the local council. Now in Scotland the community charge pays about twenty pence in the pound only of local authority expenditure. The rest is paid by the taxpayer and by business. South of the border the community charge there pays rather more towards local authority expenditure, which means that they are paying a higher community charge and having a lesser revenue support grant.
Int
Moving on now to the economy. The Conservative philosophy has been to create a property owning democracy and you pride yourself on the fact that a great deal of people have embraced that and bought their council homes for example. But now high interest rates are crippling these very people. One in ten mortgages at the moment is in arrears. Surely you can understand that these people, who embraced your philosophy, feel betrayed?
PM
No I don't think they feel betrayed. I think some of them may be sad to be in difficulty. The latest set of figures show that 99.2&pcnt; are managing to pay their mortgages so we're below one per cent and there are very very few repossessions because usually [end p11] the building societies arrange for a longer period to repay. I think they also know that in the long run - and within a few period of years - an investment in your own home is a very very good investment indeed. Indeed, the value of that investment has gone up far faster than the value of the same savings twenty years ago put in building societies. So I think they know it's a good investment. And I am very sad that some of them are having difficulties. We were growing too fast and we just had to slow it down a little because inflation is rearing its head again and that would be very damaging to everyone. So there are some difficulties. Growth is coming up fast. Growth is coming up faster now and it's going to - and it looks from the latest figures as if we in Scotland are going to have higher growth than the people further south. The confidence is very good and the new jobs coming in are very good and I've opened the St Enoch's shopping centre in Glasgow. It's marvellous. It is just a wholly different standard of living and that's wonderful.
Int
What about others, though, who depend on loans? Many Scots started small businesses. They embraced the enterprise culture as you had suggested they should. They too are now suffering high interest rates and the latest figures show that bankruptcies in small businesses are up by 10&pcnt; on last January. Now these small businesses are the ones who are borrowing and having to bear the brunt of high interest rates.
PM
Yes, there is still a very small per cent of businesses and [end p12] far more new businesses are starting up, in Scotland and the whole of the United Kingdom, than are going into difficulties. There are many reasons for going bankrupt. One is that you might not have the right product, two that you might not have the right sales organisation or not the right management, but the overwhelming numbers of people who start up new businesses do not go bankrupt. Can I also say that not all of them depend heavily on loans? Some do, yes, and some are in difficulty, but don't forget the 17 million savings accounts in this country. The 17 million people whose savings are growing because they are making them available to banks or building societies and they are getting 13&pcnt;, 14&pcnt; or 15&pcnt;, particularly some of your older folk and it is they who make it possible for other people to borrow. And so a young couple who are building up a deposit hoping to buy a home, their savings now are growing very well and the price of houses are actually falling slightly so there are always two sides. I would wish that we did not have to have high interest rates but so long as we are having to fight inflation we must do that.
Int
… You mentioned new jobs in Scotland. This week we have Connor Peripherals and I understand there is going to be a formal announcement about Motorola later today. These are both very welcome to Scotland. However, unemployment in Scotland has risen by 20&pcnt; to over 200,000 since you came to power in 1979 - an overall increase of 20&pcnt;. What do you say to these people who are unemployed? [end p13]
PM
Well, we have now been going down on unemployment for twenty-four months and indeed we have more people in jobs than at any time in the last ten years and under Conservative Government, we are attracting inward investment because they are confident in the way in which the Conservative Government in Scotland runs things. That is very good, so what we are getting now are the jobs of the future. What we had to do - and it wasn't easy - was just to let go some of the jobs of the past. You couldn't just go on subsidising them. In any event, European rules would not allow it now. So there were some difficult decisions and they are not easy to anyone to take, particularly as we remember some of the marvellous ships that were built on the Clyde. And now we have, what, one good warship builder with Yarrows and of course Caverners took over Govern and are doing very well. Now those are jobs of the future. They are new industries both that are coming in - are jobs of the future. Now we're going to put much more emphasis now on training through our new local enterprise companies. The people who know the jobs of the future are industry, they know the kind of training they will want, together with universities and the technical colleges who do a wonderful job. And so we're going to do training directly for the new jobs. I think some of the training we have done in the past has been, quite rightly, to see that young people were not unemployed so we had to use training schemes, so it will step up training very vigorously.
Int
Let's turn now to Scotland's top industries, in a sense that [end p14] between them they employ about 60,000 people all told, 30,000 in each. First steel. Ravenscraig workers are a model of the work ethic that you admire - productivity records are constantly being broken and there is no industrial action. They work as hard as they need to to bring productivity up and they work on the basis that hard work brings rewards. But is it good management to have a workforce constantly facing uncertainty? Families indeed with mortgages, perhaps with credit payments. Is that good management?
PM
Good management consists of being able to sell the product at the price people are prepared to pay for it. You can have the world's most efficient industry but if it's products won't sell then it's very difficult. Ravenscraig is doing extremely well. It is now privatised. Under the old days of British Steel, when I first came in, the taxpayer was having to support it to the tune of one billion pounds a year. That was one billion pounds we hadn't available for education and for health. Now Steel is making a profit. It is run privately. It is smaller than it used to be and, you know, that under privatisation, certain undertakings subject to commercial constraints were given and I believe that they are working extremely well. I obviously have a soft spot for Ravenscraig, as I will never forget the attitude of the people that were working at Ravenscraig during the coal strike and therefore it always has just a very special place in my thoughts.
Int
But if Ravenscraig was to be closed by BSC would you step in? [end p15]
PM
We have no authority to step in, any more than we have authority to step in on BBC or ITV. We have no authority to step in. It is a private company. It is a privatised company and it is being run very well. They have given certain undertakings which I am sure are very welcome.
Int
Briefly on fishing. Fishermen are in trouble at the moment and they say that you just don't care. Can't you give them the same robust support in the EC that you've given often to farmers?
PM
Well now, the fishing is in considerable difficulty at the moment because the waters have been overfished and haddock in particular is not very plentiful. The fishermen's incomes have I think gone down a little, but nothing like as much as farmers incomes went down. We were producing great surpluses in farming and farming incomes have gone down by a much bigger percentages and therefore we had to do what we could to help. Not so much fishermen because as the catch has gone down, the price of fish has gone up as every housewife unfortunately knows, haddock is really very expensive now but a delicious fish. We do watch very carefully and have worked very hard to get extremely good quotas for our Scottish fishermen because we bring most of the water and most of the fish in to the Community and we reckon we should have a good deal and so they work to get us very good quotas.
Int
Moving on to the Government in Scotland. The majority of [end p16] Scots vote for parties who say they will have constitutional change. Do you refuse to countenance a change in the way Scotland is governed?
PM
But I went through in the House of Commons, we were in Opposition, at a time when the Labour Government brought in the legislation on Assembly in Scotland and they had in fact the referendum. And you know the result of that. That was the telling referendum, the really telling referendum …
Int
That was twelve years ago, Prime Minister …
PM
… Yes, but as far as our approach to devolution is concerned, we have done more than any government in the post-war period to take away powers from government and give them right back to the people. Lower taxation, that is lower power to government, more power to people. Fewer houses owned by local government, that is less powers to local government, more power to the people. The same was school boards, more power to the people. That is …
Int
… What would constitute proof to you that people wanted more than that kind of devolution, that they wanted a change, that they wanted a Scottish Parliament?
PM
Well, I should still turn back and look and say when it came to it you know the result of the referendum and I haven't yet seen [end p17] anything to overturn that.
Int
So you would rule out another referendum?
PM
I haven't yet seen anything that would warrant one. I do think it's more important not to pass powers from one layer of government to another, to pass them to the people. And I have noticed how vigorous our people in Scotland have been in saying they do not want higher taxation. And an Assembly would mean a lot higher taxation. An Assembly with tax-raising power would make our people in Scotland, make us here in Scotland, the most highly taxed part of the United Kingdom. All the polls that I have seen indicate that Scotland does not want that. And I can well understand why, because under Conservative Government Scotland has flourished and the rate of taxation that is charged on ordinary people is very much lower than it ever has been under …
Int
… but it doesn't return votes, Prime Minister …
PM
&dubellip; not at the moment. There will come a time when people will have to say, do we want to vote for higher taxation? Do we want to vote for more government power?
Int
Perhaps they do, perhaps they would like that choice.
PM
They have that choice. They have that choice at every [end p18] election. They have it at every election. No-one is arguing about that. I am just trying to put into focus some of the issues that they will have to consider. The choice is theirs. I'm a good democrat. I don't try to change the law by militant demonstrations or anything like that, or by urging other people not to obey the law. I'm not like those 28 Labour Members of Parliament who are trying to say “Don't obey the law, don't pay your community charge”. I believe in the law … (interruption by interviewer) passes laws which I don't like then I have to obey them, then that is what democracy is.
Int
In a recent Glasgow Herald you were asked about the sentiment of being Scottish. You talked about Scottish regiments, Scottish names, Scottish scenery, these being very Scottish things. All that is true, but don't you understand that people find that rather patronising?
PM
Well, if it did, I'm very sorry. I come from a county in the Midlands - Lincolnshire, I'm a Lincolnshire girl, - wherever I go in the world people come up and say “You're Lincolnshire, so am I”. We feel a fellow feeling, just because we come from that part. I'm really rather proud of things that went on in Lincolnshire, so I know what it's like to feel pride and I just assumed that other people from other regions, other countries, other nationalities would feel the same pride. And if they did, well, I do hope they won't take it that way. [end p19]
Int
Finally, Prime Minister, if you were returned to power at the next election with reduced number of Scottish Conservative MPs, do you believe that you would have a constitutional crisis on your hands?
PM
I hope that we shall have an increased number of Scottish Members and I believe that our record will be such that we shall win back some of the seats that we have lost. We have had a socialist government in the United Kingdom which did not have a majority in England. We did not complain, because we believe in the United Kingdom and I still believe that each and every part of the United Kingdom has done far better by being a United Kingdom. It profited from being able to move about, it profited from being people of one country as well as being our separate nationalities and I am a passionate believer in the Union and what it has done for each part of the Kingdom.