Summary
Mrs. Thatcher said that a new date was about to be added to our national calendar—the inglorious 4th of March, the third anniversary of Labour's return to power.
She doubted if anyone would raise a cheer for that birthday. The Prime Minister was in no position to rejoice. His demoralised backbenchers were not rejoicing. The Labour Party, riddled with extremists and crumbling at the edges, was not rejoicing. The people of Britain saw no cause to rejoice as they waited wearily for the opportunity to turn out of office a totally discredited Government.
After three years in office, one by one this Government's excuses had become steadily more threadbare. “There is now no-one they can blame for their failure but themselves. There is no longer room for that ancient ceremony at which the Socialists have always excelled—passing the buck. Yet even yesterday the Prime Minister shrugged off any responsibility for the present level of unemployment” .
The economic record of the Government could be summed up in a word, failure. “Total, abject failure. Even those of us who knew these Socialist policies would not and could not succeed have been shaken by the completeness of the calamity.” [end p1] Mrs. Thatcher catalogued Labour's failures over the pound, prices, overseas borrowing, inflation and unemployment. “It has proved its right to the title ‘the natural party of unemployment’—a whole series of reckless measures have put the jobless total up.”
Government over-spending had overloaded the economy with a bureaucratic non-produtive sector weighing down wealth-creating industry. Smaller businesses suffered most.
Mr. Healey was dangling the carrot of tax cuts but there was not the faintest chance of cutting them to the level they were when the Conservatives left office. To do so would cost £4,000 million. The average family was paying more than double the income tax it paid when the Conservatives were last in power.
The Government's idea of regenerating industry was “more nationalisation, more exhortation, more regulation, plus a few more committees to draw up a few more industrial strategies.”
“Industry is a willing horse but the Government treat it like a beast of burden. They put more and more weight on the animal, starve it of nutritious food, harness it ever more tightly and then shout at it to go faster. The regeneration of British industry will begin only when the Government get off its back.”
No wonder the public was dispirited, that firms found it hard to bring their staff home from overseas, that talented people queued to emigrate, and that from shop floor to board room there was a feeling that effort was not worthwhile.
All this had to be stopped and changed. It was not going to be easy or painless. “We will come to office not on the basis of false promises but in the belief that the talent and vitality of the British people, given half a chance, can command the admiration of the world once again. It is crucially important to learn the lesson of these three deplorable years. After all, the Government did not come to office with the conscious and deliberate aim of making a complete mess of things. Equally, it is not enough for us to say that this lot of ministers are exceptionally bad at their jobs, or that this set of measures are not what the country needs: although both of these statements are true. [end p2]
“It would be a profound pity if the Government were to be turned out simply because of their economic failures, appalling though these are. The real message of the past three years is not only that the Government's economic policy has failed but that Socialism itself has failed.”
Perhaps the only good feature of the past three years was that they enabled a comparison to be made between Socialism as it really was and Socialism as it was painted up to be. “The truth is that Socialism is a system inherently inefficient, wasteful and unjust.”
There was a wave of revulsion in the country against restrictions, bureaucracy, high taxation and big government in all its forms. Under Socialism all initiative, authority, resources and wealth were eventually concentrated in the hands of government.
The class structure of Socialism was more rigid than anything experienced in the 19th century. Under Socialism there were only two classes—those who had power and those who did not, those whose faces fitted and those whose faces did not.
Honest, loyal and decent people—ordinary working men and women—were being dismissed because they were unwilling to join a trade union, even when they had been with their firm for twenty years.
In the end, the real case against Socialism was not its economic inefficiency but its basic immorality. Socialism was a system designed to enlarge the power of those who wanted to boss the lives of others to the point where they controlled everyone and everything.
Fortunately, concluded Mrs. Thatcher, the nation was beginning to understand what was happening. “We are used to freedom and we will not for long tolerate its erosion. When we reject this Government we must throw out with it the whole discredited ideology of Socialism.” [end p3]
Full Text
Most people in this country have heard of the glorious First of June, the anniversary of one of our greatest naval victories. (1794)
There is now a new date about to be added to our national Calendar, the inglorious Fourth of March, for the simple reason that 4th March is the third anniversary of the Labour Party's return to power. And what a three years it has been!
There was very little rejoicing on the first anniversary of that notable event. There was even less on the second; while I doubt if anyone at all will raise a cheer today, the third birthday of this unhappy and ill-favoured child.
Certainly Sir Harold Wilson, who so proudly formed that Administration in March 1974, was not there to preside over the birthday celebrations. He had quietly slipped away into retirement. He passed on to Mr. Callaghan the torch of Socialism, which was flickering then, and is now beginning to go out. Who is there to be pleased on this third anniversary?
The Prime Minister himself is in no position to rejoice. His Parliamentary programme is in total disarray; and with the failure of his attempt to ram through the Devolution Bill any reason the Nationalists may have had to sustain him in power seems to have vanished.
His demoralised backbenchers are not rejoicing. The Labour Party, drifting to the Left, locked in internal feuds, riddled with extremists, crumbling at the edges, is certainly not rejoicing. And the people of Britain see no cause to rejoice as they wearily wait for the opportunity to turn out of office a Government that has been totally discredited. [end p4]
All the same, the third anniversary of this latest attempt to impose on us the Socialist state is a date of the utmost importance. Up till now, as miscalculation has followed upon miscalculation, and disaster upon disaster, the Government have always had one simple excuse to trot out. “It is not our fault” they would bleat. “We inherited a difficult position. The price of oil had shot up, world trade was slowing down, there was a three-day week” . If this catalogue of excuses failed, they would hastily add “We are not to blame for inflation; it is all the fault of the Tories” .
One by one the excuses, never very convincing, became steadily more threadbare. Other countries faced the same difficulties as we did, but they seemed to cope a great deal better and recover more quickly.
The three-day week was undoubtedly a period of great difficulty for industry, but after three years of inspired Socialist planning, years of what they had the gall to describe as “getting the nation back to work” , production is actually below the level achieved during that three-day week. Even the slow-acting economic factors that take time to work through the economy can now only be traced to Socialist mistakes.
Although the rate of inflation we endure today depends on decisions taken in the past, there is not an economist to be found who will claim or believe that the timelag involved is as long as three years. There is now no-one whom the Government can blame for their failures but themselves. At last there is no longer room for that ancient ceremony at which the Socialists have always excelled—the passing of the buck. Yet even yesterday the Prime Minister shrugged off any responsibility for the present levels of unemployment. From now on the buck stops where it belongs, on the doorstep of the Labour Government.
What better time therefore could there be to examine the economic record of that Government? It can be summed up in a [end p5] word—Failure. Total, abject failure. Even those of us who knew these Socialist policies would not and could not succeed have been shaken by the completeness of the calamity.
Let us start with the pound sterling. It may be fashionable nowadays to pretend that the value of the pound is not of very great importance, but it is the best index of what other countries think of us. What is more, when the pound goes down, everything we buy from abroad, and especially our food, costs us more.
The wave of price rises in the shops that every housewife is having to suffer—and there are more to come—is a direct consequence of the collapse of the pound last autumn.
So let us accept that the value of the pound is a rough and ready index of how the economy is doing.
What do we find? The external value of the pound has dropped by more than a quarter, down from $2.30 in March 1974 to about $1.70.
What makes it worse is that, though the pound has slumped, Labour has got desperately into debt just to keep it even where it is. Make no mistake, the pound would not be at $1.70 if the International Monetary Fund had not come to our aid, and the £2.3 thousand million pounds they are lending us is only the latest in a long line of borrowing. Since March 1974 our total borrowings abroad amount to around $13,000 million or 7½ thousand million pounds at the present rate of exchange. That is the price of keeping Socialism off the rocks. They have mortgaged the proceeds of our North Sea oil for years ahead to get their hands on this money.
Next there is the question of inflation and the value of the pound at home. In three years of Labour Government prices have gone up by more than 70p in the pound. They are still rising at 16.6%; a year. [end p6]
The best hope Mr. Healey can offer us is that the rate of increase might be down to 15%; by the end of the year.
You remember his 8.4%;? That was a specious claim based on three months figures. If you take the last three months' figures and treat them on the Healey basis, then the answer comes out at 21.8%; as the annual rate of inflation!
But even 15%; or 16%; means hardship to every family in the land. The Government's aim, they proudly declared, indeed the promise they made when the social contract was drawn up, was to bring inflation down to single figures by the end of 1976. By their own test, by their own standards, they have failed. The people who have broken the social contract are the Government.
If I put the value of the pound at the top of the list of the Labour Government's failures it is because I believe inflation to be the supreme economic evil threatening this nation. But there are many other tests by which Labour's economic policy can be seen to have failed.
Time and again when we Conservatives called for early action on inflation we were accused of wanting to put unemployment up. That was a cruel and evil lie. We knew that unchecked inflation was the supreme destroyer of jobs. Each time the remedy was delayed, because Labour ran away from the problem, the cost of checking inflation became heavier. Because action was delayed there are now nearly 1½ million people out of work and we are told that the numbers may rise.
But it is not only through inflation that Labour is destroying jobs. There are other ways in which it has proved its right to the title “The natural party of unemployment” . A whole series of reckless measures have put the jobless total up. Faced with a maze of new regulations it is all too understandable if employers do not rush to take on new people. [end p7]
Year in year out the Government have overspent, but this State spending does not, as the Socialists often claim, save the jobs of anyone except in the short term. On the contrary, it overloads the economy with a bureaucratic non-productive sector, which weighs down wealth-creating industry. All businesses suffer, but small businesses, which could do so much to provide new opportunities for jobs, suffer most.
Above all, when the Government overspend they do not overspend with their own money, they overspend with yours. Nothing that the State gives you is really free, since in the end every penny comes out of your pockets.
Mr. Healey is dangling the carrot of tax cuts before the TUC, but of one thing you can be sure: there is not the faintest chance of his cutting taxes to the level they were when we Conservatives left office.
To do so he would have to take £4,000 million off the bill. As it is, the average family is paying more than double the income tax it paid when we were in power—and how many families have doubled their incomes in the last three years?
All the time that they depress the economy, let inflation rip, overtax the people and increase the burdens on productive firms, the Government talk of the need to regenerate industry. By this they mean further doses of the medicine that has already done so much harm.
More nationalisation, more exhortation, more regulation, plus a few more committees to draw up a few more industrial strategies.
Industry is indeed a willing horse, but the Government treat it like a beast of burden. They put more and more weight on the animal, starve it of any nutritious food, harness it ever more tightly, and then shout at it to go faster. The regeneration of British industry will begin only when the Government get off its back. [end p8]
It says a great deal for the natural resilience of the British people that they have not sunk under the burdens placed upon them. But is it any wonder that the public is dispirited, that firms find it hard to bring their staff home from overseas, that talented people are queueing up to emigrate and that from the shopfloor to the boardroom there is a feeling that effort is not worthwhile?
We believe that all this must be stopped, and can be changed … . I am not suggesting that it is going to be easy or painless. When the nation has been living beyond its means for three years, and when inflation is at the rate of 15%; or more, no-one can wave a magic wand and put everything to rights.
We will come to office not on the basis of false promises, but in the belief that the talent and vitality of the British people given even half a chance, can command the admiration of the world once again.
It is not pleasant for anyone to have to recount such a tale of failure. After all it is our future and our prosperity that they are failing to safeguard.
The four tests of economic policy are stable prices, a strong pound, full employment and higher production. It is not easy to achieve all four at the same time, but this must be the first Government in history to have failed to achieve any single one of them.
But this rather sad third anniversary gives us the opportunity to ask what has gone so badly wrong?
It is crucially important to learn the lesson of these three deplorable years. After all, the Government did not come to office with the conscious and deliberate aim of making a complete mess of things. Equally, it is not enough for us to say that this lot of ministers are exceptionally bad at their jobs, or that this set of measures are not what the country needs: although both of these statements are true. [end p9]
It would be a profound pity if the Government were to be turned out of office simply because of their economic failures, appalling though these are.
The real message of the past three years is not only that the Government's economic policy has failed, but that Socialism itself has failed.
The policies that have brought so much misery to this country were not just picked out of a hat—although it may sometimes seem like that. They are Socialist policies, chosen by a Socialist Government.
This is a lesson of the utmost importance. For year after year, generation after generation, Socialists have kept on about the failure, the inefficiencies, the so-called evils of capitalism. Always they compared free enterprise as it is with some imaginary vision of the Socialist society.
Under Socialism, they claimed, all would be well. We know differently now, even those who didn't know differently before. Perhaps the only good feature of the past three years is that they enable us to compare Socialism as it really is with Socialism as it is painted up to be.
No one pretends that the free enterprise system is perfect. But no inefficiency of capitalism, no injustice still to be corrected, can compare with the inefficiency and injustice of Socialism as we have seen it in action for the past three years.
At this stage in the argument the Socialists always say that if they have failed, perhaps it was because the Government were not Socialist enough. This falsity must be exposed. The truth is that Socialism is a system that is inherently inefficient, inherently wasteful, and inherently unjust.
First, as we know, and as we have seen, Socialism does not work. It has not solved our economic problems, but has made them a good deal worse. [end p10]
Socialism is only about distribution: first the distribution of the wealth created by free enterprise, then of the poverty created by Socialism.
Second, the Socialist system involves more and more interference with the lives of ordinary people. If there is one healthy sign in this country at the present time, it is the wave of revulsion against restrictions, against bureaucracy, against high taxation, against Big Government in all its forms.
All modern governments are infected with these viruses to some extent. Only Socialism makes a virtue of the disease.
Third, and this is a message which we cannot hammer home too hard, Socialism and freedom cannot long co-exist in the same society. Freedom demands the diffusion of power, and that different people with different ideas and different capabilities should do things in different ways. Socialism demands the concentration of power, and a drab uniformity throughout. Under Socialism all initiative, all authority, all resources, all wealth are eventually concentrated in the hands of Government.
Fourth, the class structure of Socialism is more rigid than anything experienced in the nineteenth century. Under Socialism there are only two classes—those who have power and those who do not, the powerful and the powerless, those whose faces fit and those whose faces do not.
We look at the treatment of the dissidents in Russia, and we thank our lucky stars that nothing like that happens here. Nobody, we say, is persecuted, nobody can lose his job or be prevented from earning a living—or so we think—because of his opinions.
But just pause a moment and think. Honest, loyal and decent people—ordinary working men and women—have been and are being dismissed because they are unwilling to join a trade union, even when they have been with their firm for twenty years, even when it was not a condition of employment to be a trade unionist when they started work. [end p11]
Other non-Unionists may be made redundant out of turn. There are elaborate laws against unfair dismissal. But in a recent Tribunal decision it was ruled that non-Unionists need not be considered equal with other workers. In this instance, the worker concerned was the first to lose his job although he had been with the firm longer than other men who stayed on.
In the end, the real case against Socialism is not its economic inefficiency, though on all sides there is evidence of that. Much more fundamental is its basic immorality. There is nothing pure about the motives of people who want to boss your lives. Socialism is a system designed to enlarge the power of those people to the point where they control everyone and everything.
The Conservative approach—the Right Approach—based on the mixed economy and free enterprise, gives economic power to the people, not the planners. The customer is King, not the politician and the bureaucrat. Free enterprise is the only way to create the wealth that the nation needs and to provide a better life for all our people.
Fortunately, I believe that the nation is beginning to understand what is happening. We are used to freedom, and we will not for long tolerate its erosion. When we reject this Government we must throw out with it the discredited ideology of Socialism.