Brian Walden
Hallo and good morning. Britain enters the eighties under the most radical leadership the country's known for a generation. Not since Clement Attlee arrived here in Number Ten thirty-five years ago have we seen a Prime Minister so determined to change things. Margaret Thatcher insists that prosperity must return to Britain and she believes that the way to ensure that this happens is to stamp out inflation and improve incentives. Mrs. Thatcher's been trying to put this plan into effect for eight months now and so far it's proved far more workable than many people expected, on some fronts. There were those who thought Mrs. Thatcher would be forced into a u-turn within the first six months, but she hasn't been. Instead she's made it clear that she intends to do whatever's necessary to make her plan work, and it's now apparent that this may mean a rougher ride for all of us than anybody expected. Already Mrs. Thatcher's found it necessary to make deep cuts in planned public spending and she's had to let interest rates rise to unprecedented levels. But recently it's become clear that even some of Mrs. Thatcher's supporters think these moves haven't gone far enough for Mrs. Thatcher's purpose. They say more cuts in public spending are needed so that interest rates and taxes can be brought down, and they say that something's got to be done about the Unions' power to cripple industry with strikes like the present steel strike. If these steps aren't taken, they say, businessmen won't have enough incentive to put Britain back on it's feet. Well today we're going to ask Mrs. Thatcher what further measures she plans in 1980 and afterwards, but first let's have the latest news headlines from ITN and Michael Brunson. [end p1]
Brian Walden
Prime Minister, you're pursuing a clear cut, radical plan to end our national economic decline and you've made it pretty clear that you intend to stick to it. Now many of your supporters, and indeed many independent commentators, think that the greatest obstacle in your path is the Trade Unions and with this weekend's steel strike in full swing, strongly supported by sympathetic blacking from dockers, lorry drivers etc., it's easy to see what they mean. Now you foresaw this in Opposition. You said that when you came to power you would redress the balance between Trade Unions and employers. Well now you've got the power, do you think you need to do anything radical to redress the balance between employers and Trade Unions in strikes like the steel strike?
Prime Minister, The Right Honourable Margaret Thatcher, M.P.
Well, we've made a start in carrying out that promise. Of course the Bill is not yet law. We introduced it—it does a number of things, first it provides for secret ballots to be paid for by the tax payer—not compulsory secret ballots but we know that if the financial obstacle is moved then we hope that a lot of ordinary people from Trade Unions will demand a secret ballot, so that's one. Then it deals with secondary picketing—now secondary picketing is not yet changed and won't be changed until this Bill is through so we're still operating on the old law, unfortunately. I wish the Bill were through, it isn't. Then it makes quite considerable changes in the closed shop provisions. Then it stops the kind of thing that we were getting, you remember in SLADE, when members of a Trade Union were compelling others to belong to the Trade Union, even though they didn't want to, under the threat of blacking. It does something about the Employment Protection Act. Now all of those things are a start, they're not a finish but they're a start and they will help to redress the balance, but when you look at some of the picketing scenes that you have been seeing, remember that the new picketing rules aren't yet through. [end p2]
Brian Walden
All right Prime Minister, the reply that you give me very strongly implies that it's the employment Bill that you're depending upon. Let me put a point to you on that. A lot of your supporters say, ‘well, the employment Bill has great merits’, of course the Trade Unions bitterly oppose it, but your supporters quite like it, but all of them when you talk to them say, ‘but it's a very minimal response, it's the least we could do,’ that's a popular phrase. Now I put it to you that some people say that this minimalist response isn't meeting the level of events and that you will need, as you rather hinted at the end of your reply, you'll need to go a lot further than this if you intend to get to terms with the realities of Trade Union power. Do you agree with that?
Margaret Thatcher
Can I just pick you up on one thing you said earlier. You said that my supporters liked the Bill—correct. The Trade Unions don't. I think some of the Trade Union Leaders don't but many, many, many members of Trade Unions are fully behind us in that Bill. Otherwise we should never have won the election and as you know, every opinion survey shows that the majority of Trade Unionists are behind us in what we're trying to do. It is a start, it was welcomed in the House of Commons as a modest and sensible Bill—it puts into legislation quite a lot of things we've promised. Yes, I agree with you. There are some things it does not touch, one of them a very obvious one; there was as you know a case called the McShane case against the Daily Express which when it went to the Court of Appeal seemed to imply that sympathetic strikes would be much, much more difficult because they were too remote from the original dispute. Indeed I remember even the Labour party, the Sam SilkinLabour Government Attorney-General relying on that case in one statement he made in the House of Commons. Now that case was overturned in the House of Lords and together with another one, about a ship called the Nawala, overturned with it, and we will have to deal with the consequences [end p3] of that judgement because it really goes to the heart of another problem. When a Trade Union is to be above the law, when is action taken in furtherance of a Trade dispute justified, how remote can it be, and I am the first to admit that either we have to deal with this in committee stage or else we'll have to have another Bill to deal with it.
Brian Walden
Let me ask you about that. First of all for those viewers who perhaps haven't seen the decision, can we explain that the McShane—Daily Express case was about very distant secondary blacking and that the Law Lords decided that even this distant blacking was in fact legal. Now what you're telling me is that you now intend to change the law so that that very distant blacking shan't be legal. I'm right about that, am I not?
Margaret Thatcher
Quite right. What the Law Lords said was, as the law now stands that distant blacking is legal. What the Court of Appeal had said was as the law now stands they believed that that distant blacking was illegal, so we had a change of the practical elucidation of the law. Now there are a number of things that you can do—you could in fact say that we were relying on the Court of Appeal McShane, and indeed as I said even John, even Mr. Silkin gave a statement about that when he was Attorney General, and we could, put the law back to what the Court of Appeal judgement was. That's one thing. We could also alter it to what it was before the Labour party changed it in their 1974–76 legislation. Both of those would leave a certain amount of uncertainty, and in such limited consultations and advice we've already had what people are saying is, look, when you make a change, for heaven's sake make a change so that the law is much, much more certain than it has been. [end p4]
Brian Walden
And is that what you're going… .
Margaret Thatcher
That's what we're going to try to do. That does require a lot more consultation but it embodies all these things, the McShane case, the change made in immunities by the 1974–76 Acts, when you know the immunities were extended far wider and also there were some differences on the definition of ‘in furtherance of a trade dispute’. While we're doing it we'd better get it right, and I'd rather spend a little longer time on getting it right and consult about it so that it covers the practical situations. A law's got to act in detail, not just in the law courts.
Brian Walden
Then do I take it that that means that you're not going to meet the situation by putting an amendment down to the employment Bill, but you're going to wait till the next Parliamentary session and introduce a new measure altogether?
Margaret Thatcher
It could be done in two ways but we go into committee fairly soon. It depends how long committee takes and then there's report stage and then there's House of Lords. We will have to consult a little bit more widely on this and see just exactly what precise amendments we can get together. I wouldn't rule out doing something about it in the committee stage but I have the feeling that to get it absolutely clear and to consult, it might take a little longer in which case we'd have to have another Bill. But we're not going to shy away from the problem, because it's there, but there is something in this Bill you know about the activities of SLADE which were of course examples of blacking. [end p5]
Brian Walden
Let me…you say you're not going to shy away from the problem and many of your supporters will certainly be glad to hear that. But let me put to you, Prime Minister, what I think the problem is. And though what you say on McShane and the Daily Express is interesting, it really doesn't cover what I would think was the major area, at least from the point of view of Conservatives. You see, the point about Trade Unions surely is that their power stems not from the closed shop, but from the very great legal immunities that they have. The fact that Parliament decided a long time ago when they were much weaker that they ought to enjoy a position virtually above the law. Now a lot of your supporters say that that was all a very long time ago and times have changed and Trade Unions ought not to have that position anymore and that Parliament that gave them the immunities ought to take those immunities away. Now are you going to go a large distance to meet that point?
Margaret Thatcher
No, I think you're going much too far, with respect. That change was made in 1906 when the Trade Unions needed, certainly, the immunities they were given then in order to carry out their duties to their members. But you know for a very, very long time that provision has been there and it has not caused that much trouble. Certainly there is a very considerable amount of power in Trade Unionism now, and the question is how, certainly the extent of that power,—and I've dealt with that on saying we must do something about one particular aspect of immunities—secondly I think it's been not only the power, it's been allied with something else which you just must take into account. Since the Prime Minister to whom you referred in your opening statement, Mr. Attlee, has been there, we've had a tremendous amount of nationalisation. That's created a large number of monopolies in this country. The theory of nationalisation was that the people owned the nationalised industries. [end p6]
Sometimes I think the nationalised industries own the people, but you've got Trade Union power allied to monopoly. We've also had another thing that, we used you remember to have a clause in public utilities legislation—water, electricity, gas—that workers there should not go on strike because they were so important and that's gone, so it's not only the Trade Union power, it's Trade Union power allied to this tremendous number of monopolies and I think monopoly is bad, and I think socialism did Britain a great dis-service, having so many nationalised industries and indeed, I think at the moment if steel hadn't been nationalised we should not have the problem we've got now. So it is this kind of thing. As you know we're trying to do something about some of the nationalised industries but it's much deeper than just Trade Union power because, look, there are powerful Trade Unions working in private industry, ordinary companies, and those companies are doing very well—they're making a profit—it's from those companies that we're getting the subsidies to subsidise some of the nationalised industries.
Brian Walden
Yes, but with respect Prime Minister, I'm going to put it to you that it isn't as simple as that… .
Margaret Thatcher
Well, I'm not saying it's simple… .
Brian Walden
No well I'm going to give you an actual case. You see your reply implies and may even state categorically that you aren't going to go very far on immunities. Now take the present steel strike. The Transport and General Workers Union and the National Union of Railwaymen are preventing delivery of steel to some independent producers who've got nothing to do with the strike whatsoever. Now if the T. and G. and the N.U.R. were corporations the citizen could and probably would take an action for damages. They can't do it because of the legal immunities of the Unions, furtherance of an [end p7] industrial dispute and all that.
Now is it acceptable to you as Prime Minister that Unions should be able to act in that way?
Margaret Thatcher
Now look, I agree it's complicated. There are two immunities, one is the Trade Unions have immunities when contracts of employment are broken, that's the one that goes back to 1906 and which I don't think anyone is thinking of changing. They also have, at the moment, immunity if they break, if their action results in breaking any commercial contract—that's the one that we really have to look at. They also at the moment are free to do secondary picketing without there being any redress on the part of the employer whose premises are picketed. That's being dealt with by the present Bill and that employer can go to the courts for an injunction, so we're doing something about that. Now certainly the law will not do absolutely everything. But supposing that people do go on and picket until the new law is through and do the action which you specify, what is the message which I have to get across? This is not action which will damage Governments. This is action which damages their fellow citizens. Do you remember Frank Chapple did a lecture just a little time ago when he quoted a very powerful saying from an old Trade Union banner and it said ‘united to support, not combined to injure’. There are times when Trade Unions are combining to injure their fellow workers, now I too have to get that message across, because who's going to suffer if they don't get the steel? It's all the users of steel.
Brian Walden
What interests me in that reply Prime Minister, is the mention of the fact by you that you might be looking at the immunities that Trade Unions now have to induce their members to break commercial contracts. [end p8]
Margaret Thatcher
No, I'm sorry, I was saying we're not looking … . you're not changing immunities with regard to breach of, I'm sorry, breach of contracts of employment.
Brian Walden
In commercial contracts you said you were… .
Margaret Thatcher
Commercial contracts?.…I agree. Commercial contracts came in, immunity for breach of commercial contracts is the one which I referred to earlier which came in with the, I think it was the 1975 Act, before that they didn't have it.
Brian Walden
Well now I…on the very case I put to you of the present secondary blacking of independent steel producers, presumably that would mean under the new measures that you have in mind that the T. and G. and the N.U.R. wouldn't be able to do that.
Margaret Thatcher
Secondary blacking can be, partly because of the immunities under commercial contracts, it can be under the other thing which came in in that particular law, which is the alteration of the definition of furtherance of trade dispute which was widened. Both are involved. And it's because of the complexity that we're anxious to get the remedial legislation right and workable, because you know there's been case after case and I've been through them—do you remember the Donovan commission referred to case after case—and the law wasn't clear and it even wasn't clear as a result of the McShane judgement in the Court of Appeal. And we do want to get it clear [end p9] and we do want to get it reasonable. We don't want to stop proper Trade Unionism from operating, we need it. We need it to operate well, we need it to operate in the interests of its members. We need it to operate in the interests of its other members in other industries and therefore we've got to get it reasonable. But you're quite right, we are thinking of looking at the immunities which are at present there, which give them, which put them above the law if they break commercial contracts. [end p10]
Brian Walden
Then what would you say Prime Minister, to a Trade Union Leader who said to you, “but I don't like the sound of all this, I think this is an insidious process, bit by bit, whereby we lose immunities, and if that happens, because after all you have to consider why Parliament gave the immunities in the first place, if that happens, you, Prime Minister, will destroy the real purpose and function of Trade Unions. We have to have secondary blacking in order to get our point across. It isn't important, you've laid great stress on this Prime Minister, but it causes harm, it causes damage.” I suppose not in public but in private some Trade Union Leaders would say to you, “but of course it does, that's the purpose of it, it's to win strikes that we use secondary blacking, and if you take that away from us, you'll make us powerless.”
Margaret Thatcher
Well if they said that to me I should say that I think they're being thoroughly unreasonable. They did not in fact have immunity from breach of commercial contracts before about 1975 but they were very powerful nevertheless before then. I would also say to them that I do think it's quite wrong that they should throw people out of work who are not in dispute with their own employer at all. Yes indeed, they do need certain powers to pursue strikes, for the benefit of their own members in their own industry. I do not think they're entitled just to throw other people out of work where the relations between employer and employee are extremely good, and I would expect the employees in those secondary industries to object, because what you're putting to me is an example of combined to injure, not united to support.
Brian Walden
Prime Minister, when you last talked to me as Leader of the Opposition on Weekend World last January, you said that if it [end p11] could be got, you favoured an arrangement, whatever that arrangement might be, whereby strikes in certain essential public services should in fact not take place, they should in effect be banned. Are you still thinking along those lines?
Margaret Thatcher
I entirely agree, I think it would be better if we could get such an arrangement and we had it before 1970, in the public utilities, in electricity, gas and water, because it was thought that those were so vital that really it's quite wrong to use the strike weapon because that injures so many people. Now unfortunately that was taken out of legislation in the 1971 Act that we brought in, and in a way one would like to be able to get back to that. Now the question is whether we can or how, and I think at the moment if you tried to do it, if you tried to get what I call No Strike Agreements, I think the cost of it at the moment, that they would try to exact would be so enormous, that I think that it would throw out quite a lot of difficulties with regard to other public sector industries …
Brian Walden
So you won't do it at the moment?
Margaret Thatcher
We've got to go about it a different way…
Brian Walden
What different way?
Margaret Thatcher
We've got again to say to people, ‘Look do you realise that the [end p12] way in which Trade Union is sometimes operating now, it is giving you more power to inflict damage on others than it is to protect yourselves and your own families against damage caused by others,’ and you've got to say to them that is not what Trade Unionism is for, and the vast majority of Trade Unionists realise that is not what it is for, and you've got to say to them, “Look there are two things about power, one is the power you have and the other is the way you use it, and each and every person in this country has a duty to wield their power responsibly. If you can't be responsible yourselves how can you expect others to be responsible towards you?” Yes, I have a weapon as well as legislation, it's persuasion, it's reality, it is events and it is the combination of those things, which is making people look at all of their responsibilities differently and I believe they are doing that.
Brian Walden
But if it's to be a no strike agreement, even if it's arrived at by the processes of persuasion, which it would be, it has to be given some sort of legislative force doesn't it? Now are you going to go for these no strike agreements?
Margaret Thatcher
But at the moment you know, at the moment, I can't remember when we've had a strike in the gas industry. The gas people, if I may say so, have been extremely responsible for the simple reason, first they're responsible people, secondly they're dealing with something very, very dangerous, and I will have to say to all public utilities, ‘look, if you are just demanding something for nothing, you're demanding it from your fellow citizens and they too will have something to say about that,’ but this all [end p13] the time is trying to get across to people, and it's part of what you would call “The Thatcher Experiment”. There isn't a pot of gold to draw on, there is either your own extra effort, working machinery better, or you're taking something from your fellow citizens, and I am saying to you, as I said at that speech which I did in the Guildhall, pennies don't come from heaven, they have to be earned here on earth. Now there are plenty more pennies to be earned, but get on and earn them, because that is the way to increase prosperity.
Brian Walden
Well, speaking of pots of gold to draw on, there have been … .
Margaret Thatcher
I thought of that, just as I said it, whether I couldn't have chosen something else, but I wish we had one.
Brian Walden
There are reports in the Press…
Margaret Thatcher
Yes…
Brian Walden
… that the government are considering withdrawing certain kinds of Social Security, at least a certain amount of Social Security benefit from strikers' families, this is the deeming principle. When they go along, they will be deemed to have been paid a sum of money by their Trade Union, and whether they've been [end p14] paid it or not, their dependents will have that money docked from their benefit, and it's argued that this is a way of making Trade Unions and strikers bear more of the costs of a strike. Now is the government going to do that?
Margaret Thatcher
We've had a look at what I've called the deeming principle, but first let me say that I think if a person's been paying into a trade union for years and the subscriptions are not small they're big, and then the trade unionism, and then the trade union calls him out on strike, he's entitled to expect his trade union will look after a proportion of his standard of living, and if the trade union doesn't then I would expect the members of the trade union to have something to say about it. Some unions do, others don't, and there was a suggestion and indeed it is reflected in part of our manifesto, that if trade unions did not pay strike money, you could deem them to do so. Now I am always, I must tell you, a little bit wary about deeming provisions. First, there would be some people drawn out on strike who are not members of trade unions, ah, and what do you do? Deem them to have strike pay which they couldn't possibly have? No, you couldn't do it that way, and I think we're finding that the deeming provision is very, very difficult, so …
Brian Walden
So you're not going to do it?
Margaret Thatcher
We're, we're not very enamoured of it at the moment, it might be the only thing we can do, but you know, more and more trade unions are actually paying strike pay, as they should, but I don't like [end p15] deeming, but we're looking at other ways of doing it, because again let me say, if trade unionists on strike are prepared to cause hardship to other people, then other people are entitled to say to them, “but why should we always protect you from hardship when you don't hesitate to cause it to us”. Life's a two way street.
Brian Walden
Well many of .…
Margaret Thatcher
… and if you expect to be protected from hardship, you mustn't put others to hardship, so there might be other ways of doing it, we are considering it … but we've not yet …
Brian Walden
Ah, that's what interests me… if deeming's out, what are you going to do?
Margaret Thatcher
Ah, you ask me what we're going to do, we have not yet decided, we're not enamoured of the deeming provision. There are other possible ways, there are some people who would say that if you …
Brian Walden
What for instance? What other ways?
Margaret Thatcher
Can I just come on to this? [end p16]
Brian Walden
Yes surely.
Margaret Thatcher
There are some people who would say that if you go on strike, that is you voluntarily put yourself in a position where you cannot earn money, voluntarily, you should not in fact be able to get as much from Social Security as a person who is in what I would call genuine need, involuntarily. That would be another way. We've not decided yet, but I again make it perfectly clear that I'm not very keen on deeming provisions because of the problem it causes between trade unionists and non-trade unionists. I must be frank with you, if you come up against a difficulty, the objective remains the same but you have to go another way about it.
Brian Walden
Let me, ah, move on to ask you about the present Steel Strike, without of course asking you any particular details on it, because it's still going on, but suppose that this strike is not in fact conciliated within the next few weeks. Suppose it goes on, suppose the secondary blacking gets worse, and suppose at the end of all that British Industry, or a large section of it, is grinding to a halt. What will you do, as a government?
Margaret Thatcher
Well I expected you'd ask me that, and it's a classic commentators' question. I must tell you that I hope very much this strike will be settled and for this reason. The underlying factors aren't going to change. The objective is clear, we want the British Steel Corporation to be able to compete with any company in the world, on price, on quality, on delivery. If it can't, it won't [end p17] have a future, and if it can't, there will be more and more redundancies. I don't want that. If it can't, then there is no job security for anyone there. Now, in the last four to five years the British tax payer has poured money into British Steel, in the last five years every family in this country has in fact put the equivalent of £220 into British Steel. Next year we have in fact allocated another £450 million, which is something like another £30 per family. That's the faith which the British tax payer is putting into British Steel. We know there is a lot more money to be earned, because other Steel Companies are managing to have the output with very, very, far fewer people. Now I see that, I see all of that and then I was seeing, at this strike, both sort of sides going into their little trenches and not talking to one another, and if I've done anything, it's just been this, to try to say, “Look you must please go on negotiating, because the underlying facts won't change.” Now, I believe that reason will prevail; I can't tell them what to do. They have been in, in the British Steel Corporation, they've been used to running different Steel Plants for ages. The Trade Unions have been used to working them, they know where they can get the productivity, they know there's more money to be earned, and the negotiating is how to earn the extra money. So I'm not looking half as black as you at it, because on the whole I believe the people who work in Steel are reasonable, and if they talk they will come to a reasonable conclusion within the extra amount for next year which is £450 million that the tax payer has allocated to Steel.
Brian Walden
Well, even Prime Ministers are entitled to have hopes, and they may be very reasonable hopes. [end p18]
Margaret Thatcher
We wouldn't get very far without them.
Brian Walden
Indeed, but ah, even Prime Ministers have to have fall back plans if the hopes go wrong, and I put it to you. Supposing the rather rosy scenario you paint doesn't happen, and you find that the strike does go on, and it does cripple British Industry, what will the government then do?
Margaret Thatcher
Then I would just hope that other sections of British Industry will also complain. After all, they're not in dispute with their members. They in fact have to try to find a livelihood for their members to go on, and the Trade Unions have lots and lots of members in other industries. Look, we've just allocated, on behalf of the tax payer, because we only have tax payers money, more money to British Leyland because they've accepted their redundancies, they've accepted a plan, and we hope they'll get higher productivity, and British Leyland, as you've seen, are turning round to the Steel Workers and saying, “but look, you don't necessarily buy cars that use British Steel.” You know the cards are never stacked all on one side. They too have an interest in trying to persuade the Steel Workers to be reasonable. All of those Industries whose taxes pay the subsidies to British Steel, all of them are having to get along themselves and make a profit, and they're entitled to say, “Look we expect some consideration from those who produce Steel.
Brian Walden
We'll have to interrupt ourselves there, Prime Minister, to take a commercial break. Afterwards, I'm going to ask you about your public spending plans. We'll be back in a moment. [end p19]
Brian Walden
Prime Minister, your economic priorities are to stamp out inflation and to improve incentives. But there was some evidence before Christmas that these two objectives might in fact be conflicting with each other. Interest rates have gone up to very high levels, the Treasury and the Chancellor were at one time talking about taxes actually having to go up. Now of course high interest rates and increased taxation are massive disincentives. Now some of your supporters said ‘Ah, the trouble is that we haven't done enough to cut public spending’. And I saw with interest that you said yourself in New York, and I'll read it to you, ‘Many, many people say I haven't been tough enough with public spending cuts, and I think that's right’, so it isn't surprising that there's now universal speculation that there's going to be a new package of spending cuts, additional to the three and a half billion of planned spending cuts you announced in November. Now, is this package in fact going to happen?
Margaret Thatcher
Oh, we have to get public spending down further, and we have to get it down further for the year 1980/81. You see, all we did was to cut the extra planned expenditure that Labour had planned. To carry that out they would in fact have had to have had an extra eightpence on income tax, which would have been about an extra four pounds a week on tax for the man of average earnings. Now they were already over-taxed so we had to get that off, but we haven't really done anything in addition to that, we haven't cut any further into that existing spending, and you know the fact is that this country only started to improve after the IMF came in and they really demanded real spending cuts, we haven't done that yet. And unless we get down the proportion which government spends and release more money to industry so that it can expand, we shan't get the growth, so yes, we are looking at the 1980/81 figure, the year that starts next April to the following April. We are looking for more cuts, we're in a good position to do it, because Ministers have had a look at the numbers of people employed in departments, erm, Derek Rainer found on his first exercise, just [end p20] looking at tiny little things, some ninety million or so could be saved. We've also had a look at some of those enormous number of what are called Quangos, bodies, advisory bodies, we've done all that, and now I am saying to Ministers, we want a little more. Er, some of course, some things we can't touch… .
Brian Walden
A little more, Prime Minister?
Margaret Thatcher
What we want, a little … .
Brian Walden
A lot more perhaps?
Margaret Thatcher
Well, when you look at the vast sums that are being spent, something like what, seventy thousand million pounds, if you get a little off that it does help quite considerably. Of course I hope to get some off from the contribution that we pay to the European budget and we've got to get that off, but we want a little more than that.…
Brian Walden
Let me ask you on that very point.…
Margaret Thatcher
Unless we do, we're not going to have, you mentioned incentives, tax… .
Brian Walden
Sure… .
Margaret Thatcher
Unless we do, we are not going to have enough manoeuvre, and people have got to have incentives to earn more.
Brian Walden
Obviously people want to know the scope of these cuts, and I see that many economists these days say that even if you, for instance additionally to what you did in November, the planned cutting then, even if you got another two billion, that would only push interest rates alone down a few percentage points. Now is that the order that you're thinking of, of getting two billions' worth of cuts? [end p21]
Margaret Thatcher
Well, a few percentage points off interest rates would indeed be an enormous help. But government isn't the only borrower, government is a very big borrower and is driving up interest rates, and certainly the planned cuts that we want to have would have to go to reducing Government borrowing, because we have got to take the burden off the person who's got the mortgage. Erm, if we got two billion off, I would be quite pleased.
Brian Walden
Ah, so it might be two billion in fact?
Margaret Thatcher
If we got two billion off, I would be quite pleased.
Brian Walden
That sounds like a lot of money Prime Minister, obviously you don't think it's a sensationally high figure.
Margaret Thatcher
No, one billion is paid over to Europe.
Brian Walden
I…ever since people have been talking about planned public expenditure cuts, because a certain amount, indeed it's a very substantial amount of cutting, particularly of capital programmes, has gone on for quite some time. People have been very interested in where you were going to get it from, and one of the favourite candidates in fact has become the de-indexing of unemployment benefits. People argue on that, well these benefits are indexed to inflation, but real living standards are growing comparatively slowly these days and that therefore the gap between worker and non-worker is all the time diminishing, and it will go on diminishing as long as the index stays there, and what the Government should do in fact is to cease indexing unemployment benefit to inflation, are you going to do that? [end p22]
Margaret Thatcher
Well, there is an argument for it. The argument has been the one deployed by all of the people who say, ‘look, why should we work when some of us are as well-off not working as we are working’. And you have to tackle that, well there's three possibilities for tackling that. One is tax on the people who are working is too heavy, we've made a start on reducing that, we want to do more, they are already over-taxed, we want to cut it down, it's expensive to raise the tax thresholds, that's one thing. Erm, secondly, as you know, when you get unemployment and sickness benefit, supposing you've been working say seven or eight months in the year, and you then get unemployment or sickness benefit in place of earnings, that benefit is not taxable, although the earnings were, that's the other way in which you can tackle it, and so you will have to tax short-term benefits because they are part of your total income, and if earnings are taxable the amount of money you get in place of earnings ought also to be taxed. After all, old age pensions are taxed so it's not very revolutionary to tax unemployment and sickness benefit.
Brian Walden
What.…?
Margaret Thatcher
… .And the third aspect is the one that you are referring to immediately, that isn't it strange if all your short-term benefits go up by the amount of increase in the cost of living, but wages don't. And I agree we must too look at that, and we have not made any decisions, but I am determined that it really should pay people to work, and it should not pay them just to stay not working of choice, that is not what unemployment or sickness benefit is for.
Brian Walden
Well, what I heard there Prime Minister is a very clear exposition, but I didn't hear a firm pledge… .
Margaret Thatcher
No… . [end p23]
Brian Walden
… .you are looking at it. Now, what will that decision depend upon?
Margaret Thatcher
It will depend upon the combination of the three things; how much we can do on tax, how quickly we can get also the taxation of short-term benefits, how quickly we believe we can get inflation down, this is really one of the most important things. If we can open up a gap by other means and if we can get inflation down, then your indexing doesn't assume nearly the same significance. No, you are asking me to come out with sudden, instant solutions. I am telling you I am not prepared to do that. But I am telling you that we are prepared to look at things which people have been afraid to look at before. And we're prepared to look at them because some things are necessary to get Britain prosperous again. And it's no earthly good a Government saying ‘Oh, we can't do that’ if that is one of the things that might in fact help to get more money in to the wealth-creating industries again.
Brian Walden
Am I right in assuming from that reply Prime Minister, that if you are not able to cut income tax in the Budget, we can expect to see short-term benefits and unemployment benefits de-indexed pretty sharpish?
Margaret Thatcher
No, I expect you'll put that question. But I must say to you, you're trying to tie me down more than I'm prepared to be tied down. I'm prepared to look at anything, whether it's been a sacred cow or not, because I'm prepared to do what has to be done. I am here to do it and at the moment you know, one of the great grievances, and a justifiable grievance, is that the people who are not index-linked are paying for the people who are, and that's a factor which I've got to take into account. There are other ramifications, but I'm sure they'll come out in your questions, so I won't go on about that. [end p24]
Brian Walden
All right, let's leave it as we might, and let me put a number of other things to you that you might be prepared to look at. See, one of the problems with unemployment benefit is that not a very large amount of it is paid out anyway, only about seven hundred and fifty million pounds a year… .
Margaret Thatcher
Only… .only.…
Brian Walden
Well, it's not an enormous sum, bearing in mind that most of these people are involuntarily unemployed, it isn't their fault. But look, I want to put another point to you on that, see if you simply de-index that, what a lot of unemployed people would do is go along and claim additional supplementary benefit, which is also indexed. So if you are going to de-index unemployment benefit, may we assume that at the same time you'll have to look at de-indexing… .
Margaret Thatcher
Look.…
Brian Walden
… .supplementary benefit?
Margaret Thatcher
I think I have gone as far as I can, we are looking at indexation, and we have need to look at it, and you have need to look at it on an even wider front. You know, someone came to see me the other day from Israel, and I said ‘My goodness, you've got inflation problems haven't you, what's your rate of inflation now?’ He said ‘Over a hundred per cent’ and I said ‘Goodness, how do you manage with wages?’ and he said ‘Well, they are indexed’, and I said ‘Isn't that why you've got inflation at a hundred per cent?’. You look at the economies that have gone for more indexing and inflation-proofing, they are the ones that have got inflation, because indexing, of itself, can create inflation. And that's why I've got to look at it, there are.…I would like to talk about it much more widely, because…
Brian Walden
Now's your chance, Prime Minister… .
Margaret Thatcher
Well,… .
Brian Walden
…I'm not stopping you.
Margaret Thatcher
Let me, I just don't like to give little lectures, because I'm here to answer your questions. One of the problems is this. If you want to get down the amount that Government borrows, and we must if we are to get down interest rates, one of the ways you can do it sometimes is by putting taxation on goods and services. Now, as we did with increasing Value Added Tax, now the trouble is that the moment you do that, up goes your retail price index and everyone who is linked to that retail price index promptly says ‘Ah, I must have more’, and if you are not careful the same time you are trying to get down your borrowing by getting in more income, you're having difficulties with next year's expenditure, because people are saying ‘The retail price index has gone up, I must have more,’ all the social security benefits have more, up goes your expenditure and up goes your borrowing. Now you can see this problem, and it's affecting us and it's affecting other countries, the United States is worried about it, some other countries, and we also have to look at this, and I'm not shying away from any of it, because I know that unless we can get inflation down, look it's not impossible, Germany has it down, Switzerland has it down, that we shall not get prosperity. And one of the things we also have to get down is people must not automatically expect to have their standard of living linked to the RPI, your standard of living depends upon what you earn, not on where a retail price index is.
Brian Walden
All right Prime Minister, now you…
Margaret Thatcher
Sorry that was rather long, but it's a very important point. [end p25]
Brian Walden
No, no, no, no, very valuable… .
Margaret Thatcher
Now your questions, I'll try to answer those.…
Brian Walden
… .and very shrewd. You're obviously looking at indexation in general, and when you say things like people can't expect in fact to have their earnings linked to an everlasting rise in inflation, it's pretty clear that something is going to happen in this sphere. However, I do take it, do I not, that you're not looking at, and that you won't be looking at, the indexation of old age pensions… .
Margaret Thatcher
No…I'm pledged on that.
Brian Walden
…to prices?
Margaret Thatcher
No, I'm absolutely pledged on that.
Brian Walden
For the life time of the parliament?
Margaret Thatcher
For the national, of the life time of the parliament that was the pledge which I made at the election. What, we've taken the index linking away from earnings sometimes as a matter of fact earnings were below prices, as you know during the life-time of the Labour Government, for three years on the trot the standard of living of the British people fell, actually fell, it only started to get back again in 1978, the year before the election. But I, I pledged at the election to our old people that their state National Insurance pensions would keep pace with rising prices, and we honoured that this last time, so that when that went up they did get the increase. I'm pledged on that, and a pledge must last.
Brian Walden
Can I ask you about employers. There have been a lot of suggestions that employers will be asked to pay the first eight days of sickness benefit, are you looking at this? [end p26]
Margaret Thatcher
We are certainly looking at measures such as that. You asked me specifically about eight days, of course we are looking at it, because in fact a large number of employers already do it. And also it would help us to get down the administrative detail that the Department of Health and Social Security has to deal with, but a lot of employers do it, and it is after all pretty good industrial relations practice.
Brian Walden
How about housing subsidies? There are suggestions that you might reduce the subsidies which are given to keep council house rents down, and there are suggestions that you might get rid of the investment grants that lead to council house building. Now there is quite a lot of money involved there, two and a half billion for instance.
Margaret Thatcher
Well there's quite a lot of money involved in the whole municipal housing sector. Altogether.…
Brian Walden
You're going to cut… .
Margaret Thatcher
I think it's something like, it's over five billion, isn't it? Five billion, five thousand million, and in fact it went up enormously in the life-time of the last Government but it didn't sort out the housing problem. We will have to look at that, whether we look at the capital or the current side, there's scope, there's certainly is scope for a little, a little reduction, and there certainly is justification. You see, what's happened is that the people who are trying to buy their own houses have suddenly had an enormous increase put upon them because of mortgages. So because we haven't got down public spending enough on some things, those in, who are trying to buy their homes are having to pay a lot out. So of course where you have a big block of expenditure, like five thousand million pounds, yes of course you would like some off it, but there is reason for doing so. [end p27]
Brian Walden
Will you be reducing subsidies to industry?
Margaret Thatcher
No.… well, subsidies to.…
Brian Walden
No. I'm surprised at that.
Margaret Thatcher
No, I'm sorry, I was not saying no, I was trying to evaluate the question. Will we be reducing subsidies to industry? As you know Keith Joseph did in fact reduce some of the regional subsidies, but what he did I think was the best thing to do, the areas that really need help, he concentrated more on those areas and took it away from some of the areas which don't need it quite as much. Will we be reducing subsidies to industry? Look, we are trying to. If you tot up the subsidies that are paid to industry, mainly the nationalised industries, erm, something like six hundred million next year to coal, four hundred and fifty million to steel, seven hundred million to British Railways, about a hundred and fifty million to British Ship-building, something to the Post Office, something to industries like Aerospace. Masses and masses and masses of them, a bigger subsidy than ever to British Leyland, because Michael Edwardes has got a plan and he's got the workers' co-operation. And subsidies through the National Enterprise Board to other industries. Look, what I've got to look at, and the thing which I can't duck, is where are those subsidies going to come from, and if I am facing a situation where more and more industries are saying we want subsidies, I have to look at what are the industries that are going to provide those subsidies. And why is it that some industries can run their business in such a way that they are profitable, and can provide subsidies to others, and why others need them? Why is it for example that the private sector steel is profitable?
Brian Walden
Prime Minister…? [end p28]
Margaret Thatcher
The British Steel Corporation isn't, well there are investment problems there.
Brian Walden
Can I move you on to ask you this? It won't surprise you, I don't suppose it surprises anybody, that your political opponents think that your economic strategy is going to fail.
Margaret Thatcher
Well, theirs failed. And so we have to do something very, very different.
Brian Walden
We haven't got time to go into that, but anyway.…
Margaret Thatcher
I wouldn't have this large number of loss-making industries if they'd succeeded.
Brian Walden
Well, they say you are going to fail anyway. But what interests me much more than that, because all oppositions say that Governments are going to fail on economic policy, is that they say that even against, if against their expectations you succeeded economically, you would still have created a society that was more unequal, riddled with avoidable injustices. Now I put it to you, is the price for our economic recovery and prosperity greater in—equality in this country?
Margaret Thatcher
But I don't know of many people who go for equality as far as equality of income and earnings are concerned. Certainly the trade unions don't. One of the problems there is differentials for extra skill and extra effort, so I don't believe many people go for equality, except in equality before the law, equality in voting rights. No, you will get a more thriving society when people can rise to the limit of their talents, and out of the wealth they create, we shall all be better off. [end p29]
Brian Walden
So a more unequal society you think is actually better for prosperity?
Margaret Thatcher
A more opportunity society, which enables the able to earn more. For example, I don't expect to be paid as much as you are Mr. Walden…
Brian Walden
But it does mean more inequality, does it not?
Margaret Thatcher
Does mean more.…yes indeed, if opportunity and talent is unequally distributed, then allowing people to exercise that talent and opportunity means more inequality, but it means you drag up the poor people, because there are the resources to do so. No-one would remember the good Samaritan if he'd only had good intentions; he had money as well.
Brian Walden
Thank you very much Prime Minister. Well, that's all for this week, from all of us at Weekend World, goodbye.