Clough
The news that the Longbridge workers have voted to go back to work tomorrow will certainly make the Prime Minister's lunch at Chequers today go down a good deal more pleasantly, for when I was interviewing Mrs. Thatcher this morning, the meeting of the workers was still going on, and it was clear that its outcome was very much on the Prime Minister's mind—but it wasn't at that point that we started our conversation. Over the last few months, Mrs. Thatcher has told us repeatedly that there is no alternative to the Government's strategy: “We cannot change course. This lady's not for turning.” All ways of voicing the Prime Minister's conviction that despite rising unemployment, despite a record number of bankruptcies in the last year, despite criticism and not merely from her political opponents, that the Government can, and must, pursue its course. In the light of that, I asked Mrs. Thatcher what she saw as her, and her Government's, priorities for 1981.
Thatcher
Let me agree at once that one of the most difficult things we have is the level of unemployment. Other countries, too, are suffering high unemployment, some even worse than us. Belgium, for example, Italy, Ireland—the United States has a high level of unemployment, Canada [end p1] a high level of unemployment. In some respects we have one extra problem added on to theirs, that is the extent to which, in the past, we've had over-manning and restrictive practices, and that's made our industries less competitive and less able to compete with others who've been in good and fit condition. So, I would recognise right at the outset, one of the real human problems we have, is how to get hope going, so that we can see expansion coming, so that we can see new jobs coming. Now, beyond that, a number of things have been happening on the economic scene which give very good news. The rate of inflation is falling, and falling comparatively fast, will continue to fall during the early months of next year. As the rate of inflation falls, the rate of interest rates will fall further—that too will be good news—because really the best help you can give industry is to go to much sounder money, so they can see a better future, a better future for investment, a better reward and return on investment, and also, interest rates falling. Those are good. Other good news: I remember a forecast by the Treasury in March last year that we'd have a bad balance of payments last year—it didn't happen. It didn't happen at all. Exports held up far better than anyone could of predicted, which means that some management and work forces are doing a superb job. They've even got us a slightly bigger share of world trade than this time last year. So, for next year, we've got to carry on with I think the three main things. First, continue your policies for sound money—that is keeping the increase in the supply of money in line with the increase in supply of goods and services. Continue your policies to ensure that industry becomes competitive and then keep in incentives in the tax system, so that the moment you start to get an expansion there really will be something for people to go for.
Clough
You've quoted one example, Prime Minister, of the Treasury forecast that was very gloomy, which turned out to be wrong on the good side. [end p2] But there have been forecasts, have there not, forecasts of unemployment, for instance, which was modest by comparison to what's actually happened? You've talked about unemployment as being one of your major priorities this year. Mr. Murray has complained that he has asked you how high unemployment has to go before you alter policy to cope with it. A forecast of more than 3 million for … in 1982. Do you see it going as high as that?
Thatcher
I don't know. I've never made forecasts of unemployment. I most earnestly hope that it doesn't come anywhere near that, obviously, because of the human problems it causes. But your question—it's one I've been asked several times—but it implies that just by changing policies you could get a long term improvement in unemployment. But what policies are to be changed? Are you to say that we should go to unsound money? To a policy of creating inflation on top of inflation? Is anyone suggesting that in the long run that would give us more jobs? Of course it wouldn't. The people who've got more jobs are the people like Germany and Switzerland, Austria—people who've said we must have a sound money policy. So that wouldn't work. Are they suggesting that one should have increased restrictive practices, increased over-manning, increased wage claims not related to output? Of course not, because then people would buy overseas products to an even greater extent than they are now. That wouldn't get us jobs. So they know that the things we are doing are absolutely right to get industry competitive. We are trying to cushion the worst effects that this will have on some people, because we should be far better off if what is called ‘the shake-out’ (I think it was Harold Wilson 's word) in over-manning, had come years ago. We are trying to cushion the worst effects of change. We have a big programme to try to get young people employed and that is going well, and many, many companies are co-operating. [end p3] Incidentally, I myself think, and there's some research to show this, we'd have more young people employed, and more would be taken on, if somehow the people who are responsible for negotiating wages had not insisted on much, much higher wages for young people. I think it's meant that a lot of firms had not been able to take them on, whereas it would of been better for a lot of young people, if they had lower wages, but good work, and good work experience with good prospects.
Clough
Well … .
Thatcher
We're doing that for the young—can I just—I know you're desperate to ask a question—can I answer just one more thing? I'm very concerned about the bread winner with a family, where we have unemployment there, because it's very degrading for him, and for the family, if he can't get a job. So we do still keep a regional policy going. We still have a fund which helps with ship building. We still keep a number of subsidies going, a number of short-time working subsidies to help with this problem. In the end, I have to remember, every subsidy comes from people who work for successful firms, who don't need subsidies, and if I put too big a burden on them, they too will not be able to bear it and they might be in difficulty.
Clough
But you know you say … . you say there is no alternative to the policies, but, whether it's a post hoc&/propter hoc I don't know, but what has happened while those policies have been…are being applied, is that unemployment has gone on rising. Now is there anything in the policies at the moment that you see reducing or stemming the rise in unemployment because a lot of people don't believe that there is anything there?
Thatcher
Yes, very much so. Again, I've just indicated that the people who have the lowest unemployment are the people who've tackled inflation, who don't have over-manning or restrictive practices and who have kept their industry competitive, and that's why I'm trying to do just exactly those things. So, the best thing I can help to give industry confidence is, keep inflation [end p4] falling which will mean interest rates will fall. They themselves are becoming competitive—witness the supreme performance in exports. Now, where are new jobs going to come from? Because this is really what you're asking me. Four times in the post war period we've had a period of expansion. Each time in that period, we've had the creation of about a million new jobs, and we'll look for the creation of new jobs when you get an expansion again. Where is it going to come from? The big firms that are changing over from old technology to new technology—it will be as much as they can do to keep their existing people employed, even with expansion. So that won't necessarily cause new jobs. The new jobs will come, therefore, from new firms, or smaller firms expanding and that's why we, in the last Budget, put a tremendous emphasis on building small factories, advance factories in regional areas—why I'm very, very pleased when I look at the Value Added Tax Register of Firms, and certainly we've seen a number of firms going out of business but the rate.…
Clough
More, more this year than in any other …
Thatcher
Yes, but the rate at which new firms are coming on to that Value Added Tax Register is as great as the firms going off, and in some months it's been even greater. What that means is new firms are starting and expanding and coming on. I gave some information the other day about an organisation called Industrial and Commercial Finance Corporation. That's a consortium of the banks, something from the Bank of England, some money from Europe, which specialises in financing people who want to start up or to expand. Last year, they financed more new firms than in any previous year—four hundred new firms starting up. They also financed managements who wanted to buy out a big of a company that was in difficulty and they said, look if we get it ourselves, we can make it zing. And so they started to finance what they call, Manage Buy-Ups. They also started to finance new technology firms, because of what we'd done on Income Tax and incentives, they got a chap back who'd gone to California, because the tax [end p5] system was better there, it gave bigger incentives, back now helping new technology here. There is a good deal of money about, Mr. Clough, what we've got to do is to see that it's spent on British industry, and for that, we have to ask one question: why do people buy the goods they do or the services they do? And there's only one answer: because they find they're good value, and that's the challenge to Britain—good design, good delivery date, good value. And I do see some hope, do see hope in new firms, do see hope in exports, do see hope in services.
Clough
My guess is that the reason a lot of people are buying, let's say Japanese motorcars rather than BL cars, is that they don't believe that BL will survive, that the delivery dates will be bad, the product will be poor, the servicing will be poor and even as we talk this morning, the Longbridge workers are meeting to decide whether they'll go back to work tomorrow. Now it's obviously very difficult for you to speculate on what the outcome of that meeting will be, on the other hand, Sir Michael Edwardes wants just over a billion pounds to fund his corporate plan for the next four years. There have been reports that you are not very strongly in favour of it. There are reports indeed that your new economic adviser, Professor Walters, is deeply opposed to continue substantial funding of BL. What is your feeling about it?
Thatcher
I remember when I was leader of the Opposition, going round the Cowley firm of British Leyland. I fervently hope'd that they would succeed. A lot of the people there said to me, look there are things wrong here. It's not our fault if components aren't there when they should be, or if there isn't a flow of things to the line. There are things wrong here. The management has improved. We in fact supported them last year when Michael Edwardes came and said, look I need some more money. The British tax payer has put £1.2 billion, not million, billion, into British Leyland. I think the whole of Britain was delighted when we felt we'd got a [end p6] really super Metro car. Super in design, super in petrol consumption. We all drove the thing around. We drove it up and down Downing Street. I drove it at the beginning of the Motor Show. We gave them a leg up in every way we can. I hope that they will not strike themselves or their fellows out of jobs. I most earnestly do. You've been tackling me about unemployment—there are some people who are striking themselves and others out of jobs. That's not my fault. It's not the fault of the people who have put money into it. It is the fault of those who are leading that, or persuading others. People must be presumed to intend the consequences of their own action. They've got a good product. They've got a good prospect; but not if they go on strike, not if they constantly give the impression overseas—there they are, British trade unions at it again; and not all trade unions have made that strike official, and they certainly haven't extended it. Their future depends not only on what governments do, but what they do. They've got a chance, they've got a good product. Let them seize that chance and sell it giving themselves good jobs, giving the component industry good jobs and all of those who supply British Leyland. But in the end, I have to get the money for them from someone else who is without a subsidy. Would we ever go to the position where we have more people demanding subsidies, because they're not efficient, and fewer people providing them we shall be on disaster course.
Clough
Let's assume then, that your hopes are realised …
Thatcher
…oh I do most earnestly hope so.
Clough
Let us all earnestly hope so. If they are can Leyland then count on the government for this funding?
Thatcher
We have to look at the plan which Sir Michael Edwardes has presented us. We have to look at it in the light of everything that happens up to that plan, and we shall consider it, bearing in mind we have to get the money from elsewhere. We shall consider it purely on merit and the prospect of breaking through the final success and I most earnestly do hope that they will do everything to help. [end p7]
Clough
May we leave the economy now for a little while, at least, Prime Minister? Let me ask you about something which, I think left the House of Commons a little confused, the country confused, and certainly the Protestants in Northern Ireland confused—what happened at the Dublin Summit?
Thatcher
What happened at the Dublin Summit was almost entirely put out in the communique. Just exactly that. The Republic of Ireland is the only country in Europe with which we have a land border. The only one. So that is a unique relationship and we have to try to see if we can develop this unique relationship because we've got a land border. We have things crossing the border more easily, we should have electricity crossing the border more easily, we should co-operate on the tourist policies—all of these things are unique to having a border with the Republic of Ireland. I might say we disagree very much on certain things, on the affect of the Common Agricultural Policy. These things we have to look at much more closely. May I make one point absolutely clear; the time we went there was a hunger strike on in the Maze, no-one has asked me, no-one in official authority or in high places has ever asked me to give political status to people who've been convicted of terrible crimes like murder, wounding, maming, causing explosions. That used to be asked. I think one of the reasons why we're not asked now is because we have got over our viewpoint and because everyone knows that this government will not budge on things which it regards as vital. There is no such thing as political murder. There is murder. There is no such things as causing explosions for political purposes and risking the lives of innocent men women and children. It is causing explosion, it is a crime, and they know that neither I, nor any member of my government will be moved on this. And we won through on that. And everyone knows it.
Clough
May I take you back to the only land border we have with another country. Is that land border going to continue? There's feeling, as you know, in some Protestant circles in Northern Ireland that what has happened at the Dublin Summit was that there was talk of beginning of talks towards the [end p8] removal of the border.
Thatcher
I have been absolutely firm and made it perfectly clear before and after the Dublin bilateral, that our guarantee to the people of Northern Ireland remains. So long as a majority of people of Northern Ireland wish to remain as part of the United Kingdom, so long they will. That is what democracy is all about. It is the wishes of the people of Northern Ireland. That guarantee remains and it is there and it continues. Last time we had a border poll they made their feelings perfectly clear, and any change could only occur after they'd indicated that they wanted a change and then it would have to go through the parliament of the United Kingdom. But nothing has changed in that respect.
Clough
Prime Minister you're going to be the first Western leader I think, to see President Reagan after his inauguration, what do you want to see him about, what do you want to talk about?
Thatcher
Oh, very very many things on the international front and also, I think, we take a similar view to solving the problems of the economy. It's not surprising because Ronald Reaganhe believes in sound money, I believe in sound money. He believes in industries being competitive, I believe in them being competitive; he takes the same view about democracy that I do, that it works and functions best when government doesn't take over too many functions, but it leaves the majority in the hands of the people. He has a similar view to the one which I've taken for a number of years and he's taken for a number of years and he's taken for a number of years. To the fact that the menace to democracy comes from the Communist countries. The Communist countries deny people fundamental freedoms; because they deny them fundamental freedoms they do not get the economic success which the democracies get, I mean, if you look, the shortages of food tend to occur in the Communist countries. Poland is short of food. The Soviet Union used to be the granary of the world; where does it have to buy some of it's wheat from? Free enterprise countries of the United States. The democracies tend to produce food surpluses. The Communist countries food shortages. The Communist countries produce wave after wave of refugees as people try to escape from them. The free enterprise democracies don't produce refugees. They are the [end p9] places where refugees come. So we know and fervently believe that our great mission in the world is to try to extend the area to it's genuine democracy applies. And we know the way in which Communism works. Once you've got Communism it's the most difficult thing to shake off. We look at the amount which they put to increasing armament rather than to increasing the standard of living of their people, so we know that we always have to keep an eye on defence, sufficient to deter. So we really have, oh, an enormous similarity of thoughts.
Clough
You're bound, of course, to talk about Iran, after all, both the United States and we have nationals held there under very difficult circumstances. Are you at all concerned that some of President-Elect Reagan 's remarks about the Iranians—reference to Barbarians for instance—might be an indication of some extreme hardening of the line which may make things much more difficult for his hostages and for our missionaries and Mr. Pike?
Thatcher
I think that there are some things in the world over this last year which have been extremely worrying. You and I were talking here this time last year. We had two enormous problems, if you remember, they were comparatively new. One was the Russians had just marched into Afghanistan an independent country. They're still there, still holding it by force. The other thing was that the Iranians, contrary to every cannon of international behaviour towards diplomats taken hostages. Those hostages are still in captivity. I think one of the problems is, you never know quite who you're dealing with, with Iran. But that will be one of the problems which must, in fact, cause, both President Carter and Mr. Reagan great concern. They will both have one view, and one view only, how best can we get them released? And it will be a source of great worry to them both. But none of us have succeeded although we've all totally condemned what has happened.
Clough
It seems as though Mr. Waite, Archbishop Runcie's representative made some headway at least, in meeting the Anglican missionary. He wasn't able to meet though, Mr. Pike, the business man who's imprisoned there as well. [end p10] We're obviously in a difficult position with only one diplomatic representative there, but have the government had any news of Mr. Pike?
Thatcher
We have tried to get consular access again and again to all four of the British people who are detained. Mr. Pike, Miss Wardell, the Colmans, we've managed, sometimes, to get things through to them. We've not got regular consular access, and that again, is contrary to all accepted international rules of behaviour. Five months those people have been there. No charge has been laid against them, and we will continue, both ourselves and also through Swedish representatives who've been very very helpful. I was delighted that Mr. Waite was able to see them on what was wholly a pastoral mission. We too, are working, like the United States for the release of our people who've been detained without any charges being laid against them.
Clough
Could I bring you back, finally, Mrs. Thatcher, to this country, to the state of the country and to the temper of the people? Is there a danger that the old idea of two nations is raising it's head again? A nation of the employed, a nation of the unemployed that because the way things have gone there are a great class of people—a great number of people who feel they are being left out of the great scheme.
Thatcher
They're not being left out, I mean, it's just exactly because one wants secure, I can't say secure particular jobs, of course, life is always changing. One wants more and more jobs in the future and secure prospects. You only get secure prospects really, by having a healthy economy and producing the goods that other people will buy. It's precisely because one wants that, and one wants a permanent fall in unemployment; one is being absolutely firm and going about the only way that will secure that fall in unemployment and increasing jobs. It's precisely because of that that we're doing the fundamentally sound thing that we are, but I think some people think that once you get on the unemployment register there's no hope. It's just not true. People come on it, and go off it. Each month, about a quarter of a million people come off the unemployment register. That is about one person in ten seconds … [end p11]
Clough
… it's pretty hard to do if you're in Consett isn't it?
Thatcher
Pretty hard to do if you are in Consett, yes, I certainly agree, and therefore we have to have special measures for Consett and other areas and there are some firms starting up in Consett. That's precisely why we do have regional policies, to try to persuade firms to go there who otherwise wouldn't. Shotton, of course, is another problem. Again, we have put a lot of money in there to get advance factories. There will be a reservoir of skilled people there and the other thing is we're constantly trying to train the skills of tomorrow.
Clough
When I've done New Year interviews with your predecessor, Mr. Callaghan, he got into the habit of giving the year ahead a sobriquet, a tag. One year I remember it was the year of the pendulum, another year was the year of decision. If you had to find a similar phrase for 1981, what would it be?
Thatcher
Well you know, in adversity. We've beaten most of the nations who are now our main competitors. If we stick at doing the right thing we shall win through. So we've got to do the right thing and we've got to stick at it and then we shall win through and we shall be a very formidable nation. And other nations know it.
Out
Prime Minister, Mrs. Thatcher talking earlier today.