Interviewer
Prime Minister, many people including many of your own supporters blame you for the resignation of Nigel Lawson from the Chancellorship and he blames you. This is what he wrote:
“Dear Margaret, The successful conduct of economic policy is possible only if there is, and is seen to be, full agreement between the Prime Minister and the Chancellor of the Exchequer. Recent events have confirmed that this essential requirement cannot be satisfied so long as Alan Walters remains your Personal Economic Adviser. I have therefore regretfully concluded that it is in the best interests of the government for me to resign my office without further ado.”[end p1]
Now Prime Minister, how you respond to this claim of blame may be of crucial significance for you personally and for your government. So I put it to you, are you to blame for Nigel Lawson 's resignation?
Prime Minister
Well, we have done very well together for the last six years and very well for Britain and I think the results are clear to see. To me the Nigel LawsonChancellor's position was unassailable. I always supported him and said quite clearly: “Advisers are there to advise, Ministers are there to decide” and that was the way we did business and we did it very successfully.
I tried very hard to dissuade the Chancellor from going but he had made up his mind and in the end I had to accept his resignation and appoint someone else.
Interviewer
Let us look though at what he says though you see. He is making the claim here that “successful conduct of economic policy is possible only if there is seen to be full agreement between the Prime Minister and the Chancellor of the Exchequer.” Now he is right about that is he not? [end p2]
Prime Minister
Yes, and I am right about the successful six years he has had in the Treasury, very successful. The economy of Britain has made great strides under his Chancellorship and we have worked together. Those are the facts and no-one can get round them. It has been extremely successful.
Interviewer
But you are not claiming, Prime Minister, it may or may not have been extremely successful, but you are not claiming that there was seen to be full agreement between yourself and the Chancellor are you?
Prime Minister
I am claiming that I fully backed and supported the Chancellor. Of course we discuss things, we discuss things in Cabinet, we discuss things in the Economic Committee, we discuss things with many advisers. There is not only one adviser, there are many advisers in the Treasury, we have many advisers and we hammered out a policy and on that policy we were totally agreed, totally, and it was implemented and it was implemented very successful and the success matters. [end p3]
Interviewer
That may or it may not be, many Conservatives would agree with you, I suppose the Opposition would not, that may or may not be true, but I must press you again, Prime Minister, plainly he—Lawson—did not think that you were seen to agree or else he would not have resigned. He did resign.
Prime Minister
He heard me say many many times faced with this question: “I fully support my Chancellor,” and of course you do. We could not have been successful if I had not and I did and we worked out many many things together. Advisers advise, Ministers decide. Nigel was decisive, I was decisive, the result was success.
Interviewer
OK, but it is pretty obvious from the letter what it is he objects to, he objects to the position of, as he then held, Professor Alan Walters and he says: “This essential requirement cannot be satisfied so long as Alan Walters remains your Personal Economic Adviser” . Now he must made that clear to you. What did you say to that?
Prime Minister
Nigel 's position, as I said to him, is unassailable. He was a very strong Chancellor. [end p4]
Interviewer
It is not now, he has gone.
Prime Minister
That is his choice. I tried to persuade him to stay. I could not believe that he would go when he has been such a strong Chancellor and his position was unassailable and he knows and I know that the advisers role is to put his view. The Minister's role is to take a lot of advice, to discuss things, to analyse them to work them out, to consider the political problems which arise, and then to decide. We did just that.
Somehow Nigel had made up his mind that he was going. I spent a long time just talking, just the two of us together, trying to dissuade him but his mind was made up. I was sad. But then once he had decided to go then one had to accept it and set about refashioning one's Cabinet.
Interviewer
But, Prime Minister, it is fairly clear is it not what was getting up Nigel 's nose, it was not that you had an Economic Adviser who very quietly and silently whispered things to you in the still watches of the night. He felt that you were not seen to be united because Professor Alan Walters, a very able man, was making absolutely clear to anybody who cared to listen to him, fundamental disagreements that he had with the Chancellor. And Nigel feared that people would therefore assume that these were your views and that is what he means when he says you were not seen to be united. [end p5] Now surely he put that point to you and what did you say to that?
Prime Minister
Alan Walters is part-time as my adviser. He has only just recently returned. The article to which you are referring was written over a year ago. It is just not possible that this small particular thing could result in this particular resignation.
You know full well that the press have been causing trouble for a very long time, no matter how much, no matter how firmly I have supported Nigel, no matter how firmly we have been saying the same things. That I am afraid was a fact of life, that was what they were doing. It is not for me to say how they saw it. It is for me to say that Nigel has advisers, that I had Alan Walters part-time, there only a few days a month, that Nigel and I and others hammered out the economic policy, we did so successfully. Neither of us is manipulated in any way by advisers, neither of us thinks that we knew everything, that we did not have to take advice, we did, we listened to it, we decided, we succeeded and I am very sad that he has gone. But he has and now we must turn to the future. The same policies will continue because they are sound and we shall carry on in precisely the same way.
Interviewer
I want to ask you about that of course Prime Minister. But let us come back to Professor Alan Walters, you see it is not just this article that he wrote eighteen months ago and that got recent [end p6] publicity. It is very well known, and you must know it, that Professor Alan Walters has been going round the City, he has been attending lunches, he has been giving journalists his views on matters and he has been expressing disagreements with Lawson. Lawson would not just have objected about an ancient article, what he objected to is the whole basis of Alan Walters ' activities. Now is that not the case?
Prime Minister
Many people in departments at the top of Civil Service departments go out and have lunches in the City. They have to keep in contact, particularly if they are in economic departments. That is not unknown at all. But Brian WaldenBrian, I am not going to get involved in this tittle-tattle. I have had a very competent adviser, Nigel also had very competent advisers, they worked together, Alan and his advisers, I am not going to get involved in this, there are far bigger things to consider.
The economy has been run extremely successfully. We have created more wealth than ever before and spread it more widely than ever before, a standard of living people have never had before and a reputation of Britain overseas that is second to none. These are the achievements and I am not concerned with the tittle-tattle, I am concerned with getting on with the job and that I shall do. [end p7]
Interviewer
Prime Minister, I am could not agree with you more about tittle-tattle, as you well know I have nothing to do with it myself. But this is not tittle-tattle. For instance, look at what Sam Brittan said in the Financial Times yesterday, their most distinguished correspondent and Assistant Editor: “There is one thing on which I will stake my reputation, this is that the constant flow of rumours and speculation about Thatcher and Walters was undermining the pound, the British economy and the prospects of job increases” . Now that is what Lawson objected to, why did you not, when he asked you to, sack Alan Walters?
Prime Minister
I am not responsible for rumours. I see many things in the press that are totally and utterly false, totally and utterly false, they are speculation, I am not responsible for those. I am responsible for the conduct of business. Nigel and I worked very well together with great success. Now let us consider the policy.
Interviewer
All right, well let us consider Lawson. I have to take it the way you have put it, Prime Minister, that you blame Nigel for the resignation, not yourself? [end p8]
Prime Minister
It is not a question of blaming anyone. Nigel was a very successful, brilliantly successful Chancellor, for six years. Of course I knew that one day he would go, he is an extremely able person and I knew that one day we would lose him. I did not expect it to happen this way or as soon as I have said to you. To me Nigel 's position was unassailable and I supported him wholeheartedly, he decided to go.
Now that is a fact and I have appointed a new John MajorChancellor whose ambition it was to be Chancellor, a new David WaddingtonHome Secretary whose ambition it was to be Home Secretary, a new Douglas HurdForeign Secretary whose ambition it was to be Foreign Secretary. Now let us get on with the future.
We have had a very successful past, that chapter has come to an end, I am sorry it did. But it is the future now that matters.
Interviewer
It is but it is also of course your political position, Prime Minister, and I have to question you on that and you know that I do.
Prime Minister
Yes do, go question, go ahead.
Interviewer
Of course, so let me ask you again, why did Nigel resign? [end p9] You say he knew that he was unassailable, he knew that you loved him and that everything that he did was marvellous, but he resigned. Now people are going to want to know why?
Prime Minister
I think that is a question you must put to him and not to me. I tried to dissuade him. I saw him three times on Thursday, first I really did not believe that he had any intention of going and then just before Questions he told me that he would be going and I said: “Look, I must go to Questions and deal with the House and the statement. I will see you immediately I return and perhaps we can talk it through” . And so we talked it through, just the two of us, and it was quite clear that he had made up his mind and there was nothing I could do to dissuade him, quite clear, that was just a fact of life and I have to accept it. More you must ask of him, he went with great dignity.
Interviewer
He is coming on next week so I will have the chance.
Prime Minister
He has been very generous in the remarks he has made about John Major and very supportive and he will continue to be supportive, as you would expect of him. [end p10]
Interviewer
Well, you see, again, Prime Minister, obviously you saw Nigel several times on that Thursday—four times was it?
Prime Minister
I saw him just before nine o'clock. I had seen him the previous day on our regular bilateral meeting. Then, of course, we had Cabinet. Then, he wanted to see me just before I went into Questions and then after Questions. So the long discussion was, of course, after Questions.
Interviewer
All right, Prime Minister, but I have to put it back to you and you know that I do, because everybody is going to ask you about this again and again. He was unassailable, you say; you were in agreement, you say; everything was going well, you say; and he said to you: “Margaret, you have got to get rid of Alan Walters!” Why didn't you and keep your Chancellor? [end p11]
Prime Minister
Nigel had determined to go. I made it quite clear that advisers are there to give advice, ministers are there to decide. You have asked me, Brian WaldenBrian, the same question about five times and I have given you the same answer. If you continue to ask that same question, I shall continue to give you the same answer.
I am concerned now with future policy and with the conduct of it and with the future John MajorChancellor of the Exchequer and the conduct of the Economic Policy Committee of the Cabinet and the Cabinet and in the House of Commons. I am answerable for that. Nigel made his decision—reluctantly, I accepted it.
Interviewer
I want to come on to future policy, but I also want to clear this up, which will not just go away. A last question:
Do you deny Nigel would have stayed if you had sacked Professor Alan Walters?
Prime Minister
I do not know.
Interviewer
You never even thought to ask him that? [end p12]
Prime Minister
I do not know. Nigel had determined that he was going to put in his resignation. I did everything possible to stop him. I was not successful. No, you are going on asking the same question.
Interviewer
Of course, but that is a terrible admission, Prime Minister.
Prime Minister
I do not know! Of course, I do not know!
Interviewer
You do not know you could have kept your Chancellor, possibly, if you had sacked your part-time adviser?
Prime Minister
I wanted to keep my Chancellor in any event because he was very good. His position was unassailable and let us face it, Brian, he was Chancellor. He and I decided.
This is not a matter of advisers. Nigel and I and the Economic Committee decided. We answer to the House of Commons. Now that is the fact and that is the big fact of the matter and I am not going on with this! [end p13]
Interviewer
All right! We, I think, have in some ways got fairly clearly … I suppose I must ask you once more … just once more: you say you do not know whether you could have kept him if Walters had gone; did he ask you to sack Walters?
Prime Minister
I am not going to disclose the conversations which the two of us had together. I admired Nigel very much. I am immensely grateful for his stewardship as Chancellor. Nigel was Chancellor. Nigel 's position was unassailable—unassailable.
Interviewer
I cannot make you say, Prime Minister, what you do not want to say but, of course, you are aware what people will assume from this discussion aren't you: that you could have kept the Chancellor if you had sacked Walters?
Prime Minister
I wanted to keep Nigel. The position of the Chancellor is a very great one—it does not depend upon advisers at all. Mine does not depend upon advisers. I make the decisions, Nigel makes the decisions, we discuss those together. That is the important fact and I think people will see it as that.
Advisers—many of them—are there to advice, ministers to decide. Nigel made his decision, I had to accept it. [end p14]
Interviewer
All right! Let us look at it from the other point of view, Prime Minister.
This is not something that suddenly blew up. It has been known in pretty well all circles—and indeed, it is one of the reasons that there has been trouble in the markets—that there have been disagreements between yourself and the Chancellor.
Prime Minister
There have not been many troubles in the markets.
Interviewer
And no disagreements between yourself and the Chancellor?
Prime Minister
Of course, markets go up and down—you would not have a market if it did not! What do you mean “trouble in the markets” ?
Interviewer
The Sam Brittan quote.
Prime Minister
There was a stock exchange crash in 1987.
Interviewer
Oh sure, I do not mean that! [end p15]
Prime Minister
There was trouble on Wall Street when it fell just 150 points and my goodness me, all television and radio and the press tried to blow it up as big as they could. That is the way they work. The markets were far calmer than either television or the press and the markets have been far calmer.
Now, let us start the question again in a different way!
Interviewer
Well all right, I will, I will!
If you will not take my word for it that there has been trouble in the markets—and of course, I did not mean the stock exchange crash—let me read you the first paragraph of the leader in the Financial Times yesterday, and it says:
“With his resignation yesterday, Mr. Lawson put an end at last to what has long been an impossible situation both for him personally and for the Government as well. It is more than likely that the behaviour of the Prime Minister, which drove him from office, may be seen in hindsight as the beginning of the end for her too.”
An impossible situation. All the financial journalists are saying that there was enormous uncertainty in the markets because of the presumed disagreement between you and the Chancellor. Now, do you deny that? [end p16]
Prime Minister
Brian, you must be quite crazy! Do you think that kind of situation could have gone on for six years? Alan Walters was with me …
Interviewer
It could have for eighteen months, though, couldn't it?
Prime Minister
Do you really think that kind of situation could have gone on for six years?
Interviewer
Yes! Everybody thinks that!
Prime Minister
One moment!
Interviewer
Eighteen months!
Prime Minister
No, they do not!
Interviewer
Eighteen months! [end p17]
Prime Minister
You have come from six years to eighteen months pretty smartly! Let us get it down to eighteen days or eighteen minutes or eighteen seconds! Look!
Interviewer
Eighteen months is a long time!
Prime Minister
Brian! We had six years of highly successful stewardship from the Chancellor of the Exchequer, six years, very successful; created more wealth and spread it more around than ever before; better social services; higher standard of living; high reputation abroad. If you think that could have gone on for six years with that success you are talking nonsense!
Now, let us stop this simple tittle-tattle! Let us get down to the success we have had, the way in which people now copy “Thatcherism” as they call it, the world over, the proud reputation we have abroad, the way people listen to us. We could not have had all of that unless Nigel and I had worked very closely together—we did. Now, let us go on to the future!
Interviewer
Well, it is not tittle-tattle!
Prime Minister
Don't you want to face the future? [end p18]
Interviewer
Of course I do!
Prime Minister
I do and I am ready to face it.
Interviewer
I am most anxious to talk about the future, Prime Minister … .
Prime Minister
Good!
Interviewer
… . but I am also anxious to talk about the political aspects of the crisis …
Prime Minister
Yes.
Interviewer
… . and there are—you know there are.
You see, there have been disagreements between you and Lawson in the last eighteen months, he says so himself, and they have caused certain uncertainties on the market. [end p19]
The question I want to put to you is this: if you found that you could not resolve these things in private with him, rather than lose Alan Walters, why didn't you sack Lawson and appoint a new Chancellor?
Prime Minister
We have resolved them. I think you are probably talking about the European aspect and the Exchange Rate Mechanism. We resolved that and we set out at Madrid precisely what we intended to do and how we intended to go in the future and we have adhered to it absolutely because we hammered it out.
Interviewer
Let me switch from Lawson, keeping on this issue of the political problems that you face, to something that people say—you may want to accept it, you may want to reject it—but some people draw a lesson from all this. They say: “It is not the first time. Margaret Thatcher has problems with strong, independent figures. Look at Heseltine at the time of Westland; look at Biffen whom she got rid of! Look at even Sir Geoffrey Howe who had to be moved from the Foreign Office in rather unhappy circumstances and all that. She just cannot get on with anybody except “yes” men.” Now, is that true, Prime Minister? [end p20]
Prime Minister
No, and it is a great insult to members of my Cabinet and you know it! You also know, from many many years arguing with me, that I enjoy a good argument.
Interviewer
I know.
Prime Minister
I enjoy dealing with the facts.
We conduct affairs so that we do have very good arguments about things, because that is the way we come to conclusions. I like strong men and strong women about me, that way we have strong government.
I have nothing like the problems which the Labour Party has. We have strong policies founded on strong principles and a record of success and an international reputation and country after country following our policies as they come in and say to me: “We have tried everything else, now we will try Thatcherism!” and I say to them: “Thatcherism is much older than me. It is based on fundamental common sense, the limitation of the power of government and handing more and more powers and the fruits of their work back to people!” and it works! That is what matters. [end p21]
Yes, I like strong people about me. Yes, I am prepared to argue anything. Yes, I am prepared to listen. Why? Because I want the result to be right. I want the policy to be right. I want to have all the arguments put because if they are not put to me in No. 10 and we do not argue them out, they are not put to me in the House of Commons and I am able to face them in the House of Commons because we have thrashed them all out in No. 10.
So what you are saying again is nonsense and you know it from having talked with me over the years! [end p22]
Interviewer
All right, I will come back to that because I think there is a very vital point involved there which I really want to put to you. But let me sum you up so far. You do not accept blame for the resignation of the Chancellor of the Exchequer, you do not know why he resigned, he is to tell me himself, you can offer no guidance on that. And you do not accept that the other resignations from your government, or the other sackings from your government, have arisen because you cannot handle strong men, because you like strong men and you like argument.
Let me put this to you, Prime Minister, it is a point that has always interested me and I think it is now politically relevant. It may be the case that in private you will have a lusty argument and you will listen to other people's opinions and that you are only too happy to accept a suggestion if it is correct, but you never come over in public like that, ever. [end p23]
You come over as being someone who one of your Back Benchers said is “slightly off her trolley” , authoritarian, domineering, refusing to listen to anybody else. Why, why cannot you publicy project what you have just told me is your private character?
Prime Minister
Brian WaldenBrian, if anyone is coming over as domineering in this interview, it is you, it is you, hammering things out instead of just talking about them in a conversational way.
Interviewer
Do you think so?
Prime Minister
Yes, you are very domineering at the moment. Now let us deal with the authoritarian thing quietly. No government has handed back more powers to the people than this one, the one I have the privilege to lead.
Taxation—we have lowered the levels of income tax. That is more power to people over their own money and earnings. That I believe in because of incentives, people work for their families. So handing power back, we take less, they have more. [end p24]
We have cut some of the controls which government used to use to control the economy, incomes controls, prices controls, foreign exchange controls, development certificates—a factory used to have to get a development as well as a planning certificate so that it had to be told to develop where they did not want to and not where they wanted to and that led to trouble. That has gone, a lot of controls have gone.
We used to have masses of nationalised industries. Let me give steel as an example. It was losing a billion a year which had to be met by the tax-payer. It is now privatised and making a profit of £500 million a year. We privatised industry after industry, government ought not to control business, it does not know how to do it, it interferes.
So in all of those things, and in home ownership we have taken more power away from councils and let people buy their own houses. In all of these things, in the reform of the Health Service, in the reforms of education, less powers to government and local government and more powers to the people.
The whole characteristic of the government which I lead has been to limit the powers of government, to be very strong on those things which only government can do, very strong, and to hand over powers to people. This is the British character, it is enterprising, it is responsible, it will take the initiative, it wants to look after its own family, wants to make its own decisions. [end p25]
Authoritarian—it is socialism that is authoritarian, it is socialism that says: “You must conform to the national plan, to the government” . I am totally different, government is there to serve the freedoms of the people under a strong rule of law.
We have handed powers back to the people, checked the part of government, enlarged the powers, the liberties, the income, the ownership of property, the choice of the people. It is the reverse, what you are saying is the reverse.
Interviewer
Well actually I was not necessarily denying any of that, it may be true, it may not be true. I thought since you thought I was domineering you, I ought to let you say a lot of it. But you know what it is that I am getting at. You see you accept in public no blame for anything that has happened with Lawson and indeed not much blame for anything else. Why? Do you not think that it would be truer to your own nature if you said in front of the public, who do not think that you are weak, all that conviction? That is what they were afraid of, the reason they might not vote for you is that they think you have got too much conviction, that you are too dogmatic, that you will not listen to anybody. Why do you not say: “Well all right, I had a quarrel with Nigel, perhaps there were faults on both sides, I do take a little bit of blame, I should have been more sensitive to his worry about Walters” . Why do you not say that? [end p26]
Prime Minister
Neither of us is faultless, none of us is claiming that. Of course we have faults, of course I take the blame for most things that go wrong, now and then a little credit for things which go right. That is life, what is the problem?
Interviewer
Ah, well then what was the blame that you are prepared to accept for losing Nigel?
Prime Minister
Nigel LawsonNigel had decided to go, I tried to keep him.
Interviewer
So you do not take the blame?
Prime Minister
I would still try to keep him, I would still try to keep him, but he decided to go and I had to my decisions from that time. Nigel made his, I made mine.
The idea you know that you can have the same government for ten years you know is totally untenable, you would not have your young people staying, they have got to see that their ambitions may be fulfilled and rise from the bottom to the top. You know full well one has to have reshuffles and I have had quite a number. [end p27]
The reasons for resignations in the past have been totally different. Michael Heseltine could not accept the collective decision of Cabinet, you have to. But we have had several reshuffles, I regret this resignation, it has happened, we shall go forward and as I indicated yesterday it will be business as usual.
Nigel is a loss. He will support this government vigorously as I have supported him.
Interviewer
I can almost feel the desire to accept some measure of blame trembling on your lips but it cannot quite come out and as you rightly say we must get on to the future, there are economic problems involved in this.
Prime Minister
Yes, you are having a highly artificial argument, let us get on to the realities.
Interviewer
Well no, it is the one the country wants to hear about, it is the political argument but after the break we must …
Prime Minister
No, no, you are not having the political argument, you are having tittle-tattle arguments, now let us get on to the political argument. [end p28]
Interviewer
Prime Minister, it is not tittle-tattle, I can assure you that when you get down to the House of Commons next week you will hear very little else.
Let us now switch to the economic side of all this because one of the unfortunate aspects of Lawson going is that it has if anything deepened the confusion about your intentions and I know you want to clear these up. You mentioned earlier the Madrid Summit. One of the problems with that is that practically everybody thinks that the wording adopted there was a fudge that both you and Nigel can stand on though you actually intended different things.
Similarly, every Government Minister now says: “The policies will go on just as they were before” and I am sure they will but that does not help much because the markets have felt that there was a division there anyway.
So I want to put it to you what is really I suppose the essential question that the markets will want to hear. Do you really want to join the European Exchange Rate Mechanism of the European Monetary System?
Prime Minister
We shall join the European Monetary System on the conditions we laid down in Madrid. There was nothing fudged about them, they were quite clear. [end p29]
Point number one, the various countries in that particular Exchange Rate play by different rules. That is nonsense. When you join any system you must all play by the same rules. At the moment some have foreign exchange control, some do not. Some have freer movement of capital, some do not. Some have artificial constraints on what their pension funds and insurance funds can invest in which prevent overseas investment or investment in other currencies, some do not. Some have a great deal of subsidy to their industry so that competition is unfair, some do not.
You just simply cannot have a system with a currency like sterling, which is a big currency, which is a more open currency, which has London as the most open market, freest market in the world, playing under that higgledy-piggledy set of rules.
We are way ahead of most other countries in our liberty, in our freedom, in our openness. They have to catch up with us, I hope they will. And so we said quite clearly, we shall join the Exchange Rate System when there are no foreign exchange controls, when there is freedom of movement of capital, when their financial services like their insurance and pension funds are run as openly and as freely as ours are, and when we have fair competition and the subsidies have gone.
Now all of that should happen during the first stage of what is called the Delors First Stage, the first stage coming towards monetary union. I hope it will but other countries have to catch up, a long way, before it happens. How long it takes is up to them. [end p30]
Interviewer
Well, which way is it in your mind, Prime Minister; that you are thinking: “I am dying to get into this because it will be very good for the pound and it will be very good for Britain. I do wish these foolish foreigners would hurry up and get into a situation where I can join!” or are you privately thinking: “I don't reckon these chaps will ever in the near future get around to doing any of these things, so I am quite all right! We shall never have to join the ERM, which I do not want to join anyway!” Which is it?
Prime Minister
I hope they will and I hope it not only for the Exchange Rate Mechanism so that we can join, but I hope it on general economic grounds.
We believe in an open economy; we believe in free and fair trade; we believe in fair competition; but they have some artificial and cultural barriers which are going to be very difficult to get down. They talk about being European and communautaire—we practise it. We are much more open than they [end p31] are, and they really have to start to do things as well as say them. It is no earthly good talking about things unless they are prepared to free-up. The more they free-up, the better pleased I shall be and they must expect to play fairly. We want it. We joined the European Community for the Common Market. It is one of the things we have not had. They have had their barriers up and still many of them have their barriers up. There are still some of them which no matter how in theory you free-up contracts, will always buy German or always will buy French, whereas we look at value for money.
But I really cannot have Britain worsted by other people having a different set of rules from the ones we have. We play fair and we will and the more liberal economics they have, the better it will please me. I shall be delighted when they have it.
Interviewer
All right, Prime Minister, but I still detect a certain underlying suspicion of these people, a certain hostility to what they are up to, a certain feeling that, yes, they have got a lot to change and they must mend their ways in many ways and you will not go in until they do, will you?
Prime Minister
Because it would not be fair in Britain.
Just take one example where we have really to bat extremely hard: there are more small farms in Germany and France than there [end p32] are in Britain and they want to fix the Common Agricultural Policy so that it always favours their smaller farms and puts our bigger family farms at risk. It is quite absurd and we have to fight like tigers for our bigger family farms. It is not fair! And of course I fight for Britain and of course I am combative and of course I fought for Britain over the Common Agricultural Policy and I shall go on doing it, but they simply must be fair.
Interviewer
All right, Prime Minister, but on the basis of putting that to me there is a lot that they have got to get rid of. What it means, in practice, is that we shall not be going into the ERM for quite some time, doesn't it?
Prime Minister
That depends on them! That depends on the gap between what they say and what they do.
Interviewer
I think, don't you, Prime Minister, that the markets are bound to interpret this to mean that you have no especial enthusiasm for getting into the ERM as it is and that you are rather doubtful how long it is going to take them to get in a position where you can get in? [end p33]
Prime Minister
No, Brian, I do not! No, Brian!
Interviewer
You don't think the markets will think that?
Prime Minister
No, and I think you are trying to persuade them artificially into a way which is not justified from what I have just said and that is one of the problems we deal with. Let the markets make their own judgement.
We shall go in when it is fair and under the same rules and under liberal economics to do so and that, Brian, is what the Common Market is all about.
Interviewer
Supposed to be about!
Prime Minister
That is right! It is not keeping constraints; it is genuinely getting them down within the Common Market as an example to others and I repeat it: we are ahead of others and I hope they catch up. We are far more communautaire in the way in which we run our trade and run our finance and I hope they will catch up so that we can join the Exchange Rate Mechanism. [end p34]
Interviewer
You do not sound very sure.
Prime Minister
It is a terrible title, isn't it?
Interviewer
It is awful and you don't sound very sure about it either, do you?
Prime Minister
I am very sure about it. I am very sure about it.
Interviewer
Oh no, that they will catch up is what I meant.
Prime Minister
Well, I hope they will.
Interviewer
Let me … . Greece and Portugal, because this is a point that has been put to me several times and the answers are unclear because some claim that the Treasury has said one thing and you have said another but I shall not pursue that. [end p35]
Prime Minister
But they will claim that in any case!
Interviewer
Of course! They may be right.
Prime Minister
We could have the identical words.
Interviewer
It has been known to happen but let me ask you on the detail: Greece and Portugal have got until July 1994 to get rid of their exchange controls.
Prime Minister
Well you expect that, Portugal is a much poorer country.
Interviewer
So that does not worry you?
Prime Minister
It is reasonable to have a transition period.
Interviewer
And that would not keep you out? [end p36]
Prime Minister
No.
Interviewer
I see!
Prime Minister
It is reasonable for them because they are much smaller currencies. We are a bigger currency than any other except the deutschmark and therefore for us to go in would be much different from Portugal.
Interviewer
The franc and the lira have got to get rid of exchange controls but Greece and Portugal you are tolerant about?
Prime Minister
The Dutch people already have got rid of their foreign exchange controls and so has Luxembourg, so it is not necessarily the size but Greece joined later, she is a poorer country; Portugal joined later and Portugal will still have a longer transition period and so will Spain because she has got until 1992. [end p37]
Interviewer
Let me ask you now about the second really crucial issue, the only other one that basically matters in terms of market confidence, and that is the value of the pound.
Nigel persistently, as you know, interfered with interest rates in order to keep sterling within certain bounds, in order to support it when it feel and sometimes to depress it when it rose. Is that policy going to be pursued?
Prime Minister
I like a strong pound. Most chancellors and most prime ministers like a strong pound. You have markets, the pound goes up and down, and do not forget the Exchange Rate Mechanism applies only to European currencies. Most of the world's trade is conducted in the dollar and the yen and you will have currencies going up and down against the dollar and the yen and joining the ERM will not affect that.
You have really only two mechanisms: one is the interest rates and the other is intervention and do not think that going into the Exchange Rate Mechanism is an easy option. You could have to swing up your interest rates extremely sharply because you had no option because you are in a fixed particular bracket. [end p38]
Interviewer
But I am talking about domestic interest rates and what I am really putting to you is if the markets get very jittery next week, and who knows they often do, will you then in fact use interest rates in order to keep the value of the pound up?
Prime Minister
You manage the markets on a day-to-day basis and you make your decisions and if ever you reveal what your decisions are likely to be, you are only helping the speculators. That I will not do and you would not expect me to.
I like a strong pound. There are only two ways: one is the interest rate, the other is intervention, and the other is I think the general demeanour and politics and stability of the Government.
We have had a strong economy, we continue to have a strong economy. We have a strong Government and we have a good majority and I hope they will make their judgement of Britain's strong economy—also may I say its strong leadership—and of a very good team-leading and a united Party—and that has an effect. There is nothing mechanical about exchange rates. [end p39]
Interviewer
Prime Minister, I think the impact of the whole interview—of course, it may not, it is a matter of opinion, you may think differently—will make many people feel that nothing that has happened has in any was shaken or chastened you and, of course, that will worry some of them. They will say: “The Prime Minister remains absolutely unyielding about everything and though she might have done a good job, I think it is time in fact that we have someone who was more yielding!” What do you say to that?
Prime Minister
Nonsense, Brian! I am staying my own sweet reasonable self, founded on very strong convictions which were a combination of reason and emotion. I feel passionately about personal liberty and Government is there to serve it. I feel passionately that it is the right of people to have more and more choice because I held these passionate convictions and fashioned our economic policies on them reasonably, firmly, strongly.
Interviewer
Prime Minister, I must stop you there!
Prime Minister
No, you must not! [end p40]
Interviewer
I must! Thank you very much indeed!
Prime Minister
Strong leadership will continue!