The MacNeil/Lehrer Report; Thatcher's Victory

MARGARET THATCHER: Her Majesty the Queen has asked me to form a new administration, and I have accepted. It is of course the greatest honor that can come to any citizen in a democracy. I know full well the responsibilities that await me as I enter the door of Number Ten, and I`ll strive unceasingly to try to fulfill the trust and confidence that the British people have placed in me and the things in which I believe.

JIM LEHRER: Good evening. Great Britain has a new government today. It`s Conservative, and it`s run by Margaret Thatcher, the first woman outside royalty ever to head a government in Britain or anywhere else in Europe. Mrs. Thatcher`s Conservative Party easily won majority control of the Parliament in yesterday`s general election. The final count is still not official, but it appears the Conservative majority may be over forty seats in the 635-member House of Commons. Today there was the centuries old ritual of change: defeated Prime Minister James Callaghan of the Labor Party called on Queen Elizabeth II at Buckingham Palace to resign; Mrs. Thatcher came a short while later to be asked, as the new Prime Minister, to form a new government.

The Conservative victory was no real surprise. It had been widely predicted by the experts and in the polls. It was an election on issues rather than personalities. Mrs. Thatcher and her party ran on a platform of three reduces: reduce income taxes, reduce government`s involvement in the economy, reduce the power of the labor unions. She in effect invited Britain to follow her in a turn to the right, away from socialism, and a majority took her up on it.

Tonight, Margaret Thatcher, her politics and her problems ahead in translating them into reality. Robert MacNeil is off; Charlayne HunterGault is in New York. Charlayne?

CHARLAYNE HUNTER-GAULT: Jim, the political career of the fifty-three year old grocer`s daughter dates back to her college days at Oxford, where she was elected president of the university Conservative association.

Trained in both law and chemistry, Margaret Hilda Roberts was twenty-four years old and working as a research chemist when she made her first bid for Parliament and lost. A common interest in Conservative politics brought her together with Dennis Thatcher some thirty years ago. They were married and have twins, a boy and a girl, now twenty-five years old. In 1953, after being admitted to the bar, Mrs. Thatcher switched from chemistry to a profitable tax practice. In 1959 she was elected to Parliament in the Harold Macmillan sweep. The only cabinet post she ever held was Secretary of Education in the `70s. During that time she began drawing national attention, in part for cutting back on the free milk program in schools. In 1975 she was elected party leader, a move that put her first in line for the post she won yesterday.

Now let`s take a little closer look at the new Prime Minister. One man who knows what it`s like to work with her is James Douglas, former director of the Conservative Party`s research department. Mr. Douglas is now teaching a course on postwar British politics at Yale University. Mr. Douglas, is Margaret Thatcher the iron lady the Russians have claimed she is?

JAMES DOUGLAS: I don`t think so. I mean, I think she`s a woman of considerable charm and a very agreeable person to talk to. I think what is caught by this phrase is that she has a certain determination, which does come out and which we see in her policies.

HUNTER-GAULT: Does that mean she`s inflexible?

DOUGLAS: No, but I think she has a great deal of stamina in going for a particular objective. She`s the sort of woman who knows what she wants and will move for it, and also doesn`t suffer fools gladly, I think it`s fair to say also.

HUNTER-GAULT: I see. During the campaign the press continually described her as personally unpopular, even though they predicted that she would win. Why was that?

DOUGLAS: Well, I think that`s very common. I mean, you will remember that exactly the same thing happened in 1970 with Mr. Heath; I mean, that curiously, the sitting Prime Minister, I think, generally has a certain personal following. Apart from that, I mean, there is a certain quality of abrasiveness about some of her type of. approach, which may put people down. It`s been said that some of the anti feeling was due to her being a woman...

HUNTER-GAULT: Yes, but the feminists were divided on that issue.

DOUGLAS: I think so. I don`t know what Michael would feel about that...

HUNTER-GAULT: Well, we`ll get to him.

DOUGLAS: Yes. I`d have thought that there was little of that, I mean, that the unpopularity was not because she was a woman.

HUNTER-GAULT: But the women themselves were divided on her.

DOUGLAS: Yes. HUNTER-GAULT: Why was that?

DOUGLAS: Oh, I think anti-feminism is as common in your sex as in mine. (Laughing.)

HUNTER-GAULT: But there were the feminists, who, I think, felt she wasn`t enough of a feminist.

DOUGLAS: Oh, yes, both ways.

HUNTER-GAULT: She`s said to have a very impressive grasp of facts and figures, and above all, control. How does that affect her dealings with people?

DOUGLAS: I think she`s got, as I said, a very penetrating intellect which is armed with a considerable memory for facts and figures. I don`t think it interferes with her human relations, as much, perhaps, as the same sort of qualities did in the case of Mr. Heath. I think to be a prime minister these days you do need to have this sort of grasp of the situation and be master of a great many technical disciplines. In her case I think probably it didn`t make for very unpleasant personal, close relations, but did present problems when she was talking on television and things like that, when she`s inclined perhaps a little (inaudible).

HUNTER-GAULT: All right; we`ll come back. Jim?

LEHRER: The Labor Party had been in charge in Britain for twelve of the last fifteen years, the last three under James Callaghan. Their string ran out on that group of issues coming under the heading "economics," including high taxation and high inflation. It was brought to a boil last winter, when a series of strikes shut down the country`s public services, everything from buses to funerals. The polls showed the people had had enough, they wanted a change; and that change was offered by the Conservatives and Mrs. Thatcher. In a pre-election interview with Denis Touhy of Britain`s Thames Television, Mrs. Thatcher talked of the changes she had in mind, beginning with her promise to cut income taxes.

(Recorded April 1979.)

THATCHER: So I am saying to people, you should be allowed to keep more of your own earnings. I say it for three reasons, really. First, people feel very, very resentful that if they work hard too much is taken away in tax. And then you know, industry won`t really keep going unless the people who are highly skilled feel that the skill pays in their net take-home pay; and it doesn`t. And the third reason is this: we`re not going to get more jobs for young people, genuine jobs, unless we can have more small businesses, more new small businesses, and more small businesses growing. So they too have to have incentives.

DENIS TOUHY, Thames Television: Now, in terms of incentives, isn`t there a danger, though, that if people in fact keep more of what they`re earning that they will be more content with their present lot instead of striving, as you want them to do, to do better?

THATCHER: No, I don`t think so. I think there are many, many people for whom the main driving force in life is that they want a better deal for their children, they want to do more things for their children. And I think that that is a tremendous incentive and they will go on and earn more for a better life for them. After all, don`t forget, a lot of our people now go overseas, they see how our European neighbors live, they see that job for job they have a very much higher standard of living, and they don`t like the idea -- quite rightly they don`t like the idea -- that Britain`s falling behind; and Britain is declining, compared to our competitors.

TOUHY: It`s been assumed, it`s been reckoned, that to make a real impact, the cuts that you have in mind, would include reducing the top rate of tax from eighty-three percent to around sixty-five, taking around three p. off the standard rate, raising thresholds generally. Is that roughly what it means?

THATCHER: The precise calculations I cannot give you. And I think we shouldn`t get into the stage when you think thrupence off here means so much loss to the Exchequer. One of the purposes of reducing tax on the pay packet is to persuade people to earn more so that they have more pounds; and by taking less out of more pounds you can still sometimes get the extra yield. For example, on the top rate I don`t think we shall lose any yield at all. I think it will bring back some people to this country who`ve gone away, and they will provide quite a driving force, a new driving force for British industry.So you mustn`t ever, if I might say so, look at the British economy as if we produce a fixed amount and no more. The object of this is to start to grow again. I hope it will succeed. We can put the ball at people`s feet. Some of them will kick it.

TOUHY: Let`s move to public spending cuts generally, and it`s been estimated you`re going to have to save about two and a half billion pounds here. You`ve excluded defense and law and order, which you wish to expand, so where will the major cuts be? Will they be in health, in education, in social security?

THATCHER: I`ll once again start off with one thing.

You make it sound as if that were totally impossible. You know, when the IMF came in and looked at Mr. Healy`s profligate spending, they said, "Mr. Healy, if you want to borrow money from the IMF, you`ve got to cut spending, and you`ve got to cut it by something between two billion and three billion." And he did. --One moment...

TOUHY: But we want to know how you will.

THATCHER: One moment. So there is evidence that it is not impossible. He did it when he was told to. We told him he should have done it before. Now let`s go and have a look at some of the things. This particular government has increased the amount available to the National Enterprise Board from one billion to four and a half billion. We think that`s for backdoor nationalization. They haven`t put in their manifesto one thousand million pounds to four and a half thousand million. That`s a colossal increase, far more than your sick industries need, far more. We think that`s available for backdoor nationalization. That will be cut very seriously indeed. We shall cut...

TOUHY: Why are you so hostile to the National Enterprise Board?

THATCHER: Can I just answer?

TOUHY: Well, the National Enterprise Board is an important point here, because every country in Western Europe has got some form of holding company, finds it necessary to secure continued investment, especially in long-term projects, which risk capital otherwise doesn`t necessarily...

THATCHER: Yes, but you will have seen, from what Sir Harold Wilson found with the city, there`s no shortage of money for investment, none. Do you know...

TOUHY: But it won`t go into the projects that...

THATCHER: One moment.

TOUHY: ...are longer-term.

THATCHER: One moment. The difficulty, and the difference between this country and others, is that in this country you do not get the return on investment. Look, The Times newspaper has all the latest equipment and machinery. Two things: first, because of restrictive practices the unions won`t operate it; two, because where it is operated -- and in some companies, take ICI -- kept up investment tremendously well--Guest, Keen and Nettlefolds, your big companies. But if they do do well, this government clobbers them. You`re not allowed to get a good return on your money; if you do, they cut down the profits, they put the Prices Commission in, and they put a tremendous control on dividends. You cannot have it all ways. If you want the investment, if you want the risk, you`ve got to get a good return on it. There is plenty of money available in this country for investment.

At the moment it`s all going into government stock instead of -- I agree with you, it should be going into productive investment, for the government`s taking too much of it.

TOUHY: Isn`t one of the reasons you`re going to find it so difficult to make the whole area of pay negotiations work is the hostility towards you from the trade unions, as exemplified by Mr. Sidney Weighell saying that a Conservative victory would lead him to tell his members to put their snouts into the trough? Isn`t that a legitimate interpretation?

THATCHER: I think that`s an appalling phrase. I know so many of my ...

TOUHY: Well, but wasn`t it -- however inelegant a phrase -- a legitimate reaction to your idea that in fact people would be free from tax and people would bargain for what they can get?

THATCHER: No. Phrases like that are not a legitimate reaction to anything. And what is more, they grievously offend many, many members of trade unions. You said something to me which I would like to correct. You said hostility to me from the trade unions. The accurate thing is hostility to me from some trade union leaders who are themselves committed labor politicians. One of the problems in this country is that we have a few, a comparatively few people -- they could be measured in thousands -- who wish to destroy the kind of society which you and I value, destroy the free society.

TOUHY: You were talking about...

THATCHER: Please, please, this is the most...

TOUHY: ...striking ambulance workers, you were talking about...

THATCHER: Please, this is the most...

TOUHY: ...auxiliary workers in hospitals.

THATCHER: This is the most important point you have raised. There are people in this country who are the great destroyers. They wish to destroy the kind of free society we have; they wouldn`t have the freedom in the kind of society they wish to impose on us. Many of those people are in the unions; many, many people in the unions do not wish to strike, and I think many of those who struck in the hospitals and in the ambulance service didn`t wish to. I`m not suggesting that every strike is dominated by those, but a number are.. And you saw the reaction of some of the trade union members; you saw at Vauxhall, you saw the man who had almost gathered tremendous courage to get up and say no to that strike. We have...

TOUHY: But I`ve also heard... THATCHER: ...got to deal...

TOUHY: ...trade union leaders speak of chaos, Mrs. Thatcher.

THATCHER: We have got to deal -- chaos caused by some of those militants. We have got to deal, all of us, with those militants. Don`t underestimate the problem; I don`t. But we`ve got to deal with them. And we shall.

LEHRER: Following through on that vow to do something about Britain`s labor leaders, at least some of them, will clearly be one of Mrs. Thatcher`s first and toughest nuts to crack. "A sad day for Britain" is what one union leader said of the election result today. "We are going to have a confrontation situation generated if they do what they say they`re going to do."

Here to shed some light on the prospects for peace and war with the unions, among other economic things, is Jurek Martin, Washington bureau chief of the British daily, The Financial Times. Are the unions likely to go without a struggle, Jurek?

JUREK MARTIN: No, they won`t go without a struggle, and the struggle could easily start next week when the power workers are due to vote on a pay contract. And I think perhaps also, given the regional nature of this last British election, with huge tory gains in the south, the relatively affluent and relatively prosperous south of England, yet a standoff in the industrial north, that those union leaders may feel that they have a base which has not yet been destroyed. It will be a difficult path for them, however.

LEHRER: What tools, as Prime Minister, does Mrs. Thatcher have to deal with this problem of the...

MARTIN: A very great majority in the House of Commons. It`s not forty-plus seats in reality; it`s probably closer to sixty if you add the Ulster unionists in, and that is a very, very sizeable majority. She will also have, without a shadow of doubt, the influence that the London establishment, through the press, through the media, can bring to bear on the country at large, and I think that of those will be quite powerful; but above all it`s the majority in the House of Commons.

LEHRER: Using that majority in the House of Commons, what specifically can she do in terms of legislation or -- what are we talking about in terms of what she could do to restrict the power of the unions?

MARTIN: There are all sorts of great British issues which from a distance often appear picayune but which in Britain assume inordinate importance, and you`re talking about various sorts of restrictive practices such as the closed shop; secondary picketing, which has been a very, very emotional issue in Britain in the course of the last winter in particular; and these are legislative things which she`s likely to attack and probably to attack quite soon.

LEHRER: And successfully.

MARTIN: How comprehensively is another matter. That may well depend on the sort of advice she gets from her advisors, on how determined she is to pursue policies once she is in office -- because there is a difference in arguing in a campaign that something is desirable and actually implementing it once you get into office. But the suspicion is that she will not, I think, shirk from an attempt.

LEHRER: As Mr. Douglas said, she appears to be a woman of determination, and...

MARTIN: So it appears.

LEHRER: On her other major domestic priorities in the economic area -- reducing the income tax and the government`s role in business and industry: what are going to be her problems in getting those things done?

MARTIN: Well, by and large in the House of Commons I would have thought not much, except again the regional problem has an impact on this. It is harder for her to -- the income tax presents no problems, but I think it is much harder to cut back on state aid to already fairly worn down industrial areas in the north of England and in the industrial heartland in Scotland without provoking some substantial public outcry. And that she has to be somewhat careful over.. On the income tax front, I doubt that she has any particular difficulty in store. I think that that`s something which she will merely have to put through.

LEHRER: Strictly from a tactical standpoint, does it stand to reason that it would be to her advantage to move as quickly as possible on all of these while the glow of the election victory is still hanging?

MARTIN: Yeah; I think the inclination -- I agree with Mr. Douglas. I think that Mrs. Thatcher is a determined lady and she may not wish to delay too long. She may well be thinking in terms of her first hundred days, or something like that. However, much depends on the sort of advice she`s getting from a band of advisors around her, many of whom are not known at all; and they range from the moderate Conservatives to those who are quite, quite far to the right wing. And it`s the mix that she forms when she announces her cabinet tomorrow night which will probably give you the first clue as to how quickly she will move.

LEHRER: Any particular appointment that Britain-watchers here in the United States should be alert to when that cabinet comes out?

MARTIN: Obviously the question is what happens to Sir Keith Joseph, who`s been a sort of gray eminence of Mrs. Thatcher`s economics thinking for so long. The betting, I gather, is that he`s likely to be appointed Chancellor of the Duchy of Lancaster, which is that sort of floating cabinet position which gives a person nominal pound power but considerable real power, as exercised by Harold Lever in the outgoing Labor government. But she may balance that, of course, with some more moderate appointments, of Mr. Howe as the Chancellor of the Exchequer, for example, or Mr. Prior dealing with industrial relations, which is a balancing act.

LEHRER: All right; thank you. Charlayne?

HUNTER-GAULT: While the campaign focused largely on those kinds of domestic issues, the new Thatcher government faces a broad series of other policy questions ranging from Northern Ireland to Africa. Here to discuss those issues is Michael Leapman, New York correspondent for The Times of London. Michael, do you expect any significant changes in foreign policy?

MICHAEL LEAPMAN: One has to always remember on these occasions that the British Foreign Office is a very powerful department of state which does its best to stop new governments changing policy too much; it always embarrasses them -- it embarrasses them here in New York at the United Nations-- if their policy switches every time there`s a change of government. So there is always very great pressure on the new Foreign Minister--and I suppose it`ll be Mr. Pym, who`s been the shadow Foreign Minister -- to keep policies largely as they are; and I think that will work probably in most respects. The big question mark, of course, is Rhodesia. That`s always been a very emotional issue for the conservatives, there`s always been a great body of support in the Conservative Party for the white settlers in Rhodesia, and that has to be taken into account. The Conservatives have said that they would like to lift sanctions on Rhodesia, and they`d obviously like to be able to recognize the new government which has just been formed by Bishop Muzorewa.

HUNTER-GAULT: Right. How`s that going to affect the new government`s relations with the U.S., which has not yet recognized that government?

LEAPMAN: Well, everyone is jumping a long way. If they were to decide that the new government had sufficient support amongst the people of Rhodesia to be a representative government, then they would, I think, want to recognize it. And that, of course, would make it very difficult for Britain in its relations with the U.S. and with the initiatives which Britgin and the U.S. have made together on this question. One date to be borne in mind is August, when Mrs. Thatcher has to go to Lusaka, which is just next to Rhodesia, and she has to meet the other commonwealth prime ministers there; that`s always a rather difficult situation for (unintelligible) prime minister. Mr. Heath used to hate these commonwealth prime ministers` conferences because he always was under pressure from the Africans and the Asians to take the toughest stand against the whites in Rhodesia, and it was always very hard for him to resist that. It may be that Mrs. Thatcher will want to delay any final decision on Rhodesia until after that conference, until after she`s had a chance to talk to other African leaders there.

HUNTER-GAULT: All right. Let me just ask you on another policy point, how is the Thatcher government going to regard U.S. advice to launch a new initiative to bring peace to Northern Ireland?

LEAPMAN: Their manifesto, I think, has one sentence, one paragraph about Northern Ireland. I don`t think they will regard U.S. advice in any more friendly way than the outgoing government did; in fact, rather less.

The policy on Ireland has been bipartisan for many years, but there`s always a tendency to believe the conservatives support slightly more strongly the northern Protestants in their desire to keep separate from the south, so I very much doubt if the kind of initiative which was suggested by Governor Carey and by Tip O`Neill when he was over there would be acceptable to the conservatives. All their manifesto said, in fact, was that they wanted to defeat the terrorists; that`s not really a policy, that`s just a strategy rather. And I don`t see any change for the better in policy towards Northern Ireland.

HUNTER-GAULT: And no chance that the suggestion by the Irish deputy minister recently to get Britain to withdraw from Ireland...

LEAPMAN: Well, Britain, I think, would like to withdraw from Ireland if it could do so in conditions which would protect the interests of the northern Protestants. Nobody`s found a way to assure that. I think the other suggestion of the Irish foreign minister for a federal solution may have some possibilities, but I think possibly this government is less likely than a Labor government to look at that seriously.

HUNTER-GAULT: All right, thank you. Jim?

LEHRER: Mr. Douglas, how do you feel about the fact of whether or not Mrs. Thatcher will hit fast with some drastic proposals within the next few weeks? Is that her style? Do you think she will?

DOUGLAS: No, I think she`s been remarkably cautious in the commitments she`s given so far. If one takes the industrial relations issue, which, I agree with you, is in many ways a crucial one, in 1970 Mr. Heath came into power with a detailed blueprint that had been published as to what he was going to do. Mrs. Thatcher has got three specific, fairly modest proposals, though I agree with Jurek that they`re likely to be strongly resented by some sections of the trade union leadership, though in fact there is poll evidence to the effect that they are acceptable and indeed popular with the bulk of the trade union membership.

LEHRER: So you don`t see any problem with that.

DOUGLAS: Oh, indeed I see a problem, yes. No, I entirely agree that it`s likely to prove an extremely difficult position to negotiate.

LEHRER: Jurek Martin, let me ask you: you cover both Margaret Thatcher and now Jimmy Carter. Are the two likely to hit it off?

MARTIN: Oh, I suppose so. Mr. Carter is a very charitable Christian gentleman, and Mrs. Thatcher is a lady. I mean, that`s not being cynical in that sense. The answer is probably yes. Mrs. Thatcher is not unlike

Mr. Carter two and a half years ago, when he got into office. People really know very little about her. Her record is twenty years in public life; she`s only held one cabinet position, education; she has been leader of the Party for quite a short time; there are lots of question marks over Mrs. Thatcher, not so much as to what she would do but how she would react to situations. All we know about Mr. Carter and Mrs. Thatcher so far is that when they met eighteen months ago Mr. Carter -- for about forty-five minutes -- apparently was quite impressed but he found it difficult to get in a single word.

(Laughter.)

LEHRER: I see. Mr. Leapman, let me ask you. If we are to gather here again a year from tonight, will Britain be a much different place, from a governmental standpoint, than it is tonight?

LEAPMAN: That`s always a hard question; there are always two answers to that question: one, there`s one body of opinion which believes that there`s very little change happens when governments change in Britain.

In fact, there is much more sound than actual action; the people talk a lot and don`t do very much. But I remember last time, when Mr. Heath came in in 1970 and people thought that, but there were lots of changes, there were changes in small ways. Education, I think, is a subject which Jurek raised and then dropped, but I think that`s quite important; it`s a subject which people take very seriously, and there is a distinct chasm between the two parties on education, on whether you should educate children in one single comprehensive school or whether you should educate brighter children in separate schools. That`s a very big difference, and that`s always been very hotly debated.

LEHRER: I`m sorry to cut you off there. What I think you`re saying is we`re going to have to come back a year from now and find out then, right.

LEAPMAN: (Laughing.)

LEHRER: Gentlemen in New York, thank you very much, and good night, Charlayne.

HUNTER-GAULT: Good night, Jim.

LEHRER: Jurek Martin, thank you. We`ll see you on Monday night. I`m Jim Lehrer. Thank you and good night.