All language subtitles for brian.and.maggie.s01e00.the.real.interview.1080p.web.h264-cbfm

Nigel Lawson's shock resignation
for the chancellorship has plunged

the Prime Minister into the most
serious political crisis

of her career.

It has also confronted her with
a full-scale economic crisis.

Can she resolve her political
and economic problems?

The Prime Minister is with me
here today.

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."

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?

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 Chancellor'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.

Let's look, though,
at what he says, 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's right about that,
isn't he? Yes.

And I am right about the successful
six years he's 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 around them.

It has been extremely successful.

But you're not claiming,
Prime Minister...

It may or may not have been
extremely successful, but you're not

claiming that there WAS seen to be
full agreement between yourself

and the Chancellor, are you?

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's 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 successfully.

And the success matters.

That may or it may not.

I mean, many Conservatives
would agree with you.

I suppose the opposition wouldn't.

That may or may not be true,
but I must press

you again, Prime Minister.

Plainly, he, Lawson, didn't think
that you were seen to agree.

Else he wouldn't have resigned.

He did resign.

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 hadn't.

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.

OK. But it's pretty obvious
from the letter

what it is he objects to.

He objects to the position
of, as he then held,

of 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 have made that
clear to you.

What did you say to that?

Nigel's position, as I said
to him, is unassailable.

He was a very strong... It isn't
now, is it?

He's gone. That is his choice.

I tried to persuade him to stay.

I couldn't believe that he would go
when he's been such a strong

Chancellor, and his position
was unassailable.

And he knows and I know that the
adviser's 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.

But, Prime Minister, it's fairly
clear, isn't it,

what was getting up Nigel's nose?

It wasn't 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 weren't 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's what he means
when he says you weren't seen

to be united.

Now, surely he put that point to
you.

And what did you say to that?

Alan Walters is part-time
as my adviser.

He's only just recently returned.

The article to which you're
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'm afraid, was a fact of
life, that was what they were doing.

Ah... It's 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 didn't

have to take advice.

We did. We listened to it.

We decided. We succeeded.

And I am very sad that he's 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.

Well, I want to ask you about that,
of course, Prime Minister.

Let's come back to
Professor Alan Walters.

You see, it isn't just this article
that he wrote 18 months ago

and that got recent publicity.

It's very well known,

and you must know it,
that Professor Alan Walters

has been going round the city.

He's been attending lunches.

He's been giving journalists
his views on matters,

and he's been expressing
disagreements with Lawson.

Lawson wouldn't just have objected
about an ancient article.

What he objected is the whole basis
of Alan Walters' activities.

Now, isn't that the case?

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're in economic departments.

That is not unknown at all.

But, Brian, I'm not going to get
involved in this tittle tattle.

I've had a very competent adviser.

Nigel also had very competent
advisers.

They worked together, Alan and his
advisers.

I'm not going to get involved
in this.

There are far bigger things
to consider.

The economy has been run
extremely successfully.

We've 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'm not concerned

with the tittle tattle.

I'm concerned with getting
on with the job,

and that I shall do.

Well, Prime Minister, I couldn't
agree with you more about

tittle tattle.

And 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's and...Thatcher
and Walters was undermining

"the pound, the British economy
and the prospects of job increases."

Now, that's what Lawson objected to.

Why didn't you, when he asked
you to, sack Alan Walters?

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'm not responsible for those.

I am responsible for the conduct
of business.

Nigel and I worked very well
together, with great success.

Now, let's consider the policy.

All right. Well, let's consider
Lawson.

I mean, I have to take it the way
you have put it, Prime Minister,

that you blame Nigel for
the resignation, not yourself.

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's an extremely able person
and I knew that one day

we would lose him.

I didn't expect it to happen
this way or as soon,

as I've 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
Chancellor, whose ambition

it was to be Chancellor,

a new Home Secretary, whose ambition
it was to be Home Secretary,

a new Foreign Secretary,
whose ambition

it was to be Foreign Secretary.

Now let's get on with the future.

We've had a very successful past.

That chapter has come to an end.

I'm sorry it did, but it is
the future now that matters.

It is, but it is also, of
course, your political

Prime Minister...your political
position, Prime Minister.

And I have to question you on that,
and you know that I do.

Yes, do. Go question. Go ahead.

Of course. Now, so let me ask you
again.

Why did Nigel resign?

You say he knew
that he was unassailable.

He knew that you loved him
and that everything

he did was marvellous.

But he resigned.

Now, people are going to want
to know why.

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 didn't believe
that he had any intention of going.

And then just before Questions,
he told me

that 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.

It was that was just a fact of life,
and I had to accept it.

More you must ask of him.

He went with great dignity...

He's coming on next week, so I'll
have the chance.

He's been very generous
in the remarks he's made

about John Major, and very
supportive, and he will continue

to be supportive, as you would
expect of him.

Well, you see, again, Prime
Minister, obviously you saw Nigel

several times on that Thursday.

Four times, was it?

I saw him just before we...just
before 9 o'clock.

I had seen him the previous day
on our regular bilateral meeting.

Then, of course, we had Cabinet.
Then I saw him.

He wanted to see me just
before I went into Questions.

And then after Questions.

Though the long discussion was,
of course, after Questions.

All right, Prime Minister,
but I have to put it back to you.

And you know that I do,
because everybody's 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?

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, 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 Chancellor
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.

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 that Nigel would
have stayed

if you had sacked
Professor Alan Walters?

I don't know.

You never even
thought to ask him that?

That is not... I don't know.

Nigel had determined that he was
going to put in his resignation.

I did everything possible
to stop him.

I was not successful.

Now you're going on asking the same
question.

But that's a terrible admission,
Prime Minister.

I don't know. Of course...
You don't know

you could have kept your Chancellor,
possibly, if you had sacked

your part-time adviser?

I wanted to keep my Chancellor
in any event,

because he was very
good. His position was unassailable.

And let's 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.
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 don't know whether you could
have kept him

if Walters had gone.

Did he ask you to sack Walters?

I am not going to disclose
the conversations

which the two of us had together.
All right.

I admired Nigel very much.

I'm immensely grateful
for his stewardship as Chancellor.

Nigel was Chancellor.

Nigel's position was unassailable.

Unassailable.

I can't make you say, Prime
Minister,

what you don't want to say,

but of course, you are aware
what people will assume

from this discussion, don't you?

That you could have kept
the Chancellor

if you had sacked Walters.

I wanted to keep Nigel.

The position of the Chancellor
is a very great one.

It does not depend upon advisers
at all.

Mine doesn't depend upon advisers.

I make the decisions.
Nigel make 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 advise, ministers to decide.

Nigel made his decision.

I had to accept it. All right.

Let's look at it from the other
point of view now, Prime Minister.

This is not something that
suddenly blew up.

It's been known in pretty
well all circles,

and indeed, it's one of the reasons
that there have been trouble

in the markets, that there
have been disagreements

between yourself and the Chancellor.

There have not been many troubles
in the markets.

And those markets are there...
And no disagreements

between yourself and the Chancellor?
Of course, markets go up and down.

You wouldn't have a market
if it didn't.

What do you mean, trouble in the
markets?

Because the Sam Brittan quote...

There was a stock exchange crash
in 1987.

Oh, sure. I don't mean that.
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 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's start the question
again in a different way.

Well, all right, I will. I will. If
you won't take my word for it,

that there's been trouble
in the markets,

and of course, I didn't 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?

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... It could
have for 18 months, though,

couldn't it? Do you really think
that kind of situation

could have gone on for six years?

Yes, everybody thinks that.
One moment.

18 months! No, they do not.
18 months.

You've come from six years
to 18 months pretty smartly. Yes.

Let's get it down to 18 days
or 18 minutes or 18 seconds.

18 months is a long time.
Look, 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's stop this simple
tittle-tattle.

Let's get down to the success
we've 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 couldn't have had all of that
unless Nigel and I had worked

very closely together.

We did.

Well... Now let's go on to the
future. It isn't tittle-tattle.

Don't you want to face the future?

Of course I do. I do, and I'm ready
to face it.

I'm most anxious to talk about the
future, Prime Minister. Good.

But I'm also anxious to talk about
the political aspects

of this crisis. Yes. And there are,
you know there are.

You see, there have been
disagreements between you and Lawson

in the last 18 months.

He says so himself. And they have
caused certain

uncertainties on the market.

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?

We have resolved them.

I think you're probably talking
about the European aspect

and the Exchange Rate Mechanism.

We resolved that and we set
it 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.

Let me switch from Lawson,

keeping on this issue of the
political problems

that you face, to something
that some 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 isn't 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?

No. And it is a great insult
to members of my Cabinet,

and you know it.

You also know from many, many years
of arguing with me

that I enjoy a good argument.
I know.

I enjoy dealing with the facts.

We conduct affairs so that we do
have very good arguments

about things, because that's 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've tried
everything else,

"now we'll try Thatcherism."

And I say to them, "Thatcherism
is much older than me.

"It's based on fundamental common
sense, the limitation of the powers

"of government and handing
more and more powers

"and the fruits of their work back
to people."

And it works.

All right... That's what matters.

Yes, I like strong people about me.

Yes, I'm prepared to argue anything.

Yes, I'm 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're not put to me
in Number 10

and we don't argue them out,

they'll be put to me
in the House of Commons.

And I'm able to face them
in the House of Commons,

because we've thrashed them
all out in Number 10.

So what you're saying again
is nonsense, and you know it

from having talked with me
over the years. All right.

Now, I'll come back to that because
I think there's 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 don't know why he resigned.

He is to tell me himself.

You can offer no guidance on that.

And you don't accept that the other
resignations from your government,

or the other sackings
from your government, have arisen

because you can't handle strong men,

because you like strong men
and you like arguing with them.

Let me put this to you,
Prime Minister.

It's a point that's always
interested me, and I think

it's 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're only too happy
to accept a suggestion

if it's correct. But you never come
over in public like that, ever.

You come over as being someone
who one of your backbenchers said

is "slightly off her trolley" -
authoritarian, domineering,

refusing to listen to anybody else.

Why? Why cannot you publicly project
what you have just told me

is your private character?

Brian, if anyone's coming
over as domineering

in this interview, it's you.

It's you.

You think so? Hammering things out
instead of just talking them

in a conversational way. Yes.

You're very domineering
at the moment.

Now, let's 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've 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 handed power back.

We take less, they have more.

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 they had to be
told to develop

where they didn't want to
and not where they wanted to.

And that led to trouble.
That's gone.

A lot of controls have gone.

We used to have masses of
nationalised industries.

Let me give you a steel
as an example.

It was losing a billion a year,
which had to be met by the taxpayer.

It's now privatised, making a profit
of 500 million a year.

We've privatised industry
after industry.

Government ought not to control
business.

It doesn't know how to do it.

It interferes.

So in all of those things.
And in home ownership, we've taken

more power away from councils
and let people buy their own houses.

In all of these things, and now
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's enterprising. It's responsible.

It will take the initiative.

It wants to look after its own
family,

wants to make its own decisions.

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.

All right. The freedoms of the
people under a strong rule of law.

We have handed powers back
to the people.

Check the power of government.

Enlarge 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.

Well, actually, I wasn't 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'm 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? Don't you think
that it would be truer

to your own nature if you said
in front of the public,

who don't think that you're weak
or lack conviction?

That's what they're afraid of.

The reason they might not vote for
you is that they think you've got

too much conviction,
that you're too dogmatic,

that you won't listen to anybody.

Why don't you 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 don't you say that?

Well, none 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's life. What's the problem?

Ah. Well, then, what was the blame
that you were prepared to accept

for losing Nigel?

Nigel had decided to go.

I tried to keep him.

So you don't accept that?
I would still try to keep him.

I would still try to keep him.

But he decided to go,
and I had to make 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 wouldn't have your young people
staying.

They've 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've had quite a number.

The reasons for resignations in the
past have been totally different.

Michael Heseltine could not accept
the collective decision of Cabinet.

You have to. All right. I...
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.

I can almost feel the desire
to accept some measure of blame

trembling on your lips,

but it can't quite come out.

And as you rightly say,
we must get on to the future.

Yes, because... There are economic
problems involved.

You are having a highly artificial
argument.

Well, no, it's the one the country
wants to hear about.

It's the political argument.
But after the break... No, no.

You're not having the political
argument.

You are having tittle-tattle
argument.

Now, let's get on to the political
argument. It's 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.

However, I want to come
on to the economic argument,

but we must for the moment
take a break.

Prime Minister, 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.

Now, you mentioned earlier
about 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'm sure they will.

But that doesn't 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?

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.

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 a foreign
exchange control, some don't.

Some have freer movement
of capital, some don't.

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 don't. Some have a great deal
of subsidy to their industry

so that competition is unfair.
Some don't.

You just simply can't 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're 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's
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,

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 will take is up to them.

France says that she will get rid of
her foreign exchange controls,

I think, by July next year.

I'm not sure about Italy or Spain.

I think they might want longer,
but then we'll see.

They've got till '92,
Spain and Ireland.

Yes, and then we will see...
Greece and Portugal till '94!

Yes, well, Portugal has
a much smaller currency.

And then we'll see whether
the exchange rate can hold

under those circumstances.
I hope it does,

but they have to catch up with us.

Shall I tell you what I suspect,

not from my point of view,
but from yours, Prime Minister,

might be the trouble
with that answer?

It's very clear, it's very logical,
And you've always said it.

But especially now Lawson's gone,

there's a slight smell of
hostility to the ERM about it.

If you could show some enthusiasm
for wanting to get in,

you might cheer the markets up.

Are you enthusiastic to get in?

I have just indicated, I hope that
the other countries will catch us up

in free, liberalised markets,

free movement of capital,
which is in the Treaty of Rome,

and we are one of the first
countries to have it.

Germany has it. Holland has it.

I hope they will catch us up.

When they do,
in all those particulars,

and we have free movement,
when we have genuine competition,

when they get rid of some of
their hidden restraints -

and they have them -
and when they're prepared

abide by the rules as we do,
and I hope they do.

Well, which way is it in your mind,
Prime Minister?

That you are thinking,

"I'm dying to get into this because
it will be very good for the pound.

"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'm quite all right.

"We shall never have to
join the ERM,

which I don't want to join anyway."
Which is it?

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're much more open than they are,

and they really have to start
to do things as well as say them.

It's no earthly good
talking about things

unless they're prepared to free up.

The more they free up,
the better pleased I shall be,

but they must expect to play fairly.

We wanted... we joined
the European Community

for the Common Market. It's one of
the things we haven't had.

They've had their barriers up

and there's 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 can't 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 -

using it with a small L -
the better it will please me,

and I shall be delighted
when they have it.

All right, Prime Minister,
but I still detect

a certain underlying suspicion
of these people,

a certain hostility
to what they're up to,

a certain feeling that,
yes, they've got a lot to change,

and they must mend their ways
in many ways,

and you won't go in
until they do, will you?

Because it would not be fair
to Britain. Why?

It would not be fair to Britain.
Just take one example

where we have really
to bat extremely hard -

there are more small farms
in Germany and France

than there 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's not fair.

And of course I fight for Britain,
and of course I'm 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.

All right, Prime Minister, but
on the basis of putting that to me,

there's a lot that
they've got to get rid of.

What it means in practice is that

we sha'n't be going into the ERM
for quite some time.

That depends on them.

That depends on the gap between
what they say and what they do.

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 you're rather doubtful how long
it's going to take them

to get in the position where you can
get in. No, Brian, I don't.

You don't think the markets
will think that? No,

and I think you're 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 judgment.

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.

Well, was supposed to be about.
It's not keeping... That's right.

It's not keeping constraints.

It's 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 communitaire
in the way in which we run our trade

and run our finances, and I hope
they'll catch up so that we can join

and have...
join the Exchange Rate Mechanism.

Don't sound very sure...
It's a terrible title, isn't it?

It is. Exchange Rate Mechanism.

And you don't sound very sure
about it either, do you?

I am very sure about it.
Oh, no, no, no...

But they will catch up.
I am very sure
about it.

But they will catch up, is what
I mean. Well, I hope they will.

Let me knock off Greece and
Portugal, because this is a point

that's been put to me several times,
and the answers are unclear,

because there's some claim that
the Treasury said one thing

and you said another,
but I sha'n't pursue that.

Well, they claim that in any case.

Of course, and they may well be...
they may be right.

I don't think we could have
the identical words...

Been known to happen!

Well, let me ask you on detail.

Greece and Portugal have got
until July '94, 1994,

to get rid of
their exchange control.

You would expect that.
Portugal is a much poorer country.

So that doesn't worry you?
She must have.

It's reasonable to have
a transition period.

And that wouldn't keep you out?
No, it's reasonable for them,

because they're
much smaller currencies.

We are a much bigger currency,

a bigger currency than any other
except the Deutschmark,

and therefore for us to go in

would be much, much different
from Portugal.

The franc and the lira haven't
got to get rid of exchange controls,

but Greece and Portugal,
you're tolerant of that?

Well, The Holland... Dutch people
already have got rid of

their foreign exchange controls,
and so has Luxembourg.

So it's not necessarily the size,
but Greece joined later.

She's a poorer country.
Portugal joined later,

and Portugal will still have
a longer transition period,

and so will Spain, because
she's got until 1992. All right.

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's 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 fell,

and sometimes to depress it
when it rose.

Is that policy going to be pursued?

I like a strong pound.

Most chancellors and most
prime ministers like a strong pound.

You have markets,
so the pound goes up and down,

and don't 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 won't affect that.

You have really only two mechanisms.

That is, one is the interest rates
and the other is intervention,

and don't 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 have no option,

because you're in
a fixed particular bracket. Sure.

But I am talking about
domestic interest rates.

And what I'm 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?

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 do. No.

I like a strong pound.
There are only two ways -

One is the...
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've 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'll make
their judgment

of Britain's strong economy,
and also, may I say,

its strong leadership and of
a very good team leading

and a united party.

And that has an effect.
That has an effect.

There's nothing mechanical
about exchange rates.

Prime Minister, I think the impact
of the whole interview...

well, of course, it may not -
matter of opinion,

you may think differently -

will make many people feel
that nothing that has happened

has in any way 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's time, in fact, that we
had someone who was more yielding.

Now, what do you say to that?
Oh, nonsense, Brian.

I'm 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's there to serve it.

I feel passionately that
it's 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.

Prime Minister, I must...
I must stop you there.

No, you must not.
Thank you v...

I must! Thank you very much indeed.

Strong leadership will continue.