My view is that the Prime Minister [Tony Blair], far from lacking conviction, has almost too much, particularly when dealing with the world beyond Britain. He is a little too Manichaean for my perhaps now jaded taste, seeing matters in stark terms of good and evil, black and white, contending with each other, and with a consequent belief that if evil is cast down good will inevitably follow. I am more inclined to see the world and the regimes within it in varying shades of grey. The experience of the past year, not least in Afghanistan, has given more support to that view than to the more Utopian one that a quick "change of regime" can make us all live happily ever after.

I am myself convinced that the existing law on abortion is uncertain and is also, and perhaps more importantly, harsh and archaic and that it is in urgent need of reform. I certainly shall have no hesitation in voting for the Second Reading of the Bill. I take this view because I believe that we have here a major social problem. How can anyone believe otherwise when perhaps as many as 100,000 illegal operations a year take place, that the present law has shown itself quite unable to deal with the problem? I believe this, too, because of the danger which exists at present to those who are forced to resort to back-street abortionists and to the misery which is caused to some of those who fail to get an abortion. I believe it also because we all know...that the law is consistently flouted by those who have the means to do so. It is, therefore, very much a question of one law for the rich and one law for the poor.

What is more likely [if there were a referendum]...is that party loyalties would be strongly mobilized and that in order to frustrate the government of the day the Opposition would form a temporary coalition of those who, whatever their political views, were against the proposed action. By this means we would have forged a more powerful continuing weapon against progressive legislation than anything we have known in this country since the curbing of the absolute powers of the old House of Lords. Apart from the obvious example of capital punishment, I would not in these circumstances fancy the chances, to take a few random but important examples, of many measures to improve race relations, or to extend public ownership, or to advance the right of individual dissent, or to introduce the planning restraints which will become increasingly necessary if our society is to avoid strangling itself.

No one contemplating the present position and looking back at the whole series of vicissitudes which has beset the British economy throughout the past 20 years can find the prospect other than very difficult at present. But I believe that there is also a great opportunity at present. There is certainly no quick, easy road to prosperity for this country, but the changes which must be made are fairly marginal. They must be made with absolute determination, but if they are so made, and accepted by the people, the whole outlook can change. The Government can only provide the right framework. Unless they do that, our national energies will be misdirected, but once they have done it the opportunities for export and growth and efficiency must be seized by everyone. There will still be two years of hard slog ahead. But at the end of it we could have a more securely-based prosperity than we have known for a generation.

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Undoubtedly, looking back, we nearly all allowed ourselves, for decades, to be frozen into rates of personal taxation which were ludicrously high...That frozen framework has been decisively cracked, not only by the prescripts of Chancellors but in the expectations of the people. It is one of the things for which the Government deserve credit...However, even beneficial revolutions have a strong tendency to breed their own excesses. There is now a real danger of the conventional wisdom about taxation, public expenditure and the duty of the state in relation to the distribution of rewards, swinging much too far in the opposite direction...I put in a strong reservation against the view, gaining ground a little dangerously I think, that the supreme duty of statesmanship is to reduce taxation.

Were we to leave [the EEC], the worst damage would be done to ourselves. But not only damage. Western unity, at a time of great international danger, is under greater strain than at any time since it was put together in the aftermath of the war a generation ago. Were we to start to disengage, the whole delicate but precious structure might begin to fall apart.

First, there is really no sign at all of any significant reduction in unemployment without a major change in policy...Unemployment has probably levelled out but at a totally unacceptable figure. Secondly, contrary to what the Secretary of State said, the post-oil surplus prospect—not merely the post-oil prospect, because the oil will take a long time to go, but the surplus, the big balance of payments surplus, which is beginning to decline quite quickly—still looks devastating...our balance of payments is now overwhelmingly dependent on this highly temporary and massive oil surplus. Our manufacturing industry is shrunken and what remains is uncompetitive...We have a manufacturing trade deficit of approximately £11 billion, all of which has built up in the past three to four years. This is containable by oil and by nothing else. Invisibles can take care of about £4 billion or £5 billion but they cannot do the whole job. As soon as oil goes into a neutral position we are in deep trouble. Should it go into a negative position, the situation would be catastrophic...To sell off a chunk of capital assets and to use the proceeds for capital investment in the rest of the public sector might just be acceptable. However, that is not what is proposed, and what is proposed cannot be justified on any reputable theory of public finance; and when it is accompanied by a Minister using the oil—which might itself be regarded as a capital asset; certainly it is not renewable—almost entirely for current purposes, it amounts to improvident finance on a scale that makes the Prime Minister's old friend General Galtieri almost Gladstonian.

In retrospect we might have been more cautious about allowing the creation in the 1950s of substantial Muslim communities here, although when one observes the, in some ways, greater problems which France and Germany have in this respect, it is an illusion to believe that in the integrated world of today any major country can remain exclusively indigenous.

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During this conversation she vouchsafed her only awareness of Dimbleby. The Belgian Prime Minister was justifying his hesitancy about cruise missiles by citing his coalition difficulties. Mrs Thatcher turned to me with a mixture of belligerence, good humour and total self-satisfaction and announced to a slightly bewildered table – none of them elected by the British system – "And that is all your great schemes would amount to."

The next Labour Government can be content with nothing less than the elimination of poverty as a social problem. ... The Labour movement was created to fight against a wealthy minority on behalf of a poor majority. Now it has a more complex and demanding task. It has to enlist the majority in a struggle on behalf of a poor minority, who on grounds of age or health or family circumstances or disgracefully low pay are unable to help themselves. No one has a right to expect a fair deal for himself unless he is prepared to work for one for others too.

Neutrality is essentially a conservative policy, a policy of defeat, of announcing to the world that we have nothing to say to which the world will listen. ... Neutrality could never be acceptable to anyone who believes that he has a universal faith to preach. And those countries which have successfully adopted it in the past have paid the price of becoming little islands full of frustrated hedonists. Switzerland and Sweden are as ideologically sterile as they are physically undevastated.