STATE paternalism was responsible for eroding Britain's values and only by "thinking the unthinkable" could public spending be reduced, according to Sir Geoffrey Howe, the Chancellor of the Exchequer, in Government papers from 1982 released by the National Archive today under the 30-year rule.

His views were given as Margaret Thatcher – who famously said in 1987 there was no such thing as society – set up the informal Family Policy Group to consider "renewing the values of society".

Ministers were invited to give their views with the aim being to "identify and seek ways of counteracting those factors which tend to undermine or even prohibit the exercise of personal responsibility and a sense of individual self-respect".

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What, in fact, the group gave was an insight into the Thatcher Government's philosophy about running Britain.

Willie Whitelaw, the Home Secretary, suggested school sports were important so "our teenagers unleash their physical energies through games rather than petrol bombs".

Industry Secretary Keith Joseph highlighted the "sharply rising trend" of irresponsible parents and felt a TV campaign modelled on anti-smoking adverts could help to discourage underage pregnancy.

Norman Tebbit, the Employment Secretary, who controversially suggested people should get on their bikes like his father to find work, was adamant that the "single most substantial threat to the family unit" was unemployment and the creation of "real jobs" was the answer.

One measure he put forward was ensuring "there always exists a greater financial incentive to work rather than not to work" – a forerunner of what Iain Duncan Smith, the Work and Pensions Secretary, insists is the motive behind his proposal for a Universal Credit.

In his contribution, Sir Geoffrey insisted "state paternalism is the enemy" and that the past appeal of Labour's centralist approach had led people away from self-help and towards placing "excessive demands on the state"; the key was promoting self-reliance and responsibility.

He went on: "The only way to reverse the unacceptable momentum of public spending growth – with its implications for levels of taxation or borrowing – is by 'thinking the unthinkable' in many areas.

"It is imperative to create safety valves for growing demand and rising expectations by ensuring that these can be met at least at the margin by increasing private provision."

Mrs Thatcher thanked all those who submitted papers and said that many of the problems were the product of a decline in discipline and authority.