Below is the text of Mr Major’s speech to the Lord Mayor’s Banquet, held at the Guildhall in London on Monday 11th November 1991.
My Lord Mayor, My Late Lord Mayor, Your Grace, Lord High Chancellor, Your Excellencies, My Lords, Aldermen, Sheriffs, Ladies and Gentlemen.
May I begin by thanking you for your toast this evening to Her Majesty’s Ministers. And My Lord Mayor, I would like if I may also to congratulate you both on your recent election and on your speech, nothing I believe could be more apt than the theme that you have chosen for your Mayoralty – serving Europe.
You said a few moments ago that you had started in the City in 1960. I started in the City in 1959, alas my career never took off. I enjoyed your joke, My Lord Mayor, about Arthur Wood, but I hope you will forgive me if I finish it. He did get to the wicket with 770-odd runs on the board, he then scored half a century, as I recall, and returned to the pavilion when the score had advanced around 870-odd for 7. He then turned round in the dressing room to the England team and said: “Fifty-three runs, always at my best in a crisis.”
My Lord Mayor, we owe Sir Alexander Graham a very special debt of gratitude for hosting the welcome home parade for our troops who performed so magnificently in the Gulf. It was a day I believe that the City can look back on with pride and your predecessor can look back on his whole year of office with equal pride, he has served London magnificently.
I am delighted to make my debut on this platform with His Grace, The Archbishop of Canterbury. Our predecessors forged a long and popular double act, may we too be yolked together for many years to come. Your Grace, if you speak for God I promise to speak for Mammon, and I must say, I wonder which of us has a majority here this evening.
My Lord Mayor, you have expressed your determination to safeguard the economic prosperity of London and of those who live and work in our great city. London is by far the largest city in Europe, its population three times that of Paris. It is a giant in the world of finance, it is Europe’s largest equity market, leader in the Eurobond market and the world’s largest foreign exchange market.
It scores also in its variety of attractions, its theatres, its music, its galleries and museums, its historic buildings, its parks, its shops. It is the most visited city in the world, overseas visitors spent 4 billion pounds here last year.
You spoke, My Lord Mayor, of transport. In the last few years the government has approved plans for eight new rail and tube links for London – the East-West crossrail, a new line for Heathrow, the Jubilee Line extended to Docklands, and in addition we have chosen a route for the Channel Tunnel rail link which approaches London from the East, and that I believe is where so much of London’s future development will lie.
Tonight I can announce one further step. Less than three miles from here a third London city is rapidly emerging in Docklands, its success depends upon good transport, the immediate key to this is the Docklands Light Railway. The best way to put the DLR into the hands of a body with a single clear objective – that is the way forward, that is the way to make a success of Docklands – and we have decided therefore with that in mind to transfer responsibility for the DLR to the London Docklands Development Corporation. And I am delighted to tell you this evening that one of your Aldermen, Sir Peter Levine, has agreed to take over as DLR’s Chairman in addition to his other responsibilities.
And this transfer has another advantage, it will enable London Transport to concentrate on its massive investment programme, now totalling 3.5 billion pounds over the next three years. My Lord Mayor, we are determined that London shall have a transport structure which meets its needs and marks its status as the world’s finest city.
Just a few days ago the Chancellor delivered the traditional Mansion House address on the economy. Many of you were in this room to hear it then so I will be brief this evening in case I say too many of the same things or perhaps, even worse, say something different.
In the Autumn Statement the Chancellor set out our spending plans for the next three years. He was able to announce some carefully targeted expenditure on priority areas, such as transport and health, as well as the necessary increases in programmes which tend to arise at this stage of the economic cycle.
At the same time he was also able to demonstrate that prudence in fiscal affairs which has been the hallmark of this government and that has earned us over the years the support of the financial markets.
As a proportion of national income, public expenditure will still be sharply lower, some 5 percentage points lower, than it was in the early 1980s at a similar stage in the economic cycle. And I have no doubt, no doubt whatsoever, that with steady growth in the years ahead we will see that proportion decline further. While sticking to our policy of balancing the budget over a run of years, we will be able once again to cut direct taxation.
Ask any businessman what he really needs from government. I think I know what he will say: certainty, low inflation and a stable currency.
Against that background I have no doubt about the most important economic development of the last year – our historic decision to join the Exchange Rate Mechanism. The City had long supported our membership, events I believe have amply justified our membership. Our inflation rate has been more than halved, at 4 percent it is now below the European Community average. Interest rates have been cut eight times while sterling has remained stable. Our trade has flourished with record exports to the Community and a much reduced deficit with the rest of Europe and the world. For the third year running our share of world trade expanded.
The speed and the scale of these achievements are rightly recognised. But I often wonder whether their economic and social significance has yet been grasped. For the first time in 50 years, we are now in a position to achieve on a lasting basis that greater certainty that businessmen want. That is a great prize, it has been hard won and it must not be thrown away.
The opportunities in the 1990s will be unprecedented, so will the competition, not least from Eastern Europe, the Pacific Rim and even South America. Those who backslide on inflation will lose orders and lose markets, their growth rate will falter, there will be fewer jobs. The competitive atmosphere will be unforgiving and the lesson to be drawn from that is unmissable.
I make no apologies for our crusade to get inflation down and keep it down. The 1990s present us with a simple, stark challenge, to create the jobs we need and the just society we want we must keep inflation down permanently, there is no other way.
My Lord Mayor, in the last few months we have witnessed one of the most dramatic revolutions of this century, the Soviet Union has shaken off 70 years of tyranny. In September, when I went to Moscow, there was a tremendous sense of euphoria, a feeling that oppression had had its last desperate throw. There was real belief that democracy would now take root.
Since then, I have received a succession of leaders from the Soviet Union and the republics at 10 Downing Street. I am told that there are 120 languages in the Soviet Union but these visitors spoke a language that was unknown there a few years ago, the language of democracy and free markets. They are wrestling with the strong forces of nationalism on the one hand and the need for a continuing central structure on the other, the need for a single army, central control over nuclear weapons, a single market, a coordinated foreign policy.
There is no easy transition from tyranny to freedom or from an inefficient command economy to a free market. The people of the Soviet Union have chosen democracy but it is not yet stable democracy. Whether the Soviet Union survives as a recognisable entity or breaks up into individual republics must be a matter of negotiation, not coercion. The situation is volatile. The August coup failed because the Free World refused to accept what had happened and because the Russian people refused to be cowed but a number of leading representatives from Russia and other republics have expressed to me their fears for the future, fears of a renewed attempt to overthrow legitimate government if lack of food, lack of goods, old rivalries and lack of political leadership overwhelm that euphoria that followed the August events.
We cannot dictate what happens in the Soviet Union. We can and we must help create the conditions in which stable democracy has a chance to succeed. That is why with our G7 and European Community partners we have launched a $10 billion lifeline of food and medicines to be drawn on this winter as necessary; that is why the special association status of the Soviet Union with the IMF agreed in principle at the London Economic Summit here in London in the summer has now been made a reality; and that is why the G7 countries and the IMF are urging the Soviet authorities and the republics to move decisively towards economic reform. If they fail to do so, all our plans to help them will be undermined.
The Soviet Union is looking for help with its foreign debt. For their part, the republics must assume their responsibility for servicing that debt; this and the pursuit of reform are essential for future credits and for the continuing support of the international community. The republics must honour too those international agreements signed by the Soviet Union, especially treaties on arms control and proliferation and they must exercise restraint in developing their own military forces – that too will be a condition of our future assistance.
The events in the Soviet Union and Eastern Europe pose perhaps the greatest challenge to the West since World War II. The republics of what was the Soviet Union have a chance to join the Western family of democracies but there is a risk, a risk that they could fall into a dark abyss of political conflict and economic hardship. If we are to avoid the tragedy of Yugoslavia on a larger and more dangerous scale, we have to adapt the political structures of the West to accommodate the new democracies of the East. The changes that we have made in NATO, the development of the CSCE have both helped but it is the European Community which offers them the best prospects for political and economic stability.
It is right for the European Community not to neglect its own development but it would be foolish to be so preoccupied with internal development that it became an end in itself. We have to hold out to the countries of Eastern Europe and perhaps to some of the new republics in the Soviet Union as well the prospect of closer association with the Community and in due course membership of the Community.
My Lord Mayor, the shape of the Community they join is being set now in the negotiations under way in Europe. Those negotiations are important for the Community but no more important than the Community’s obligations to the rest of Europe. We will never create a genuine European union if we exclude those countries that most want to join, countries which for the first time since World War II are free democracies. It would be unforgivable if when they are ready to join we made it impossible for them to do so [applause] and it would be tragic if twenty years from now there was an economic iron curtain across Europe, an iron curtain forged by the wealthy member states to keep out our democratic neighbours to the East.
The influence of the European Community has never been greater. Some see that as a threat but truly it is an opportunity. Its attraction was shown in the recent negotiations with the EFTA countries. They were prepared to accept the rules of the Community, which they had no part in drawing up, in order to attain the prize of access to the Single Market. To maintain its influence, the Community must continue to look outwards and be a liberalising force in world trade.
In the GATT talks, we have a unique opportunity to create a free and open trading structure that will last well into the next century. Our future prosperity depends upon the success of this effort. The completion of the Single Market would be undermined if we had meanwhile unleashed a world trade war of unprecedented proportions. Success in the GATT talks, too, is crucial for the world’s poorest countries. There is something immoral in the fact that they lose more from the distorting effects of subsidies than they gain from aid from the West. If you give a man a fish, you give him food for a day; if you teach him how to fish, you give him food for a lifetime; but if you teach a man how to fish and then stop him selling his catch, you create injustice, hardship and resentment and we should not do that. There is as much at stake in the GATT talks as there is at Maastricht.
My Lord Mayor, the European Council at Maastricht is only a month away; the issues are momentous. We have an opportunity to take decisions which will carry the Community on a sound basis into the next century. Yesterday in Bonn, I discussed these matters with Chancellor Kohl. We are both aware of the opportunities and the risks that lie ahead, of the responsibility to take decisions which will enable the Community to give a lead to the whole of our continent as it emerges into democracy, decisions which underpin the vital relationship with the United States, decisions which avoid narrow nationalism but which safeguard the best traditions of our national life.
Good progress has been made in the negotiation of the treaty on economic and monetary union. There is some way to go but I hope it will be possible to reach an agreement. There has been increasing recognition by our partners of the point we have consistently made, that to move to a single currency without the convergence of national economies would be an economic catastrophe. That is why we are negotiating a treaty which would permit economic and monetary union only when strict economic conditions on convergence are met and that treaty must also allow the British Government and the British Parliament to take the decision on whether to join such a single currency when the option is a realistic one. Only then can a balanced judgement be made.
When that moment comes, we shall need to weigh carefully the issues of sovereignty and accountability raised by a single currency against the potential impact on our influence and prosperity were we to take a different decision from our principal competitors. It would be wrong to decide now to join a single currency but it would be equally wrong to decide now that in no circumstances will we ever do so.
We still face huge problems in working for an agreement on political union. No-one should assume that simply for the sake of agreement we could accept some of the propositions now before us – we couldn’t.
Much of the debate centres on defence and foreign policy. I welcome the idea of Europe doing more for its own defence – it should – but we have to remember that we are not writing a new policy on a blank sheet of paper. There are existing organisations, NATO and the Western European Union, which have successfully provided for our defence for over forty years. It makes sense to take our existing defence structures and enhance them with increased European cooperation. I can agree to that. I could not agree to undermine them with a new competing and therefore damaging European defence structure. The same message came through loud and clear from others at the NATO Summit last week.
In foreign policy, we have increasingly developed the habit of cooperation and common action among the Twelve – it has worked well. Common action cannot work miracles but it magnifies our influence. Consensus is a strength and not a weakness. It would be a serious mistake to replace that habit of consensus on common action by majority voting – we might take more decisions but we would wield less influence – nor is it conceivable that we would give up our right as a nation to take vital foreign policy decisions. [Applause].
But there are areas such as the environment, which transcends national frontiers, where it may make sense to extend the competence of the European Community but we should not be afraid to say “No” to the general clamour for wide-ranging extensions of Community competence.
I am thinking especially of the social area. Under existing Community rules, we are already faced with unnecessary intrusive and costly proposals. The proposed Working Time Directive would cost British employers 5 billion pounds in the first year. That proposal is more than unnecessary – it is damaging. It would blunt our competitive edge. It would not be European workers who would benefit but those in the United States and Japan. It is not in the interests of Europe and we cannot allow the Community to extend its power to burden business with unnecessary proposals. [Applause].
The principles that must apply are those of subsidiarity and accountability. The Community should not interpose itself in areas best dealt with at national level. The Commission is unelected; it must be made more answerable to elected members of the European Parliament. [Applause].
My Lord Mayor, our partners know there are certain principles that are vital for us in these negotiations. They equally know that the British Government will go on working over the next crucial weeks for an agreement at the European Council in Maastricht.
Maastricht will be an important stage on the road to ever closer union among the peoples of Europe. I believe that the basis for an agreement can be found but it has to be an agreement which all twelve member states accept – that will require give and take on all sides. We have to find an agreement which will command the support of twelve national parliaments and which all member states not only support in theory but will actually implement in practice. An agreement of that kind is in our interests. It is in the Community’s interests. It would be the best outcome in these negotiations for our own country and for the Europe we hope to build together. [Applause].