The Rt. Hon. Sir John Major KG CH

Prime Minister of Great Britain and Northern Ireland 1990-1997

1992Prime Minister (1990-1997)

Press Release – Prime Minister’s Comments on Labour’s Budget – 19 March 1992

Below is the text of the Conservative Party Press Release on Mr Major’s comments on the Labour Budget. It was issued on Thursday 19th March 1992, reference 488/92.


“The real Budget Norman Lamont presented last week reinforced the foundations for economic recovery. It gave carefully targetted and fully costed help for taxpayers, especially those on low incomes. It also offered help to pensioners on Income Support and was able to offer a range of assistance to business. It ensured that inflation will fall further – the basis for stable, permanent jobs and rising living standards in the future,” the Rt Hon John Major, Prime Minister, and Leader of the Conservative Party, said at a press conference at Conservative Central Office, today.

Britain’s economy is now poised to bounce back. The signs are already there – better retail sales figures, encouraging signs for the motor industry and positive evidence from the CBI distributive trades survey. All that is needed is the confidence which will come with the re-election of a strong Conservative Government.

John Smith’s mock budget this week was, by contrast, a budget for a slump. It not only savages taxpayers; it makes a nonsense of any pretence to competence in economic management. He doled out the familiar Labour recipe: higher taxes; higher inflation; misguided intervention. And those were only the bits that were immediately obvious.

But other bits became obvious the moment one looks carefully at his statement. We have found some very elementary omissions – either by intent or by mistake.

The costs aren’t all there.

The consequences aren’t worked out.

The effects on people and businesses are not what he claims.

No real Treasury Minister would ever be permitted to get away with such a sloppy piece of work.

Nor should Mr Smith.

This is not just a mock budget – it’s a mockery of a budget.

Let me give you just a few examples:

1. The subject of privatisation receipts is quietly ignored. Yet they will raise an average of over £4 billion a year during the lifetime of the new Parliament. Lost to Labour if privatisation stopped. Where would Mr Smith raise the money? From yet more tax, or yet more borrowing?

2. Local Authority capital receipts are another black hole in Labour’s figures. Labour spokesmen talk of spending billions – but again, no cost is shown. Labour don’t seem to understand that this would add to public expenditure and so have to be matched by either higher taxes or higher borrowing. Every billion would add to the PSBR that Mr Smith says he won’t increase.
But surely Labour must understand what independent commentators are telling them – that other Labour policies would push up interest rates anyway? How much more does Labour want to add to the cost of borrowing?

3. Labour promised a billion pounds of extra spending on the Health Service. They do not appear to understand – or do not venture to reveal – that the vast bulk of the money would be eaten up by the effect of introducing a minimum wage in the Health Service and abolishing compulsory competitive tendering.

So there would be virtually no impact on patient care in hospitals at all.

This is just a small sample of the many points which are either superficial or mistaken in John Smith’s mockery of a document. I could go on to point out, for example, that there is no price tag on the investment allowances Labour promises. The whole paper is not only the greatest tax bombshell ever to hit middle income groups like headteachers, GPs, warrant officers in the armed forces, police officers and others; it is also staggeringly incompetent.

I will now invite the Chancellor to explain more of the absurdities and the injustices in Labour’s document.”