The Rt. Hon. Sir John Major KG CH

Prime Minister of Great Britain and Northern Ireland 1990-1997

1993Prime Minister (1990-1997)

Mr Major’s Speech to the CBI Annual Dinner – 18 May 1993

Below is the text of Mr Major’s speech to the Confederation of British Industry (CBI) Conference in London, held on Tuesday 18th May 1993.


Mr President, Ladies and Gentlemen. Before I turn in a few moments to other matters, I would just like to say a word or two about the referendum today in Denmark. Although counting is still going on, it is now clear that there is a very large majority in favouring the Maastricht Treaty. Seven out of the eight political parties were in favour, business opinion was in favour and the result of that is evident in the votes cast today.

Before today’s result, a large question mark hung over the treaty. The Danes, initially less cautious than us, agreed to the treaty without the opt-outs that we negotiated. As you will recall, their electorate rejected that position and they needed to come back to their Community partners. We were always clear in this country that Maastricht needed the consent of all Twelve members, eleven would not do. At Edinburgh we helped Denmark secure new agreements, agreements similar to those we had obtained in the original negotiation. Today, in the referendum, this new position has been overwhelmingly approved.

Across Europe nine nations have now ratified. Denmark and Germany can be expected to do so shortly. Only in Britain where our process has been a little protracted is substantive approval for ratification still being sought.

Mr President, business has warned government often enough of the danger that we in Britain could sideline ourselves from Europe. And away from the sound and fury of Westminster, away from the interminable, incomprehensible procedural wrangles over the Maastricht Treaty, away from all that the issue is stark and simple, the issue is British jobs, British sales, Britain’s future.

So we will be moving on with our parliamentary process as soon as possible. I hope we will obtain approval in the Commons at third reading on Thursday of this week. We need now to put the Parliamentary wrangles behind us and get on with doing business for Britain in Europe, developing our sort of Europe, an open Europe, a wider Europe, a Europe that liberates the talents of its businesses and its peoples, emphatically, Mr President, not a federal Europe.

We want a competitive Community, that is why we objected to the Social Chapter, it is why we opted out of it, Maastricht without the Social Chapter, influence without handicap. Mr President, business knows that that is what this country needs, I hope, Mr President, that business will speak out and say that that is what this country needs. And the sooner we put this debilitating period behind us, the better it will be for British business and for British prosperity.

Mr President, success, business success, your success, that is the theme that I want to concentrate on this evening, that theme and the new partnership that is emerging between government and industry. It is private enterprise that creates wealth, government’s job is to help you get the orders, not to give you the orders. We must create the climate for business to flourish, low inflation, low interest rates, low tax rates.

In the late 1980s the economy was allowed to overheat and the government then had to cool things down. And that is the best response when there has been a mistake, to correct it and then to make sure that it never happens again. Three years ago inflation was in double figures and rising, that would have halved the value of money in just seven years. Mr President, it had to be tackled. If inflation runs on unchecked, ruin is certain. If inflation is confronted and beaten, prosperity can then be re-built.

So that hard grind of recession had to be endured. I know that it was painful, I know that recession has left its scars. Too many businesses had to close down altogether and many others shed many jobs. We have all learned the hard lessons of those years and we must never let inflation drive Britain off its course again.

As we speak this evening, retail price inflation is now under 2 percent, interest rates are down to 6 percent, the process of recovery has begun. We now know that recovery began slowly, cautiously, in a timid fashion perhaps in the course of last year. And now the ripples are widening through industry and along the High Street. House building and car sales are up. Your own surveys show a new level of confidence and after today’s independent poll, dare I say it, confidence is galloping.

Now that is cause for cheer but it is not cause for complacency. Tonight we need to look to the future. So be in no doubt, I am in no doubt whatsoever, it is going to be a highly competitive decade. The economy has been picking up here in the United Kingdom but in much of continental Europe it is slowing down, trading is tough, the horizon is crowded with new challenges, new competitors, new markets, new technology.

If we are going to look competition in the eye, we need to look at ourselves in the mirror. Our objectives must be clear. We need to broaden our recovery, widen our manufacturing base, build on our strength and remedy our weaknesses.

So I want to pick up a theme expounded at your last CBI Conference, the theme of competitiveness. First, manufacturing matters. I want to congratulate you, Mr President, on setting up the National Manufacturing Council, a very welcome initiative, a strong single voice for Britain’ s manufacturers, very welcome, I wish it had happened years ago.

And let me say something else about manufacturing that I personally feel passionately. I do not believe we have any reason to be defeatist about manufacturing in Britain. In the 1980s productivity in British manufacturing rose faster than in the United States, faster than in any other major European economy, more than twice as fast as in West Germany. We have increased productivity over 7 percent in the last year and we have cut our costs as well and that is the key to success, keeping quality high and costs low. And those hard won productivity gains were especially valuable, they protected Britain’s manufacturing from the worst of the recession.

But it is true, yes, our manufacturing output fell, but much less than in the previous recession, and indeed, to put it in context, much less than it has fallen in West Germany in just the past year. But let me give you an even longer perspective than that. Look back to 1981, the bottom of the previous European recession. Since then France has increased its manufacturing output by a creditable 7 percent. West Germany has done rather better – an increase of 13 percent. But Britain, Britain so often derided for its manufacturing performance, Britain has increased manufacturing output by over 24 percent.

Mr President, they are outstanding figures. Of course we need to do better still, much better, but my point is simply this. In the 1980s we turned the tide, in the 1990s we can catch the flood and that must be the aim for all our manufacturing industries. I believe that we can do it. There is a new mood in British industry, a new culture, a new ambition stimulated by the transformation you went through in the 1980s, industry is not just leaner these days, it is keener, it is fitter, it is more prepared to go out and fight for its markets and keep its markets, it is less inclined just to look to a home base, it knows it has to fight around the world for the markets it needs.

And you can illustrate that perhaps in a number of ways. Last autumn you illustrated it very vividly. Last autumn you turned the spotlight on yourselves, on your own performance, you applied a critical self-analysis to the competitiveness of British industry, asking the difficult questions, facing up to the quality of the competition. Those are the actions of the confident, not the cautious. You have assessed where British industry is ahead and where it is behind. It is for each company to determine what it must do to stay ahead or to catch up.

We have world class companies in this country, world class companies making state of the art equipment, winning in the toughest of market places around the world – pharmaceuticals, aerospace, chemicals, biotechnology, power generation, the water industry, international construction – a very long list, Mr President, but not long enough. You create the world class companies but in a thousand ways the decisions that we take in government can help you or can hinder you, so we too, the government, we are part of Britain’s competitiveness.

Let me say this about that. All our policies, not just our economic policy, need to be focused on the future strength of the British economy. I believe that industry and government are coming to a new understanding, a new partnership. Your leadership has represented your views very clearly and equally clearly we have responded.

In March, against a difficult background for public finances, we still managed to cut industry’s tax bill by around 1 billion pounds, and that of course is on top of the help we gave industry in the autumn statement. But I believe that the government’s side of this partnership goes much wider than simply budget changes. We, government, we must bend our energies right across the whole field of government o the pursuit of enterprise and growth and prosperity, backing Britain’s exporters, making the single market work for us in the United Kingdom, fighting for free trade, rolling back excessive red tape, rolling up our sleeves together with industry to give this country the infrastructure it needs, getting better value for taxpayers’ money, raising standards across all our schools, putting training on the fast track and harnessing our scientific genius to industry’s needs. That is an agenda right across government so that harnessed together government and business can build a new prosperity for our nation.

Mr. President, let me say just a little more about each of those goals and I will turn first, if I may, to that crucial question of trade. We are traders in this country. We live by trade. Exports make up a third of our national income. We know above all that we need to win in the world’s market-place. Our trade deficit is substantial. Imports have risen and the recovery has only just begun. Time after time in the past, expansion at home has brought a further surge in imports whilst business has turned its back on the export challenge. Mr. President, in all our interests, that of the country, that of the shareholders, that of the businessmen, that of the future, we simply must not let that happen again and it is partly because of our concern about that that the Chancellor increased export cover by 1,300 million pounds in the Autumn Statement and the Budget. It is why we have cut the cost of export cover. It is why in this country we have got to have the best export services in the world. You, business, generously lent Michael Heseltine some of your best people to sharpen up the Department of Trade & Industry’ s export work here at home. I am grateful for that and every overseas embassy must put you at the top of their priorities and I promise you this – every embassy around the world now knows they have to put British business at the top of their priorities.

But Mr. President, where are our export markets? They are of course all around the world but our main export market is Europe or rather perhaps it is now our home market. We have heard all about Britain selling televisions to Germany and lace to Brussels but traditional French suits to Paris, pizzas to Italy? Why not? As the old song says: “Anything you can do we can do better!” and across this country those are the sort of exports that enterprising British manufacturers are now sending abroad.

And, of course, those opportunities are vital for us. We recognised that right from the moment we joined the European Community. That is why, whatever the difficulties, whatever sometimes the extreme difficulties, we have fought for a competitive Europe, one in which every country in the community is forced to obey the rules right across the Community and that is also why we fought to keep those rules to a minimum. It was why I was so determined to keep Britain free of the Social Chapter. The Single Market is the opportunity of a business lifetime. I don’t intend to let Brussels spoil it for Britain because our prosperity depends upon taking those opportunities.

Of course, Mr. President, some of our European competitors complain. They don’t want Britain to become a magnet for investment, a seed-bed for growth, a haven for jobs but the answer is simple – Europe as a whole needs to keep its costs down and sharpen its competitive edge.

Mr. President, I spoke of free trade. The need for free trade doesn’t just apply in Europe’s Single Market – it applies throughout the world – and yet for seven long years governments have been promising to complete a crucial round of negotiations to liberalise world trade. Each year, pledges have been published, each year the deadline has been allowed to slip. Mr. President, that simply cannot go on! We are past the eleventh hour and the strains are showing. Europe and the United States have twice in the past year come close to a damaging exchange of hostile protectionism that could easily escalate into a full-blown trade war. Twice, good sense and good negotiation have prevailed but only just prevailed.

I welcome without a shred of reservation President Clinton’s commitment to completing the Uruguay Round. I believe in Leon Brittan we have the best possible negotiator. I hope Japanese Government will engage fully in the effort to secure a breakthrough on tariffs at the Tokyo summit this summer.

Let me speak quite bluntly and frankly about this position: the test of good intentions can no longer be delayed. We need progress, not words; agreement, not dissent; decisions, not delay; we need a conclusion to the Uruguay Round and we need it this year.

Mr. President, we need it for a raft of reasons. We need it not least of course because our manufacturers’ markets are at stake. There are huge potential gains in the GATT Round for our service industries as well but that of course is the bright side; that is the side of getting an agreement.

There is a dark side too, the dark side of no agreement, and on the dark side the threat to our industries from so-called “managed trade”, the threat to competition from back-room deals between governments, the protectionist threat to our freedom and prosperity. All can and must be resisted until we get that agreement.

Mr. President, I spoke of the partnership between Government and business. Sometimes, the best service Government can do for industry is not to do something but to undo something. Take regulation or rather, perhaps better, take it away! Now there is an idea for a Government service – a takeaway service, deregulation by another name.

How many times do you hear people say: “It shouldn’t be allowed! The Government ought to put a stop to it!“ and how many times when the public presses Government to respond is the final result another form to fill, another reel of red tape, another restriction on trade and enterprise? Mr. President, business and Government must join together to fight the bias against regulation.

So we have changed policy sharply, clearly and distinctly. In future, every time Whitehall prepares a nice little parliamentary Bill, it is going to have to tell us what the bill will be for you, what it is going to cost business to comply with the new rules proposed. The rule for Government in future is a simple one: “No Bill without the true bill!” and that I believe will help us cut down on regulation.

But that is weed control for the future. We need to go a good deal further than that. We need to uproot the weeds that are already there choking enterprise. Michael Heseltine’s task forces of industrialists under the leadership of John Sainsbury are digging away already. We plan to legislate in the next session of Parliament to cut red tape. That means that you, business, must act fast to tell us where regulation is putting you at a competitive disadvantage, where it is excessive, where good intentions have turned into bad results but if you need it changed, tell us now and if I may be blunt again, there is no point in coming to tell me after we have presented the parliamentary Bill. I need to know soon so that we can draft changes in the Bill and make the changes that business believes are necessary.

Mr. President, there are other ways in which we are seeking to change the old habits of Government. You often press us. Every time I see you, you rush up with Howard and grip me warmly by the throat. You often press us for further investment in infrastructure. But then you also press us to restrain public spending and borrowing. I agree. You are right, on both counts.

Government needs to subject its services to the same severe tests you face. It is essential to keep public expenditure under control. This summer we are vigorously assessing our spending priorities. Like you, we cannot afford waste. Like you, we are market-testing our activities. Like you – in this year’s unified Budget – we are separating our capital programmes from our current spending. Like you, we must constantly be looking to see where money can be saved – where more can be done for less. And where less should be done by Government – more by the individual and the private sector.

So let me make this request of you. As we will support you in your drive for efficiency, so we will look for your support in ours. But we can do more than back each other up. We can work together. That’s why I do not believe that the provision of infrastructure has to be restricted to the public sector. Now is your chance – in partnership – to get the infrastructure that you, the private sector, feel is important.

Consider our history! Many of the great infrastructure projects were designed, built and funded by entrepreneurs. It was the private sector that built our canals, that laid the foundations of our railway system. More recently, it was the private sector that built the new Dartford bridge on time, on budget and very well too. It is the private sector that is behind the Birmingham northern relief road, the first privately-funded major road this century.

We want to see the private sector fully involved in London’s Cross-rail project. We are determined to make sure the project is carried out as cost-effectively as possible and let me confirm tonight for those who may have had doubts that London Transport’s parliamentary Bill is going ahead in Parliament next month.

Some people say that private finance won’t make a noticeable difference to our capital programmes. The City say differently. The City say that there already is something in excess of a billion pounds worth of private money available to support Crossrail and as President Reagan once memorably said: “A billion here, a billion there and pretty soon you’ re talking real money!”. The Chief Secretary says something similar from time to time! Almost every time I see him, as I recall!

Mr. President, it isn’t just physical capital that is important. Human capital is vital too. Tomorrow’s school-leavers will not be up to the jobs you are creating if they cannot read, write, calculate or spell. Government in Britain spends a higher share of our national wealth on education than either Germany or Japan and yet a third of those going into further education still need remedial help with English to get through their courses. Forty percent need help with numbers. Poor basic skills in literacy and numeracy cost you, business almost £5 billion a year. That, frankly, is a handicap Britain cannot afford. Schools cannot be a no-go zone for accountability and they cannot be a no-go zone for testing either in the future we are building.

We British are a common sense people. We know that tests in schools are a necessary preparation for the tests that we all face in life. Britain is tested day by day in every market around the world and I want to see British workers top of the league tables of the world and that means the right education from the very first day each and every one of our children goes to school. And beyond school as well, because I know and you know that we can only do that by training our workforce throughout their lives. Education never again will stop at the school gate on the day the pupil leaves.

Again, we need to set the right framework for the future turning the tattered patchwork quilt of vocational qualifications into a proper banner of progress, getting the best training for the best jobs and that is what tests and training credits are intended to do but I recognise that Government’s training effort can only be a fraction of industry’s own effort. Good businesses invest in their people, train them, develop them and as a result of that, they keep them as valuable employees for a very long time.

I would like to pay my own tribute to the CBI who played a key role in the “Investors in People” initiative and I know that many of you here this evening are among the 3,000 organisations working to meet its demanding standards, organisations that include the public sector right up to its core in Whitehall and I expect more and more to take on that particular challenge. With Brian Wolfson spearheading the drive, we are now on track to meet our target for this initiative and tonight I am delighted that Bass Taverns represented by Charles Derby this evening have become the 250th investor in people. I hope we will soon increase that number many times over.

Mr. President, right across industry we need to turn best practice into common practice. The best help smaller arms to grow, nurture their suppliers, even pay their bills on time! They adopt partnership-sourcing. You can always tell how many small firms are in the audience! They work together to offer the best possible deal for their customers and the best possible future for British industry as a whole.

Innovation isn’t just about technology or about science but it depends on them and our scientists today are every bit as worthy in their own particular fields as were their great predecessors like Faraday or Fleming. They can’t be trammelled to think the state decree like some intellectual short-order cook but within our science base there is a cornucopia of ideas, of invention, of ingenuity just waiting to strengthen Britain’s competitiveness. Our job as Government is to help bring the best ideas out of the laboratory and into industry and William Waldegrave who is here this evening will shortly publish a White Paper on science and technology and his aim in that White Paper is quite clear, to help maintain and improve scientific and engineering skills and then to engage them in the creation of this nation’s wealth.

We want all those changes that I have set out this evening and others besides that time has not permitted me to mention for one overwhelming, over-riding reason: I want to see this country hungry for excellence and thirsty for achievement. Those aren’t slogans to be discarded as recovery fades the economy out of the daily news headlines; they are imperative for all our futures. We must have the confidence to compare and to compete and beat our competitors around the world and we won’t do that – we shouldn’t do it – by asking where our competitors are today or where we were yesterday. Let them ask that about us! We should ask where we want to be by the turn of the century and some of our aims are clear. We should lift our eyes beyond the immediate horizon of next week, next month, next year to look at what is going to happen during the rest of this hugely competitive decade.

The search for high and rising productivity must be continuous. Firm control of costs is needed; a well-educated workforce ready for high-quality training is essential; an economic environment of low inflation and hence low interest rates; a wealth-creating economy, free from the burdens of over-regulation and high taxation.

Mr. President, not one of our competitors is standing still, not one of our competitors will stand back for us. It is up to us, the people here in this room and your colleagues in business from one end of the country to the other, it is up to us, all of us in partnership, to help Britain get that step ahead and keep that step ahead and if we do it, if we can achieve it, if we can develop this new culture that you can sense happening in British industry and commerce day after day, then the prospects for our country, our future, this generation and the next are very bright indeed. We must set as our ambition to enter the new millennium at the forefront of achievement, a nation respected for what it contributes, admired for its standards and emulated for its practices. That must be the aim to which all of us must dedicate ourselves.

Mr. President, today we are laying secure foundations for sustained recovery. Tomorrow, we must build on them as we face this hugely competitive future.