Below is the text of Mr Major’s speech at the Lord Mayor’s Banquet, held in London on Monday 20th November 1995.
First of all this evening, Lord Mayor, may I thank you and the Sheriffs for agreeing to move your banquet from its traditional date. I greatly appreciate your courtesy in doing so but I must tell you I spent most of last Monday evening hoping that none of you turned up here to an empty Guildhall!
This evening, I want to talk about some aspects of our nation’s future. I shall not this evening talk of Northern Ireland though I hope very soon to do so with the Irish Prime Minister and the mainstream political parties in Northern Ireland. Tonight, I want to talk about some of the ways in which the United Kingdom as we meet here this evening stands at a crossroads. In the next few years, we, must make choices, choices that may shape our country for generations. So far, debate on these has been limited, too often trivial stories dominate the news, too often the truth gets in the way of a good story. I believe the British public deserves better than that; they need to be told about the prospects and the problems that lie ahead; they need to have the options set out before them plain and unvarnished with common sense answers and in some aspects I will seek to do that this evening.
First, jobs and competitiveness. Today, the greatest challenge to our competitiveness comes from Asia and from China. The centre of gravity in world trade is shifting, shifting I think perhaps more rapidly than many people realise. Practically half the world’s people are emerging into vigorous industrial economies, they can offer new markets to us, they can offer new opportunities to us provided we are prepared to go out and claim them. But there is downside to those new opportunities because these new countries will also threaten to relegate an uncompetitive Europe to a far lesser role than it is privileged to play today.
My Lord Mayor, we have no automatic right to prosperity. We must earn it or we will lose it in the years that lie ahead. That is why it is my aim to turn Britain into the unrivalled enterprise centre of Europe. Let me discuss some of the wars we might make that aim a reality.
The heart of the matter is that there must be a limit to the share of national income that Government spend on behalf of the nation and there must be a limit to what they take from the nation in tax. Today’s fastest-growing economies have a very clear lesson for us: by keeping spending down, they have kept taxes down and low taxes are the best incentives for business to invest and this is our aim, the less we take in tax the more we can encourage enterprise. Enterprise means that employers can afford to employ people and effort is rewarded. That enterprise creates the living standards and funds the public services that we all care about.
In the mid-1970s, Government spent around 50% of our national income. We have brought that down to around 42% today, 10% below the average for the rest of the European Union. Because of the steps that we have taken to reform welfare and to encourage people to save themselves for their pensions, I expect that gap to widen further over the coming years. So we are doing quite well but not well enough. We cannot afford to compare ourselves with our European neighbours alone. Both America and Japan, crucial world competitors of this country, spend less and tax less proportionately than we do.
Our aim is to go further still and get public spending below 40% of national income and keep it there and if we are to do that we have to make tough choices between competing priorities. The State cannot – and in my judgement the State should not – try and do everything. We need to find new, more efficient ways of delivering public services and capital investment.
When the private sector takes responsibility and bears the risk, it is generally more efficient than the public sector. That, of course, is the underlying reason behind the Private Finance Initiative in which the City of London had such a vital role to play. Private finance already is a significant reality. By the end of this financial year, we shall have signed contracts under the Private Finance Initiative worth over £5,000 million. We are applying new ideas of private finance to one area of Government spending after another. It is already, of course, My Lord Mayor, well established in the Health Service for example where 25 schemes of over £25 million each are already in the pipeline.
Transport, crucial for the City and crucial for the country, is another rich area for private finance. I can tell you we have passed another critical milestone today. Subject to contract, we have selected the winning bid to design, build, finance and operate the upgrade between Newcastle and Carlisle. Another three major new road projects will follow, making a first tranche of £400 million and we have encouraging bids for a further four on top of that.
So private finance is not a passing fancy, private finance is here to stay; it will play an increasing part in capital investment in the future and I am determined to break down the barriers that currently have existed within Government for too long and enable the City to play the role that it has been denied from playing for far too long.
My Lord Mayor, an international enterprise economy is the only way we can offer lasting security and prosperity to our people. Free trade is in our blood, it is in the City’s blood and I believe that gives us a unique advantage as we look to the future. To make Britain the enterprise centre of Europe means pursuing our historic role as a global trading nation and that is why developing North Atlantic free trade and strengthening our links with Asia and Latin America are so crucially important to our own future but the market on our doorstep is Europe. Our task is to persuade the rest of Europe to take the enterprise road as well.
From next spring until probably the summer of 1997, the European Union will again be reviewing the treaties in an intergovernmental conference. Many of you feel, I am sure, that it is too soon after Maastricht for yet another conference. You might say that but I couldn’t possibly comment! So I don’t expect the intergovernmental conference to be a very wide-ranging review. I would like it to focus on specific areas where some modest improvements are attainable. We are already mapping out common ground with like-minded countries. Last month, President Chirac and I identified some areas where the conference should focus: a more effective common foreign and security policy; the reinforcement of subsidiarity, the right to have more decided domestically in host nations rather than at the European level; strengthening of the role of national parliaments and intergovernmental cooperation in the fight against crime and against drugs. These are areas where Britain and France aim to work together and where we also share much common ground with Germany.
These issues are important but they are not the great issues facing Europe at next month’ s summit in Madrid and thereafter I see three great issues: how to be competitive and to work; how to enlarge the European Union further across the Continent of Europe; and, of course, the implications for us and Europe of a single currency.
Let me turn first to competitiveness. Britain used to be seen by many as the poor performer. Today we have some of the most successful companies in Europe in steel, cars, electronics and we are attracting by far the bulk of foreign investment beyond Europe into Europe and from Europe into the United Kingdom. Britain leads the world in telecoms and media, we are in the vanguard of information technology and as we meet here this evening, we now have more of our people in jobs and fewer unemployed than any major European country, better than Germany and far ahead of other countries where employers are dragged down by high social costs.
The Social Chapter is not simply a set of principles, it is a set of policies which, whatever else their supporter may claim for them, add to costs and cost people their jobs. Nor is it a pick-and-mix option. The great bulk is decided by qualified majority voting; that means Britain cannot block proposals on our own even if we are opposed to them, there is no national veto and it is for those reasons that the Government oppose the Social Chapter.
We need here a climate where business – and perhaps especially small business – can prosper to create new jobs and to help business grow. If Europe competes it can prosper. It will be immensely damaging if Europe ignores the competition from the Far East. That competition is real. We cannot just pretend that it isn’t out there waiting to take our markets from us. To do so would be folly and if we were to do so, then Europe would surely get left behind.
So My Lord Mayor, if others in Europe bind themselves into uncompetitive economic and social structures, Britain will not join them. We are not going to put our economic success at risk and I shall take that message clearly and concisely to the conference in Madrid next month.
My Lord Mayor, too often and too simplistically that sort of message is taken as anti-European, nationalistic, seeing Europe as a trading area and no more. I say to you, My Lord Mayor, it is none of those things. I want Europe to succeed. We have gained greatly by being part of the European Union and there is a great deal more for this country to gain as a member of that great Union but I believe to maximise the benefits for us and for the rest of Europe it is right to set out the difficulties and to set out what needs to be done.
That brings me to the second question, enlargement of the European Union. I believe that we must spread stability and democracy across a wider Europe. Eastern and Central Europe have been the cockpit of war throughout the centuries but now we have an historic opportunity to bind them into a single market and the democratic embrace of Western Europe and if we are able in this generation of politicians to achieve that, we will bring for our children and our grandchildren a security and prosperity that our fathers and our grandfathers could only have dreamed of. That is the possibility that lies ahead of us and that is why enlargement of the European Union remains a vital objective. Europe has agreed this in principle, now it must face up to what it means in practice.
The problems are formidable. As Europe enlarges, the Common Agricultural Policy as it stands will be increasingly unaffordable. I put it mildly, reform will not be easy in the European Union of the Common Agricultural Policy but it is essential. The fledgling economies of Eastern Europe have already come a long way in a very few short years yet they will still need help to develop, still need help to survive alongside the competitive aspect of a free market in the single market of Western Europe but if help is to go to these newcomers, where will the help come from? How will it be accepted if some existing member countries of the Union are told there is less help for them or if other Members are asked for larger contributions to assist the new members? These issues must be addressed, they must be addressed if Europe is serious in its promises to Poland, the Czech Republic, Hungary, Malta, Cyprus and the other aspirant nations waiting to join the European Union.
Enlargement is complex enough on its own but at the same time we must grapple with an even more complex and politically-charged debate – the question of a single currency. Some are passionate about this, others have profound doubts. Britain, I am glad to say, has a choice. We can decide whether to stay out or opt in but whatever choice we make – in or out – one thing is certain: if there is to be a single currency, it will affect Britain and it will change Europe fundamentally. Not all members will join or could join. Only a minority could meet the criteria on the present timetable – a point I think that is now accepted right across Europe – but if some went ahead while others did not, the Union would be divided between those countries which adopted the single currency and those which remained outside it. In some areas of policy, such variable geometry may be sensible, indeed inevitable, but it needs to be thought through and so do its implications.
For instance, how would a single currency and the currencies or the rest of the Union co-exist? How would Europe’s institutions serve the interests of those countries which adopted the single currency and of those who did not? What would it mean for the Community budget? What would its implications be for the single market that has been of such benefit to every member of the European Union?
Attentive listeners will notice I did not ask what will be the name of the single currency; I left that question out because it is, to be frank, a convenient distraction from the issues that matter most and those issues must be answered before a single currency goes ahead. The price of error would be too high for Europe individually and collectively. This is something all of us, even the most enthusiastic advocates, need to consider. The time has come to answer these questions so that the Union can expand and reform successfully, so that stability and democracy are extended to millions more Europeans who are desperate to move from Central and Eastern Europe into the embrace of the European Union and to whom we have made a promise that in due time they will be welcome and they need to be answered so that Europe can compete with the rest of the world and win because our living standards today and our children’ s living standards tomorrow depend upon us successfully meeting that challenge.
Europe must not become an economic museum; it must and it can become a power-house and that is the purpose to which we must drive our policy and European policy as a whole. There is no point standing on the sidelines carping and moaning about things we don’t like. When I said we needed to be in the heart of Europe, I meant it for this reason: if we are in the Heart of Europe we can influence Europe, from the sidelines of Europe we cannot and we need that influence in Europe in the interests of every single member of this country.
My Lord Mayor, I said there were choices to be made. They must be made on the basis of a cool assessment and clear facts. Emotion is heady stuff but it often makes for poor policy. A cool assessment and clear facts is what we must look at and that is the basis upon which the Government will approach European policy, the only basis that is undeniably in the British interest.
These challenges are real, complex and often uncomfortable but they are at the centre of the choices that we face about our nation’s future; they must be addressed and they must be at the centre of our national debate and I, My Lord Mayor, intend to ensure that they are.