The Rt. Hon. Sir John Major KG CH

Prime Minister of Great Britain and Northern Ireland 1990-1997

1997-2001 Parliament

Mr Major’s Contribution to the Queen’s Speech Debate in the House of Commons – 13 December 2000

The text of Mr Major’s contribution to the Queen’s Speech debate, held in the House of Commons on Wednesday 13th December 2000.


Mr Major: If I had any doubts about whether this was the last Queen’s Speech debate in which I would have the privilege of speaking before leaving the House at the next election, the Chancellor has removed them over the past 40 minutes or so. The Government have been generous in allowing six days to debate a Gracious Speech with so little in it. I now know that that was because they wanted to debate the Opposition’s alleged programme rather than their own policies. As we come to the end of this Parliament, the Queen’s Speech, which we should have been debating, is more of a shop window than a programme for action. It contains a small number of measures, most of which every hon. Member knows will not be enacted in this Parliament.

The Government took office with a large majority and an enormous amount of public goodwill. They faced a depleted Opposition who had suffered a painful election defeat. Given all that, it is extraordinary how little of real worth has been achieved in those remarkable circumstances. In addition to all that–I will return to this later–the Chancellor inherited an economy that was in better shape than that inherited by any incoming Chancellor for a long time. In similar, although not identical, circumstances, between 1945 and 1950 Mr. Attlee did so much more with his majority. We may not agree with what he did, but he made remarkable changes, out of any comparison with what has been achieved in this Parliament. The same can be said of my right hon. and noble Friend Baroness Thatcher between 1979 and 1983 and perhaps even more so between 1983 and 1987. Although I voted positively against the Labour Government with great will, even I could see that there were attractive aspects to some of what they said they would do. They were going to think the unthinkable, but they have scarcely thought at all. The Minister who was going to think the unthinkable was soon out-thought and out of Government as well.

The Government’s fondest boast is their management of the economy. With all the regularity of a man who has convinced himself and is seeking to convince everyone else, the Chancellor tells us that he has avoided boom and bust–and thus far he has–and has remained faithful to prudence. Prudence has become famous. In fact, in his last Budget he rather strayed from prudence and I suspect that, far from straying, he will be downright unfaithful to prudence when he delivers his new Budget and tells us of his plans to bribe the electorate with their own money. Poor old prudence has served her time adequately but is about to be ditched in favour of a hussy who is willing to distribute her assets in every conceivable direction.

To preserve the tattered reputation of prudence, and perhaps the Chancellor, the right hon. Gentleman has hinted at targeting tax cuts. We will have none of the crudeness of giving everybody their money back. He has said that they will be targeted, and I bet they will. They will be targeted on every voter who might be persuaded to put the Chancellor back into the Exchequer. As the Chancellor is keen to put matters on the record, let it be recorded that even he smiled at the prospect of what he might do.

I find it ironic, although perhaps not amusing, that if we believe what is said, the economy is to be at the centre of the Government’s re-election campaign. That is disingenuous at best and downright dishonest at worst. Despite the earlier difficulties to which he alludes so frequently, the Chancellor knows that in 1997, he inherited a growing economy with low inflation, falling unemployment and a rapidly declining fiscal deficit.

The Government can claim accurately that, thus far, they have not yet wrecked that economy, although cause and effect in economics is often lengthy and the substantial tax increases that the Chancellor has levied will threaten our competitiveness, as will the Government’s agreement to some of the anti-competitive measures from the European Union and their tendency to advocate regulation. It is difficult to get rid of regulation. I do not complain about some aspects of regulation. I acknowledge that we had great difficulty in getting rid of it, too.

Mr. Andrew Miller (Ellesmere Port and Neston): Will the right hon. Gentleman give way?

Mr. Major: If the hon. Gentleman will forgive me, I shall make a little progress.

The Chancellor, of course, knows all that. He does not openly admit it, but he is not foolish; he knows all that. That is why he talks regularly–he talked about it again today–of his economic achievements: so as to fix in the public mind the fact that he, and he alone, may be responsible for the benign economic circumstances that currently exist. That is why boom and bust in the 1980s–he almost invariably says the 1980s, although seeing me sitting here he added the early part of the 1990s–features so much in his vocabulary. However, even the Chancellor at his most slippery, and that–I mean it as a compliment, for he is a politician–is very slippery indeed, knows that the economy has been benign and growing for eight years, which is an almost unprecedented post-war record. When in opposition, he and his colleagues opposed many of the measures that brought that about. He now advocates many of those measures as prudent for the present and the future.
Perhaps I might remind the Chancellor, as it seems to have slipped his and the Prime Minister’s mind, that it was the Conservative party that created the economy that he inherited in 1997. Masters of spin he and his colleagues may be, but attempting to air brush out of history economic growth from the early 1990s onwards is pushing their talent for obfuscation just a touch too far.

Liz Blackman (Erewash): Will the right hon. Gentleman give way?

Mr. Major: Let me make a little progress. I shall then give way to the hon. Lady.

I remind the Chancellor of where we were on 1 May 1997, as opposed to the fiction of where we were. Interest rates were at 6 per cent. GDP growth was at 3.5 per cent. Inflation was at 2.6 per cent. and unemployment was on a very sharp downward track. Thank goodness it has remained on that downward track since then. The Chancellor can take some credit for that. Over the first 18 months, the impact of what had been done before kept it on a downward track. In the past 18 months, he can take some personal credit for that.

The tax burden in 1997–we heard about the 22 Tory tax rises time and again–was only marginally above that of 1990 and substantially below that which applies now. I shall not bandy figures about. There are various ways in which one can calculate them, but, whichever way one calculates them, the tax increases between 1997 and today are larger in total than the tax increases between 1990 and 1997. The talk of 22 tax increases was entirely bogus, for it utterly neglected the parallel tax reductions, which made a substantial difference to the net position.

Perhaps the Leader of the House, who will wind up the six-day debate, will tell us–I do not know the figure and I have not yet managed to obtain it–how many tax rises have been introduced since 1997. If she is in a frank mood, and I hope that she is–I greatly admire her leadership; she is a fine Leader of the House–perhaps she can add to her reputation by telling us how many of the tax increases since 1997 were announced by the Chancellor in the House in the Budget, as opposed to being slipped out in a post-Budget press release from the Treasury. I would thank her for that and welcome it.

Several hon. Members rose–

Mr. Major: I think that the hon. Member for Erewash (Liz Blackman) was first.

Liz Blackman: Does the right hon. Gentleman accept that, on record to the Select Committee on the Treasury, the Governor of the Bank of England clearly stated that interest rates should have risen well before the Government came into office in 1997, but for political reasons that did not happen? Does he recall that, in 1998, in the teeth of the Asian crisis, the Opposition forecast recession? It was the good management of the Government that steered the economy on a fair course.

Mr. Major: I have a feeling that the state of the world economy, notwithstanding the enormously good activities at Millbank, stretches a little further than the direct responsibilities of the Chancellor. I may be mistaken about that. It may be that Mr. Greenspan has very little to do with the American economy, that the American economy has very little to do with us and that the European economy does not affect us in the slightest, but I ask the hon. Lady to consider that it is just possible that world events interfere even with the activities of a Chancellor who inherits a benign economy.

I come a little closer to the tax point. I have said before and I repeat: we did put up taxes. We put up taxes in a recession to help to protect individuals and our national accounts from the economic downturn. I seem to recall that, at the time, the Chancellor and his colleagues demanded that the then Government did precisely that to protect people who were vulnerable in their constituencies. It was right. It was very painful. Conservative Governments do not like to put up taxes. They do not wish to. They did not intend to, but the social requirement of protecting people in that recession was necessary.

That is in some contrast to what has happened since the 1997 election. Since then, the Government, first, have increased taxes by more than we did and, secondly, have increased them in a benign economic climate rather than in a recession. That is a sharply different proposition.

Mr. Matthew Taylor: The right hon. Gentleman speaks with his usual eloquence and charm. He referred earlier to the trend in unemployment continuing on a downward path. There was another trend: the trend in projected taxation, which his Chancellor had announced and was printed in the Red Book. That showed taxation continuing to rise after the general election as a proportion of GDP–it was slightly above the present Government’s projection–to close the very deficit that the Government have closed in that way.

Mr. Major: I give the hon. Gentleman exactly the same answer that the Chancellor would give him. If I had said to the Chancellor that the Red Book projections show taxation rising in future, he would have said, “These are stylised projections based on unchanged policies.” Of course, they change with each successive Budget. That is why I referred to the tax burden as it is now, not as it is projected by the Chancellor in future. I am grateful to the hon. Gentleman both for his kind words and for letting me make that particular point.

Is there scope for tax reductions now? The Chancellor clearly thinks not and had much pre-election fun rehearsing his hustings speeches in village halls throughout the country, but there is clearly scope for tax reduction to reverse the Chancellor’s raiding of the net personal incomes of millions over the past three years.

My right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo), the shadow Chancellor, is searching for savings throughout Whitehall. Good luck to him. It is an extremely good thing for him to look for, but, although it is wise always to see where prudent savings could be made, he could justify his proposed tax cuts simply by saying that he is reversing just a part of the sheer scale of the economically damaging increases that the Chancellor has piled upon the electorate in the past three years.

Some time ago, I heard the Prime Minister–not my favourite programme, Members can understand, but I listen to him from time to time–praising our low-tax economy. Unfortunately, I must have missed the bit where he praised his predecessors for creating it, and the bit where he repented his Government’s smash-and-grab raids on people’s pockets. The plain truth is that the Chancellor, a very agreeable man, has had his hands in the public’s pockets more often than the public have had their hands in their own pockets.

In 1997, taxes in the UK broadly, because one can calculate it in different ways, were 6 per cent. below those of our main European competitors. That gap, important for our competitiveness, has shrunk to 2 per cent. and may shrink further because Germany, France and Italy are all embarking on programmes to cut their taxes.

That is potentially important for our competitiveness, our inward investment and for our jobs, on a day when, sadly, many jobs have been lost at Luton. Tax cutting is not simply a matter of putting more money into the pockets of those who have some money already. In my judgment, and I dare say that of my right hon. Friend the Member for Kensington and Chelsea, the weight of tax reductions should be at the lower end of the scale.

It is not greed that demands tax. To a certain extent there is an economic justification for tax reductions, quite apart from the fact that we are not giving people something, but simply taking less of their money away from them.

The Chancellor’s move over the past three years from fiscal Scrooge to fiscal Micawber is by no means his only policy change. Once upon a time, as I recall, he was proud to be represented as being in favour of quite early entry to the euro. I understand from his aides, that now, to judge from briefings against the Foreign Secretary and the Northern Ireland Secretary, he is not in favour. Of course, those briefings could be personal rather than policy–one never knows with the Cabinet–

Mr. MacShane: The right hon. Gentleman knows about that.

Mr. Major: Indeed I do, and that is exactly why I say it. However, it is nearly Christmas, so let us make the generous assumption that it is policy that activates the Chancellor and not a wish to undermine his colleagues, which is always an unattractive trait in senior politicians.
The Chancellor now favours delay in entry to the euro. The time is not yet right. One might perhaps characterise his position as wait and see. I think that he is right about that. When they were in opposition, the Prime Minister and the Chancellor roundly condemned that policy, but in government they have warmly embraced it. Indeed, wait and see appears now to have become a rather venerable old gent much loved by nearly all political parties.

The Government wait and see. The Opposition wait and see–albeit for a rather longer time. Entry into the euro rightly provokes great debate. Unfortunately, for many years it has been inadequate debate. Some hon. Members see a new currency as a child of Beelzebub while others regard it as a benign inevitability. It is, in fact, neither. Personally, I disagree with both the “go in now” brigade and the “go in never” brigade. We should measure United Kingdom political and economic interests, which are not yet clear–the Chancellor is right about that–and make a decision only when they are. It could take some time. After the election I shall not be in the House to be told that I am wrong, but I do not believe that any Government will enter the euro in the next Parliament and in my view nor should they. I would actively oppose premature entry.

Mr. Nigel Beard (Bexleyheath and Crayford): What is the difference between the policy that the right hon. Gentleman has just outlined for entry to the euro and the established policy of the present Government?

Mr. Major: The established policy of the present Government is very familiar to me for it was mine long before it was theirs, so it is hardly surprising if I have a certain degree of affection for waiting to see whether it is the right policy before deciding upon it. A more accurate question might have been to invite the Chancellor to explain why, two years after the euro came into being, he still adopts the policy that he criticised so harshly when I sat on the Government Front Bench three years before the euro.

Mr. Miller: He is not listening.

Mr. Major: Of course he is not listening; he does not want to hear this and that is perfectly all right.

Mr. Miller: Will the right hon. Gentleman give way?

Mr. Major: The hon. Gentleman will probably defend the Chancellor, but I do not think that the Chancellor needs defending. He is big enough to look after himself.

Mr. Miller: Just for completeness, so that we know exactly where the right hon. Gentleman stands, is he in favour of a referendum so that the people can decide?

Mr. Major: I actually said, in government, that there should be a referendum on the euro. Once again, the present Government gave that commitment because they inherited it from me. That is my position on a referendum, but if in the next Parliament there is concurrence that there will be no decision to enter, it is painfully evident that there will be no referendum.

The Government are allegedly preparing for entry if–and it is a big if–they judge it to be in our national interest. If that is the case, and if their position is not simply a public relations posture, they must consider some serious questions. However, they have not given us their judgment on those serious questions. I do not know the Chancellor’s view on the debate. For example, how does he think that the pound will fare in future alongside the dollar, the euro and the yen? Does he worry about the very large capital outflows from the eurozone to the dollar zone? Why does he think that it is happening? What does he think is happening within the eurozone following the birth of the new currency, albeit too early and certainly in the wrong conditions–not remotely the conditions that were agreed at Maastricht some years ago?
It seems to me, as an observer, that the euro has accelerated structural change in continental Europe. If that is so, we need to consider whether the proposed tax reforms in Germany, accompanied by the proposed pension reforms there and the anticipated balanced budget there in about four years’ time if the Germans hit their targets, will affect us and if so how?

We also need to consider the implication–as it is critical to the United Kingdom–of the huge growth of mergers and acquisitions in France especially, but also across Europe. If the Government are leading the debate on the euro, what do they think about all those and 50 other issues that the Chancellor and I and all my right hon. and hon. Friends could easily set out as being crucial for discussion and consideration before any rational judgment should seriously be taken to take us into a single currency?

Some oppose it on principle and others do not. Most people probably wish to know whether it will have a benign or a malign effect on the British economy. We cannot know that without a proper debate on all those issues. I wish that we were having that debate and I wish that the Chancellor of the Exchequer would lead it

The Chancellor of the Exchequer is better placed than any other politician to lead that debate, so what does he think? How does the Chancellor think the unification of the continental financial markets will impact on our own financial markets and what will it mean for future policy? Here is another illustration of an issue that is far beyond the often rather superficial arguments for and against the euro and one that we genuinely need to examine and consider before we make a decision. It is all relevant to our national interest. Where is the debate on all this so that we can make a rational judgment?

We have time. As I said earlier, I do not favour entry in the next few years. I do not think that it would be wise and I would not vote for it. In fact, I would oppose entry in the next few years, but we have to consider that the world around us may be changing and we need to look at that changing world and judge what it means for us.

Mr. MacShane: I am grateful to the right hon. Gentleman. I have been listening with great interest to what is perhaps his valedictory speech. I congratulate him on his remarks because it is rare indeed to hear from the Opposition a considered discussion of the problem of euro entry. Perhaps he should address his remarks to those on the Opposition Front Bench and to his own party leadership because until we have a rational discussion across the Chamber and the nation that is not dictated by The Sun and the Daily Mail and their venomous anti-Europeanism, we cannot have a discussion at all.

Mr. Major: When I hear the hon. Gentleman praising me, I feel the slide of a knife in my ribs.

Mr. Alex Salmond (Banff and Buchan): Is it a familiar feeling?

Mr. Major: Of course not. It is not remotely familiar. That is a disgraceful suggestion.

The other point that I would make in response to the hon. Member for Rotherham (Mr. MacShane) is that, although I may be terribly old fashioned, I came into the Chamber today believing that the debate was to be about the Government’s programme and policies. I did not think that it would be about the Opposition’s programme, or about any distorted version of that programme that it may be convenient for the Chancellor to allege might be implemented in certain circumstances.

The Chancellor, rather like Fanlight Fanny, looks at our programme through the wrong end of a telescope, on a very dark night, standing on a stool, and through a clouded window. Anything that the right hon. Gentleman says about our policies we may routinely assume to be the opposite of the reality. There was much evidence of that today, and the right hon. Gentleman is very good at it. He is able to say that which is not so with such conviction that he convinces himself that it is so–but it is not. The Conservative party that I joined–I look forward to campaigning for it in the next general election, in the hope and belief that it will win–bears no relation to the party painted in such lurid colours by the Chancellor of the Exchequer.

I see that the Chancellor is smiling. He may well smile: he has done a good afternoon’s work, and enjoyed himself jolly well. He has not defended his own policies, but has talked about ours instead. He did not get past page 3 of the prepared speech given to him by his advisers. He was also able to use up 49 minutes, which was necessary because not too many Labour Members are waiting to speak later on.
The Chancellor has had a really super afternoon, which he is thoroughly enjoying. He has safely moved on and ditched poor old Prudence, who was useful once but is no longer. We must continue to remind the right hon. Gentleman of Prudence, because she will yet be an embarrassment to him when, in the very near future, he comes to prepare his Budget. Prudence may be the only person in the country who will not be given a tax handout of some sort when the Chancellor addresses the House on Budget day.

I return, briefly and finally, to the question of the euro. My prediction is not shared by many people, but I stand to be judged on it. It seems to be more likely than not that, over the next year, the euro will recover in value against the dollar, the yen and sterling. It is worth noting, in passing, that that will help sustain the price stability that was the objective demanded of the European central bank by the Maastricht treaty. The treaty was often misunderstood, but that provision was absolutely clear.

All such issues, and the conclusions that follow from them, are material to our consideration of whether sterling should one day–although not in the near future–enter the eurozone. In a mature debate on the future of our economy and currency, all those issues would be aired.
I was rather disappointed that the Chancellor should have aired other issues and spoken rather intolerantly about our policies, rather than address an issue that he hopes will go away in the period before and during the next election. I can tell him that it will not go away, as it is of abiding interest to far too many people for that to be possible. However, no mature debate is being held. The current Government have enjoyed a massive majority in the House of Commons for four years and, frankly, it is time that such a debate were held.

The hon. Member for Rotherham said that this might be my valedictory speech. He may wish it to be but, unless the election is held very speedily, I promise him that it is not going to be my valediction. However, it is certainly my valedictory contribution to a debate on a Queen’s Speech. With your permission, Madam Deputy Speaker, I shall use the latitude that the debate allows to say something about the House of Commons and the way in which it operates these days.

The House of Commons has always had a certain mythology about its past. I have been here for only 20-odd years, but I am in no doubt that the complexion of the House has changed in that time, to the disbenefit of democracy and of the nation at large. It is not good for the House that only a handful of enthusiasts take part even in significant debates, and that it should be so often bypassed when statements come to be made.

Moreover, although all Governments have used guillotines, it is not good for the House when placing them at the necks of innocent pieces of legislation becomes too frequent and callous. It is not in the interests of the House of Commons that we should be able to go in the No Lobby, on a day when we happen to be here, and vote on issues that we do not understand after debates that we did not attend.

None of what I have set out is in the interests of democracy. If we were really interested in re-establishing democracy, there are things that we could do. There are many ways to reform the House of Lords other than the way in which it has been reformed, and they should have been implemented. Standing Committees of both Houses should be used to examine treaties–such as Nice, for example, or the Maastricht treaty of many years ago–both before and after they are negotiated. Standing Committees could also be used to look at the creeping constitutional change that is undermining the House. Those matters are what we need to be looking at.

I shall conclude with a prediction that gives me no pleasure at all but which I fear will be realised. It is that turnout at the next general election will be very sharply down, and that it will be below the level recorded in any general election for a very long time. No hon. Member ought to want that to happen, and it is not something to be proud of. If such matters were in the forefront of the Government’s mind and covered in the legislation proposed for the few weeks available before the election is called for late April or early May, perhaps the Queen’s Speech would have been better and more relevant than the one that the Chancellor nearly debated this afternoon.