Category: Chancellor (1989-1990)

  • Mr Major’s Comments on Labour’s Economic Policy – 22 May 1990

    Below is the text of the press release, 377/90, issued by Conservative Central Office on Tuesday 22 May 1990. It was titled, “What are Labour’s Plans for the Economy?”.


    CHANCELLOR OF THE EXCHEQUER:

    I’m looking forward with keen anticipation to the launch of the Labour Party’s policy document.

    I’d like to pose some questions which they ought to answer in it, but almost certainly won’t.

    Are we going to hear at last Labour’s plans for the economy? Will they explain how their policies would control inflation? Will they tell us the cost of their spending plans? Will they reveal the levels of taxation necessary to finance them? These are vital questions but to none have we so far had an adequate answer.

    They say they would control inflation by introducing credit controls and joining the ERM. What sort of credit would be restricted? What sort of controls? How could credit controls work in the context of the Single European Market when intermediaries like shops can easily arrange credit through a European bank? Would they exclude mortgage lending, or would they create mortgage queues? And if they exclude mortgage lending how would their controls be effective, when 85 per cent of credit is for house purchase?

    Labour say they would join the ERM. But that doesn’t remove the need for responsible economic policies. The ERM is a commitment to a stable exchange rate. So what do Labour mean by a “competitive” exchange rate? Is this pre-emptive devaluation? And, if so, how does it square with membership of the ERM? The truth is that Labour use the ERM as a fig leaf to cover their lack of a credible inflation policy.

    Neil Kinnock accuses me of “clobbering the economy with 15 per cent interest rates”. And Labour say that they would use every economic weapon against inflation except interest rates. That is, they would use every weapon except the one that works. Every other country uses interest rates to control inflation, even the Labour Government in Australia. Only Labour plan to reduce inflation by lowering interest rates and stoking up demand.

    The truth is that Labour have no credible strategy for controlling inflation. None whatsoever. And though they pretend they have only two spending commitments, every Shadow spokesman gives the lie to this statement. Last Friday, in Wales, Neil Kinnock himself either explicitly or implicitly called for more spending on health, social security, education, transport, roads and training. Just as John Smith calls for additional spending on training, regional development and support for industry every time he speaks. Their spending plans are limitless.
    They fool no-one with their pretence that they are committed only to “an increase for pensioners and an increase in child benefit”. The fact is that Labour have a massive spending programme which can be paid only by increasing taxes or higher borrowing or a combination of both. As John Prescott has said, “it is not credible for Labour to suggest that our policies can be financed on a programme of low taxation”. For once he has hit the nail on the head.

    Labour try to hide the effect of their plans on tax levels. They will abolish the upper earnings limit on National Insurance contributions, adding 9 per cent to the tax bills of almost three-and-a-half million people. People earning just over £18,000 before tax don’t regard themselves as rich, but they will be hit. They admit they will phase out the married couple’s income tax allowance, affecting 11 million taxpayers at every level of income. They admit they will re-introduce a surcharge on what they call investment income and ordinary people call savings. How does all this square with Neil Kinnock’s statement that Labour tax plans won’t hit the huge majority of basic rate taxpayers? The truth is it doesn’t – and it can’t. Millions of people will pay more tax to finance Labour’s plans and nothing can hide that fact.

    No-one should believe the Labour Party have changed. They haven’t. They have no policy on inflation, they have no will to control expenditure, they have no idea how to run the economy. All they have to offer is debt, devaluation and decline.

  • Mr Major’s Written Parliamentary Answer on the Stamp Office for Deeds – 18 May 1990

    Below is the text of Mr Major’s written Parliamentary Answer on the Stamp Office for Deeds on 18th May 1990.


    Mr. John D. Taylor To ask the Secretary of State for Northern Ireland what consultation there was within Northern Ireland other than with relevant staff and the legal profession before the decision to close the Belfast stamp office for the registration of title deeds.

    Mr. Major I have been asked to reply. None. Any prior consultation would have been incompatible with Budget confidentiality for my decision to abolish stamp duty on shares.

  • Mr Major’s Written Parliamentary Answer on Economic Statistics – 17 May 1990

    Below is the text of Mr Major’s written Parliamentary Answer on Economic Statistics on 17th May 1990.


    Mr. Higgins To ask the Chancellor of the Exchequer if, further to his statement to the Treasury and Civil Service Committee on 3 April, he can now announce his plans to improve the quality of economic statistics.

    Mr. Major I have arranged for the Central Statistical Office to take further steps to improve the quality of statistics in three areas – services, companies and balance of payments. My aim is to introduce these changes as quickly as possible so that some results will begin to appear in the figures as early as the end of this year. This is a development made possible by last summer’s reorganisation of the CSO which was undertaken to enable improvements to be made to economic statistics.

    On services, I propose that extensions are made to quarterly inquiries of turnover in the services industries, and that more information on external trade in services is collected on a quarterly basis. On company statistics, I propose to obtain more quarterly information on capital expenditure, stock-building and profits. On balance of payments (and other financial) statistics, I propose that the quarterly direct investment inquiry should be expanded, and that more information be collected about United Kingdom companies’ financial transactions with domestic and overseas residents. Because of the severe problems with balance of payments statistics, I have asked the CSO to undertake a thorough review over the next 12 months of the way in which these statistics are collected and compiled.

    In addition, I have asked the CSO, in consultation with the appropriate bodies, to consider the case for wider use of statutory surveys. This should improve the quality of statistics by increasing response rates. It should also ensure that the burden on businesses is shared more fairly.

  • Mr Major’s Speech at the 1990 CBI Dinner – 17 May 1990

    The text of Mr Major’s speech to the CBI Annual Dinner, held on 17th May 1990.


    CHANCELLOR OF THE EXCHEQUER:

    I am very pleased indeed to have this opportunity to address your Annual Dinner, in this your silver jubilee year.

    Over the years the CBI has become a pre-eminent representative for industry and business. Not only pre-eminent but vocal. No one could accuse you of being shy in expressing your views either publicly or in personal discussion; and the Government invariably considers what you say with great care – even though we cannot always adopt the policy prescription you set out. It has long been a forthright and constructive relationship; and I hope and expect it will continue to be so.

    It is particularly important it remains so at present. For the economy is now entering a crucial period, which will test all that has been achieved in the last decade and which will set the base for our prosperity in the ‘90s. I believe that the British economy will pass that test – indeed do better than pass – but it may not be easy, for Government, or for business.

    Our objective in managing the economy and industry is simply stated: it is to outperform our competitors. We need to show the successes achieved in the ‘80s – in productivity, in export markets, and in increased investment in new equipment, innovation and training – these successes were not just a flash in the pan; rather that they were an example of just how much attitudes and performance have changed in Britain.

    The truth is that while 1990 is proving, as we expected, to be a difficult year, the 1990s will offer British businesses unparalleled opportunities. There is no need for despondency or hand-wringing. There is a need for businessmen and women everywhere to look to the future and plan for it. For the decisions which will spell success or failure for British firms in the years to come are already upon us.

    At the moment, we are confronted with an unwelcome resurgence in inflation and a difficult short-term outlook. That has led some commentators to write off the last few years as no more than a brief interlude of success, and to say that now we might be sliding back to where we started at the beginning of the ‘80s. I understand this fear. But I disagree with it. I believe that this thought is wholly wrong, and potentially very damaging. I was pleased to see John Banham making these points with his usual force a few days ago.

    Of course there have been setbacks. And I do not belittle the problems we face in the short-term. But however intractable they may seem to some, they are as nothing compared with the deep-seated weaknesses of the British economy at the beginning of the ‘80s. At that time our economic base was weak and uncompetitive, unhealthily reliant on declining industries, and contained some real pockets of economic deprivation.

    That was so because for too long, Governments had disguised the symptoms of decline, and neglected the disease itself. As a result, the real cure, when it came, was all the more painful. But it was the essential precondition for a sustained revival in our economic fortunes. With great effort the trend of decades was reversed, and we began to make up ground on our competitors, and even to out-pace them in many respects.

    And as many here tonight will testify, underpinning that recovery at national level were countless individual success stories: the thousands of people who began the decade working for someone else, and ended it as owners of businesses, creating still more jobs for others; the millions of individuals and families who in the ‘80s took the first step towards home-ownership, share-ownership or capital ownership. Remember too the re-birth of many of our regions, towns and cities – Glasgow’s nomination as this year’s European City of Culture being a striking example of this. The pessimists who look at where we are and worry should look also at where we have come from and how much has been achieved.

    All in all, it has been an astonishing economic transformation, and one whose benefits will continue to work through the economy for years to come. And it has a lesson for us. What was achieved in the ‘80s can be built on in the ‘90s.

    For the moment, the immediate priority of economic policy must be to bring down inflation. I am acutely aware that the measures we have to take hurt many of the people who regard themselves as the Government’s natural supporters – in particular, small businesses, and home-owners on modest incomes. I know there are some who are puzzled that we should keep in place policies that bear heavily on these groups. I understand that. But it is not hard to explain, not when one recalls the damage done by the high inflation of the ‘70s throughout society, to business, to investment, to industrial relations, to savers and those on fixed incomes. Anyone who recalls those days will know one thing very clearly: a period of high interest rates is infinitely preferable to the alternative of high inflation for good.

    And that is the problem: the only alternative to high interest rates is inflation. I know there are always plenty of people peddling apparently easy options, but that magic potion – a pain-free cure for inflation – simply does not exist. Nor will membership of the exchange rate mechanism of the EMS remove the need for a tight monetary policy. I am sure we will benefit from joining the ERM and join it we most certainly will when our conditions are met. But it is an added discipline, which will reinforce domestic monetary restraint, not replace it.

    There can be no doubt that interest rates have to be used to bear down on inflationary pressures. And there can be no doubt that they are working. The effects are clearly there for all to see – in the housing market, and in the high street.

    But I am afraid their job is not yet done. Yes, we are seeing an effect, demand is cooling, but as I have said before, it needs to stay cool for a time while we work off the inflationary hangover. In particular, it will be a few months yet before we see an improvement in the RPI, and in the meantime it has reached an extremely unpalatable level. Of course the RPI overstates the real problem: the idiosyncrasies of the headline rate are well enough understood, and I need not rehearse them again here. But the fact remains that inflation, however you measure it, is unacceptably high, and we must force it down closer to the average of our competitors, and when we have done that we must try to get it down even further still.

    We must do so because the reduction of inflation is not some abstract totem. It is the absolute precondition of all our hopes for the coming years. Low inflation will deliver them. High inflation will destroy them. From this it will, I hope, be clear that I have no intention whatsoever of relaxing monetary policy prematurely, and if necessary, I shall tighten it. And I should add that when I am able to reduce interest rates, I will do so cautiously and prudently. My aim is a resumption of steady and sustainable growth combined with low inflation.

    Because interest rates are so painful we need the best possible information about how they are working. That means we need to monitor what is happening in the economy with great care. And yet in recent years a problem has arisen: in a buoyant, unregulated economy the behaviour of firms and consumers has often been in sharp contrast to many of the established economic wisdoms.

    Most notably, we have found that people are prepared to live with far higher levels of borrowing and far lower proportionate saving than in the past. One reason for this is that credit has become far more widely accessible than in the days of the mortgage queue. But it is also the case that years of sustained growth in incomes and wealth here made people and firms more confident that they can service their borrowing in future.

    These factors have proved important upward pressures on demand and to an extent they were predicted. But what we failed to predict was how far, if at all, they would be offset by external shocks such as the stock market crash, and how much and how fast they would respond to the progressive tightening of monetary policy over the last two years.

    Such unpredictability is, I suspect, inevitable in a free and open economy, and I make no complaint about it. The freedom is worth the uncertainty. However, in addition to our inability to predict future behaviour accurately, it has become increasingly difficult to assess the present state of the economy with certainty – because of the growing gaps and inconsistencies in our official economic statistics.

    The development of the latest outbreak of inflation highlights this very clearly. On the basis of the information available, in common with other countries, policy was directed at avoiding a crisis in confidence and a recession in the wake of the stock market crash. Having avoided that recession, as we now know, policy should have been tighter to bear down on strengthening inflationary pressures. With hindsight, we see that policy mistakes were made – but only with hindsight. At the time, we were not exactly overwhelmed by calls for higher interest rates, and the statistics we had to hand did not reflect the buoyancy of the economy. Again, even when tighter policy was put in place, we still underestimated the strength of demand we were trying to counter.

    Since coming back to the Treasury I have given considerable thought to how to cure these statistical shortcomings. It is important we do because we need to ensure that we have the best information we can get, and as soon as we can get it, about the level and nature of activity in the economy, since it will inevitably carry on changing with ever growing speed.

    The statistics we have at present do not provide that. Too often the first estimates of key indicators have been radically different from the final revised figures. And many of the accounts do not add up. There is for example a huge balancing item (a technical term for errors and omissions) in the balance of payments statistics for 1989 of over 15 billion pounds. And our information on service industries is very patchy – even though they now account for over half our national output.

    In Parliament the Treasury and Civil Service Committee has emphasised the costs to economic policy of unreliable statistics. I know too that representatives of business have been pressing for similar improvements.

    I have therefore announced today a package of improvements to statistics that should considerably improve our ability to monitor and forecast developments in the economy.

    There are a number of elements to the package. It will involve enhancing existing surveys to collect more information on service industries, investment and profits and it will involve a thorough on-going review of the balance of payments statistics.

    I expect the first of these improvements to be introduced by the Autumn and Winter. Taken together with the improvements already in hand, the results of this package should be a substantial improvement in the quality of our key economic indicators. I believe that is essential.

    There will obviously be compliance costs, but we shall ensure that these proposals do not lead to unnecessary or excessive burdens on business. They will be kept to the absolute minimum necessary.

    I have no doubt that the modest price of the new information will be well worth paying, not least because there will be tangible benefits for business as well as government. Better statistics mean better understanding on the part of government and business. And this in turn should lead to better decisions. That must be good for us all.

    But more crucial than the decisions Government takes are the collective decisions of all of you in business, commerce and industry. On this front, I have two particular points I want to make.

    The first concerns the familiar problem of high wage settlements. In particular cases no doubt high settlements are justified. But often they are not. And at present it is clear that pay increases overall are running ahead much too fast. Too many negotiators simply assume that they have to match or more than match the RPI regardless of their business circumstances. This morning’s figures for unemployment show graphically what happens if you take that approach. Higher pay and higher costs squeeze profits, investment and output and lead inevitably to higher unemployment. Sometimes restraint is necessary – and that applies as much to management’s salaries as to those of their workforce.

    Some companies may imagine that if they price their goods out of markets the Government will accommodate this with a lower exchange rate. John Banham and Trevor Holdsworth have repeatedly pointed out the folly of such thinking – and they are right. It would be a great mistake to think the exchange rate can only move in one direction.

    My second point concerns investment. There is no more welcome sign of the improved health of British industry than the record rise in investment over the last three years. I welcome this unreservedly – even though it is costing the Exchequer a massive nine billion pounds a year through capital allowances. I recognise that the slowdown in demand and output makes it harder for companies to invest for the future. But wherever they can invest I hope they will. And I believe they would be wise to do so. For investment needs and opportunities do not simply disappear because the short-term position is tight.

    Indeed, in many respects the medium-term investment prospects in the world economy are very good indeed – especially in Europe. We are now only two years away from completion of the European Single Market – a huge market with a population approaching that of the US and Japan combined. The dramatic developments in Eastern Europe are creating fresh opportunities for business ventures of all kinds and will continue to do so. To give one example, hitherto East Germany has traded mainly within the Eastern bloc and UK exporters have sold very little there – only one hundred million pounds in 1989. As it becomes integrated in the Western economy we should aim and expect to account for as high a proportion of East Germany’s imports as we currently do of West Germany’s. In the long term that should bring as much as a tenfold increase in our exports, to one billion pounds – a substantial rise by any yardstick. And of course that is only one of the economies being opened up in Eastern Europe.

    I have no doubt British exporters can take these opportunities. In the last year exports have increased by 11%, which is the clearest possible illustration that many British companies are ready to profit from these developments. But many are not. I am concerned when I hear of British companies that have not yet developed strategies for getting the most out of the Single Market. Enormous opportunities exist, but only for those ready to compete for them. And that means preparing now. Not tomorrow. That will be too late. Others will be there before you.

    No-one should under-estimate the challenges before us, or the rewards available if we meet them. The 25 years since the CBI was formed have brought their share of problems, but looking across the span of years we can see also the enormous improvements they have brought to the general living standards and quality of life in this country.

    None of that would have been possible without the growth of British industry and commerce. It is incomparably better managed, better equipped, more profitable, and more productive than it used to be. The climate in which it operates is altogether better. Now is the time for you to build on these strengths; and to carry them forward into the 1990s. I am sure you will do so.

  • Mr Major’s Written Parliamentary Answer on the European Monetary System – 10 May 1990

    Below is the text of Mr Major’s written Parliamentary Answer on the European Monetary System on 10th May 1990.


    Mr. Shore To ask the Chancellor of the Exchequer what swap arrangements are available to the United Kingdom from other central banks in the European monetary system; and what additional funds are available to those European monetary system members that are also members of the exchange rate mechanism.

    Mr. Major [holding answer 3 May 1990]: Since 1984, a mobilisation mechanism has existed which allows EMS members to obtain dollars in exchange for the ecu provided by the European monetary co-operation fund (EMCF) against the deposit of 20 per cent. of gold and 20 per cent. of dollars in official reserves.

    In addition, some credit facilities are available to EMS members. All members have access to medium-term financial support (MTFS), which is an inter-governmental facility to help member states with balance of payments difficulties, and short-term monetary support (STMS), which is a central bank facility providing support for temporary balance of payments difficulties. ERM members also have access to the very short-term financing facility (VSTF) to enable interventions to be made in Community currencies.

  • Mr Major’s Written Parliamentary Answer on the Belfast Stamp Office – 10 May 1990

    Below is the text of Mr Major’s written Parliamentary Answer on the Belfast Stamp Office on 10th May 1990.


    Mr. John D. Taylor To ask the Secretary of State for Northern Ireland (1) what consultation there was with the staff of the Belfast stamp office for registration of deeds and with the legal profession before the decision to transfer its work to Scotland and England;
    (2) what is the income and expenditure of the stamp office for deeds in Belfast; if he will make a statement on its cost to the public Exchequer; and what savings he estimates arising from its closure;
    (3) how many people are presently employed in the stamp office for deeds in Belfast; how many will be offered posts (a) elsewhere in Northern Ireland and (b) at the stamp offices in England and Scotland when the Belfast stamp office is closed;
    (4) how long there has been a stamp office for deeds in Belfast;
    (5) by what means he announced the proposed closure of the stamp office for deeds in Belfast;
    (6) what arrangements are being made to acquaint the staff in the stamp office in Scotland and England with the differences in property law between Northern Ireland and elsewhere in Great Britain.

    Mr. Major I have been asked to reply.

    The Board of Inland Revenue’s intention to close the Belfast stamp office in 1992 was notified to the staff on Budget day; the Law Society of Northern Ireland was informed by letter. Prior consultation would have been incompatible with Budget confidentiality for my decision to abolish stamp duty on shares.

    There has been a stamp office in Belfast since about 1922, but with a revenue of about £12 million and costs of about £190,000 in 1989–90, the cost of collecting stamp duty in Northern Ireland is now more than three times greater than the average cost in similar offices throughout the United Kingdom. Closure is expected to save about £160,000 a year at current prices.

    The office currently employs eight staff. Apart from one person on secondment, all staff will, wherever possible, be offered jobs in line with their preferences. Any necessary guidance to staff in England and Scotland on differences between the property law of Northern Ireland and the rest of the United Kingdom will be given nearer the time of closure.

  • Mr Major’s Written Parliamentary Answer on European Monetary Union – 8 May 1990

    Below is the text of Mr Major’s written Parliamentary Answer on European Monetary Union on 8th May 1990.


    Mr. Shore To ask the Chancellor of the Exchequer, following the meeting of the 12 Finance Ministers in Galway on 31 March and 1 April, what proposals have been made for the timetable of introducing phase 2 and phase 3 of European monetary union.

    Mr. Major [holding answer 3 May 1990]: No such proposals have been made. It was agreed at the special meeting of the European Council on 28 April that the preparations for an intergovernmental conference on economic and monetary union which will begin in December this year should be intensified with the objective of finishing the work of that conference in time to permit ratification of the results before the end of 1992. It is too early to say how feasible such a target will be.

  • Mr Major’s Speech on the Verdict of the Trial of the Pyx – 27 April 1990

    Below is the text of Mr Major’s speech on the Verdict of the Trial of the Pyx on 27th April 1990.


    CHANCELLOR OF THE EXCHEQUER:

    Thank you, Prime Warden, for those kind words of welcome. It is a very great pleasure for me to attend this occasion in my new capacity as Master of Her Majesty’s Royal Mint. It is an office with a very long and noble history – rather longer, I understand, than the office of Chancellor of the Exchequer and almost certainly more noble – and one which I know my predecessor Nigel Lawson held with much pride. It is a great honour to take my place in that long tradition.

    May I first take the opportunity to thank the Jury who have so carefully checked the coins this year and say how very relieved I was to hear that they have found no fault in them. All in all, that’s quite a relief! My officials have had great pleasure – malign pleasure, even malicious pleasure – in warning me of the dreadful fate that can befall Masters of the Mint when the coinage was found to be below standard. I gather that one Master in 1318 was sacked and jailed for six weeks for making a silver coin below standard, and another, 30 years later, was fine 93 pounds, 13 shillings and 3 pence. I understand the penalties have been rather less in recent years, but I am nevertheless relieved that I have not had cause to find out what they are!

    If I must be historical, I think I prefer to associate myself with Thomas Major, who held the office of Chief Engraver of Seals in the eighteenth century. A resourceful man, capable of speed and efficiency, he is said in 1784 to have provided within twenty-four hours a copy of the Great Seal of George III, stolen during the night from Lord Chancellor Thurlow’s house in Great Ormond Street. I am not sure that I ought to add that the first Proclamation to which the replacement seal was attached called for the dissolution of Parliament and the summoning of a new one!

    It does not, of course, come as any surprise to know that the jury has found the coins fully up to standard. The Mint has a reputation for the quality of its products which is, I believe, unsurpassed in the world. Their financial performance over the past year has also been impressive. The Mint achieved profits last year of over 10 million pounds, a return on assets of a healthy 20%. Much of this profitability came again from their excellent export performance. The Mint have also achieved record production levels. I would like to congratulate the Deputy Master and all his staff for this notable achievement. I know how much hard work it has meant for everyone at Llantrisant.

    I would like also to congratulate the Mint on becoming one of the 18 new Executive Agencies announced earlier this month. As a trading fund, the Mint has of course been subject to fewer restrictions than in many other parts of the public sector, but I hope they will nevertheless find that their new status gives them a clearer, firmer basis on which to develop their business on the sound commercial lines that have become their hallmark in recent years.

    The next year will be a challenging one for the Mint because they are about to make a change in the coinage which will put them very much in the public eye. On 27 June, a new lighter 5 pence coin is going to be brought into circulation to replace the existing one. It is a brave Minister who interferes with anything so familiar to the public as the coins in their pocket, and, with your indulgence, Prime Warden, I would like to take this opportunity to remind people why the Mint is doing it.

    Just over 3 years ago, after complaints about the weight of the coinage, my predecessor asked the Royal Mint to undertake a consultation exercise to test the public’s reaction to the idea of changing the existing coins to lighter ones. The Mint commissioned some research at Nottingham University where a range of sizes and shapes of coin were tested to see which could be most easily distinguished. Among those asked to test the designs were elderly residents in sheltered accommodation and blind people. In July 1987 the Mint issued a consultation pamphlet setting out four possible options.

    I should say, to be precise, that the pamphlet set out 5 options because it included doing nothing at all. We made it very clear at the time that if that was what people wanted, no changes would be made.

    The consultation exercise was widely publicised at the time and extensively reported in the newspapers. The Daily Mail actually ran its own survey and let us have the results. The Mint made a particular effort to draw the exercise to the attention of the representatives of the blind, the elderly and the disabled and made it clear that Ministers would listen to their comments very carefully before any decision was taken. When the replies to the consultation exercise came in, a substantial majority of those who responded favoured a change to lighter coins, and preferred the option with the smaller 5 pence and 10 pence coin which the Mint are now introducing. The results of the exercise were announced by my predecessor in December 1987. Ministers gave two and a half years notice to give the vending machine industry as much time as possible to plan ahead for the switch over. And before settling the final specifications, the Mint gave test coins both to the vending industry and to representatives of the blind, to see if there were any particular modifications we could make to help them. One result is that the coins will have a special milled edge to help the blind.

    No one likes change, and I have no doubt that there will be complaints when the coins are issued. But the Mint has done all it reasonably can to make the transition as quick and smooth as possible. The old 5 pence coins will be withdrawn by the end of the year.

    The new 5 pence coin has the same design as the existing one and is about the size of the old silver sixpence, which many of us still remember fondly, and which was with us for over 300 years. It will make a substantial difference to the weight of the coinage, particularly after the lighter 10 pence has also been introduced in June 1992. This switch over will be irritating for many, I am sure, but I am convinced it will be worth it in the long term.

    The Mint is of course issuing another, far less controversial, new coin later this year. It was with considerable pleasure that I announced on 28 March that the Royal Mint would be issuing a five pound commemorative crown to mark the ninetieth birthday of Her Majesty the Queen Mother on the 4 August. It is a magnificent coin and as I am sure you will all agree when you see it, a very fitting tribute.

    Finally Prime Warden it only remains for me to thank you and the Goldsmiths for your generous hospitality and for a most enjoyable occasion. Thank you very much.

  • Mr Major’s Parliamentary Answer on VAT – 26 April 1990

    Below is the text of Mr Major’s response on VAT made on 26th April 1990 in the House of Commons.


    Mr. Donald Thompson To ask the Chancellor of the Exchequer how many businesses he expects to be helped by his proposed value added tax reforms.

    Mr. Major About 1,150,000 businesses should be helped by the proposed new scheme for the relief from VAT on bad debts and most of the 250,000 or so businesses that are expected to register in a year could benefit from the simplified VAT registration requirements.

    Mr. Thompson With the rapid increase in the number of businesses in my constituency and throughout the United Kingdom, what steps is my right hon. Friend taking to ensure that businesses which grow to VAT level understand their responsibilities?

    Mr. Major I think that the small business sector in recent years has shown that it understands its responsibilities very well. It will also react favourably to the fact that we have the most generous tax structure for small businesses of any country in the European Community.

  • Mr Major’s Parliamentary Answer on the ERM – 26 April 1990

    Below is the text of Mr Major’s response on the ERM (Exchange Rate Mechanism) made on 26th April 1990 in the House of Commons.


    Mr. Frank Field To ask the Chancellor of the Exchequer when he expects the Madrid conditions for exchange rate mechanism participation to be satisfied.

    Mr. Major In due course.

    Mr. Field Do the Government believe that all the conditions for entry, including those related to inflation, will be met by next year?

    Mr. Major We must wait and see, but when the conditions are met we shall join the exchange rate mechanism.

    Mr. Latham What specific features of the Bretton Woods agreement were so successful that we should want to recreate them now?

    Mr. Major I think that we now find ourselves in a different set of circumstances, in which a greater degree of exchange rate stability would be extremely useful for everyone.