The Rt. Hon. Sir John Major KG CH

Category: Chancellor (1989-1990)

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

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

    Mr. Alfred Morris To ask the Chancellor of the Exchequer how many letters he has received from small businesses about the level of interest rates.

    Mr. Major A small number each month.

    Mr. Morris Will the Chancellor explain to people who run small businesses how a rise of over 100 per cent. in the number of firms going into receivership caused, they say, largely by the Government’s policies of high interest rates and the uniform business rate, helps Britain prepare for the challenge of 1992? If a doubling in the number of firms going bust was not the purpose of those policies, will he now at least urgently address himself to their undoubted effects?

    Mr. Major The most crucial element of all for 1992 is to make sure that by then we have a competitive economy and much lower inflation than at present. That is the purpose of the Government’s present monetary policy. The right hon. Gentleman quotes the number of companies going into receivership; he might equally have quoted the net number of new companies which is running at a record level of 1,300 each week.

    Mr. Ian Stewart Will my right hon. Friend assure the House that whatever representations may be forthcoming from business, he will not consider reducing interest rates until it is clear that inflationary and monetary pressures are at last abating?

    Mr. Major I am entirely content to give my right hon. Friend that assurance.

    Mr. Radice Has the Chancellor noted the Treasury and Civil Service Select Committee report that was published today, in which we say that the level of interest rates has a major impact on the timing and level of investment? Is not there a case for the Government not to rely so exclusively on interest rates in managing the economy?

    Mr. Major The hon. Gentleman will also be aware that interest rates are a powerful counter-inflationary weapon. It is precisely for that purpose that we believe that monetary policy is so important. I must echo to the hon. Gentleman what I affirmed to my right hon. Friend the Member for Hertfordshire, North (Mr. Stewart): interest rates will have to remain high until I am confident that inflation is on a downward trend.

    Mr. Burt Does my right hon. Friend recognise the damaging connection between high public expenditure and interest rates? In particular, does he share my concern about the impact of high local authority expenditure on public expenditure generally? I am sure that he will have noticed that the high-spending authorities are Labour controlled. Does he share my worry about the impact on interest rates in the future if a party that is committed to high local expenditure should again get its hands on the Treasury?

    Mr. Major I entirely share my hon. Friend’s view. That matter will he watched carefully in the coming months. It is essential that we retain firm control of public expenditure which we intend to do.

    Mrs. Beckett Does the Chancellor recognise that the danger that most people, particularly in small businesses, fear is not that he will prematurely lower interest rates but that he will shortly raise them again? Will he reconsider the use of increased interest rates as the sole instrument of policy, particularly in the light of the recent Bundesbank report which showed that across the major economies of the world credit controls play a useful, if minor, role as a direct alternative to the use of interest rates alone? Will he assure the House that he is not waiting until 4 May to increase interest rates?

    Mr. Major I am not entirely sure that the hon. Lady carried all her hon. Friends with her in every aspect of her question, which she founded on a misconception. Monetary policy is backed by fiscal policy, and must remain so.

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

    Below is the text of Mr Major’s response on TESSAs (Tax-Exempt Special Savings Accounts) made on 26th April 1990 in the House of Commons.

    Mr. John Greenway To ask the Chancellor of the Exchequer what representations he has received about TESSA.

    Mr. Major This innovative proposal has been widely welcomed.

    Mr. Greenway The explosion of credit in recent years has not been matched by a similar growth in personal savings. Does my right hon. Friend agree that tax concessions can play an important role in encouraging individual savers, and that is why the TESSA scheme and the abolition of the composite rate have been so warmly welcomed? Does he agree that it is important to promote that new scheme next year to people who do not save now so that there will be a growth in savings and not simply a replacement of other deposits to take advantage of that valuable tax concession?

    Mr. Major My hon. Friend makes an important point. There will certainly be an element of dead weight cost in the new scheme, as I acknowledged from the outset, but I hope that it will be widely promoted to encourage people who at present do not save to do so. That would be wise economically and socially.

    Mr. Boateng Will the Chancellor step back for a moment from the paean of self-congratulation on TESSAs and reflect on their impact on the competitive position of friendly societies, which have made such a considerable contribution over the years to encouraging the very small savers whom we want brought into savings schemes? Will he consider raising the exempt limit on deposits for friendly societies, and will he legislate at an early date and bring into force the recommendations in the Green Paper? We do not want Green Papers alone, we want action.

    Mr. Major Green Papers need to be considered. As for friendly societies, the hon. Gentleman will be aware of the measures in the Budget, to which I have nothing to add at present.

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

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

    Mr. Kirkhope To ask the Chancellor of the Exchequer what discussions he has had with the pools promoters about his Budget.

    Mr. Tredinnick To ask the Chancellor of the Exchequer what discussions he has had with the Football Trust about his Budget.

    The Chancellor of the Exchequer (Mr. John Major) Following the Budget statement, officials met the Football Trust and the Pools Promoters Association to discuss implementation of the proposed reduction in the rate of pool betting duty. Both organisations welcome that and I am confident that they will meet the conditions for reducing the duty. Negotiations are proceeding to that end.

    Mr. Kirkhope Although I welcome the progress, will the requirements to distribute the funds according to the differing needs of clubs be met through the Football Trust? For example, at the moment Leeds United is storming back into the first division, where it belongs, but other smaller clubs such as Halifax, Huddersfield and even Stockport County may have different requirements which have to be met.

    Mr. Major I congratulate my hon. Friend on the success of Leeds United, and I look forward to seeing them lose at Stamford Bridge next year. The Football Trust is committed to a fair distribution of benefit and duty reductions according to the differing needs of clubs. It has also undertaken to account separately for the moneys received and distributed.

    Mr. Tredinnick I am most grateful to my right hon. Friend for his reply. We welcome that in Leicestershire and in particular in Bosworth. Will he give an undertaking that Leicestershire will be considered most carefully under those proposals?

    Mr. Major I assure my hon. Friend that the Football Trust will carefully consider comparative needs before distributing resources.

    Mr. Tony Banks As the Chancellor of the Exchequer is Chelsea football club’s second best-known supporter, will he guarantee that he will declare an interest as Stamford Bridge could do with some of that additional money, and he and I could enjoy the additional facilities that would be provided?

    Mr. Major As the hon. Gentleman is undoubtedly Chelsea’s best-known supporter, perhaps we should declare a joint interest.

    Mr. Skinner The Chancellor said that the reduction in duty will be granted to those in need on the basis of ability to pay. If he can do that for the football pools, why cannot his right hon. Friends do it for the poll tax? As some of those football clubs are owned by very wealthy people, will he make sure that the Government are not bailing out people such as Robert Maxwell and his friends?

    Mr. Major There are some temptations that even I can resist. The hon. Gentleman’s ingenuity stretches matters a little far when he refers to the community charge. But the Football Trust made it clear that it is entirely committed to a fair distribution of benefit and duty reductions and I am confident that that will be achieved.

    Dr. Marek The Chancellor will be aware that the Government have designated as international grounds Wembley, Roker Park and a ground in Belfast. Those grounds will require extra money because they have extra commitments. Why have not the Government designated any ground in Wales for international status?

    Mr. Major I am not sure whether that is a matter for the Government and I am certain that it does not arise on this question.

  • Mr Major’s Written Parliamentary Answer on ECOFIN – 25 April 1990

    Below is the text of Mr Major’s written Parliamentary Answer on ECOFIN on 25th April 1990.

    Mr. Norris To ask the Chancellor of the Exchequer if he will make a statement on the outcome of the latest meeting of the European Community’s Economic and Finance Council.

    Mr. Major The ECOFIN Council met in Luxembourg on 23 April. The Paymaster General and I represented the United Kingdom. The Council heard a report on the presidency’s negotiations with the European Parliament on the revision of the financial perspective but without substantive discussion. The German Finance Minister reported on the latest developments regarding economic and monetary union between the two Germanys. There was further discussion of the site and presidency of the European bank for reconstruction and development. I stressed the strong case for London and the need for an early decision in order to begin the bank’s work in eastern Europe as soon as possible. I also emphasised the need to maintain budgetary discipline in the context of agricultural price fixing.

    A brief note from the presidency outlining the necessary procedures for conducting multilateral surveillance of member states’ economies was also agreed, as was the text of a speech to be given by the presidency at the forthcoming meeting of the interim committee of the International Monetary Fund.

    The presidency offered a progress report on discussions concerning the scope of zero and reduced VAT rates, pointing out that there was a need for further work on a wide range of issues before decisions could be taken. In the subsequent discussion, the Paymaster General expressed our regret that no progress was made in accepting the Commission’s proposals for substantial increases in travellers’ allowances between now and the completion of the single market on 1 January 1993.

    A package of three tax measures which would encourage cross-border co-operation in tax affairs was also discussed but without agreement.

  • Mr Major’s Written Parliamentary Answer on Value Added Tax – 24 April 1990

    Below is the text of Mr Major’s written Parliamentary Answer on Value Added Tax on 24th April 1990.

    Sir David Steel To ask the Chancellor of the Exchequer if he will amend VAT leaflet 700/11/88 to include a paragraph on not using VAT form 100 where deregistration applies.

    Mr. Major Customs and Excise is currently reviewing its published guidance and instructions relating to traders deregistering for value added tax following representations made by the right hon. Member to my noble Friend the Paymaster General. That review will consider whether leaflet 700/11/88 is the appropriate vehicle for guidance along the lines suggested.

  • Mr Major’s Written Parliamentary Answer on Money Laundering – 19 April 1990

    Below is the text of Mr Major’s written Parliamentary Answer on Money Laundering on 19th April 1990.

    Mr. Irvine To ask the Chancellor of the Exchequer when he expects to publish the report of the financial action task force on money laundering; and if he will make a statement.

    Mr Major The Government welcome the report of the financial action task force which is published today. A copy of the report has been placed in the Library of the House.

    The task force was established following the G7 Paris summit in July 1989 to review existing measures against money laundering and to recommend improvements. Experts from 15 countries (G7 countries, Austria, Australia, Belgium, Luxembourg, Netherlands, Spain, Sweden and Switzerland) and the EC Commission, the OECD, the IMF and the bank for international settlements contributed to the work of the task force, with the United Kingdom playing a leading role. The report has three main sections: an assessment of the extent and nature of the problem; a review of existing legal and administrative measures against money laundering; and 40 detailed recommendations for further action.

    The report’s recommendations encompass domestic measures implementing the United Nations Vienna convention against illicit traffic in narcotic drugs and psychotropic substances, improvements in laws and administrative practice relating to institutions dealing with large amounts of cash, and strengthening international co-operation. While acknowledging that the recommendations have no formal legal status, the Government fully endorse them. The priority now is for their implementation in all participating countries. In the United Kingdom, the Drug Trafficking Offences Act 1986 already makes drug money laundering an offence and gives the police and Customs and Excise strong enforcement powers.

    Provisions included in the Criminal Justice (International Co-operation) Act 1990, which received Royal Assent on 5 April, will further strengthen these powers and allow the United Kingdom to ratify the United Nations convention. Further measures are also being considered to reinforce our defences against money laundering inside and outside the formal financial sector.

    However, money laundering is an international problem which cannot be tackled by individual countries in isolation; the commitment by the major industrialised countries to strengthen international co-operation in the fight against money laundering is therefore all the more welcome. Our record is good and many of the areas of co-operation covered in the report are already covered by our bilateral agreements to trace, freeze and confiscate the proceeds of drug trafficking. So far agreements have been signed with 13 countries and negotiations are in progress with several others.

  • Mr Major’s Written Parliamentary Answer on Income Tax – 5 April 1990

    Below is the text of Mr Major’s written Parliamentary Answer on Income Tax on 5th April 1990.

    Mr. Denzil Davies To ask the Chancellor of the Exchequer what percentage of the individuals who, in the fiscal year 1989–90, were subject to the composite rate tax, would, if the Budget proposals for its abolition had been in force, have paid (a) income tax at the basic rate and (b) no income tax.

    Mr. Major About 75 per cent. of individuals with composite rate income would have been liable to pay at least some tax at basic rate, and about 25 per cent. would not have been liable to pay any. Wives with composite rate income have been included as taxpayers or non-taxpayers according to the liability of their husbands.

  • Mr Major’s Written Parliamentary Answer on Wales (Official Visits) – 5 April 1990

    Below is the text of Mr Major’s written Parliamentary Answer on Wales (Official Visits) on 5th April 1990.

    Mr. Gareth Wardell To ask the Chancellor of the Exchequer if he will publish the dates on which he has made an official visit to Wales since his appointment to his present post.

    Mr. Major I have not visited Wales since taking up my present post. I intend, however, to visit Wales in July of this year.

  • Mr Major’s Written Parliamentary Answer on the European Commission Budget – 5 April 1990

    Below is the text of Mr Major’s written Parliamentary Answer on the European Commission Budget on 5th April 1990.

    Mr. Denzil Davies To ask the Chancellor of the Exchequer what was the total net contribution to the European Commission budget made in the latest available year by(a) the United Kingdom, (b) the Federal Republic of Germany, (c) France and (d) Italy.

    Mr. Major I refer the right hon. Member to the answer my hon. Friend the Economic Secretary gave the hon. Member for Great Grimsby (Mr. Mitchell) on 22 March 1990 at columns 687-88.

    £ million (Principal and interest)
    1986 1987 1988 1989
    Fixed-interest issues
    1 to 6 and conversion 4.37 4.05 3.77 3.44
    7 25.12 24.41 22.89 20.63
    £ 1.67 1.64 1.55 1.39
    8 12.82 12.32 11.14 9.49
    9 39.71 38.59 35.10 30.03
    10 93.38 90.02 79.99 66.66
    11 38.20 36.56 31.43 25.44
    12 153.11 148.01 126.55 102.92
    Decimal 316.04 313.38 279.13 242.78
    14 801.30 749.18 547.18 388.34
    16 430.39 405.97 288.66 187.11
    18 496.68 459.82 324.64 218.33
    19 784.12 1,899.07 1,145.74 693.94
    21 – 283.24 200.43 132.67
    23 – 333.92 696.82 407.08

  • Mr Major’s Written Parliamentary Answer on the Civil Service Catering Organisation – 4 April 1990

    Below is the text of Mr Major’s written Parliamentary Answer on the Civil Service Catering Organisation on 4th April 1990.

    Mr. Neil Hamilton To ask the Chancellor of the Exchequer what plans the Government have for the future of the Civil Service Catering Organisation.

    Mr. Major I have commissioned a study of future options for the Civil Service Catering Organisation (CISCO).

    The aim of the study will be to examine how CISCO might be placed on a more commercial footing for the future in an increasingly competitive environment for the provision of staff catering.

    The study will centre on possibilities for the transfer of CISCO to the private sector. Operation in the private sector might provide a better basis and greater range of opportunities for building upon the success that CISCO has achieved to date. The options will include the possibility of management and employee participation in the privatisation of CISCO’s business.

    If this approach is found not to be feasible or desirable, the study will consider whether CISCO should be retained within the civil service as a “next steps” agency or whether the delivery of catering services is best devolved fully to Government Departments.

    The study will involve discussions with Government Department clients of CISCO and consultation with relevant bodies in the catering trade. Consultation will also take place with the Council of Civil Service Unions and the joint coordinating committee for Government industrial establishments.