Tag: 1992

  • Mr Major’s Press Conference in Birmingham – 16 October 1992

    Below is the text of Mr Major’s press conference in Birmingham, held on Friday 16th October 1992.


    PRIME MINISTER:

    Let us now move to the second half of this mobile press conference.

    Let me say something about economic and domestic matters and then I will be happy to take whatever questions you have.

    Let me firstly say that I am delighted that the Chancellor has been able to announce today a further 1% reduction in interest rates. Base rates have now been cut from 15% to 8% in just over two years. The impact of those reductions, that they are worth around £9 billion a year off industry’s interest bill and about £100 off the payments of a typical mortgage, has now been a substantial but in my view justified easing of monetary conditions and as a result of that British industry can look forward with more confidence to improving domestic and overseas sales.

    As I said a week ago at the Conservative Party Conference at Brighton, we will be looking to help British exporters take advantage of the new competitive situation in Europe. The Chancellor will be consulting industry in the coming weeks about what the Government can do to help industry further and he will be doing that in the context of our continuing commitment to control public expenditure and contain inflation.

    Britain’s recovery from the recession we have suffered for so long depends crucially not just on domestic circumstances but on world recovery and particularly upon prosperity in the European Community. Over 60% of our trade is with our Community partners and that is where the new jobs and the growth that we want to see is going to come from and that is why it is so important that the Community progresses on the right lines and why today’s Council in Birmingham was so essential. It is also why the Chancellor and I have made it absolutely clear that even though we have been forced to suspend our membership of the Exchange Rate Mechanism we must match the best inflation performance of our competitors in Europe and I believe we are on course to achieve that.

    Let me say something about British Coal and the announcement of large pit closures earlier this week. In answering questions earlier this week, Michael Heseltine said that the decision to agree British Coal’s plans for closure was about the most difficult decision that he had ever had to make. I can certainly endorse that. It was similarly difficult for me but the fact was that we simply could not ignore reality. The demand for coal is shrinking. The electricity generating companies want to buy only 40 million tonnes of coal next year whereas British Coal would produce 88 million tonnes of coal. Shift after shift, miners have been coming up to see piles of unwanted coal growing day by day. Stocks at the present time are increasing by more than 1 million tonnes every month and as a result of that, we have been spending £100 million a month of taxpayers’ money on keeping pits open even though the products of those pits – the coal – had no market and was not likely to have any market in the future.

    Why did we make the announcement now? We made the announcement sooner rather than later because we felt it right to remove uncertainty and because we did not believe that we would make a difficult decision easier by putting it off. There were rumours, there were leaks. Many people in the industry had been expecting difficulties in their own particular pit for a long time and it was getting to be an increasingly debilitating and difficult position to sustain.

    What we have done is to announce one of the most generous redundancy packages that we have ever seen. It is up to £1 billion plus a package of special measures to help the areas that have been affected by the closures. Those special measures include special training, help in finding new jobs, new factories, assisted-area status for some areas and fresh funds from the European Community. The talk about RECHAR this year overlooks the fact that it will be possible to apply for RECHAR next year from the European Community when the funds in that bloc are replenished.

    Michael Heseltine will be announcing more details about this special programme in his statement to the House of Commons on Monday but I can say to you now that there will be an immediate, closely-targeted programme of assistance led by the Training & Enterprise Councils – the TECS. They are employer-led and they are linked to local communities and we think they are the best mechanism and we believe they will do a fine job in helping in those areas.

    Nobody could do anything other than regret the anguish of the mining families. I understand that and I know and I regret the anguish faced by anyone who finds themselves made unemployed. Whether they were expecting it or not, it is always a shock when it happens but I do believe equally firmly that it would have been wrong to keep producing coal for which there is no market and for which, alas, there is going to be no market in the future. The important thing that we now have to do is to get on with helping the miners and their families and get on with beating the recession and that is what we are seeking to do.

    I know a number of questions arise from that and I will be happy to take as many of them as I can.

     

    QUESTIONS AND ANSWERS

    QUESTION (ELEANOR GOODMAN – Channel 4 News):

    You talked about the reality in terms of the pit closures but isn’t the political reality that you have a large section of public opinion against you, you have a large section of the Tory Party against you and that you are going to have to rethink otherwise you risk being defeated in the House over it?

    PRIME MINISTER:

    Nobody would have wished to close those mines unless it was essential. Nobody would have wished to do that. It is not a pleasant thing to do. Nobody gets any pleasure from it whether you are part of those who face the anguish of being without a job or whether you actually have to make the decision to do it. It wasn’t easy for British Coal, it wasn’t easy for the Government and none of us did it with any pleasure whatsoever.

    What we have seen in the mining industry over many years is the steady shrinkage of an industry because of the collapse of demand. If one takes, for example, the 1970s, there were around 30,000 mining jobs lost each year on average right the way through the whole of that decade simply because of shrinking demand.

    What we need to do is to deal with the problem, remove the uncertainty and seek to regenerate hope and employment in those areas and if I can give you a practical illustration of this, just a few weeks ago I visited Wales and I visited the site of the old Shotton Steelworks and many of you will remember that at the beginning of the 1980s, 10,000 jobs all on a single site were lost in a single day.

    What has happened as a result of the regenerative measures there is that there is now a modern industrial estate there providing secure, permanent employment for the people who once worked in the Shotton Steelworks, mainly medium-tech, high-tech, exporting all over the world and providing a rich diversity of employment for the people who work there. Misery and despair when it closed – a better prospect for the future as a result of what has subsequently happened. That is what we will seek to do in the areas that have been so badly affected by this closure but I repeat the point: it is not possible to continue to produce something for which there is no market and for which there will be no market and the money that would have been spent on artificially subsidising that for whatever length would not be available either for regenerating those areas or for any other public expenditure purpose.

    QUESTION (Peter Riddell – THE TIMES):

    Prime Minister, two parts: one, what has changed since earlier in the week when the Bank of England signalled that there would be no change in interest rates and the Chancellor was cautious to the Treasury Committee to justify a one-point cut in interest rates? Secondly, what form will the Chancellor’s discussions with industry take and what type of areas does that imply?

    PRIME MINISTER:

    The Chancellor’s discussions with industry will be with leaders of industry and they will be face-to-face discussions. The Chancellor will be inviting them to meet him and discuss a range of issues. I think I will leave the Chancellor to set out the details he will cover. The outcome of that I am not prepared to speculate about until we have had discussions.

    As to the reduction in interest rates, the Chancellor set out in an addendum attached to his press statement today precisely why we thought it was appropriate to cut interest rates at the present time: M0 close to its target range; M4 at its annual rate of growth at 5 1/2% is at the lowest level it has been for 20 years; M4-lending also growing very slowly. We all know the impact of the recession on house prices also showing there is no inflationary pressure in the system. All the surveys of inflationary pressure show that it is continuing to be downward pressure. The Producer Price Index rose by only 2.6%. All of that together suggests that there is scope for an easing of monetary policy and it was when reviewing all that that it seemed appropriate to ease monetary policy now. There is always a choice about whether one does it last week, this week or next week and the reality is you have to make a judgement at the time as to when it is appropriate. Judged by the way the markets have reacted today, they too thought it was appropriate and certainly forward rates would seem to indicate that as well.

    QUESTION:

    Prime Minister, it strikes me that you have no clothes. The Germans subsidise their coal industry, you subsidise the nuclear industry. You are throwing 30,000 miners out of work at once with immediate effect it seems to them. Why can’t you phase it out? Why can’t you act more slowly? Why so precipitate?

    PRIME MINISTER:

    Let me take those points and let me put it in a wider context than you did:

    The Germans will have to phase out their subsidies; they are no longer legal and they will have to be phased out. If one looks elsewhere, you will find in France the coal industry, once a very big coal industry, has now virtually gone. If you look at Belgium, you will find the industry has virtually closed. We will still have in the United Kingdom a significant coal industry, not only a significant coal industry but one that will be viable provided we no longer operate with pits that are not viable that have not only the effect of making losses in those pits but inhibit the profitability of other pits elsewhere.

    I know it is a painful decision. If it could have been avoided, we would have avoided it. At the very last moment before the decision to go ahead was announced by British Coal, we reviewed the whole matter entirely in two aspects: firstly, whether it was right in strategic terms, whether we were certain that we wouldn’t need that coal capacity in the future and secondly, to make absolutely sure that we were not closing marginal pits that could themselves survive and just before the announcement was made called together the Ministers affected and we had a lengthy and detailed examination of everything that underlay that decision to make sure that we could satisfy ourselves that it was a proper decision to take.

    I do believe that the sooner we take those difficult decisions, the sooner we can embark upon the lengthy but necessary task of putting back jobs that are self-sustaining and are there because there is a market for what they produce in the areas that at present are served by those mining jobs which in reality no longer are needed for their product is no longer wanted.

    QUESTION:

    Following the Rio de Janeiro World Environment and Development conference where it was agreed to return emissions to the 1990 level by the year 2000, could I ask two things: first of all is the present closures policy in the coal-mining industry a direct reflection of that commitment given at Rio and repeated in Mr Howard’s White Paper a fortnight ago; and in the reduction of emissions is there a place for the Dutch energy policy which seeks to limit the greenhouse effect by, in line with the Maastricht Treaty, having better European energy grids and for example a cable taken through the Channel Tunnel to make a wide insurance of energy sources so that we may not be dependent, as we have been hitherto, on one particular source?

    PRIME MINISTER:

    On the answer to your first question the answer is no, it is not directly related to any commitments made at Rio or elsewhere. I suppose you could argue in a sense it is indirectly related because one of the reasons why the demand for coal has fallen is that the consumer demand for non-fossil fuel energy has grown dramatically, both nuclear and of course non-coal fossil fuel and gas, the demand for both of those. If you look at the scale of demand by the consumer for different forms of energy you will see that both of those have grown and coal has correspondingly fallen. So I suppose there may be an environmental impact in the demand of the consumer but it was not any part of the decision that the government itself made. We reflected what the market itself was saying.

    As far as the Dutch energy policy is concerned, I am not really sure that I am in a position to answer that with any authority so if you will forgive me I will not attempt to do so.

    QUESTION (Dan Revive, CBS News):

    If I could try again with Elinor Goodman’s question which is on the pits issue, how will you cope with public opinion being against you on this issue as well as some Tory MPs and the press that normally supports you?

    PRIME MINISTER:

    I push aside the last part. It was hardly to have been expected that public opinion would welcome a decision like that, who would possibly welcome a decision like that or having to make a decision like that, of course people do not like it. There is a very great respect in this country for the mining industry, it is not a job which most people would wish to do themselves and if I may say so I have yet to meet a miner who would wish their son to be a miner. So there is very great respect in this country for people in the mining industry and so of course there will be great disquiet at what has actually happened.

    As far as Parliamentary opinion is concerned, of course Parliamentary opinion is concerned about what has happened. But what Parliamentary opinion of course yet does not know are the full reasons behind the closure that will be set out both in the statement next week and in the debate that we will have next week, and also of course the measures that will be taken to assist those particular areas.

    Although it is a tremendous shock when so many jobs of this sort go in a single way, it is the fact, and the miners will concede the fact, that they know that many of those pits had only a limited life and over the last few years there has been a constant closure of pits, whichever government has been in power, as it happens Conservatives have closed rather fewer pits than the Labour Party in government. And the figures I gave you a moment ago, 30,000 mining jobs every single year in the 1970s, is an indication of the economic trend. It is not suddenly something that we have woken up, rubbed our eyes and decided to do something beastly to the mining industry, if it was not economically unavoidable we would not have done it, but since it became economically unavoidable we thought it better to do it cleanly and quickly and then be in a position to put measures to alleviate the difficulty and help regenerate the areas in place. I think that is the right way to do it even though I understand it causes great disquiet and great anguish to the people concerned.

    QUESTION (Chris Moncrieff, PA):

    Is the proposal final, will there be any going back, any amendments or any changes to the timetable?

    PRIME MINISTER:

    I do not anticipate any. I know many people are very worried, they say well why have you taken such an unpopular decision? If I may say to some of the people who say that, they cannot say to us one day that the government have to take decisions, you must show leadership and take decisions, and then the next day criticise us for doing something that everybody would have wished to avoid. We did it because it was necessary and only because it was necessary and economically unavoidable for the reasons I set out a moment ago.

    QUESTION (Alistair Campbell, Daily Mirror):

    What do you say to a miner who voted for your party because you said vote Conservative on Thursday and the economic recovery continues on Friday, and what do you say to all the others who have been betrayed and let down day after day since the election?

    PRIME MINISTER:

    I think we made it perfectly clear at the time of the election that we thought that recovery was beginning to come, and we were not alone in that. There have been two occasions when recovery has flattered to deceive, in the summer of 1991 and then in spring of 1992. But we still intend to get permanent sustainable recovery. It is very easy sometimes to buy short-term popular decisions at the cost of long-term difficulties. I have consistently made it clear that what we are seeking is long-term, permanent, sustainable growth. I do not want to see inflation take off again and I want us to make sure that we are in the best possible circumstances to weather any future international economic difficulties, quite apart from domestic difficulties.

    Now that is not easy and it is not quick and it is not painless, but that is what we believe we have to do and those are the policies we are seeking steadily and daily to put into place. It is not all that long ago when people were saying: interest rates are 15 percent, when will they ever get down – they are now 8 percent; it is not all that long ago when inflation was nudging 11 percent and people were afraid we were going into hyper-inflation – it is now down to 3.6 percent. Those two things are absolutely key to the recovery that we need if it is to be sustainable.

    As to the general economic circumstances, it is not just a British problem, I do not say that to push aside the British problem, but if you look at what is happening in the United States or Japan you begin to see the scale of what is happening all around the world. If you look at France, they have 3.75 million people unemployed, 13 percent interest rates, 10 percent real interest rates. If you look at Germany their economy is slowing down at an astonishing rate. Nobody here I think will need telling about the economic difficulties in Italy or the problems that exist in Spain. They are very painful, not just domestically, but abroad. And of course all our economies are interlinked, there is an impact one upon the other, and it is a combination of those factors that has made this particular recession so painful and so lengthy in this country and in others. But what we need to do is to stick to the policies that will get us out of it in a form that will ensure we do not dip straight back in it 9 months or a year later, that would be unfair and that I am not prepared to take a risk in doing.

    QUESTION (French Tribune):

    About the decision to organise a meeting between the Chancellor and leaders of industry, is it not the whole point of having a Department of Trade and Industry and a Secretary of Trade and Industry to take the pulse of industry to help them, why do you have to resort today to this somewhat unusual channel?

    PRIME MINISTER:

    It is not that unusual, we frequently meet businessmen and we frequently discuss with them their concerns and what they think is necessary. But we are facing, as I indicated in the question I just answered, circumstances that are not wholly unprecedented but very unusual economically at any stage since the Second World War, so we are in very unusual circumstances. In those very unusual circumstances I think it is wise to step up a gear with the consultation with the people who are in the front line and that does, I think, mean an extra higher level between industry and commerce, both with the President of the Board of Trade, whose regular routine this is, and also with the Chancellor of the Exchequer and that is what the Chancellor proposes to do. I think it is a worthwhile initiative and one that will be welcomed by industry.

    QUESTION (David Langstone):

    This Council was called after what has been loosely termed the turmoil in the markets. We have heard very little discussion whatsoever today about economic matters, I know that you have taken subsidiarity to your heart and shelved that over to EC ECOFIN Ministers, but could you tell us what you have discussed on financial and economic matters today, I cannot believe that you and Chancellor Kohl did not talk about the economy, can you tell us something about the reason for this meeting being called which now seems to have slipped off the agenda? And finally, did you talk about the environment?

    PRIME MINISTER:

    No, we did not talk about the environment, that was not on the agenda today. The substance of this meeting today was set out in my statement earlier, it was not just the question of the turmoil in the markets. The work that needs to be done to discuss that turmoil in the markets is not the subject of a general discussion in the course of one day between Heads of Government, there is a great deal of detailed work to be done. And as I indicated in the earlier press conference I had, we have commissioned that work to be done by the Economic Ministers, by the Finance Ministers and by the Central Bank Governors, that work will be done and then reported to the Heads of Government. It is very important that we got the authority of the Community to proceed with that work, that is what we have done. As to what private conversations I might have had with Chancellor Kohl, I am sure you will understand that I have no intention whatever of telling you about those.

    QUESTION:

    [Indistinct] on the problems of Europe’s economy?

    PRIME MINISTER:

    I think the over-view is self-evident in many of the things we have said, many of the things that are set out in the declaration. The ingredients that are necessary in the European economy I think are fairly clear. One of the ingredients that has gone, not just in Europe but everywhere, is the confidence factor for investment. If you look, to take a British example to illustrate the point, at the savings ratio in the United Kingdom, it has dramatically improved over the last year, that suggests that the very high levels of debt that were built up at the end of the 1980s, which were the principal cause of the recession, are now being liquidated. But because of the continuing uncertainty, people are not spending the extra money that they have got saved and it is when they begin to spend that retail sales, housing and the whole of the domestic market begins to move, and you get that benevolent cycle in which confidence returns.

    You need several things for that, you need general confidence, you need general stability and sometimes there is a catalyst to start it, but that will vary as one comes out of different recessions.

  • Mr Major’s Article on Europe – 15 October 1992

    Below is the text of Mr Major’s article on Europe, issued on 15th October 1992.


    PRIME MINISTER:

    The futile argument about whether Britain is part of “Europe” or not has resumed here and there both in Britain and on the European mainland. It is a debate for political theorists and people living in ivory towers. It has nothing to do with historical, political of cultural reality.

    What happened on the mainland has always had an immediate impact on Britain’s domestic politics, as well as its foreign policy. Britain too, paid the price of blood in the two wars which have torn Europe apart in this century. Britain’s contribution to European literature, philosophy, political thought and practice, is an essential part of the unique civilisation of our European continent.

    It is absurd to talk as if Britain could detach itself voluntarily from the mainstream of European affairs. It is just as absurd to talk as if Britain could in some way be expelled from the European mainstream. Talk of a “mini-Europe” without the British is disreputable. Neither the Community nor any other institution can claim the “European” title if it is incapable of accommodating one of Europe’s most important countries. Britain is central to the affairs of Europe, and so it will remain. I have found no serious statesman on the European mainland who thinks differently.

    Nevertheless Britain’s postwar relationship with the rest of Europe has not been entirely happy. After the war a group of far-sighted European statesmen set up the European Community in order to ensure that the Europeans would never again try to destroy one another and their common civilisation. This was a noble objective, and it has been achieved. The British stood aside from the process in the 1950s; a mistake for which we have been much criticised ever since.

    But we learned from our mistake very quickly, and applied to join the new Community only four years after it had been founded. The Original Six then made an even bigger mistake. The British application was twice rebuffed. Britain was eventually allowed in only after twelve whole years had passed, and under financial arrangements that were patently inequitable and had to be renegotiated. It is hardly surprising that the British felt uncomfortable in a body where they were accused of being “un-European” whenever they expressed their own views about the way the thing should be run.

    We all made mistakes. I have no intention of distributing praise or blame. But the emotions generated in those years still cast a shadow. We respect the arguments of those who want to go now for the most far reaching interpretation of the goals of political and economic union. But our centuries-old experience in building a stable and peaceful political society has led us to be suspicious of attempts to force the pace of history.

    There is a metaphor that the Community is a bicycle that will fall over if not ridden full speed ahead. But if you cycle too fast you may hit a stone and crack your head and lose direction. The British believe that durable political institutions are like coral reefs; best built slowly but surely. There is nothing “un-European” about that.

    In recent months Europe has hit just such a stone. It is quite clear ordinary people – not only in Denmark and France, in Germany or in Britain – are unhappy at the pace of events. They are dissatisfied with the explanations they have been given by their political leaders. They fear they are being asked to give up their cherished national traditions and their political institutions, their freedom to manage their own affairs as they see fit. They feel they have been taken for granted, rushed by events, and bamboozled by contorted bureaucratic formulae which bear no relation to the everyday language they use themselves.

    These people are not ignorant. They are not foolish. They are not opposed to European cooperation. It is now up to their leaders to explain what they are doing, in language that the ordinary people of Europe can understand, and to carry forward the building of our common institutions at a pace and in a manner which they can accept.

    So the first lesson of the last few months is that the procedures of the European Community must be opened up and brought closer to ordinary people in all the European countries. The European Commission has an essential role in initiating proposals and ensuring fair play between the Community’s sovereign members. But it must consult those who are affected by its proposals in far greater depth before it brings its ideas to the Council of Ministers. It is the Parliaments in each member state which guarantee our national freedoms, each in their own unique way. All of us must get away from dreadful Eurojargon, the contorted language of European communiques which does little to enlighten its leaders.

    Second, we need to be much clearer about the tasks which need to be done by the European Community, and those which should be left to the legislative and executive institutions of individual countries. This is what is meant by “subsidiarity”, itself an unattractive piece of Eurojargon which nevertheless embodies an important principle.

    Above all, we need to be clear about where the European Community is going. There are those who argue that it will eventually become a Federation, a United States of Europe with a single government, a single economy, a single army. I simply do not believe it. The argument is based on a false analogy with the history of the United States of America. The USA grew out of a confederation of thirteen small colonies with a common language, common law, and a common political tradition. Even so the Americans did not establish their unity without a bloody civil war.

    The members of the Community are engaged in an enterprise unique in history; to create amongst the nation states of Europe what the authors of the Treaty of Rome wisely described in deliberately vague language as “an even closer union” of the European peoples.

    A crucial part of that enterprise is the Single Market for which businessmen throughout Europe have been pressing for many years. Our common effort to create the biggest free trade area in the world is well on its way to completion. It offers opportunities to all Europeans, to create new jobs and greater prosperity.

    The Exchange Rate Mechanism was intended as an instrument for promoting stability. But the events of the last few weeks have demonstrated beyond doubt that the ERM has been operating under excessive strains. Two of its members have had to suspend their membership. A third currency has been devalued, and exchange controls activated in three member states. Barriers to trade in Europe have gone up, not down. That is now what any of us intended. We must now take a serious look at the conditions under which the mechanism has operated. The pound will not return to it until we are convinced that the mechanism can operate in the interests of all its participants.

    Some people hope, and others fear, that the Economic and Monetary Union proposed on the Maastricht Treaty is a step towards a Federal Europe. I have already explained why I believe that the hopes and fears are unrealistic. A single central bank and a single currency – firstly under the control of all the member states – might make the conduct of monetary policy more responsive to the needs of all these states. But neither can come into being until the economies of the European countries are much more closely aligned than they are at present.

    At Maastricht I was sceptical about the timetable proposed, and determined that the final decision should be left to the British Parliament. I am not surprised that the Bundestag, too, wishes to be heard at the decisive moment. When the time comes, I would expect other Parliaments and other political leaders to say the same. That is right and healthy, the arrangements set out in the Maastricht Treaty will simply fail unless they are backed by the clearly expressed will of all the member states.

    The Maastricht Treaty is not perfect, it could not hope to be, since it seeks to reflect a consensus of twelve sovereign states. Nor does it exhaust the European agenda. There is much to do beyond our discussion of the future of Maastricht. There are tasks for the short term which will enhance our common prosperity: the completion of the single market to remove the barriers to trade with Europe; a GATT agreement to lower the barriers to international trade. But there are tasks for the long term as well. Above all, those of us who are already engaged in building a peaceful, prosperous, outward-looking and democratic Europe have a duty to our fellow Europeans who are still outside the Community.

    It is to everyone’s advantage that we should extend membership as soon as possible to the prosperous democracies of EFTA. But I go further than that. The Community has already shown what the path of cooperation meant to the new democracies of Spain, Portugal and Greece. It is our duty to bring the same benefits to the new democracies emerging from the darkness of Communism. It will be a complex and protracted task. But if we do not embark upon it, we will not be forgive by history.

    The Maastricht Treaty maps out a way forward for the Community to advance together. It sets attainable goals, and reasonable aspirations, for the years ahead. I negotiated it under the authority of the British Parliament, and it formed part of the mandate upon which I and the Conservative Party won the election last April. I shall bring it back to the British Parliament in the very near future. The debate in our Parliament will be serious, detailed, protracted, often noisy. Our Parliamentarians rightly want to know exactly what the Treaty will mean in practice for our country and out future. But I have no doubt that the Treaty will be passed.

    One thing must be clear beyond a doubt. The Treaty cannot come into force unless it is ratified by all Twelve member states of the Community. That will not happen unless all member states are convinced that the Treaty is in their interest. It is pointless to try to force any member state – however large or small – into supporting European policies in which it does not believe. To do so would be to undermine that common purpose on which the achievements of the Community depend, and without which the Community cannot stand.

  • Mr Major’s speech to 1992 Conservative Party Conference – 9 October 1992

    Below is the text of Mr Major’s speech made to the 1992 Conservative Party Conference on 9th October 1992.


    PRIME MINISTER:

    Well it hasn’t exactly been a dull week has it? What we have seen has been democracy in action. And this Party is stronger and healthier for it.

    Mr President, someone – I forget who it was – said that nothing that’s good is ever easy. I’m beginning to know what they meant. Politics is a rough, tough, unpredictable business – and troubles come in bunches. But you have to keep your nerve. And remember that when you come out of the teeth of the gale you’re tougher, more battle hardened and the weather is better.

    Mr President, in this stormy period, some people seem to have forgotten something rather important. Just six months ago this very day this Conservative Party won the General Election. We did so against all the odds. Everyone said we didn’t have a chance. The opinion polls – and in those days people actually believed them! – they were against us. The pundits were against us. They said history was against us. They all got even more egg on their faces than I did. Because they left something out of their calculations. 14 and a half million British people were with us. We got more votes than ever before in any election in the whole of British history.

    So why was it that those television exit polls were so wrong? Why didn’t the commentators see? Why didn’t the experts see? For that matter, why didn’t the BBC?

    There were two reasons why we won that record level of support. First, it was the principles we all stood for – the principles we stand for still. And second, it was the people who worked for that victory. You. And thousands like you. Who did so much, gave so much, campaigned so hard together. Mr President, there is one lesson we should never forget. When the Conservative Party is united, it is an irresistible political force.

    We Conservatives have great hopes and dreams for our country. But to make them reality we must win the battles we care about. Lift our country back into growth. And, in all we do, create the society we want for our children and the future.

    But before I turn directly to the great decisions that face us, I’d like to say something about someone not with us today – Chris Patten. We planned the Election in the early days of January. We knew we would go into it behind in the polls – and we were confident we’d come out of it ahead. But we knew, too, that for Chris to run the Election and hold Bath would be desperately difficult.

    So it proved. He’s a huge loss, not just to us, but to British politics. It was typical of him to decline a by-election, turn down a peerage, and take one of the toughest jobs in the world – as Governor of Hong Kong.

    Chris, win for Hong Kong, just as you won for us. And when you come back, come and join us. In Government. Because you’ll still be welcome and we’ll still be there.

    Someone else was a tower of strength through that Election. Norman Fowler. He was always at my side. Always there – with everything from beef burgers to wise advice.

    But every time I went out with Norman, something very curious happened. People threw eggs at him. But they kept missing him and hitting me.

    There are moments when great truths become evident. And this was one. A man who could duck so fast so often was clearly the right man for Central Office. Norman – it’s good to have you back.

    But, above all, I must thank someone who is not a politician. Someone to whom my debt is too personal to express fully. She is here today – just as she was on every day of the Election Campaign. I mean of course, Norma.

    Her role was even bigger than you may think. If I hadn’t met her on April 9th 1970, I might never have picked April 9th 1992. All those oceans of ink guessing the election date! Wasted! If only they’d asked Norma!

    Mr President, in all our Conferences there is theatre. You expect to hear us expose our opponent’s policies. Expect none of that today. For Labour and the Liberal Democrats are utterly irrelevant. let us leave them on the sidelines – where they are and where they deserve to be. I intend to address myself to the country, the Conference and the Conservative Party.

    Mr President, debates over our place in Europe have always touched raw nerves – in our Party and in our country. I don’t find that surprising. There are gut issues at stake. Opinions are passionately held. It is right to speak plainly and directly, even if for some it is uncomfortable. People must know exactly what’s at stake. The great dangers for our country and – as Douglas Hurd pointed out so graphically on Tuesday – for our Party if we make the wrong choices. And the right choices can only be based on facts. They can never be built on fears.

    Of course, emotions run high. We saw that from both sides in the great Conference debate earlier this week.

    For many of you, I know, the heart pulls in one direction and the head in another. There is nothing that can stir the heart like the history of this country. It is part of us. Nothing can change that. But it’s a different world now.

    Our families are growing up in a different age. They know we can’t pull up the drawbridge and live in our own private yesterday. They know we live in a world of competition – and we can’t just wish it away. Change isn’t just coming, it’s here. I want Britain to mould that change, to lead that change in our own national interest.

    That’s what I mean by being at the heart of Europe. Not turning a deaf ear to the heartbeat of Britain. But having the courage to stand up and do what we believe to be right.

    Right for British industry, right for British jobs, right for British prosperity.

    During the summer, when I was in Cornwall, a lady came up to speak to me. “Mr Major” she said, “please, please don’t let Britain’s identity be lost in Europe”. She didn’t tell me her name. But she spoke for the anxieties of millions. She spoke for this country. She spoke for me.

    So let me tell this Conference what I told that lady in Cornwall. I will never – come hell or high water – let our distinctive British identity be lost in a federal Europe.

    Let no-one in this Conference be in any doubt, this Government will not accept a centralised Europe.

    And if there are those who have in mind to haul down the Union Jack and fly high the star-spangled banner of a United States of Europe, I say to them; you misjudge the temper of the British people. And you do not begin to understand the determination of this Prime Minister to put the interests of this country first, now and always.

    Mr President, it’s true, the European Community has centralised too much. It has talked too much about European directives, and thought too little about Europe’s direction.

    But at Maastricht we began to reverse that trend. And at Birmingham and Edinburgh we will carry that further.

    So let me say to the European politicians; if you don’t heed that, you will never build the European Community you want. You will break up the European Community you have.

    You cannot go forward by browbeating Denmark.

    And to those who offer us gratuitous advice, I remind them of what a thousand years of history should tell them, you cannot bully Britain.

    Mr President, I speak as one who believes Britain’s future lies with Europe. But, when I hear assertions from others in Europe, that we or the Danes should sign up on their terms. I’ll tell you what I think. I think they should keep their advice to themselves. Sign up on their terms? Before I was born, if this country hadn’t fought on our terms there’d be no free Europe to sign up to.

    All these are frustrations. They cause great anger. But emotion must not govern policy. At the heart of our policy lies one objective and one only – a cold, clear-eyed calculation of the British national interest. What is right for Britain. What is right for our future. And from that calculation I will not be budged.

    Let me come directly to the issue that has caused such controversy. The Treaty of Maastricht seems to have become enshrouded in myth and legend. Certainly, the Treaty I hear about is not the one I negotiated.

    What are the fears people have about Maastricht? We heard many of them in our debate this week.

    A Single Currency! Under the Maastricht Treaty, Britain is not committed to a single currency.

    Immigration? Immigration policy is specifically excluded under the Maastricht Treaty.

    Jobs and working conditions? I refused to sign up for the Social Chapter.

    Education? The Treaty explicitly rules out any Community interference in what is taught in schools or the way education is run.

    Defence? Defence is kept out of the control of the Community.

    Citizenship? We are British citizens and we will always remain British citizens.

    Conference, if I believed what some people said about the Treaty, I would vote against it. But I don’t. So I’m going to put the real Treaty, the one I negotiated, back to the House of Commons.

    There is one great prize in the Treaty. For the first time we have reached agreement on developing the community in voluntary cooperation between independent nation states. That means outside the Treaty of Rome, outside the jurisdiction of the European Court, outside the competence of the European Commission. We have wanted this principle established for years. And we now have it in the Treaty I signed.

    It is time the distortions were put to one side. It is time to return the debate to reality and away from myth.

    In the Treaty, there was give and take – there has to be in any partnership. But in the end we got what we wanted. Not the agreement our partners signed up to: a better agreement. We obtained for Britain the flexibility and freedom which others signed away.

    When I hear some of the criticisms of the Treaty I think of Don Quixote – you may remember him. He read too many old books and got carried away, fighting imaginary battles. He tilted at windmills in the belief they were giants. He saw things that weren’t there. There has been a lot of that in the current debate on Maastricht.

    Yes, we made concession. But so did our partners. What would they now think of a British Prime Minister who fights a tough negotiation, gives firm undertakings, and then comes back and breaks his word? What would we think of someone who did that to us?

    Who would ever trust Britain again? We would have broken faith. A demeaning position in which no British Government should ever be placed.

    But, far more than that, what is at stake is something practical and hard-headed.

    We wouldn’t just be breaking our word. We would be breaking Britain’s future influence in Europe. We would be ending our hopes of ever building the kind of Europe that we want.

    And we would be doing that, just when across Europe the argument is coming our way. We would be leaving European policy to the French and the Germans. That is not a policy for Great Britain. It would be an historic mistake. And not one your Government will make.

    Let us not forget why we joined the Community. It has given us jobs. New markets. New horizons. Nearly 60% of our trade is now with our partners. It is the single most important factor in attracting a tide of Japanese and American investment to our shores. It is absolutely vital for businesses, big and small – and for our prospects of economic growth.

    There isn’t a single business leader who believes Britain’s interests lie outside. And I hope they will make their views clear – and public.

    But the most far-reaching, the most profound reason for working together in Europe I leave till last. It is peace. The peace and stability of a continent, ravaged by total war twice in this century. Today images of violence and exile are being acted out on the shores of the Adriatic. Where only two years ago the children of a million tourists laughed and played, young men of Europe are locked in a bloody civil war.

    That’s why I want Britain to work in the ’90s for a wider and wiser Community, embracing the new democracies of the East. That is the vision we have for the next generation. And it’s vital for our own security. But it is a vision we will only make real if we’re in there arguing for it, not scowling in the wings.

    Mr President, I’m not starry-eyed about Europe. If I’m starry-eyed, it’s about this country. Britain has always grown and prospered when it has looked outwards – from the time of the First Elizabeth, right through to the Second. Let us then not turn away and put up the shutters – but do what we believe – with faith, and courage and conviction. In the name of the present, and in the name of the future, we cannot sit this one out.

    Some take the view that we must choose between Europe and our friendship with the United States. What total nonsense. Britain is the indissoluble link between the United States and the continent of Europe. We have growing ties of commerce and trade with Europe, but we have blood ties over many generations with our friends in America.

    We in this party will preserve and strengthen our special relationship with America. It is longstanding. Tested in many battles. Reinforced by ties of kinship, language and shared values. Britain and America have stood side by side many times in many theatres of war against tyranny and oppression. On that line we must always take our stand and will, together.

    Eight weeks ago, we decided to send some 2,000 troops to Yugoslavia under the flag of the United Nations. They will bring aid to the victims of that terrible civil war. Without this common effect, we would be seeing in a few months time hundreds of thousands of people – men, women and children in Bosnia – in Europe – dying of starvation, of cold and lack of medicine.

    Britain is already the largest supplier of medicines. And, amidst all the dangers, our RAF Hercules have played a leading part in the airlift into Sarajevo. Those young men know the risks; but they have met them, just as the young men who will keep open the land corridors know the risks and will meet them. We can be proud of them – and we are.

    The safety of these troops will always be first in our minds. They are there for humanitarian reasons. They are not there to hold the combatants apart – and they will not be asked to do so. They are there to fight only in self-defence and then they have authority to use all the force they need.

    We are asking a lot of them. But they know what we know – and what our soldiers in Northern Ireland who stand in the front-line against terrorism also know. There is a duty to be done. I believe it is a duty that this Conference, gathered here in Brighton, would not want Britain, of all nations, to shirk. In these difficult and dangerous tasks they deserve, and will get, this Party’s full support.

    Mr President, I have spoken of our plans for Europe, and our beliefs about Britain’s place in the world. We now have to lead Britain through difficult times at home, as we have done so often in our history.

    You know the things I care about – we all care about – the things I dreamt about as a boy. The chance to get on in life. To acquire knowledge, security, the prospect of a better future – and a life fulfilled. A corner of life that you can call your own. That’s what people struggle for and sacrifice for when they watch their children grow.

    If we’re going to meet those hopes, fulfil those dreams – then we must build a strong economy.

    And looking around the world, we can see even more clearly what makes an economy strong. A Government that secures two things; low inflation and the right climate for business to succeed.

    It is people who create wealth.

    People, not Government. Business, not bureaucracy. Enterprise, not interference.

    But business can’t succeed if Government doesn’t play its part.

    Low taxes – low inflation. Leaving people more of their own money to spend and save. Protecting them from those robber barons of the twentieth century. Inflation and the state.

    I believe – I know – that it was for those tasks that the British people elected us to govern again.

    They didn’t trust anyone else to control inflation. They didn’t trust anyone else with their taxes. They didn’t trust anyone else to keep the state of industry’s back.

    Mr President, we must – and we will – deliver upon that trust.

    But today even the world’s most successful economies face difficulties. In the United States. In Japan. Throughout Europe – yes, and in Germany, too.

    And here in Britain I know how great is the personal hardship that many people are facing. Some have lost their jobs; some their businesses; some their homes. We must pursue policies that will bring hope back into their lives.

    I know how hard people are hit by the misfortune that befalls home after home, family after family, in a recession. Unemployment is a bitter experience. I don’t want a temporary cure. I want a lasting recovery. To come out of this recession safe from the threat of its repetition. If there is one thought that goes through my mind wherever I see this recession Mr President, never again! That’s why we’re looking for long-term solutions. That’s why we’ll take no risks with inflation. And that’s why we will continue to do everything possible to create the prosperity that is the hallmark of a Conservative Government.

    But we must not forget what has been achieved and is essential for lasting recovery.

    Inflation – down from nearly 11% to just over 3.5% in the past two years. And today I can tell you that even the underlying rate – that hard core we have found so difficult to reduce – has come down to 4%.

    Interest rates – down from 15% to 9%. The starting rate of income tax – down from 25% to 20%. Mortgage payments down, on average, 80 pounds a month. All putting more of people’s own money back in their own pockets.

    And, yet, despite that progress, it’s been taking such a long time for things to get going. I know hos frustrating that is. Here as abroad, debt has made people cautious. Slow to spend. That’s made things tough for small businesses. Tough for industry, too.

    That’s what makes British industry’s successes all the more remarkable. Exports – close to record levels. Manufacturing output rising – and productivity at record levels. Investment began to rise in the spring. And even in the High Street, sales have been picking up again.

    It is not enough. It is only a beginning. But now, I believe, we can aim for more.

    With a low inflation rate, we can compete with the best in Europe.

    Let’s not forget how we managed to bring inflation down and the man who did it – Norman Lamont. As he reminded us yesterday, for nearly two years it was the discipline of the ERM that helped us do so. But last month, we faced turmoil in the markets and rising interest rates across Europe. Germany’s troubles had driven European interest rates so high that the mechanism was no longer the servant of Europe’s prosperity.

    But let us not waste time looking back. We have to deal with the world as it is. Let’s take advantage of our circumstances to win new success for Britain.

    With a lower exchange rate, we have a new competitive edge in Europe. And provided we don’t blunt it with inflation, it gives us a real opportunity, in a single European market of 330 million people.

    A market for British computers. British cars. British televisions. British textiles. British services. British skills. The biggest free trade area in the world.

    That’s the market in which British enterprise must succeed. And the Government will back British business all the way.

    Let us return to that old and vivid slogan: British means business. And let me say a little more about what I believe Government can do to make it true.

    First, low inflation. Down to the point where it no longer interferes with the decisions people and businesses have to make in their daily lives.

    Second, we must create an economic environment in which more people are willing to invest their effort, their savings, their skills in new businesses because of the rewards that exist.

    Those who risk their savings should know that if they build up wealth by their efforts, they will be able to keep more of it. What families have worked a lifetime to create, the taxman should never be allowed to destroy.

    Those who build up new businesses must be confident they won’t be stifled by taxation. And we know what that means for Government – it means standing firm against all those pleas for extra public spending. All so attractive to someone – so disastrous in combination.

    Where more is really needed we will spend more. Our plans allow for that. But more for some programmes may have to mean less – for others. Because we have set our limits – and we will stick to them.

    Mr. President, it’s going to be a tough spending round. All my colleagues know it. But they also know they’ve got to do what business does. Protect the quality – cut the cost. We can keep improving our public services – if the public sector doesn’t pay itself what the taxpayer can’t afford.

    It’s too easy – when spending is under pressure – to forget the long term. To let the burden fall on private industry alone.

    We must work with industry, to see whether the public and private sectors working together can do more to invest in our future. More to improve the infrastructure of this country. I know the problems. But it is time to look afresh at whether we can find new solutions.

    But that’s not enough. We must also see what more we can do to help our exporters win for Britain. In the single market – and in the world trading system.

    We are battling for free trade – and to make sure we take the best advantage of it. I want to see British enterprise succeeding across the globe. Winning contracts. Creating British jobs. Generating our future prosperity.

    And as part of this we must do more to lighten the burden of government regulation. Government should stand behind business – not in its way.

    Mr President, this is a battle we’ve been fighting since 1979. But it’s a battle that is never won. And now is the time to mount a new offensive.

    We’re already on the march against the Eurocrat and his sheaf of directives. But you know, it isn’t just Brussels that rolls out the red tape.

    It’s Whitehall. And town hall. Everyone likes to tie another knot. Admirable intentions – disastrous combinations. Piling costs on industry. Mr President, that must stop.

    It’s not just big business that suffers. Far too often, it is the small firms who really suffer. Small firms – fed up with filling in the forms – who feel that it is just not worth being in business at all.

    Of course, we want to have confidence in the safety of the food we eat, the homes we buy, the place we work in, the people who take charge of our children. But when this reaches the point where you may need 28 separate licences, certificates and registrations just to start a business, then I say again, this sort of thing must stop.

    I have asked Michael Heseltine to take responsibility for cutting through this burgeoning maze of regulations. Who better for hacking back the jungle? Come on, Michael. Out with your club. On with your loin cloth. Swing into them!

    You know, deregulation isn’t just about making life better for business. It’s about making life easier for everybody. Take the bureaucratic controls which mean Whitehall decides whether you have the chance to stop off the motorway. Every parent knows what I mean. Next services, 54 miles – when your children can’t make 10!

    They’ve got to go. And so those rules have got to go!

    Or take the system that keeps air fares far too high. It’s absurd that international air travel is regulated under rules set out before the jet airliner was even invented.

    And why should so many people, from all over Britain, have to come to London when they want to fly abroad? I want to see more flights directly out of Glasgow, Manchester and Birmingham and all our regional airports. That’s better for the people who live there – and better for London too.

    Mr President, it is vital that we get the economy back into strong – and sustainable – growth. We can do it. We must do it. But that is only the first of our ambitions for the course of this Parliament. The manifesto that won the Election set out a full programme for five years. Now we’re going to put it into action.

    Ladies and gentlemen, the year 2000 is less than a hundred months away. That, at any rate, is the latest Treasury forecast. I want Britain’s example, its ingenuity, its decency and principle to be in the forefront as we cross that threshold.

    In all we do we must speak to the instincts of the British people. For 300 years, the Conservative Party has reflected those instincts in a way that no other political party has ever been able to match.

    So let’s go out and tell the people about the things we’ll be working for, and fighting for, in the next four years of Conservative Government.

    We’ll be fighting for better public service.

    For services that put the parents, the patients, and the passengers first. Fighting bloody-minded and petty bureaucracy wherever we find it. That’s what the Citizen’s Charter is about.

    We’ll be fighting for good local Government, closer to local people. That’s why in Wales it’s set to be goodbye to the likes of Clwyd and Gwent and back to Pembrokeshire and Anglesey. In Scotland, the Scottish Secretary will be consulting the public on change – but I rather suspect it could be an Ian Lang farewell to monstrosities like Strathclyde.

    In England we will give everyone the chance to put their views on the future of councils like Cleveland or Avon. I can’t predict the outcome. But can you imagine Len Hutton walking out to bat for Humberside?

    We’ll be fighting for better health and social services.

    For a Health Service run by local people in patients’ interests. For more GP fundholders and more of our successful hospital trusts. We want better care for the elderly and vulnerable in the home and the community – wherever they choose to be. And we must make sure local councils respect the wishes of those who do go into homes. People in their last years are entitled to as much choice and dignity as anyone else. Not less choice and no dignity.

    And Mr President, we have all been deeply shocked at the reports of scandals in some social security departments. It’s terrible when children are involved. That’s why we are going to set up regular independent inspection of social work in every council. We will not let vulnerable people and children be put at risk.

    We’ll be fighting to strengthen the rights of ordinary trade union members.

    They must have freedom to join the union of their choice – and fairness in union ballots and finances.

    And, under the Citizen’s Charter, we’re going to give you – all of you – a new right. To take direct action in the courts against those who disrupt public services through unlawful strikes, and hold the country to ransom.

    And we’ve already blown the whistle on one of the last bastions of the closed shop – student unions. The days in which they march and demonstrate at the taxpayer’s expense are numbered.

    When it comes to education, my critics say I’m old-fashioned. Old-fashioned? Reading and writing? Spelling and sums? Great literature – and standard English grammar? Old fashioned?

    Well, if I’m old-fashioned, well, so be it. So are the vast majority of Britain’s parents. And I have this message for the progressives who are trying to change the exams. English exams should be about literature, not soap opera. And I promise you this. There’ll be no GCSEs in Eldorado – even assuming anyone is still watching it!

    I also want reform of teacher training. Let us return to basic subject teaching, not courses in the theory of education. Primary teachers should learn how to teach children to read, not waste their time on the politics of gender, race and class,

    I don’t know if you feel as I do, but I think it is intolerable that children should spend years in school and then leave them unable to read or add up. It’s a terrible waste of young lives.

    We want high standards, sound learning, diversity and choice in all our schools. But, in some – particularly in those inner cities – Isaac Newton would not have learned to count and Anthony Trollope would never have learned to write.

    We cannot abandon the children in schools like these. And we will not. So if local authorities cannot do the job, then we will give the job to others.

    In the place of the local authority which has failed, new Education Associations will be set up to run and revive these schools. Governments have always shied away from it. But I am not prepared to any longer.

    Yes, it will mean another colossal row with the educational establishment. I look forward to that. It’s a row worth having. A row where we will have the vast majority of parents – and the vast majority of good, committed teachers – squarely on our side. They believe what we believe – that children must come first.

    Mr President, there was a time when Britain was a watchword for good behaviour across the world. I want to restore that good name. People are horrified when they see mindless vandalism; old people attacked by young thugs; drunken louts on the rampage, blackening Britain’s reputation abroad. Not only horrified, they’re ashamed.

    Mr President, to excuse crime may seem understanding. But it’s wrong. Sympathy doesn’t curb crime. If society wants to protect itself it must condemn crime, not condone it. We must create a climate in which people know the difference between right and wrong and yours and mine. We must spell out the truth. Crime wrecks lives, spreads fear, corrupts society. It is the fault of the individual, and no one else.

    We are cracking down hard on crime – particularly violence. And that includes – as I promised last year – tough sentences for those who cause death by dangerous driving or drunken driving. Nothing can excuse those who kill in this way. We are taking action. And I hope the courts will respond.

    There’s another problem we are dealing with – the illegal occupation of land by so called “new-age travellers”.

    You will have seen the pictures on television or in the newspapers; if you live in the West Country and Wales you may have seen it on your doorstep. Farmers powerless. Crops ruined and livestock killed by people who say they commune with nature, but have no respect for it when it belongs to others.

    New age travellers? Not in this age. Not in any age.

    They say that we don’t understand them. Well, I’m sorry – but if rejecting materialism means destroying the property of others; then I don’t understand. If doing your own things means exploiting the social security system and sponging off others, then I don’t want to understand. If alternative values mean a selfish and lawless disregard for others, then I won’t understand. Let others speak for these new age travellers. We will speak for their victims.

    Mr President, the things I care most about are the long term things – stability and security at home and in Europe; rebuilding standards in education; the long-term strength – economic and moral – of our nation. Preserving Britain’s pride and purpose and belief in itself. That’s what I care about. That’s what I stand for.

    Isn’t that what we’re all about together in this Party? That’s what our forebears worked for when they built it, when they sent its roots down deep – right into the very heart and marrow of Britain. That’s why we are all in this Party together – you and I.

    That’s why I fought so hard in the Election to keep our country one. For me that is the highest and greatest of our causes – to defend the unity of the United Kingdom, and all that binds our nation together. For unless we stay united, unless we stand together, as a Party and as a nation, this country will never prevail. There is not a man or a woman in this hall, or listening outside, who doesn’t know in their heart that is true.

    So let’s be confident at home and in Europe. Let’s not turn away and say “It’s all too difficult”. Let’s not hang back because we don’t believe our voice will be heard. Right across Europe, now, in this critical hour, people are looking and listening to us and to what we have to say.

    It won’t always be easy. It won’t always be comfortable. But in all we do, there is one thing I will never forget. This is our country.

    What we do, we do for Britain. What we do, we do for the future of our children and for generation yet unborn. For their prosperity and their security, and never for short term political advantage.

    Let us have faith, and courage, and pride. Britain’s interests will come first – for me, and this Party. First. Last. Always.

  • Mr Major’s Comments on the ERM – 29 September 1992

    Below is the text of Mr Major’s comments on the ERM, made on 29th September 1992.


    QUESTION:

    [The Prime Minister was asked whether Britain would rejoin the ERM].

    PRIME MINISTER:

    It takes time. It is perfectly clear that we could not go back into the Exchange Rate Mechanism in the immediate future. I made that perfectly clear and those fault-lines would need to be addressed and corrected to our satisfaction before going back. I made that clear in the House of Commons the other day and I’m happy to reiterate it now.

    QUESTION:

    [Mr Major was asked if that was the case as the other eleven member states didn’t agree].

    PRIME MINISTER:

    That is not the case, wait and see.

    QUESTION:

    [Mr Major was asked about the personal attack on him by Norman Tebbit].

    PRIME MINISTER:

    I’m going to deal with the substantive issues in front of me, that is my responsibility.

    This is a time for a clear, cool and careful calculation of what the British interest is. I’m not going to be distracted by froth and bubble, I’m going to deal with the substantive issues in front of us.

  • Mr Major’s Third Cabinet – 25 September 1992

    Below is Mr Major’s third cabinet, announced on 25th September 1992.


    PRIME MINISTER – John Major
    CHANCELLOR OF THE EXCHEQUER – Norman Lamont
    FOREIGN SECRETARY – Douglas Hurd
    HOME SECRETARY – Kenneth Clarke
    LORD CHANCELLOR – Lord Mackay of Clashfern
    SCOTLAND – Ian Lang
    WALES – David Hunt
    NORTHERN IRELAND – Patrick Mayhew
    LEADER OF THE COMMONS – Tony Newton
    LEADER OF THE LORDS – Lord Wakeham
    TRADE AND INDUSTRY – Michael Heseltine
    DEFENCE – Malcolm Rifkind
    HEALTH – Virginia Bottomley
    SOCIAL SECURITY – Peter Lilley
    ENVIRONMENT – Michael Howard
    TRANSPORT – John MacGregor
    EMPLOYMENT – Gillian Shephard
    EDUCATION – John Patten
    AGRICULTURE – John Gummer
    NATIONAL HERITAGE – Peter Brooke
    DUCHY OF LANCASTER – William Waldegrave
    CHIEF SECRETARY TO THE TREASURY – Michael Portillo

  • Mr Major’s Commons Statement Following Ejection from the ERM – 24 September 1992

    Below is the text of Mr Major’s statement to the House of Commons on 24th September 1992 following ejection from the ERM.


    PRIME MINISTER:

    I beg to move,

    That this House expresses its support for the economic policy of Her Majesty’s Government.

    Following the developments in the foreign exchange markets over the past weeks, I thought it right to recall Parliament to debate the present position. The essential conditions for Britain’s economic success are low inflation, low taxes, free trade and freedom from excessive state interference. I am happy to reaffirm those principles today. The Government stand for a low-inflation, low-tax economy–and so, I believe, do the British people. That is why, five months ago, they made their choice and we sit here and the Labour party sits on the Opposition Benches.

    We joined the exchange rate mechanism in 1990 to help to bring down the rate of inflation in this country. British industry supported us in that decision; indeed, it urged us to join believing that, on balance, it would help to stabilise exchange rates, bring down inflation and bring down interest rates from the high British level, which then applied, to the much lower European levels. Of course, during the period of our membership, interest rates fell from 15 to 10 per cent.

    I congratulate industry on its magnificent response in the battle against inflation. I know that it has not been easy, but, against a difficult background, exports have risen to record levels, costs have been controlled and productivity has soared. It was not just industry which supported entry into the ERM–so did commerce, the City, most trade unions, the TUC and the Opposition parties in this House. The Leader of the Opposition, whom I warmly welcome to his new responsibilities, was consistent in his support of the exchange rate mechanism. When we joined it, the right hon. and learned Gentleman supported us, and agreed. When I announced the exchange rate central figure the right hon. and learned Gentleman was generous enough to agree. When, last week, I said that we needed reforms because of the fault lines that had become apparent, the right hon. and learned Gentleman agreed that reform was needed. I congratulate him on his consistency, even though on this issue the House has been not just a debating Chamber but an echo chamber.

    Now, of course, we hear most loudly from those people who were critics of the exchange rate mechanism. They come from all sides and every party. My right hon. Friend Lord Tebbit, I understand, says that the Government were, I think the expression is, “dragged in” by the then Chancellor. Now we all know my right hon. Friend Lord Tebbit. He is an old friend to us all. I admire him as a man of great courage, a fighter, a bruiser. He likes to bite your ankles, even if you are not walking up his pathway. Yet even my right hon. Friend Lord Tebbit lost many battles with my formidable predecessor. Despite this, according to Lord Tebbit, even my formidable predecessor, whose convictions and firmness of purpose are everywhere admired, was somehow dragged into the exchange rate mechanism by her new Chancellor. Ah, yes, I remember it well.

    Since we joined the exchange rate mechanism we have brought inflation, which was rising to 11 per cent., down to nearly 3.5 per cent., and falling. That is an achievement for which my right hon. Friend the Chancellor of the Exchequer deserves to be warmly congratulated, so let me do so and let me say this : I take full responsibility for the actions and policies of my Chancellor. In the exceptional circumstances of last week, we were obliged to suspend our membership of the exchange rate mechanism. In the circumstances, there was no choice. No mechanism could have survived the market’s attack on the scale that occurred last Wednesday. One after another–not just sterling–the currencies of Europe came under fire. We need to see that against the background of events world wide : a referendum in France, whose outcome was in doubt, and great economic difficulties in Germany where interest rate levels were at their highest level for a decade. Those strains were increased by a slowdown across Europe and the falling exchange rate of the dollar. That speculative attack turned first to the lira, which was forced to devalue and subsequently to step outside the exchange rate mechanism.

    It created havoc beyond the exchange rate mechanism–in the Scandinavian countries, where overnight interest rates in Sweden touched 500 per cent. The market, encouraged by injudicious comments about realignment which should never have been made, then turned on sterling. In such circumstances, there could be only one response : to defend the pound with foreign exchange reserves and then to raise interest rates. That is what we did, but the severity of the attack compelled us to leave the mechanism. Other currencies, too, have come under attack and suffered varying degrees of damage. I do not wish to understate the consequences of this event.

    Let me turn first to the exchange rate mechanism itself. I do not see that we could readily return to the mechanism without dealing with the problems that have been thrown up in the past fortnight. These need careful examination and consideration before we can decide whether such a mechanism can be made to work to the benefit of all its members. Some fundamentalists say that it cannot. Other fundamentalists say we should pop straight back in.

    Let me say bluntly to the House that I have no intention of being bound to either course without a proper examination of where future British interests lie. My expectation is that co-operation is a better way, if it can be seen to be adequate, and no one should doubt that we will examine carefully whether a reformed mechanism can be made to work. But I do not believe that we shall be able to go back into the mechanism soon, or into the same mechanism that we left last week. My right hon. Friend the Chancellor of the Exchequer has already made our criticisms very clear to other European Finance Ministers, and I will be doing so at the European summit next month. But inside or outside the exchange rate mechanism, the Government’s economic policy must retain the same objectives. Our ambitions to bring inflation down steadily but surely during the lifetime of this Parliament were spelled out in the last Budget, and that remains our strategy. Thus far, our anti-inflation strategy has succeeded more spectacularly than anyone in the Opposition ever believed possible. Outside the exchange rate mechanism, the conduct of monetary policy cannot, indeed should not, be exactly the same. We must have regard to a range of indicators of monetary conditions to make sure that our objectives on inflation in particular are not at risk. These will include our existing narrow money target, the behaviour of broad money and asset prices and, of course, the exchange rate. Nobody should believe that a floating exchange rate is a free meal, always allowing interest rates to fall to a very low level.

    Mr. Alex Salmond (Banff and Buchan) : The Prime Minister spoke about fault lines in the exchange rate mechanism. When did he first discover them? Did his Chancellor, who we now understand is a long-term sceptic of the ERM, ever inform the Prime Minister of his doubts, and if so, when?

    The Prime Minister : The speculative attack on sterling was of a size and scale that we have not seen for beyond a quarter of a century. I do not believe that any mechanism would have been able to withstand the size and scale of that. But I believe that there are other areas within the exchange rate mechanism where reform could have made it a more credible instrument for use last week. We shall discuss that with our European partners and others.

    Mr. Stuart Bell (Middlesbrough) rose —

    The Prime Minister : I shall give way later.

    Interest rates elsewhere in Europe have been driven up this summer, particularly by the strains in Germany.

    Indeed, in the last 10 days of turbulence in the mechanism, interest rates have risen in Greece, Italy, Sweden and France. In Spain they have not only devalued but have effectively reintroduced exchange controls. Ireland, too, this morning reintroduced exchange controls. Since we stood aside from that turbulence, it has been possible to reduce base rates by a full percentage point this week, and the benefit to business and to home owners will help strengthen economic recovery.

    But interest rates alone will not achieve the non-inflationary growth that we need in this country, and that point needs to be understood. That depends even more crucially on keeping firm control of public expenditure. The Government’s new system of control will allow money to be directed towards priorities, while we keep strictly within the overall limits laid down for the growth of public expenditure as a whole.

    In essence, the Government have set an upper limit to expenditure and will divide resources between priorities in the public expenditure round. That contrasts with the previous system of individual bids that were added up at the end of individual negotiations. It is a fundamentally different system of controlling public expenditure. It is tough and will be tough, but it is necessary and is an important component part of overall economic strategy.

    Mr. Stuart Randall (Kingston upon Hull, West) : Will the Prime Minister give the House some idea of the likely time scale for reforming the exchange rate mechanism? Will it be Christmas or in three of four years’ time?

    The Prime Minister : Reform self-evidently depends on negotiation with all the other members of the mechanism. At this stage, nobody can say how long that will take. As I said a few moments ago, given the turbulence that has existed–not least the money supply figures announced in Germany yesterday–I would not expect our return to any mechanism, and certainly not the same mechanism, to be in the near future. I do not believe that that will be practicable, and I must make that clear.

    Mr. Tony Benn (Chesterfield) : The Prime Minister is speaking as President of the European Council, not just as Prime Minister of Great Britain. He has repeatedly told us that his object is that we should be at the heart of Europe. Will he please explain how allowing speculators to determine our currency, German banks to determine our interest rates and French voters to determine the future of the Maastricht treaty puts this country at the heart of Europe? Is it not clear that the British, like the Danish, Irish and French, are entitled to determine what is essentially a political matter, although in a debate dressed up as an economic debate?

    The Prime Minister : I will turn directly to the question of Britain’s place in Europe in detail in a few moments. On the question of speculation, it is certainly within the memory of the right hon. Gentleman that, whether inside the mechanism or outside, inside the European Community or outside, sterling has been subjected to speculative attacks on many occasions in the past. The exchange rate mechanism offered an extra line of defence, although not a complete defence; as we have seen, and as we have always known, there could be no total and complete defence.

    Sir Teddy Taylor (Southend, East) : To avoid any possible misunderstanding, will the Prime Minister say whether it is the Government’s intention to seek to rejoin a fixed exchange rate system?

    The Prime Minister : I have explained to the House twice that we shall examine whether a system can be made credible. When we have finished that examination, we shall make our decision.

    Mr. Bell : Will the Prime Minister give way?

    The Prime Minister : I will give way to the hon. Gentleman, and then I shall make some progress.

    Mr. Bell : The Prime Minister is announcing what appears to be a very important and significant change of policy : we are moving away from the external discipline of the exchange rate mechanism and the deutschmark as an anchor to our policy of getting inflation down to an internal discipline. Are we still shadowing the deutschmark, and will there be a wages control policy for public sector employees?

    The Prime Minister : I announced to the House–for I think it has a right to know–how we shall conduct economic policy while we are not in the exchange rate mechanism. It is essential that the House is aware of how we shall conduct policy. I have said that we shall examine the practicality of returning to a reformed exchange rate mechanism and make a judgment on whether that is a workable system and then whether to join. We shall certainly undertake those negotiations.

    I turn now–

    Mr. Nicholas Budgen (Wolverhampton, South-West) : Will my right hon. Friend give way?

    Hon. Members : Give way!

    Madam Speaker : Order. The Prime Minister has made it clear that he wants to make a little progress.

    The Prime Minister : I give way to my hon. Friend.

    Mr. Budgen : I am sure that my right hon. Friend will agree that we have been discussing the details and fundamentals of the exchange rate mechanism for very many years in this House. Will he please explain to the House what are the new details that have caught him out so unexpectedly that he requires guidance on them before he can tell the House whether he intends to go back into the mechanism?

    The Prime Minister : My hon. Friend has a long-held view that the right thing to do is to let sterling float. I understand that view, but I must remind him that sterling was floating when, in 1981, interest rates rose by 4 per cent. in less than a month, and that it was under a system of floating exchange rates that interest rates rose to 15 per cent. before we were able to bring them down to 10 per cent. within a co-operative mechanism such as the ERM.

    The Government’s general policy towards Europe must be founded on a concern for our long-term national interests, and I believe that it is time that we turned afresh to face directly the whole question of Europe and our place in the European Community.

    There are broadly three schools of thought about our membership of the Community. The first–it is spread thinly across each political party–is that we should leave the Community; that we should never have joined. It is a minority view, often disguised by rhetoric affirming support for the principles of membership while actions speak the opposite. There are people who, in their hearts, would prefer it if we were not in the Community, who trade under false colours and who do not address their arguments to the implications of non-membership for jobs, prosperity and the future.

    The second school of thought is that European development is inevitable and goes inexorably in one direction : that sooner or later a centralised Europe is inevitable. Those who take that view are often the direct descendants of those who, 20 years ago, thought that socialism was inevitable, before it became completely discredited around the world.

    I do not share the belief in the desirability or inevitability of a centralised Europe. Each country in the Community at times of crisis will inevitably look first to its own national interest; each will pool some of it in the common interest, but none will sacrifice it. Just as the interests of France and Germany will always come first for them, so the interests of Britain must always come first for us. I understand the fears about a centralised Europe, but I think that they are fanciful, for we will not have one.

    The third school of thought, the one for which I stand, is quite different. It is that it is in the interests of Britain–our interests, our objectives and our prosperity–for us to be part of the development of our continent. By part, I do not mean a walk-on part; I do not mean simply being a member. I mean playing a leading role in the European Community. I mean helping to determine the direction of policy, building the policies that we want and fighting those that we do not want. We will need to compromise on some matters, but so will every national state in Europe unless we return to tribalism right across the European Community.

    This co-operation in Europe demands a wider Europe. It demands the entry of the Scandinavians and the Austrians and, over time, of the east Europeans– those newly democratic states which have every right to look to the Community and the west for a more secure future. This co-operation also requires us to deal with the concerns about the internal development of the European Community. Those concerns exist not only in this country but in every country of the Community. There are fears throughout Europe that the Community is too centralised, that it is too undemocratic and that the leaders of the Community are seeking to develop it too fast for their national Parliaments and people. The events of recent months have shown that, if Europe is to be built on a sound foundation, we cannot ignore those feelings or brush them aside as a matter of no concern. The good European does not ignore those fears. He seeks to put them right–and that is the policy we pursued up to Maastricht, during Maastricht and after Maastricht.

    The Maastricht treaty has become a totem around which those in favour of Europe and those opposed to Europe are now dancing. In truth, it is less important than the pro-Europeans claim and in no way as far-reaching as the sceptics tell us. Many of the things for which the Maastricht treaty has been criticised spring inexorably from the treaty of Rome or the Single European Act.

    One of the main criticisms of the Maastricht treaty is the move towards a single currency. The House will recall that I declined to accept that move in the negotiations because I did not believe that Europe would reach the right economic conditions to support a single currency. I have never believed–I have stated it frequently–that Europe would reach the right convergence by the mid-1990s. That is why I refused to commit Britain to a single currency.

    In the light of the continuing economic problems throughout Europe and of the currency turmoil of the past week, I must say that I was right and– [Interruption.]

    Mr. William Cash (Stafford) rose–[Interruption.]

    Madam Speaker : Order. A great many of our fellow citizens were keen that the House should be recalled, and they want to hear what the House has to say–as, I believe, do people thousands of miles away. Let us give each and every one of us a proper hearing. The Prime Minister knows exactly who is standing behind him. If he wants to give way, he will do so.

    The Prime Minister : I must tell those who have exaggerated ambitions for a single currency that it must now be an ambition postponed. In the Maastricht treaty, we safeguarded our national interest on the single currency. Elsewhere in the treaty, we secured other very important gains for Britain. I remind the House that, early in their presidency, the Dutch presented proposals on foreign policy, defence policy, immigration and justice–all of which would have been undertaken under the treaty of Rome. We rejected that. At Maastricht, we secured provision for co-operation between nation states outside the treaty of Rome, outside the power of initiative of the Commission and outside the jurisdiction of the European Court. Those who claim that Maastricht was a treaty too far should ask themselves, “What was the situation before the Maastricht treaty?” Another important achievement was the provision restricting the scope for Community action. That provision was put in at our insistence. It reflected our long-standing argument that the Community should take action only where it could do so more effectively than a nation state or more than one member state co-operating voluntarily. We had to fight hard for that provision with the support of some other countries–notably Germany–but it was a break point and we won it. It has since found an echo in public opinion in Denmark, France and right across the Community. Although the Danish people narrowly voted against the Maastricht treaty, the Danish Government have made it clear that that is not necessarily the last word. The Danish Government plan a further referendum.

    Mr. D. N. Campbell-Savours (Workington) : Will the Prime Minister give way?

    The Prime Minister : I will make some more progress.

    If, however, the Danes were unable to go back to the people, or were to lose again in that further referendum, the Maastricht treaty could not proceed. It would not be acceptable for the 11 to go ahead without Denmark, and against the will of the Danish Government and people. That cannot happen, and it will not happen.

    The Danish Government will publish a White Paper next month, at the start of a process of consultation. It would not make sense to bring the Maastricht Bill back to the House of Commons before we know clearly what Danish intentions are, and when and how the Danes propose to consult their people again. When those things are known, however, we must examine the Bill further.

    Those who assume that the Bill is dead have overlooked two things. First, there is much in it that we want; secondly, with the consent of this House of Commons, I agreed that Bill. I do not believe that it would be proper for a British Prime Minister to agree a treaty, and then come back to the House of Commons and disown it. In this country, people know that it is in our interests to be in Europe, but they fear that the Community seeks to intervene too intrusively in our national life. They fear that things that have always been dealt with by individual nation states–and should be dealt with by individual nation states–are instead gradually being drawn within the control of the Community. So we need a definition–a settled order–of what is for national action and what is for Community action. We need clear criteria by which Community proposals will be judged. When we are satisfied that such a system has been put in place, and when we are clear that the Danes have a basis on which they can put the treaty back to their electorate, we shall bring the Maastricht Bill back to the House of Commons.

    Mr. Campbell-Savours : If the French, the Germans and the Benelux countries decide to forge ahead with a Community based on greater monetary and political co-operation, will the Prime Minister be prepared in any conditions to leave Britain outside that in the Community?

    The Prime Minister : There might well be circumstances in which others would make decisions that they believed to be in their national interests; but I have said repeatedly, and agreed under the Maastricht treaty, that any question of a single currency must be determined by the House of Commons at the time when others go ahead, and I stick to that view.

    Mr. John Wilkinson (Ruislip-Northwood) : Is my right hon. Friend really telling the House that–notwithstanding the fact that two thirds of the French people did not vote in favour of the ratification of the Maastricht treaty; notwithstanding the fact that, when the question was first put to them, the Danes voted against it; and notwithstanding the fact that my right hon. Friend will not grant the British people a referendum–the House is somehow to proceed with this extraordinary process?

    The Prime Minister : We are a parliamentary democracy, and the House is the place in which to consider the Bill–line by line and clause by clause. Other nations may have a tradition of referendums : they may call a referendum, followed by a debate on the whole Bill lasting one or two days, and approve every part of the Bill immediately. That is not our parliamentary tradition, and I do not believe that it would be acceptable to the House of Commons. As for the second part of my hon. Friend’s question, I have made it clear–and I repeat again–that, when the conditions that I have set out are fulfilled–when we have moved forward on subsidiarity, and when the Danes have decided how they will proceed–I will bring back to the House the treaty that I negotiated with the approval of the House : the treaty that was approved at the general election, and on Second Reading some time ago.

    Let me repeat that, when we are satisfied that a settled order has been put in place, we will bring the Bill back to the House. That is one of the matters that are to be put in hand at the special meeting of the European Council on Friday 16 October.

    Mr. Michael Spicer (Worcestershire, South) : I am most grateful to my right hon. Friend for giving way. He has expressed the view that the House should take the final decision on the Maastricht Bill. Therefore, will he give consideration to allowing a free vote in the House?

    The Prime Minister : I believe that my hon. Friend stood at the general election supporting the Conservative manifesto, which indicated that we would bring the Bill before the House. I still support the commitment that I had in that regard in the manifesto. I said that that was one of the matters to be put in hand at the special meeting of the European Council on Friday 16 October. That special meeting will take place at the international conference centre in Birmingham.

    That European Council needs to respond to the concerns that people right across Europe have shown about the direction of Community policy, to review what is wrong with the exchange rate mechanism and how the system can be made to work better in future, to consider preparatory work to meet Denmark’s concerns and, of course, to give a further impetus to the general agreement on tariffs and trade round. During recent months, our concerns about the Community have been mirrored across Europe. The British agenda is now on the table in every country of the Community.

    It is worth reminding ourselves why the Community was built and why we joined it. Its founders wanted lasting peace in western Europe, and they achieved it. But they wanted something more [Interruption.] Yes, what about the economy? The founders wanted to build up economic prospects across Europe on a scale that no previous generation had seen, and they achieved that. They wanted the prosperity of each generation to exceed that of its parents, so that the chances for each generation would be greater and the opportunities more fulfilling. Collectively in Europe, that is what we have achieved, despite the difficulties that presently exist.

    Mr. Jimmy Boyce (Rotherham) : On a point of order, Madam Speaker. Given that the debate’s title is the United Kingdom’s economic policy, could you tell us when the Prime Minister is going to get round to discussing that policy?

    Madam Speaker : As I have not seen the Prime Minister’s speech, I can only say that the hon. Member for Rotherham (Mr. Boyce) must give the Prime Minister the opportunity to reach that point.

    The Prime Minister : Clearly, the hon. Member for Rotherham (Mr. Boyce) does not realise the extent to which our economic well-being depends on our relationship and trade with Europe.

    I have never seen our future as being a sour, isolated country off the mainland of continental Europe. That surely cannot be a way for us. Even though some will swallow hard at compromises that may need to be made, they should remember that others in Europe will need to compromise as well. The voice that is raised to say that we should look after only our own interests is the voice of narrow self-interest. Such a voice always has resonance in politics and is almost always wrong. It is a policy more certain to begin with cheers and end in tears than any other policy that has been devised.

    I have never understood why some are so fearful of our prospects in Europe–neither do I understand why those who are often most fearful are those who would claim to be most proud to be British. Why, then, with that pride do they assume that we will always lose the arguments in Europe when that has not been the Community’s history and will not be the Community’s future?

    We have the chance to build in our time, in our generation, the sort of Europe for which we have always longed; the sort of Europe that I believe its citizens want; a secure Europe of nation states co-operating freely for the common good; a prosperous Europe, generating new wealth within the biggest free trade area in the world; a free trade Europe in which Brussels is kept off industry’s back. Only one Government–this Government- -offer industry freedom from state control. Only our policies of low taxation and low inflation will allow the genius of British enterprise to flourish, and only this Government’s policies will secure for the British people the prosperity that they deserve in the ’90s and which this Government will deliver. I commend the motion to the House.

  • Mr Major’s Statement Following French Referendum – 20 September 1992

    Below is the text of Mr Major’s statement following the French referendum result, made in London on Sunday 20th September 1992.


    PRIME MINISTER:

    Good evening. I want, first, to congratulate President Mitterrand on the outcome of the French referendum today. We now need to consider the way forward and there are a number of important matters in that consideration. We firstly await Denmark’s conclusions on how she will deal with the particular problems of ratification that she faces. Secondly, I believe we need to deal with the very particular problems in the foreign exchange markets in recent days that have revealed short-comings in the Exchange Rate Mechanism System. And thirdly, I think we do have to take account in public debate of many of the concerns that have been raised throughout the Community over recent weeks.

    In the light of all that I propose to call a Special European Council of Heads of Government in early October to consider those issues. In the light of the outcome of that Council the Community can decide how to proceed in a way that carries the support of member states right the way across the Community.

    As far as Britain is concerned, let me say that progress with the Maastricht Bill in the House of Commons must await firstly the clarification of Danish intentions and secondly, the outcome of the Special European Council that I have just announced.

    There is of course a vast weight of other Community work that will need to continue, we will need to continue with the completion of the Single Market, the enlargement of the Community, there is an urgent need for a GATT settlement, we need to look at future financing of the Community and there are a range of other issues that need urgent attention during the British Presidency. We will continue with those matters quite apart from the earlier problems I raised.

    QUESTIONS AND ANSWERS

    QUESTION:

    Is Maastricht no longer good for Britain, Prime Minister?

    PRIME MINISTER:

    No, the situation is as it was before, we must wait and see what the outcome is of the special Council and then we will have to decide how to go forward.

    QUESTION (Mike Brunson, ITN):

    Given the narrowness of the votes both in France and in Denmark, can you really press ahead with enthusiasm the ratification of the Bill in this country ever?

    PRIME MINISTER:

    I think we have to take account of the concerns that have been expressed right the way across Europe and that of course is one of the reasons for calling the special European Council, clearly that is important.

    QUESTION:

    Are you personally still behind the Maastricht Treaty?

    PRIME MINISTER:

    Yes I am.

    QUESTION:

    Will not the monetary elements of the Maastricht Treaty now have to be re-written in view of the course of the ERM mechanism?

    PRIME MINISTER:

    No I do not think that is the case, we are examining that but it seems at first glimpse that that is not so.

    QUESTION:

    Do you still think that this is a good treaty for Europe and a good treaty for Britain?

    PRIME MINISTER:

    Yes I do. There is much in the Maastricht Treaty, the areas of development which enable us to develop outside the Treaty of Rome that we have sought as British policy for a long time and that will enhance cooperation right the way across Europe. That cooperation is valuable for Europe and it has been an object of British policy for the last quarter of a century. So I think there is much in the Maastricht Treaty of value and I very much hope that those elements will go forward.

  • Mr Major’s Press Conference in Edinburgh – 11 September 1992

    Below is the text of Mr Major’s press conference in Edinburgh, held on 11th September 1992.


    GUS O’DONNELL:

    Good afternoon, ladies and gentlemen. Welcome to Bute House. I apologise that we’re running a little late, but our very interesting discussions this morning overran. I’ll be brief. The Prime Minister will make a brief opening statement, and then the Prime Minister and Secretary of State will be happy to answer your questions. During that period, if you could, during the questions and answers, make clear names and organisations, and keep your questions just to single questions if that’s at all possible.

    PRIME MINISTER:

    Fine. Thank you, Gus. I’ll just speak very briefly at the moment, and then we’ll try and get in as many of your questions as I possibly can. I’ve come back to Scotland for a raft of reasons. Firstly, because I wanted to take the opportunity of last night’s dinner at the CBI to make a speech that’s relevant, not just to Scotland, but to the whole of the United Kingdom, and our relationship particularly with the European Community, and I was grateful of the opportunity of being able to do that in Glasgow. Some of you this morning may already have seen today’s inflation figures that were published around 40 minutes ago. The Retail Price Index is down from 3.7 to 2.6, but equally relevant, I think, is that the underlying rate of inflation has fallen from 4.4% to 4.2%, so the progress on inflation is continuing, and continuing steadily. In the Seminar we’ve had this morning – the Seminar is not an end in itself. It’s just part of a continuing process of taking stock. Scottish Office Ministers have been doing that in different ways. The Policy Unit have been doing it. I have been doing it on a number of visits to Scotland, but it is very easy for me to get hold of political opinion, to find out Party opinion, and to bring together business opinion. What I was seeking to do this morning was to bring together a number of distinguished Scots who were there in their personal capacities, not because of their particular public position, but because their personal experience and knowledge made it likely they would have something worthwhile to contribute as Scottish individuals, to the debate about the constitutional arrangements for Scotland.

    I think it was a very good debate. There are a number of things within it that I propose to follow up with the individuals concerned, but it is just part of a continuing debate so I don’t propose to go into the details of what was said, and I think it is too early to draw conclusions from it. I will say it was a pretty wide ranging discussion, and in a number of areas, rather surprising points were made that I shall certainly wish to follow up with the individuals concerned, perhaps in further meetings, perhaps in correspondence, so from my point of view, it was an extremely useful occasion. Now, I am in a few moments going to have the opportunity of extending this debate. We have a large lunch here for Scottish lawyers and members of the Church, and this afternoon you might say, or may not yet know, I’m going to have a look at Holyrood House to check the arrangements for the European summit that will take place in December. So that is broadly the pattern of the day. I’m now happy to take whatever questions you may have.

     

    QUESTIONS AND ANSWERS

    QUESTION:

    Prime Minister, you talked about surprising points there. Could you perhaps give us a little bit more information about what those points were, and why they were surprising?

    PRIME MINISTER:

    I think the – I’m not going to give you details of them all, no, but I think there was a different perspective put on some of the constitutional questions that have been asked in Scotland in the past. There was a great deal of concern expressed by a number of people around the room about decentralisation as opposed to devolution. That applies to the private sector, of course, as well as to the public sector, and it was a point made that that affects too the lives of people in Scotland. There was also a point, I thought rather a striking point, that one of the things that took authority away from the Regions, not just Scotland, but the other Regions in the past, was nationalisation because it necessarily centred the decision-making process far away, and that was another point that emerged, and so there are a whole series of angles on the debate – some historians, a number of people in other practical professions, farmers – that were actually raised during today’s discussion.

    QUESTION:

    Prime Minister, your opponents, your political opponents, say that this morning was largely a stunt. Do you have any particular comments to make on that? They say it was a charade, no real substitute for genuine consultation

    PRIME MINISTER:

    Well, they would, wouldn’t they? What would you expect them to say? If I wasn’t here talking to people from Scotland who are distinguished individuals, they would say, why am I not here doing precisely that? As I am here doing that, they say “Well, it’s a charade”. They may wonder why I haven’t invited them to have a discussion with them. Well, I know their opinion. I get their opinion weekly in Parliament. I’m aware of what it is. I’m able to consider it. I know its value, and I want to stretch out beyond that, so they are saying what I would expect them to say, but I don’t think it really matters. We will continue with consultation, and when we’ve reached conclusions we’ll announce what they are.

    QUESTION:

    Prime Minister, David Whitton, Scottish Television. We’ve heard about the taking stock exercise almost ad nauseam, since the Election. Can you give any indication at all as to when the taking stock will cease, and you’ll come up with some solutions?

    PRIME MINISTER:

    Well, let me come back to the point I was making just now. If I produced a solution now, you’d stand up and ask me a question about how I could possibly have consulted all the people who needed to be consulted in this time, and the answer is, I can’t have done, so I’m going to go on consulting until I am sure I have got a rounded view of Scottish opinion, and when I’m certain that I have a rounded view of Scottish opinion I will discuss that with my colleagues, and we will make decisions. I can’t put a time frame to it because I don’t know how far the debate will develop and what points will arise within it, but as soon as we have our decisions we will make them, and there will be no unnecessary delay.

    QUESTION:

    Prime Minister, Rona Campbell, Sky Television. The reduction in inflation has been minimal today. What do you have to say about that?

    PRIME MINISTER:

    Well, it’s steady and it’s consistent. It’s only two years ago that I was facing press conferences like this, and people were saying, “Well, inflation is over 10% and it’s rising”. It’s now 3.7% and it’s fallen again to 3.6%. That is progress, steady, secure progress in the right direction. We’ve now got inflation down to levels it has only touched briefly in the last quarter of a century, and what is different about this is it looks as though this is a secure reduction of underlying inflation that will be sustainable in the future, and the reason I think that is very important is really very clear-cut and very simple. If we have an inflation rate that is higher than the inflation rate of our principal competitors in Europe and beyond, then we will become uncompetitive, we will lose markets, we will lose jobs, we will lose prosperity. If, on the other hand, we have an inflation rate that is better than our principal competitors, then precisely the reverse will apply. We will gain in competitiveness, we will gain markets, we will gain jobs, and we will gain prosperity. I wish it could be done magically and quickly, but it can’t be. It’s a long and a sustained process. I think we’re making the most substantial progress in inflation that we have seen for very many years.

    QUESTION:

    Can I ask, Prime Minister, on a personal basis, has your personal commitment to the distinctive nature of Scotland been strengthened by this morning’s talks?

    PRIME MINISTER:

    Yes. I used the expression, and it was quoted back to me this morning. When I spoke about Europe the other day I made the point about the importance of the Nation State, and that people did not wish to lose the distinctive nature of their Nation. Well, I used that in terms of the European Community as a whole, but it is equally applicable in terms of the United Kingdom, and I see no circumstances in the future where the Scots are not going to remain distinctively Scots, the English distinctively English, the Welsh distinctively Welsh, and the Northern Irish distinctively Northern Irish, and I welcome that. I don’t wish to do anything that would damage the distinctive cultures, natures, traditions, and instincts of the component parts of the United Kingdom. What I do wish to do is to make sure in which we can show the whole of the United Kingdom, that it is a genuine partnership. It isn’t a question of saying “Scotland must stay there with England because that is good for Scotland”. That is not the argument. The point is that if any part of the United Kingdom were not an equal partner within the United Kingdom then every part of the United Kingdom will suffer. That is the point of the argument, and that is what has repeatedly to be made clear.

    QUESTION:

    [Inaudible] from the Independent. You gauged the opinion of 14 people this morning. A constitutional referendum would slightly widen that opinion. Is that an option that you would ever consider at any time?

    PRIME MINISTER:

    Well, what I was doing today was gathering thoughts in depth. If you have a referendum of any sort, it asks a single question, and one of the disadvantages of referenda is, you may ask a single question, but the answer may come back for a whole raft of reasons, many perhaps unconnected with the question, and I think that is what people are finding, for example, in the French referendum at the moment. What I am trying to gauge is not the answer to a simple single question. I’m trying to gauge the instincts of people, and what they believe needs to be done to enshrine and secure the distinctiveness of Scotland and its place within the Union.

    QUESTION:

    Did the spectrum of opinion among those 14, do you think, represent what you wished to find out from them?

    PRIME MINISTER:

    It was a broad spectrum of opinion, yes. What it was not, what it was emphatically not, was the entrenched political opinions of the political parties. I know that, and I know the opinions, and welcome the opinions that I get from the political parties and from business, but I do know that. I do need to meet distinguished individuals and find out what they need. Lots of other individuals as well. If it were possible to hold in-depth meetings with everyone in Scotland, no doubt I would learn more, but I think one has to draw a line of practicality somewhere.

    QUESTION:

    Prime Minister, you’ll be meeting The Queen at Balmoral, and discussing probably the recent events surrounding the Monarchy. How concerned are you about these events, and would you consider a Privacy Bill.

    PRIME MINISTER:

    I have no doubt about the conviction right across the United Kingdom about the importance of the Monarchy. It is an entrenched, enduring, and valuable part of our way of life. I have absolutely no doubt about that. I’ve nothing to add to that.

    QUESTION:

    Mr. Ashdown has called for the recall of Parliament – is he likely to get a different answer to the one you gave to Mr. Smith?

    PRIME MINISTER:

    Well, I haven’t seen the letter that I gather Mr. Ashdown has sent to me. I will consider it carefully, but I see no reason to change the decision I made in the past, unless something quite compelling is in Mr. Ashdown’s letter that I don’t expect to find there, but I had better read his letter first.

    QUESTION:

    He says that British lives could be at risk, and never before he says, have British Service lives been placed at risk without Parliament being first consulted.

    PRIME MINISTER:

    I think I’d better wait for his letter, don’t you, as I’ve just said.

    QUESTION:

    Please can we go to your proposals – I know you can’t tell us precisely what they’re going to be, but are we right to see them within the parameters of building essentially on the Scottish Grand Committee, and possibly doing something within the Scottish Office, or might they go further than that? Might they be more radical than that?

    PRIME MINISTER:

    I think everyone is looking in individual areas to see what we might do, and I’m not going to speculate, I’m not going to have the proposals that we are beginning to build up, and they’re by no means concluded yet. Eleanor – we’re beginning to build them up as we talk to people. I’m not going to have them picked off one by one as we go through, so I’m going to respond to that when we’ve concluded our consultation.

    QUESTION:

    Referring to what you said about nationalisation because of one of the questions here is the feeling against water privatisation. Is that something you heard this morning?

    PRIME MINISTER:

    That came in as a side issue in the discussion in the general question of decentralisation. The point that was actually made about privatisation was a point of substance. If there is to be privatisation, the best way to do it was through the levels of individual shareholding rather than franchising. That was a particular point that was made. That was the way that it came up.

    QUESTION:

    [Indistinct] from the Guardian. You referred to the European Nation State. Scotland, of course, is a Nation but not a State. You’ve ruled out Statehood for Scotland. Is there anything substantial below that which will give the Scots any indication that you’re taking the reform of Government seriously north of the border?

    PRIME MINISTER:

    Well, if I were not taking it seriously north of the border, I wouldn’t be spending as much time on it as I have been doing. I wouldn’t have made the importance of the Union and Scotland’s distinctive role within it an absolutely central part of the General Election campaign. Many people were surprised when I did that and they were surprised of what happened as a result of me doing that. So, I don’t think it is a criticism that is sustainable that I’m not taking it seriously.

    QUESTION:

    Prime Minister, [Inaudible] of The Courier in Dundee, can you make any comment on Scotland’s share of Central Government funding?

    PRIME MINISTER:

    Well I see the stories in the press that appear every year as well but I think you’ll have to wait till the end of the public expenditure round. There are during every public expenditure round a vast amount of rumours, some related to Scotland, some related to individual departments. I think you will have to wait until the PES round is concluded.

    QUESTION:

    Will you make public what the other regions of the country get?

    PRIME MINISTER:

    Oh, it’s all published, yes of course. Of course, there’s a public expenditure White Paper that is published at the end of the round and then there is typically a debate in the House of Commons and all the Budget Heads are published right the way across public expenditure for each component part of the United Kingdom. The answer to your question is, yes.

    GUS O’DONNELL:

    We have time for two more please.

    QUESTION:

    [Inaudible], BBC Television. You’ve made much of the principle of subsidiarity in the European argument. How far is that principle exactly the same when applied to Scotland?

    PRIME MINISTER:

    Subsidiarity relates to devolution of responsibilities. One of the things I think that people really have not taken on board, and this did come up of course in our discussions this morning, was the extent of administrative devolution that actually lies in the hands of the Secretary of State. He has a most remarkable amount of devolution. Now it is perfectly clear, from an opinion poll mentioned to us by one of the participants this morning, that that is not fully appreciated in Scotland. People aren’t aware of the extent of devolution in the Scottish Office and of the responsibilities of the Scottish Office and I don’t suggest that that is an answer to all the matters that we are discussing, but I think in terms of subsidiarity, it is not all that long ago that there was relatively little responsibility devolved from Whitehall to the Secretary of State in Scotland. Over recent years that has built up quite dramatically. There are areas where people would wish to see it extended of course and that is a legitimate part of debate. But, nobody on the subsidiarity principle should underestimate the amount of devolution of administrative responsibility that has gone from Westminster to the Secretary of State in Scotland.

    QUESTION:

    Prime Minister, were you surprised by the views of the poll this morning?

    PRIME MINISTER:

    There were some very original ideas. I cavil at the word “surprise”. I don’t think I was surprised in that sense but there were some very original thoughts and some very original ideas put forward and – no, I’m not going to – and they were put in an historical content in a number of cases as well and it may be other people will wish to express publicly what they said at this morning’s meeting, that is for them, but I don’t want to put into my words in public what they said to me in private.

    QUESTION:

    Of the 14 participants, did any openly advocate a Scottish Parliament, Assembly, any such body like that?

    PRIME MINISTER:

    Yes, all the points were raised in the discussion.

    QUESTION:

    Prime Minister, you said earlier that your stand on Unionism had been vindicated by the General Election result. What do you say to the three out of four Scots who did not vote for your Party?

    PRIME MINISTER:

    Well you’re presupposing that all Scotland voted on one issue. And they didn’t. They patently didn’t. They voted on a whole series of different issues. This, as somebody did point out this morning, this is the first occasion for very many years, at the end of a term of Parliament, where the Government in office, whether Conservative or Labour, actually achieved more votes and a better turnout in Scotland at the end of a period of Parliament. We actually achieved that at the end of a fourth parliament. Now, I think that is something that not many people in this room would have anticipated as we came into the Election campaign. Indeed, I know that to be the case, and you know that to be the case, because we discussed that in the run-up to the General Election itself. Now I think, I know as an ex-Treasury Minister, you probably don’t expect me to count well, but there were two more questions and I think we’ve had them. But, we’ll take this last question.

    QUESTION:

    [Indistinct] from The Herald Newspaper. Can I ask how the 14 people were selected, and whether you genuinely think that was a representative cross-section?

    PRIME MINISTER:

    Well, I’ll ask the Secretary of State. I devolved the selection to the Secretary of State. [Laughter].

    SECRETARY OF STATE FOR SCOTLAND – IAN LANG:

    They weren’t selected in a representative capacity. They were selected for their individual achievement, their distinction in their individual walks of life and they covered a range of walks of life. We had historians, journalists, we had academics, we had businessmen, we had those involved in running Government bodies and working on a range of Government bodies across the whole scene and I believe that the distinction and the quality of the contributions that they made to the discussion this morning vindicated the choice. Indeed, I think their own view about their fellow participants was altogether complimentary.

    PRIME MINISTER:

    Thank you all very much indeed. Thank you.

    GUS O’DONNELL:

    Sorry, must end it there.

    PRIME MINISTER:

    Otherwise, I shall be very discourteous to Scottish lawyers and the Scottish Church, and I wouldn’t wish to do that. Thank you very much.

  • Mr Major’s Speech to the Scottish CBI – 10 September 1992

    Below is the text of Mr Major’s speech to the Scottish CBI at the Forte Crest Hotel in Glasgow on Thursday 10th September 1992.


    ALISTAIR MCCALLUM:

    Prime Minister, President, My Lords, Ladies and Gentlemen, welcome to CBI Scotland’s Annual Dinner. I hope you’ll have a very happy evening. The Grace will be said by Dr. William Morris. The Rev. Dr. William Morris.

    THE REV. DR. WILLIAM MORRIS:

    Let us pray.

    Oh, Lord, since these good things are of Thy giving

    Help us to use them all for wiser living

    Each use restraint, reduce inflation

    To be a slimmer, fitter nation

    And not be sunk in deep depression

    When waist and hairlines face recession

    Oh, Lord Thou dost with steady interest wait

    Which of Thy family will devaluate?

    Lord, guide us in our problems from on high

    And, for this evening, bless the CBI

    Amen.

    THE PRIME MINISTER:

    Alistair, thank you very much for your kind words, and perhaps first I can offer my thanks to you and your colleagues in the CBI for your hospitality here this evening. I knew when I arrived a couple of hours ago that this evening was going to be a special evening [Laughter] and so, for one reason or another it has so far proved. I was piped in, I was offered what I was told, in that lovely bowl, was a half glass of whisky. If that was half a glass of whisky, I’m half a Dutchman. [Laughter].

    Then we had what I can only call a rather novel Grace from Dr. Morris …., [Applause]. It’s always good to see the Church join the State in a little battle against inflation [Laughter] so the CBI has lost none of its originality, and none of its hospitality, and then when Alistair and I stood up for the Loyal Toast a few moments ago, you may or may not have noticed, but a part of this platform nearly collapsed. I felt rather like the Nationalists on Election night [Laughter] but let me turn from the ridiculous to the relevant.

    I want, if I may, Chairman, to speak tonight about the economy of our Country, the whole of our Country, every part of it, its role in Europe, and its future prospects, and they’re big subjects all of them, but what I want to seek to do this evening is to put them into proper perspective because far too often comment on the economy is partial, and is narrowly focused. It takes no account of the wider domestic and international scheme. It’s a snapshot, not a portrait; a detail, not a landscape. It’s too often darkly lit because too many always think it’s fashionable to be gloomy about our future. They forget what we’ve achieved so they underrate what we can do.

    Chairman, it’s only two years ago that business was demanding two things from the Government, and, as Chancellor at that time, I remember the insistence of business, and I remember well what they were seeking from the Government. Business wanted a stable pound, and it wanted lower inflation, and it wanted this, I think, for good reasons. Inflation robs people of their savings.

    It impoverishes those on fixed incomes. It wrecks profits and investment. If Britain has higher inflation than our competitors we lose competitiveness and we lose jobs. Inflation loads the scales against us, and business wanted stable exchange rates because it wanted certainty. It wanted a climate in which it could plan for the long term. I believe that business was right to demand low inflation, and stable exchange rates. They are the essential preconditions for sustained economic success.

    Two years ago, before we joined the Exchange Rate Mechanism, inflation was over 10% and seemed to be rising. We forget too readily the alarm that that caused. Now inflation is 3.7% and falling, and we overlook too readily the opportunities that that offers. We saw such figures before. We saw them briefly in the mid-1980’s but they didn’t last. This time I am determined that that regime of low inflation will last [Applause] and as it does so wages are moderating as well. There has been a crucial change in the inflationary climate in industry. Growth in underlying earnings is down to 6%, the lowest that we’ve seen for a quarter of a century.

    We forget also that, two years ago, exchange rates against our European trading partners, where 60% of our trade now goes, exchange rates against our European trading partners were uncertain and volatile. Now they’re kept within a 6% band in the Exchange Rate Mechanism, and, in due course, will move to the two and a quarter per cent band. Sterling still fluctuates, of course, against the dollar and other currencies, as we’ve seen all too vividly in recent weeks, but it does now have a fresh and certain stability against the currencies of our main trading partners.

    Chairman, as the fear of inflation and exchange rate instability has diminished, so the cry of many of the Government’s critics has changed. Now, we have the inevitable chorus of quack doctors peddling their remedies. There is, I think, a difficulty with these remedies. As we’ve learned from experience, miracle cures simply don’t work, never have, and never will. We need to face our problems squarely. It’s too easy to regard Britain’s problems as unique, or to blame them on the Exchange Rate Mechanism. Neither point is true. The problem of slow growth, a difficult problem, one we face at present, the problem of slow growth is not peculiar to Britain. It is, at the moment, a worldwide problem. We’ve seen the same chain of events in the United States, in Canada, in Australia, in New Zealand, and elsewhere, and in all those Countries, not just in the UK, in all those Countries businesses and individuals took on too much debt in the late part of the 1980’s. Asset prices, especially property, rose sharply on the back of that, and general inflation began to accelerate. Eventually, of course, as interest rates rose and debt burdens became intolerable, people’s top priority was to reduce their debts, and, as a result, businesses stopped expanding, and consumers stopped spending. Some of those Countries have lower interest rates than Britain, but as the United States has illustrated in recent months, the problems of adjustment are just as difficult.

    Equally, I dare say any businessman returning from Continental Europe will have become only too well aware of economic difficulties faced there – weakening activity, low confidence, and rising unemployment, so the process of adjustment has been painful everywhere, but it is necessary, and it is not something that Governments can simply wish away. Improvement rests critically on the decisions which individual businessmen and consumers have to make about how they adjust their own finances.

    I will tell you what my conviction is. My conviction is that adjustment is best managed within the framework and the discipline provided by our membership of the Exchange Rate Mechanism. That discipline ensures that we keep in line with our major competitors in Europe. One thing is certain. If we have inflation around 4%, and our principal competitors have inflation around 2%, then we will lose markets, competitiveness, jobs, and prosperity. It would, at this moment, be madness to let our competitors steal the edge on inflation. I am absolutely clear that for us to compete effectively in Europe, we would need our present policies, whether or not Britain was a member of the Exchange Rate Mechanism, and as we have seen in Scandinavia this week, it is a cold world outside the Mechanism for many Countries that one day wish to join it.

    I was pleased to note, Chairman, that the CBI, in your August Economic Situation Report, firmly endorsed the view that our exchange rate against European currencies, is an exchange rate at which industry can compete successfully, and Howard Davies repeated this very clearly when he addressed the TUC this week. I am sure that that is the right view. As the Chancellor has made crystal clear, there is going to be no devaluation, no realignment, and the export performance of many British, and notably many Scottish companies, provides convincing evidence of our current competitiveness.

    I know that things are not easy, even in Scotland – even in Scotland, which has outperformed so much of the United Kingdom in recent years, and sometimes I think we perhaps overlook, pass along and miss the remarkable changes that have come about in many parts of the United Kingdom, not least in Scotland. Anyone coming back, as I’ve done today, to Glasgow, and remembering the Glasgow of 15 years ago, would not recognise the same City, so great have the changes been [Applause] and then for the first time since records began, Scottish unemployment is below the average for the United Kingdom as a whole. Too high, I know, and I wish to see it lower, but when last was it ever below UK average? Never before. It is now as a result of the changing prospects in Scotland, and the enterprise of the businessmen in this room, and their predecessors in recent years in Scotland, so let me take this opportunity tonight to pay tribute to the response that industry has already made, and continues to make, in adjusting to the new disciplines of the Exchange Rate Mechanism. Costs have been brought under control. Exports are at record levels, and so is manufacturing productivity. Those are real achievements, and quite apart from being genuine achievements, they are the surest possible foundation for the future. Of course, there are problems caused by the weakness of the dollar, a dollar that has fallen by over 20% against the Deutschmark, and if that weakness were to persist, it would have damaging consequences, not least the distortion of international trade and investment.

    Let me say this to you, Chairman, for it is something that I believe passionately – all my adult life I’ve seen British Governments driven off their virtuous pursuit of low inflation, by market problems or political pressures. I was under no illusions when I took Britain into the Exchange Rate Mechanism. I said at the time, that membership was no soft option. The soft option, the devaluer’s option, the inflationary option, in my judgment that would be a betrayal of our future at this moment, and I tell you categorically that is not the Government’s policy. [Applause].

    All too often at difficult times in the past the solution was the same. Let the exchange rate go, and every time, sooner or later the result was the same – rising import prices, rising wages, rising inflation, and a long term deterioration in Britain’s competitiveness which offset any short term gain that there had been. Look for example, at the formal devaluation of 1967. The pound devalued by 14%. Did that lead to a sustained improvement in the UK’s competitiveness? It did not. A brief flurry only. Retail price inflation doubled over the following year, and any improvement in competitiveness swiftly ended. No greater competitiveness, and doubled inflation. What sort of target is that for British industry?

    Since the late ‘60’s the pound’s external value has halved. There were some who saw that as a way to steal a competitive advantage. They were wrong. Maynard Keynes, whom I have to tell you I don’t often quote – Maynard Keynes was right when he said, and I quote “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency”.

    There is a question, a question we might usefully ask ourselves – let me ask it, Chairman. Why is the Deutschmark so preeminent in the currency markets of Europe? It’s not because of current German economic performance. It is because the Deutschmark has an anti-inflation record, and maintains its value. Those who want freedom from the influence of the Deutschmark should realise that they can best get it from matching the Deutschmark’s anti- inflation record, and that is what we are determined to do in this Country. [Applause].

    We shouldn’t expect the road to permanently low inflation to be quick or to be easy, and we still have some way to go. Our inflation is above that of France and Germany, our most important competitors. Well over half our exports go to Countries with lower inflation than ourselves, so we must bite the anti-inflation bullet, or accept that we will be forever second rate in Europe. I refuse to accept such a future for this Country. We face difficulties, I know, but we have the prospect of non-inflationary growth, sustained non-inflationary growth in our grasp, and I am not prepared to let it go. There should be no doubt in anyone’s mind, the Government will stick to its policies, low inflation, free markets at home and abroad, low taxes, and firm controls on public spending. Those policies are good for business, and good for Britain, and they are our policies.

    Let me turn to something else that I believe is good for Britain, and good for business, and that is the Government’s European policy. In December, the Heads of Governments of the 12 will meet at Holyrood House in Edinburgh, the high point of the British Presidency. I’m delighted that so important an occasion will take place in Scotland, and I hope the famous, or perhaps in Glasgow I should say, the infamous Edinburgh climate will be benign.

    Earlier this week I spoke at some length about the Maastricht Treaty. Tonight, I would add only this. Britain stayed firm at Maastricht, firm in its determination to resist the encroachment of European regulations into the workplace. We rejected completely the Social Chapter, and we did so because our ambition is to free industry to compete on its own terms in the widest possible market for its products. Free trade is the route to growth. Free trade is the way out of recession, and to our Presidency of the European Community falls the task of completing two great efforts to liberalise international trade, the single market of the European Community, and the Uruguay round of negotiations under the General Agreement on Tariffs and Trade. When completed, the single market will be the biggest free trade area in the world – 340 million customers. A vast opportunity right there on Britain’s doorstep, right there on Scotland’s doorstep, and to us, the British Presidency, comes the responsibility for bringing it about, so we will be working hard for liberalisation, liberalisation in areas like transport and energy, removing barriers wherever they remain, seeking a level playing field for British business, making sure that the single market becomes a reality and not a slogan, and as we do so, we’ll be working at something else no less important, working at the ambitious task of completing the GATT round, and here agreement depends, not just on 12 Nations, but on over 100 Nations from every part of the globe. Nevertheless, progress is critical to the recovery of the world economy. It’s important to Britain. There are still far too many Countries, even rich, developed Countries, which maintain high tariffs against our manufactured goods. We need the new opportunities a GATT settlement could bring to our service industries, and a growth in world trade that a GATT settlement would bring about is a growth that the world in its current economic situation cannot afford to turn aside. The sooner we have that GATT agreement, the better it will be for every Nation in the world. [Applause].

    So, it’s not only our self interest that’s at stake. A GATT agreement already, in my judgment, long overdue is vital to the developing world, it’s essential to the survival of a world trading system that’s far too vulnerable to national protectionism. It is, that GATT agreement, one of the engines to restore growth. Negotiation of this in Europe, is a matter for the Commission, but we, the British Presidency, will press them, help them, cajole them, until that settlement is reached, but that is only part of our European agenda.

    We’ve already agreed far-reaching plans to reform the Common Agricultural Policy. We’ve agreed to liberalise air fares, to prepare membership negotiations for the EFTA countries, to put subsidiarity, that principle of minimal interference in national matters, and turn it from a slogan into a reality in practice. We have resisted extravagant plans for increasing the Community’s budget. All these bear tribute to Britain’s influence, an influence, I tell you frankly, that would not have been possible if we had sat carping on the sidelines rather than moving our Country into the very heart of the European Community …..[Applause] and only by that policy, by placing us where we can best maximise our influence, only by that policy can we maximise our influence and our control over decisions that affect our Continent and people. There is no other way, and to those who say, sometimes directly, sometimes subliminally, to those who say, “Withdraw from Europe”, “Pretend it doesn’t exist”, I say to them ,”Where have you been, Rip Van Winkle, that you ignore the largest market for our goods and a principal source of our future prosperity?”. I have not a shred of doubt that if we are to build the prosperity for this Nation that we need, then we need that British influence in the heart of the Community to build the sort of Europe, and the sort of Community that we wish to see: free, open, liberal with trade, and respecting the national identities and cultures of each of its member States. That is the ambition we have for the Community, and that is what we shall press for in our Presidency, and long beyond it. [Applause]

    Chairman, I want to conclude by looking at a different Union, a special Union, that very special partnership between Scotland and England. We should never express the value of that Union in purely economic terms. By the start of the 18th Century we had already shared a Monarch for a hundred years. Since your Stuart King, James VI, went South to succeed Queen Elizabeth, the last of the Welsh Tudors, that Royal bond, that military strategy formed good reasons for a closer Union, but it was the economic opportunities that persuaded many Scots of a necessity of Union with England in 1707, and that economic Union has prospered, and today Scotland can justly claim to have one of the most modern and diverse economies in Western Europe, and since 1707 Scotland and England, with Wales and Northern Ireland, have carried out a remarkably successful joint enterprise. It is the Union, with Scotland’s distinctive contribution, which has made all of this possible. It is since the Union, and because of the Union, that Scottish values, Scottish traditions, the Scottish Church, are to be found around the whole world.

    I believe the result of the General Election showed that there remains in Scotland, a strong desire to keep Britain united. [Applause]. I believe that when Ian Lang and I made that a central plank of our General Election campaign, we reached out above the normal issues of inflation, and mortgages, and education, and health, and touched something that is a very basic instinct for people in every part of these united Islands of ours and I don’t believe it was an accident that while all the other Parties suffered reverses in Scotland, the Conservatives defied the polls and the pundits, and won both seats and increased our share of the vote, but that is in the past. We must look to the future, and now we must uphold, develop, and strengthen that remarkable magical Union that has lasted for so long, and that in essence, Chairman, is what taking stock is all about.

    Ian Lang and Peter Fraser have already met a wide range of groups and individuals, each of whom has a special interest in and particular perspective on the role of Scotland within the United Kingdom. Their door will remain open to anyone with a genuine commitment to the integrity of the Union, and with ideas for making it work better. When I come to Scotland, or when I see Scots South of the Border, I will always be receptive to proposals designed to strengthen Scotland’s place in the United Kingdom, and it is as part of that continuing process of taking stock that I have invited a number of leading Scots from a variety of walks of life, to come and meet me in Edinburgh tomorrow so that we can exchange and generate ideas. I know that what they say will be immensely valuable. I’m looking forward to what I hope will be a wide ranging and productive discussion, and I want to hear myself, personally, from Scots, how they believe we can build up and strengthen that Union. These are matters of immense importance, not just to Scotland, but I think to every part of the United Kingdom. Sometimes I think the debate in Scotland has not focused on a wide enough canvas. It isn’t just a question of keeping Scotland in the United Kingdom. It is not just a question of that. It is a question of the contribution and the importance of Scotland to every single part of the United Kingdom. We would not have the United Kingdom without the support and the strength of each of its component parts. It is that capacity of each of the parts of the United Kingdom to come together with common aims, common purposes, common beliefs, but retaining the distinctive cultures of the English, the Welsh, the Irish, and the Scots, that makes this such a remarkable United Kingdom. We propose to strengthen it and build it.

    Chairman, in the few moments I’ve had this evening, I’ve taken the opportunity to touch on a number of important subjects – inflation, our position In the European Community, our future, and the constitutional links of such vital importance between the component parts of the United Kingdom. I’ve spoken about our policies, our strategy for the United Kingdom, but that strategy is something we can only make together – make together in partnership between Government and industry, Scotland and England, Britain in Europe, Britain and Europe. Those are the partnerships that matter. Those are the partnerships that will build, for this generation and the next, a higher quality of life, a higher standard of living, a more secure present and future than ever we have known at any stage in the past. Those are the ambitions we have. They are ambitions, I believe, that are shared, not just in the instincts of Government Ministers, but in the instincts of businessmen, business women, individuals up and down every portion of our land. Together we can make sure that those instincts can build a better future for all of us.

    Chairman, you are our host, and I have both the privilege and the pleasure of thanking you not only for an excellent dinner, but for a great occasion, and the very great privilege also of inviting everyone to join me in proposing a toast to our hosts this evening.

    The toast – the CBI, Scotland. [Toast]

    The CBI Scotland. [Applause].

  • Mr Major’s Statement after Meeting with Shimon Peres – 8 September 1992

    Below is the text of Mr Major’s doorstep statement following a meeting with Shimon Peres, the Israeli Foreign Minister, on 8th September 1992.


    PRIME MINISTER:

    We have been discussing the peace making process and the progress that has been made, and I think it is a much happier atmosphere that exists and a greater prospect of peace. I have made it perfectly clear that we would do whatever we can to speed that peace process up – not just the United Kingdom but the whole of Europe want to see that peace process make progress so it is in the interests of all the people in Israel and all the people throughout the Middle East.

    People are sitting down and talking now – that is very welcome. It is a credit to both sides that they are doing so. I think it is essential that those talks continue. From time to time there will be difficulties, there will be hitches and set backs but the important ingredient is that those talks are taking place and that those talks continue despite the setbacks that might occur. I believe there is a will there to continue those talks – it has not always been evident, but it is evident now and I think that is a very good sign.