The Rt. Hon. Sir John Major KG CH

Tag: British Coal

  • Mr Major’s Comments on Coal Mine Closures – 20 October 1992

    Below is the text of Mr Major’s comments on coal mine closures, made in an interview on Tuesday 20th October 1992.

    QUESTION:

    [Mr Major was asked if he was retreating on the coal mine closures].

    PRIME MINISTER:

    No, I don’t think it is the case in that way at all. What you have seen is a fundamental shift in understanding of what we intend. A very frenetic atmosphere yesterday and I think many of the implications of the moratorium simply weren’t understood but it was never out intention that during the moratorium there should be anything other than a full examination of all these matters. It is right that there should be.

    QUESTION:

    [Mr Major was asked why Michael Heseltine hadn’t admitted the DTI Select Committee should examine the issue].

    PRIME MINISTER:

    That is a matter for the Select Committee, it is not a matter for the Government. The Select Committee are independent of the Government, they were set up for that reason, but it was never a practical likelihood that one wouldn’t have a change of policy to deal with the difficulties of the pits and then not have a proper examination by a Select Committee. It is right there should be. It never occurred to Michael Heseltine or indeed anybody else that this wouldn’t be a matter that the Select Committee would properly look at.

    QUESTION:

    [Mr Major was asked why Michael Heseltine was saying only minor changes would be considered].

    PRIME MINISTER:

    We didn’t suddenly scratch our heads and decide that this was the right policy. There are some very economic realities. Pit reductions and jobs disappearing in the mining industry isn’t a new phenomenon. During every year in the 1970s, for example, under both governments, governments of all sorts, ministers of all sorts, there were 30,000 jobs lost every single year and is because the demand for coal has been contracting over a very long period of time. That economic reality remains the same today.

    QUESTION:

    [Mr Major was asked if there was hope].

    PRIME MINISTER:

    We are having a moratorium; the pits aren’t closed and our minds aren’t closed. What we will seek to do is to open up the possibility for people to make representations, to make their case. If the miners want to make a case with professional help and make that case to the President of the Board of Trade, they can do so.

  • PMQT – 20 October 1992

    Below is the text of Prime Minister’s Question Time from 20th October 1992.

    PRIME MINISTER:

     

    Engagements

    Q1. Mr. Jacques Arnold : To ask the Prime Minister if he will list his official engagements for Tuesday 20 October.

    The Prime Minister (Mr. John Major) : This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

    Mr. Arnold : Bearing in mind my right hon. Friend’s commitment to putting Britain first, will he confirm that the Government attach priority to getting this country out of recession and creating jobs?

    The Prime Minister : All across Europe and beyond, economic circumstances are very difficult and in recent months have worsened noticeably in a number of countries. We are seeking the right policies to bring back not just recovery to this country but recovery with low inflation. The interest rate reductions that we have been able to make and the increasing competitiveness of the exchange rate will enable us to lead this country back to recovery with the low inflation and sustained growth that we need.

    Mr. Bell : In the light of the statements made by the president of the Bundesbank and by the chairman of the Italian central bank that a general realignment was available to the British Government prior to Black Wednesday, will the Prime Minister answer the question that his Chancellor of the Exchequer failed to answer when he appeared before the Treasury and Civil Service Select Committee or at the Dispatch Box? Was there or was there not a general realignment–either formal or informal–on the table?

    The Prime Minister : I am happy to answer that categorically. No, there was not–formal or informal.

     

    Q2. Mr. Adley : To ask the Prime Minister if he will list his official engagements for Tuesday 20 October.

    The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

    Mr. Adley : Referring to matters that are in the minds of right hon. and hon. Members, does my right hon. Friend accept that there is some linkage between electricity privatisation and the current problems in the coal industry? This morning I heard from British Rail that if the proposed mine closures go through, British Rail will face a bill in excess of £200 million in terms of lost revenue and redundancy payments. Will my right hon. Friend please give a clear assurance that if there are to be any further privatisations, either of industry or of the nation’s transport infrastructure, a full cost-benefit analysis will be provided to the House so that it may assess the full national implications?

    The Prime Minister : Many of the problems faced by the coal industry — those that it faces at present and those that it has faced over many years–preceded privatisation. They have far more to do with the demand for coal and the changing energy market in this country. It is for that reason that there has been a severe contraction of the coal industry, not only in this country but in France, Belgium and Germany, and elsewhere.

    As for my hon. Friend’s specific question about the railways, the White Paper published in July was preceded by a great deal of thought, discussion and consultation inside government, and consultation continues on all matters.

    Mr. Ashdown : Having been found out seeking to close down the coal industry quickly by rigging the market, are not the Government now asking to be allowed to close down the coal industry slowly by rigging a review? Is that not the proposition that their Back Benchers are being asked to swallow?

    The Prime Minister : No, that is not an accurate reflection of the policy that the Government are following–as yesterday’s statement by my right hon. Friend the President of the Board of Trade made perfectly clear. No one doubts, and no one has disputed, that over many years, under all Governments, there has been a continuing and severe contraction of the coal industry, owing to factors that were unavoidable.

    The Government now face the fact that, even at existing coal prices–which we are now aware will be noticeably lower in future–the market is contracting, and coal stocks are growing daily. The Government cannot ignore that problem. The sooner they deal with it, the sooner we shall be able comprehensively to establish assistance measures that will provide alternative employment and alternative security in areas where people know that existing jobs have at best only a limited life.

     

    Q3. Dr. Spink : To ask the Prime Minister if he will list his official engagements for Tuesday 20 October.

    The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

    Dr. Spink : Will the Prime Minister join me in welcoming the 1 per cent. cut in interest rates that was made on Friday, which will do so much to help all the people who have to repay mortgages and to help businesses, large and small? Does he agree that the key to resolving our unemployment difficulties and taking us out of the teeth of the world recession is low inflation, which we are achieving?

    The Prime Minister : We have now achieved low inflation in terms of both the retail prices index and the underlying inflation rate, at a level that we have not seen for many years. It is undoubtedly helpful to British industry that it has been possible to reduce interest rates to 8 per cent. I was particularly pleased by the consequential mortgage rate reductions that were announced today.

    As my hon. Friend suggested, however, we must bear it in mind that it is not simply a question of low interest rates. It is also vitally important for our future prosperity to restrain any reinflationary surge that may follow. My right hon. Friend the Chancellor of the Exchequer has made it clear that keeping inflation low–one of the essential ingredients for the sustained encouragement of jobs, prosperity and growth–remains central to the Government’s policy.

    Mr. John Smith : It is crystal clear that, whatever else he did yesterday, the President of the Board of Trade did not announce a review of the pit closure programme. Will the Prime Minister now agree to establish a genuine and independent review before any pit is closed for ever?

    The Prime Minister : So that there is no dispute or misunderstanding anywhere in the House, let me make clear the position of the 10 pits identified by my right hon. Friend, and that of the others that he mentioned in his statement. In our judgment, the 10 pits that he specifically named have no sustainable economic future, but the full statutory review procedure will take place. I have no doubt that, during the moratorium on the other pits, the Select Committee on Trade and Industry will wish to hold its own inquiry, and the Government will give that their fullest co-operation.

    During the moratorium, the President of the Board of Trade will himself take views and evidence to consider alongside the information already available to him on all matters. In due course he will publish that material, in time for consideration by the House and before any future debate in the House. His statement will be set in the context of the Government’s energy policy and will set out the consequences of that policy for British Coal, the implications for individual pits and the employment prospects for the industry. It is after that debate that future decisions will be made.

    Mr. Smith : I remind the Prime Minister of the question that I asked him, which was whether he would establish a genuine and independent review. If the Prime Minister really believes that he has a strong case, what has he to lose from an independent inquiry? What is he afraid of?

    The Prime Minister : Let me refer the right hon. and learned Gentleman to the answer that I gave. When we have completed the consultation and the examination–which, I repeat, will be made public and which, I repeat, will also be laid before this House–there will be every opportunity for every view to be taken into account before matters proceed.

    Mr. Smith : Is it not now clear that the only satisfactory alternative to constantly shifting statements from the Prime Minister and the President of the Board of Trade, and to the unseemly Dutch auction which is going on among Conservative Back Benchers, is for this House tomorrow night to vote to refer the whole matter to our own Select Committee and for that to be the responsibility of Members in all parts of the House?

    The Prime Minister : It is clear that the right hon. and learned Gentleman was not listening, for I said that it was an assumption of the Government that the Select Committee on Trade and Industry would wish to consider this matter and that we would provide whatever evidence was necessary to the Committee. Notwithstanding the tremendous emotions that have arisen about this whole affair, it is bogus of the right hon. and learned Gentleman not to recall the vast number of mines that were closed by the Labour Government, the large number of miners who were put out of work by his Government and the activities of his Government in recent years that played a significant part in reducing employment in the mining industry from 700,000 down to the present level.

    Sir Patrick McNair-Wilson : Is my right hon. Friend aware that the concern that is being expressed about the closure programme is very much bound up with the wider concern about the direction of our economy, post-ERM? Does he not agree that with a low value for sterling it really is essential that we have a policy of import substitution, of “Buy British”, and that we should not build gas-fired power stations when we have already got 50 per cent. too much gas generating capacity? If my right hon. Friend were to put those facts into the review, he would find that he had the enthusiastic support of people like myself, who are deeply concerned about what is being proposed.

    The Prime Minister : I agree entirely with my hon. Friend that the changing level of the exchange rate offers the most remarkable opportunities for British exporters and also offers a better incentive for import substitution than we have seen for many years. My hon. Friend also needs to remember that we are by instinct a trading nation and that we must bear that in mind in all the policies that we follow. As I made clear a few moments ago, what the Government are seeking to do and will continue to do in the period up to and including the public expenditure round is to look at the difficulties that this economy faces and at the right possibilities and the right policies, in order to build on present economic circumstances a proper level of growth for the British economy and for British industry.

     

    Q4. Mr. Andrew Smith : To ask the Prime Minister if he will list his official engagements for Tuesday 20 October.

    The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

    Mr. Smith : Can the Prime Minister understand that it is my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) who has spoken for Britain? Can the Prime Minister name one independent expert who is prepared to say that gas will produce cheaper electricity than coal? The President of the Board of Trade could not name one yesterday. Can the Prime Minister name one this afternoon–yes or no?

    The Prime Minister : If that were not the case, perhaps the hon. Gentleman could explain to the House why the demand for gas among consumers across the country is rising dramatically and shows signs of rising even further.

    Mr. Rathbone : Despite all the difficulties being faced at this moment by this country and by other countries, will the Prime Minister give the House and the nation reassurance that we shall continue our efforts to aid countries in the developing world which suffer even greater difficulties than we do?

    The Prime Minister : We have a very proud record indeed in that respect, in terms of the quantum of aid that we provide, in terms of the quality of aid that we provide, and in terms of keeping open markets in this country for the exports of those countries which, in many ways, is the greatest assistance that we can provide to the developing world. In my statement in a few moments on the European Council, I shall also set out some extra help to other countries which face particular needs at present.

  • Mr Major’s Doorstep Interview in London – 19 October 1992

    Below is the text of Mr Major’s doorstep interview at Downing Street, London, before a Cabinet meeting on Monday 19th October 1992.

    PRIME MINISTER:

    I called a meeting last night of senior colleagues and interested ministers. We discussed the question of the coal problems for two to two and a half hours. The purpose of this morning’s Cabinet meeting is to consider the conclusions we reached on that occasion and after the Cabinet meeting Mr Heseltine will announce the outcome of that in the House this afternoon.

  • Mr Major’s Comments on Coal Mine Closures – 16 October 1992

    Below is the text of Mr Major’s comments on coal mine closures, made in an interview on Friday 16th October 1992.

    QUESTION:

    [Mr Major was asked if he would scrap the coal mine closure because of opposition].

    PRIME MINISTER:

    No-one likes to see closures of this sort and we would not have done it unless we felt it was absolutely unavoidable. There are something like 40 million tons of coal lying at the top of the pit head that nobody wants, there is an extra million tons being added to that each month, the total production of coal is twice as high as we are remotely likely to be able to sell. That is the reality. What we need to do is firstly deal with that problem, painful though it is, and I understand that very well, and then start to put in place measures that will provide permanent jobs and regenerate those areas that at present face difficulties. It is not a decision that could have been delayed forever, it seemed to us to be cleaner, more clear cut and more honest to say frankly what the difficulty was and to seek to deal with it.

    QUESTION:

    [Mr Major was asked if he knew the dismay about the closures and if he would resign if defeated in the Commons on this].

    PRIME MINISTER:

    Who would not be dismayed? Who would actually have wanted to implement closures like this? I certainly would not. Michael Heseltine said earlier this week it was one of the most painful decisions he had ever been connected with, I would echo that. If we could have avoided it we would have avoided it. Right at the very last moment, before the decision was taken, I called the appropriate Ministers together and we had a complete representation of the entire case, whether there was a strategic demand for that coal or likely to be in the future, whether there were marginal pits that could have been saved. We looked again, and again, and again to see if we could change the decision.

  • 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.