The Rt. Hon. Sir John Major KG CH

Tag: Economy

  • Sir John Major’s Speech at the Prince’s Trust Dinner – 29 June 2009

    Below is the text of Sir John Major’s speech at the Prince’s Trust Dinner, held at Mosimann’s on Monday 29th June 2009.

    SIR JOHN MAJOR:

    My theme tonight is – change.

    Over the past few months, we’ve lived through economic and political events that have unsettled the previous view we had of the world.

    A new Presidency has revived the perception of America. But Iraq is not yet secure. Iran is in flux. We are not winning the war in Afghanistan. Pakistan is facing an upsurge in militancy. Progress on the MEPP is bedevilled by mistrust between Israel and Palestine.

    Meanwhile the EU is locked in yet another institutional crisis while Russia is hurting economically and, once again, moving away from the West.

    Economy

    The backcloth to all this is the economic firestorm of the last few months: a time in which the unthinkable has become thinkable and the future uncertain.

    No-one can be quite sure where we now are in the economic cycle – but it seems probable that the steep economic decline is over and activity is stabilising at – or near – the bottom of the cycle. Certainly the world economy is not collapsing but no route out of our difficulties is yet apparent.

    Some of the signals are mixed. Exports are rising from a very low baseline. Some business surveys are more positive. Economic data is less bad.

    There are other positive signs. Equity is now being raised in capital markets. The Banks generally – but not universally – are now on a more sound footing. And the ‘fear factor’ – fear of a systemic collapse – has largely gone away. These are all essential components of recovery although over that recovery hovers the potent threat of protection.

    But risks remain. Many financial institutions remain heavily over-borrowed. A lot of toxic debt is still hidden somewhere in Banks, Hedge Funds or Pension Funds. Its emergence would be de-stabilising.

    Government debt is at record highs in many countries. In countries like the UK, this raises the risk of higher taxation or rising interest rates to fund the deficit. This risk increases in the recovery phase when both governments and the Private Sector begin seeking loan funds.

    Amid these mixed signals we can be sure that the economic world we are entering will be different.

    We should be under no illusions. Free trade and market forces look much less attractive to the world than they did six months ago. Millions of people feel let down – have been let down. They have saved, and been prudent, yet their security has been wrecked. The UK again illustrates the point: Jobs, Houses, Pensions – the basis of well-being for individuals – are at risk for far too many people.

    In the foreseeable future, policy makers will need to show that the free market is sound: and that they know how to curb the excesses.

    It is certain that regulation will be tougher – and more restrictive. It is likely investors will be more risk averse. Public sentiment has lost its affection for – as the public sees it – the profit-at-all-costs, high risk, casino capitalism of the recent boom. Managed and less buccaneering capitalism seems more attractive.

    Some underlying fundamentals have not changed. China exemplifies the reality that, for over a decade, the economies of the emerging world have been star performers. Of course, the crisis hit China, too. But the speed and size of China’s fiscal stimulus suggests she is recovering well ahead of the Western economies. Certainly, unlike elsewhere, credit is expanding rapidly.

    Other emerging economies will enjoy growth well ahead of their Western counterparts among them – China, India, Indonesia. Some of the smaller economies – Ukraine, the Baltic States – face more intractable problems but, in the future, we can expect most of the world’s growth to come from the East. We can no longer deny what is evident: there has been a shift of economic power. And this shift is not short-term; it is more likely to accelerate.

    This hasn’t come about because the West became careless – or degenerate: quite the reverse. Not only did the West win the argument for the free market, but Western science put rocket boosters on it.

    The moment Jack Kilby invented the integrated circuit, we were in a new world: nothing in the 20th Century so accelerated change. That circuit was the forerunner of silicon chips. It led to the computer revolution. To the Digital Age. Without them, there would be no Silicon Valley; no Internet; no laptops; no Google; no iPods; no Blackberrys – and no PlayStations.

    Similarly, spin-offs from the space race have given us global communications, satellites and – less happily – missiles to carry nuclear weapons: it is likely there will be further unexpected advances as a fall-out from experiments with the Large Hadron Collider, now due to re commence operations in October.

    Science has not only changed how we live: medical science is changing the quality and length of our lives. A hundred years ago, no-one knew of blood groups, hormones or barbiturates. Since then, the advance of medicine has been bewildering.

    Whole new industries have emerged. Synthetic Biology has brought together science and engineering to design and build biological functions. New technologies are delivering better drugs to combat disease, promote genetic engineering, healthy food, better pesticides, the control and destruction of pollution, and advances in forensic medicine.

    Scientists are examining how to combine computer chip technology with pharmaceutical research in order to target drugs to treat specific parts of the body. Imagine – for example – chemotherapy with only minimal side-effects.

    Such science is leading a revolution in medical care: advances in engineering techniques have given us insulin pumps for diabetes; cochlea implants for deafness; and there are realistic prospects of repairing nerve cells for sufferers of Parkinson’s and Alzheimer’s disease. It may soon be possible to replace heart muscle cells. A few years ago, all this would have seemed like Black Magic. Soon, fantasy will become reality, with investment and commercial prospects that are simply staggering.

    Population growth is also effecting change. At the time of Christ, world population was about 350 million. Over the next 19 centuries, it grew by a little over one billion. Now, we are growing at nearly one billion every ten years. Most of this growing population is very poor: 3 billion – nearly one-half the present world population – live on only a handful of dollars a day.

    Here is a cruel irony. As some nations reduce poverty and improve their own living standards, they drive up food prices. This is calamitous for even poorer nations. The arithmetic is simple: if one billion Indians – one-sixth of the entire world population – together with millions of Chinese, Brazilians and Malaysians – now eat two meals a day, instead of only one, the demand for food soars. So does the price – provoking fear and panic in poor communities.

    The rich nations promise to help – but many do not live up to their promises. It cannot be right that both Europe and America spend broadly seven times as much on providing subsidised food for those already well-fed as the whole world spends on all the needs of those who often are not fed at all.

    This statistic is even more bizarre when you realise such subsidies cut away the chance for poor nations to sell their agricultural produce – often their only export – into developed markets. This is hardly free trade.

    Now, factor in future growth. Between now and 2050 it is estimated world population will grow by the equivalent of two more nations the size of China. Most of these 2½ billion people will be very poor. This is not a problem we can ignore.

    Nor is climate change: hard-to-ignore science warns us that the long-term risks are real.

    We had better recognise coal, oil and gas are going to dominate energy supply for decades to come – irrespective of any advances in solar energy, advanced bio-fuels, fusion and other renewables.

    As dioxides rise, scientists warn of global warming of up to five degrees: this sounds small – but isn’t: in the depth of the last ice-age the temperature fall was – five degrees. But – this single figure is utterly misleading: the land warms more than the sea and high altitudes more than low. So the impact of global warming is not uniform. Nor is it localised: innocent non-polluters may suffer – and the guilty may not: no-one can predict where the flood, or hurricane, or drought risks will be. This does not make it easy to persuade the polluters to stop.

    Nor do the time-lags: the main perils of global warming lie far ahead. It takes decades for the oceans to adjust, and centuries for ice-sheets to melt. Yet, for all its scientific uncertainty, climate change is a challenge we cannot, dare not, ignore.

    Politics is changing our world, too.

    Fifty years ago, no-one could have predicted the world of today.

    The Soviet Union and the United States were the two super-powers. China was isolationist. Japan had barely begun her post-war rise. Central and Eastern Europe fell under Soviet control. Germany was still divided. Latin America was a continent of revolutions. The EU was in its infancy. Much of Africa was still colonised. Oil was $3 a barrel and no-one imagined an Islamic Revolution.

    We worry about Iraq, Iran, Afghanistan, Arab-Israel and the stability of the Middle East – but talk of it as though it were one problem – which it is not – and without looking at history in order to understand the roots of conflict.

    We conflate Islam and fundamentalism: and yet fundamentalism is a perversion of Islam, that threatens it as much as us. Bin Laden hates the Saudis even more than he hates the Americans!

    In its diversity, there are tensions between Christian, Muslim and Jew; Arab, Persian, Kurd and Turk; Shia and Sunni; between Monarchies and Republics; Secular and Islamic societies; Monarchies and Republics. Some countries have oil, some not. Some are large, others small.

    The Middle East embraces nations in which references to the Prophet Mohammed, or the Old and New Testaments, are part of everyday conversation. For some – the Salafists – Islam was perfect when founded and cannot be changed or improved.

    It is a cauldron. It is not a liberal democracy.

    Over the centuries we – in Europe – have chosen democracy as our form of government. Others – China, Russia, much of the Middle East, Central Asia and Africa – seem to accept, even welcome, a form of autocratic quasi-democracy, that is more concerned to enhance competition than to use social expenditure to improve what Disraeli called “the Condition of the People”.

    As we go forward, the West will need to take account of this. We cannot – other than by example – presume to impose our own democratic system of government – itself imperfect, despite its longevity – on other nations with their own histories and cultures.

    I have not talked tonight of our own country although, no doubt, many expected me to do so. I did not – because I despair at Government that is reduced to a soap opera and Parliament to irrelevance and disaffection.

    But – if you wish – please ask!

  • Sir John Major’s Article on Gordon Brown – 7 May 2009

    The text of Sir John Major’s article on Gordon Brown, published in the Daily Telegraph on 7th May 2009.

    SIR JOHN MAJOR:

    In recent days, there have been many comparisons drawn between the present plight of the Labour Government and the final months of its Conservative predecessor. Similarities there may be – but the differences are striking.

    The Conservatives were in their 18th year of government: Labour is in its 12th. The Conservatives had no majority, and were at the mercy of a handful of rebels: Labour still enjoys a large majority. Conservative divisions were over policy – notably Europe – in which the dissenters believed they must prevail for the national interest: Labour has no such excuse. And – crucially – the Tory economy was well on track to full vigour: Labour’s is in the mire.

    In the mid-1990s, I was acutely aware the Tories were likely to lose the election. Indeed, on the morrow of the 1992 election victory, Chris Patten and I speculated on the unlikelihood of a fifth win: it was, we thought, stretching the democratic elastic just too far.

    Throughout the 1992-97 parliament, we tried to do what we believed was right for the country, although much of our programme was controversial – especially in our own party. We persevered with policies we believed would curb inflation and bring long-term economic benefit. So they did, but at the expense of our electoral prospects.

    Labour, by contrast, has retreated to tactics I believe they will live to regret. Too often, in the face of public hostility, they cite the last Conservative government as a precedent, the not-so-subliminal message being: “They’re worse than us.”

    It is not convincing. Take the roasting they received for mishandling the Gurkhas: Labour’s defence was that the Conservative government “had never done anything about it”. Nor had earlier Labour governments, and for the same reason: it had not been an issue. And if it had been an issue, why was there not a peep from Labour about it in the 1990s? Opposition days in Parliament are not a New Labour invention.

    After 12 years in office, excuses such as this are bordering on the desperate.

    Why do they do it? Habit, of course, for fact has never got in the way of New Labour fiction – it has been in their DNA since the mid-1990s.

    But now it seems they have lost all touch with reality: in their minds, what they say is truth, even if the facts don’t support it. Such delusion is dangerous – especially for a government.

    And it is continual. Since the Prime Minister can no longer defend Labour policies, he attacks a fictional Tory past at almost every Prime Minister’s Questions. To Mr Brown, the Tories are the enemy, therefore any criticism – however wrong or distorted – is permissible. Let us take one of his familiar attacks on David Cameron, flawed from beginning to end. According to Mr Brown, Mr Cameron was adviser to Norman Lamont when he raised interest rates to 15 per cent, and created three million unemployed. This is ludicrous. The belief that a 26-year-old political adviser would have been responsible for a Conservative government’s economic policies is fanciful. And – in any event – how does Mr Brown know what advice Mr Cameron offered his minister? He may well have advised against the government’s policies and been over-ruled.

    But Mr Brown doesn’t care: he simply wants to smear Mr Cameron for events over which he knows he had no control. The premise of his argument is also incorrect: interest rates were not raised to 15 per cent by Norman Lamont in the 1990s, but by Nigel Lawson in the 1980s.

    As chancellor, Norman reduced them from 14 per cent to 6 per cent.

    The Prime Minister is wrong about unemployment, too. First, a pedantic point: it did not reach three million under the Conservative government, but peaked well below. Furthermore, it was rising sharply long before Norman Lamont became chancellor, and David Cameron his adviser. Mr Brown knows all this, yet persists with charges that are fundamentally unworthy.

    And he is not alone. Other ministers continue to claim that Labour inherited three million unemployed whereas, in 1997, the claimant count was 1.6 million and falling rapidly.

    But Labour has not won three elections by allowing truth to get in the way of a good smear. The uncomfortable reality for Labour is that, however unpopular the last Conservative administration may have been, it was the only government in the last 50 years to leave office with every single economic indicator improving.

    In 1996-7, the economy had been growing for five years, and borrowing – now the nation’s nemesis – was £22 billion (although one of Labour’s “recalculations” upped it to £35 billion).

    Even so, the estimate for the current year is a staggering £175 billion. Similarly, total debt has doubled, and the taxpayer will be funding Labour’s debt mountain for many years to come.

    That the Conservatives bequeathed such a buoyant economy is not a truth universally acknowledged, for – in order to claim credit for the economy – Labour has peddled “disinformation” about its inheritance from the day it took office. The truth – apparent to independent economists – is that the years of prosperity under Labour were based on Conservative supply side changes (in the 1980s) and Tory destruction of inflation (in the 1990s).

    Did Labour build on that legacy? No. Instead, they squandered it, and will leave the country near bankrupt as a result. This slide from riches to rags inspires another Labour deception: that our present woes are entirely due to the financial crisis that began in America. Of course, there is an international dimension, but Labour’s alibi is – at best – a half-truth. Even if there had been no international crisis, the UK would still be in recession; our debts would still be at record levels; our pension system would still be wrecked; our education system would still need reform; our health system would still be unable to cope; and our prison system would still be overflowing with inmates who should not be there, while others who should are being released early.

    The Prime Minister hopes to win the next election but, in his heart, he must recognise his party is likely to lose. I offer him one piece of genuinely well-meant advice: fight the next election on policies, not personalities; on fact, not fiction; on substance, not spin. The people of this country deserve such a campaign, so that they can make an informed choice.

    It may not win Labour the next election, but Gordon Brown will leave office a more contented man.

  • Sir John Major’s Interview on the Andrew Marr Show – 14 December 2008

    The text of Sir John Major’s interview on the BBC’s Andrew Marr show, broadcast live on 14th December 2008.

    ANDREW MARR:

    Now then, a falling housing market, rising job losses, the pound plummeting, high borrowing. Well life goes on after that, even political life, as the former Prime Minister John Major can witness. But he’s described the current Prime Minister Gordon Brown as having “as much financial blood on his hands as any banker”.

    Well Sir John Major is here now. Welcome, Sir John.

    SIR JOHN MAJOR:

    Good morning.

    ANDREW MARR:

    Let’s start with the sort of parallel, with the early 90s before your General Election victory, when in many respects things were the same: we had negative equity, we had all sorts of problems in the economy, and as Prime Minister, you were seeing job losses, more announcements of factory closures coming across your desk day after day. What’s it like to be in that position?

    SIR JOHN MAJOR:

    It’s pretty awful. I mean I became Prime Minister at a time when a recession was certain: interest rates were 14%, unemployment was rising very rapidly, and the economy was heading clearly for a recession. And it is very painful, and anyone who believes people don’t suffer from that – by people I don’t just mean the people in the country who lose jobs and lose security – but anyone who believes those who are in government don’t suffer as a result of that are quite wrong. It was extremely painful and even now I remember the difficulties that one felt and the helplessness sometimes one felt. But it was a very different form of recession from this one. The recession in the early 90s was once again an inflationary recession.

    For 40 years we’d had inflation bedevilling the British economy and we needed to get inflation down, so it wasn’t open to us to spend a lot of money, to spend our way out of it because it would have just put inflation back up and so we looked particularly heartless sitting there. But I look back and I can tell you why we did it, exactly why I did it. As a boy, I remembered what it was like when the week lasts longer than the money. And that is what happens when you have a recession: the week lasts longer than the money.

    ANDREW MARR:

    And it’s happening to a lot of people just now.

    SIR JOHN MAJOR:

    Well it had happened repeatedly between 1950 and 1990 and I was determined then to stop it. So we looked very heartless, we paid a very heavy political price for it, but we did kill inflation for a very long time and the British economy subsequently benefited. But today we have very different circumstances. We have two things in fact: we have what I suppose, without wishing to downgrade it, is a communal garden recession. And on top of that, we have a credit crunch, and the two things have interleaved to make it very complex.

    The Government concentrate on the credit crunch and blame the international community, whereas in fact the domestic recession is entirely as a result of domestic policy.

    ANDREW MARR:

    Because there’s been too much borrowing?

    SIR JOHN MAJOR:

    Because there’s been too much borrowing. If you look, we’ve had 15 years of growth now, 15 years of very strong growth. It didn’t start with the Labour Party; they inherited it.

    As Derek Scott, Tony Blair’s adviser said, “Gordon Brown inherited the best economy of any Chancellor in living memory”, and so he did.

    And they’ve squandered it. They have spent and spent and spent.

    ANDREW MARR:

    Well except that I mean it could be said that the Conservatives in your day went through a big, long boom, very strong economy, and then it turned to bust. Now it’s happened again.

    SIR JOHN MAJOR:

    Yes.

    ANDREW MARR:

    Isn’t that just a kind of natural part of the cycle?

    SIR JOHN MAJOR:

    Well it ought not to be. It usually follows policy mistakes. I don’t think anyone denies that there was too much of a boom in the late 80s and we paid the price in the 90s. What has happened here…

    ANDREW MARR:

    And then another kind of boom in the 20s.

    SIR JOHN MAJOR:

    What has happened here is continual expenditure above and beyond that which we can afford. We should have been repaying debt. We’ve been adding to it. The Government say they’ve repaid debt, but the only time they did that was when they were following our spending plans in 1998 and 1999.

    Since then, they’ve built up debt. We now have, well we now pay – here’s a horrifying thought – we now pay every day £262 million in interest alone on the debt, and the debt is set to double over the next few years. It’s a frightening scenario.

    ANDREW MARR:

    And what do you think, as an old-fashioned guy, of a government that is saying to people we must go out there and spend more to get ourselves…

    SIR JOHN MAJOR:

    Well it’s curious.

    ANDREW MARR:

    I mean I’m talking about personal debt.

    SIR JOHN MAJOR:

    Well, I think personal debt’s very high. I mean personal indebtedness has risen by 70%, after you discount inflation, in the last 10 years. We have the highest level of personal debt in Europe. We have the highest level of government debt in our history. It’s set to double and the cost is going to be absolutely horrendous. I think that is wholly wrong.

    You’ve seen over years these very distasteful television advertisements – at least I find them distasteful – where you say people are asked to consider are they in debt? Yes. Would they like to roll it up and reduce their outgoings? Well of course they do, but at a higher rate of interest and for a longer period. And it builds up indebtedness and

    ANDREW MARR:

    So?

    SIR JOHN MAJOR:

    So? This is economically disastrous.

    ANDREW MARR:

    So how bad do you think things are going to get? I mean you know we think about Japan, we think about deflation, we think about possibly quite a long period of depression.

    SIR JOHN MAJOR:

    Well it isn’t depression, it isn’t 1929 to 33. I mean in 29 to 33, you had a national income in America fall by over 50%, you had unemployment go up from 3% to 25%. We’re not in that ballpark.

    The depression oratory has been used to justify some areas of expenditure – unjustifiably so in my case – so it’s not, it’s not a depression.

    ANDREW MARR:

    So you think ministers are scaring people too much?

    SIR JOHN MAJOR:

    I think they are. I think they’re overcooking it because they’re concerned and they wish to justify the amount of debt they’re getting us into. I think that is a mistake for a raft of reasons. I don’t downplay the seriousness of this.

    I think this is the worst situation we have had since the Second World War, and after 12 years of Labour government we now have a level of national debt that is the same as we had after 6 years of world war. That is the scale of the indebtedness and the problem we’re in.

    ANDREW MARR:

    We’re going to see unemployment rising, sadly, very sharply?

    SIR JOHN MAJOR:

    Well I’m very sniffy about the unemployment figures. The claimant count is said to be 1.84 million, rising to 2 million, and most people think it will hit 3 and above, which is dreadful. It’s happened before. We got very close to that in the early 90s and it is awful for everyone concerned. But in fact the situation may be worse than that.

    We have a total of 5 million people on out of work benefits of one sort or another. Nearly 2 million show as unemployed. But there’s another million at least on invalidity benefit whom the Government themselves say could and should be working. So the unemployment figures are actually far worse than they immediately appear, and I fear we’re going to have an avalanche of job losses in the first three or four months of next year.

    ANDREW MARR:

    And yet in all of this, the Labour Party’s opinion poll rating has improved; Gordon Brown’s personal rating has improved; and your party has perhaps been easy to caricature as a party which simply says, “We don’t have a response to this”.

    SIR JOHN MAJOR:

    Well there are.

    ANDREW MARR:

    At least Gordon Brown is saying something.

    SIR JOHN MAJOR:

    Well there are some ironies here, aren’t there? If the burglar has ransacked your house, you don’t normally invite him back to fix the security locks. The concept that Gordon Brown, who’s been Chancellor for 10 years and Prime Minister for one and presided over this train wreck, is the person to put right what he’s got wrong strikes me as being ironic, to say the least.

    As far as what ought to be done, it’s very easy to give an impression of action. The question is is the action wise? Now I don’t think most of the Government’s actions are wise. Recapitalising the banks – I agree with that. I think it was inevitable, I think it was right to do it. I congratulate the Government on doing that. That was fine.

    But I think since then, they’ve got their policy badly wrong. The reduction in VAT, you might as well have burnt the money and thrown it away, frankly. I don’t think it’ll do anything that is credible at all. There are two things that we need to address: firstly the credit crunch; and, secondly, the recession, if I might draw that distinction. On the credit crunch, we need to get credit moving. David Cameron’s proposed a National Guaranteed Loan Scheme. Now it is a very big scheme and I think it is exactly the right way to go.

    If we can guarantee the credit, then the banks will lend. I think one thing David might wish to look at in future is incorporating housing within that scheme, so that the banks and the building societies might safely advance say 75% of a £150,000 loan and have that guaranteed as well. I think that would help the housing market.

    ANDREW MARR:

    So you’d help the housing market.

    SIR JOHN MAJOR:

    And I think the other thing we might look at beyond that which has already been proposed – and I think David Cameron’s plans to freeze council tax, that sort of thing, I absolutely support them – the other thing I think we may have to look at in the future is the position of savers.
    They are being appallingly treated at the moment. There are millions of people who have saved for their security to supplement their pension in retirement. And what has now happened – those who have been prudent and saved for their retirement are now finding the amount they’re earning in interest on their savings has dropped dramatically because we’re in economic difficulties.

    ANDREW MARR:

    But sorting that out would be hugely expensive, wouldn’t it?

    SIR JOHN MAJOR:

    No it wouldn’t, no it wouldn’t. What I would suggest we do is exempt from tax the first £5,000 worth of savings income each year. That would help those people who’ve seen interest rates drop in their lifetimes preparedness for retirement. I think that would be a help and I think it’s also socially just. At the moment policy helps the imprudent, but it penalises the prudent. I don’t think that’s either socially just or economically wise.

    ANDREW MARR:

    If you’re against the fiscal stimulus, as it’s been called, aren’t you and your party also saying that President-elect Obama is 100% wrong, that the European Community is wrong, that everybody else is wrong?

    SIR JOHN MAJOR:

    That’s the Labour argument. You’re quite right, that’s the argument that’s being put to us, so let me actually address it. Everybody else, America is a case in point. The dollar is a different proposition from sterling. America is a case in point. Beyond that, there are many very good authorities pointing out that you can only put in a fiscal stimulus if you have the right strength of reserves in order to do so. We don’t. We have spent it.

    ANDREW MARR:

    So we’re in a different position?

    SIR JOHN MAJOR:

    We’re in a wholly different position. But let me run forward 3 years. If we continue borrowing like this, the world will be coming out of recession. We will have a huge amount of borrowing which will force up interest rates.

    In 3 years time, as the world comes out of recession, in the United Kingdom we’ll have higher interest rates, we’ll have higher national insurance contributions because the Government have already implemented that, and we’ll have higher taxes. Are we going to come out of the recession with everybody else, with higher interest rates, higher taxes and higher national insurance contributions? I think not. What the Government are doing now with this appearance of action, often misplaced action, is ensuring that our recession is longer and deeper than anybody else’s.

    ANDREW MARR:

    All that being the case, isn’t it astonishing that they’ve become more popular, not less? And isn’t it also clear, I think a senior Conservative said David Cameron and George Osborne haven’t had a good war.

    SIR JOHN MAJOR:

    I think there are two reasons why that’s happened.

    ANDREW MARR:

    So you’d accept it as an analysis?

    SIR JOHN MAJOR:

    Not entirely, no, because I think you have a good war if you win in the end; not if you win the first skirmish. And I think there’s always a tendency to grab hold of nurse for fear of something worse. Uncertainty always drives people back to the Government. But I think as they analyse what has happened, I think they will see that the Government are leading them into a deeper problem, not leading them out of the problem. And the analogy I gave of the problems we’ll have in 3 years time is a case in point. The biggest idea actually that has yet emerged after the recapitalisation of the banks is the National Loan Guarantee Scheme and I think people need to understand what that means.

    ANDREW MARR:

    OK.

    SIR JOHN MAJOR:

    It will get the lifeblood of industry flowing to industry.

    ANDREW MARR:

    Would you like to see… Sorry, we’re running out of time. Would you like to see Ken Clarke coming back? There have been a lot of rumblings about that. Michael Portillo in the papers today is talking about that.

    SIR JOHN MAJOR:

    I’m not going to pick David Cameron’s Shadow Cabinet. I had long enough picking my own. I know the difficulties with that. I’m certainly not going to touch that. He’s a very able man, he’s certainly there to help and be very supportive, but I’m not joining this general clamour for change.

    ANDREW MARR:

    You’ve been in the world of international finance and so on really for the past 10 years one way or another. When did you start to see that something badly was going wrong on the banking side? Was there a sort of moment of revelation?

    SIR JOHN MAJOR:

    No, there wasn’t a single moment of revelation. It’s simply the general aggregation of debt. There has been a belief that the economic cycle had been abolished, we have finished with boom and bust. Well fooey! We’ve certainly finished with boom and we’ve got a huge, great bust.
    And when you see debt piling up year after year, just as with an individual – if you, if you and your family piled up debt year after year after year, there would come a reckoning, you would have to pay it back. And that is what Gordon Brown and the Government have done.

    They have piled up debt and now is the reckoning. Let us not pretend that it is all external factors. External factors are creating the credit crunch. External factors emphatically did not create the domestic train wreck and recession that we now have. That was domestic policy and it has been building up for some years.

    ANDREW MARR:

    Sir John Major, for now thank you very much indeed.

    SIR JOHN MAJOR:

    Thank you.

  • Sir John Major’s Interview on the Andrew Marr Show – 16 December 2007

    The text of Sir John Major’s interview on the BBC’s Andrew Marr show, broadcast live on 16th December 2007.

    ANDREW MARR:

    Now of course one of the big events from the past year was Tony Blair’s exit from office.

    Already the histories and political obituaries have been written, but so far his predecessor in No. 10 has been virtually silent on the New Labour years. John Major joins us now to look back over the last year. Welcome, thank you very much for coming in.

    SIR JOHN MAJOR:

    My pleasure.

    ANDREW MARR:

    Let’s start with the economy, because some people might say it’s a sense of déjà vu, house prices under pressure, coming down again, the kind of outlook that we haven’t maybe had since the immediate days around Black Wednesday?

    SIR JOHN MAJOR:

    Well that of course was exactly what I inherited when I became Prime Minister, there were some similarities with now, we were going into a recession, it was clearly going to be very deep. And it took a long time to get out of it.

    But if you recall, when we left office in 1997 I think we probably left the best economy any government has left for the last 50 years. We had had five years of consistent growth every quarter, falling interest rates, falling unemployment, increasing growth, for a long period.

    It wasn’t created by the present Labour government it was there in place when they took office. But of course they have always used Black Wednesday to mask that.

    ANDREW MARR:

    I mean it has to be said that they then picked up that ball, as it were, and ran with it for a long time?

    SIR JOHN MAJOR:

    Yes they did, to a certain extent and the fact that they haven’t wrecked the economy is something one can give them credit for. But I think it’s now beginning to unravel in quite a serious way.

    If you look at what has happened over the last ten years, there were going to be no tax increases, specifically there were going to be no tax increases on pensions. In fact a specific tax increase on pensions has wrecked final salary pension schemes and wrecked the security of many pensioners.

    But you now see over the full ten years we have dropped significantly in competitiveness, productivity is down over those ten years. We have had a tax increase almost every month for the last ten years, on average. We’ve had 111 tax increases over that period.

    The economy is now clearly running into some significant difficulties, and there are two events, two events that are specifically related to the government policy that have caused huge problems. One of them you’ve referred to them already this morning, Northern Rock, and I’ll come back to that in a moment.

    The other of course was the then Chancellor’s decision to sell gold. He sold gold quite gratuitously, something like 395-400 tonnes of gold at an average price of, I think, about $275. The loss to the exchanges from that decision is now in excess of the loss to the exchanges on Black Wednesday, in excess of the Black Wednesday costs.

    ANDREW MARR:

    From your point of view, Golden Tuesday or whatever it was, is worse than Black Wednesday?

    SIR JOHN MAJOR:

    Well in terms of the loss to the exchanges most certainly it’s a different political damage. But in terms of the loss to the exchanges it most certainly is. And I hope it will stop the Prime Minister talking about ten successful years because they haven’t been entirely successful. And that absurdity that he sometimes turns to, that he appears to blame David Cameron who was a bag carrier for Norman Lamont on Black Wednesday, as though David was at all responsible, for he wasn’t.

    The second point of course is Northern Rock. We don’t yet know what the cost of Northern Rock to the Economy will be. But it is quite likely, not certain, but quite likely that it will exceed the cost for the taxpayer of either Black Wednesday or of the sale of gold. And that runs specifically from changes to the system introduced by the then Chancellor in 1997.

    ANDREW MARR:

    The regulatory system?

    SIR JOHN MAJOR:

    The regulatory system.

    ANDREW MARR:

    Right. I wondered in the final film that Tony Blair made about looking back over, looking back in part, over his ten years, what you felt when he said maybe he’d been a little bit rough in going for you over sleaze?

    SIR JOHN MAJOR:

    Well I didn’t watch it, I didn’t watch the film, but I read about it. But I think there is a clear-cut distinction between what was called sleaze in the 1990s and what has happened since 1997. Lots of people misbehaved in the ’80s and in the ’90s, but they were all individuals, it was never institutional, it was never related specifically to the Conservative Party or to the Conservative Government.

    ANDREW MARR:

    You don’t think there was a culture of overseas business people putting money in, sort of behind the back of the political system?

    SIR JOHN MAJOR:

    I don’t think there was a culture. I mean I devolved responsibility for party fundraising when I became Prime Minister, so I had no direct hand in it. But, no I don’t think so. But what happened in the 1990s, there was a deliberate attempt to portray the Conservative Party as an institution, it was almost McCarthyite frankly, as though it were sleazy, and it wasn’t.

    The distinction is that sleaze has seemed to be systemic since 1997. I mean, I can see a clear pattern, you probably remember the Ecclestone affair in, I think, November 1997. We have Abrahams in November 2007, and serial offences in between those two dates. 2002, when I think they were taking money from Mr. Desmond, the Labour Party set up a committee and decided they would vet every future donor. Well it clearly wasn’t very successful vetting, from what we’ve seen subsequently.

    So I do think that they have every reason to regret what they did in the 1990s, but I must say I was sorry when the Prime Minister apologised for the fact that it had bounced back on the Labour Party. I think he should have apologised for the fact that it wasn’t true what he was saying in the 1990s. And to accuse people in the Cabinet, a Cabinet that had people like Douglas Hurd, Michael Heseltine, Malcolm Rifkind, Ken Clarke, Gill Shepherd, Virginia Bottomley, John Gummer, Peter Brooke – to accuse them of being part of a sleazy government is just unscrupulous.

    ANDREW MARR:

    Do you think that Tony Blair has presided over a corrupt government?

    SIR JOHN MAJOR:

    I don’t think it’s corrupt, no I don’t use the word corrupt, I think they have been careless. I think they have had a huge majority and they have been careless, I think that’s what it is. I don’t accuse them of corruption and I wouldn’t accuse them of corruption. I don’t think most politicians, occasionally there’s a bad apple in the barrel. We are in parliament a microcosm of the nation, there are bad applies. But I don’t think that. But I do think it was institutionally careless in the grand manner.

    ANDREW MARR:

    And why do you think that happened, simply because they thought when Tony Blair said I’m a pretty straight kind of guy, he sort of believed it therefore?

    SIR JOHN MAJOR:

    Well I think if they were to say today, whiter than white or purer than pure, I think people would just laugh. And I think that is sad for the sake of the whole system. But there were of course a whole series of slogans then that look pretty stupid now – Tough on Crime, Tough on the Causes of Crime – well we now have prisoners being let out early, gun crime up, violent crime up, total crimes up.

    It really hasn’t lived up to the billing and you could say that in the National Health Service, 24 hours to save it, well it’s a lot longer than 24 hours. And you don’t have to take my word, take Derek Wanless’s word, we are not on our way yet, to a world class health service despite huge extra taxation going into it.

    ANDREW MARR:

    I imagine that Gordon Brown and Tony Blair would say we’ve all had the same problem with party funding, it’s something that’s bedevilled British politics in Margaret Thatcher’s time, in John Major’s time, and now in our time too. And there does need to be a better way of dealing with this?

    SIR JOHN MAJOR:

    I don’t think a better way is more money from the taxpayer, I know there seems to be a communal view that it is a good idea from all the parties, I don’t personally agree with it. And I don’t agree with it specifically for this reason – I think, apart from the fact I don’t think it’s right for the taxpayer to pay, but let us even put that to one side, there’s another practical reason. If too much of party funding comes directly from the taxpayer a great deal of the activity at the grass roots that brings a party together, that makes a party, that keeps the politicians in touch with the grass roots, gets swept away.

    And I think politicians are remote enough already from the electorate as a whole, I wouldn’t wish to see them made even more remote, and my fear apart from the undoubted desirability of the principle, my fear would be that if party funding too much came from the centre that it would diminish grass roots activity even more, that would be a thoroughly bad development.

    ANDREW MARR:

    Yes. I mean you were swept out of power by Tony Blair and the Labour Party saying that you were sleazy, that your government was riddled, if not with corruption but certainly with sleaze which was the slightly politer way of saying corruption, as I recall. The old Chinese saying about if you wait long enough the bodies of your enemies float past, does it occur to you?

    SIR JOHN MAJOR:

    Well, just a touch. But I mean, what they did at the time was absolutely unscrupulous. I don’t think that’s what cost us the election, frankly we’d been there so long if the leader of the Conservative Party had been the Archangel Gabriel and the Cabinet had been a choir of angels, I think after 18 years we would have lost.

    I think what their pretty unscrupulous use of facts did, was to magnify the defeat, to turn a defeat that was always likely into a much bigger defeat. And I think that they did do very successfully but I think in a manner that scarred politics in the long term.

    ANDREW MARR:

    And turning to your party now, it strikes me that what we said about New Labour back in the mid-1990s could apply to the Conservatives now, which is terribly inexperienced. Very, very successful in the polls at the moment, beginning to look like a party that could win an overall majority at the next election, long way away and all the rest of it. But nonetheless, is that a worry, the inexperience?

    SIR JOHN MAJOR:

    Well I think the government are pretty inexperienced, in this sense. I mean half the Cabinet were special advisors two or three years ago.

    ANDREW MARR:

    Everybody’s only been a special advisor in politics these days.

    SIR JOHN MAJOR:

    I know, it’s a great mistake to get to the top of politics that way in my judgement. But if you look back in Margaret’s time there were always three people who could have been Prime Minister. When I became Prime Minister, if I had been run over by a bus and some people rather wished for that, there were several…

    ANDREW MARR:

    Depends who was driving the bus?

    SIR JOHN MAJOR:

    There were several people who could have taken over – Douglas Hurd, Michael Heseltine, Ken Clarke, Malcolm Rifkind – who may well have done a better job, maybe people thought they would have done. If Gordon Brown were run over who would be Prime Minister?

    There was one very senior member, Jack Straw, beyond that nobody with any experience whatsoever. It is the most inexperienced Cabinet that I can remember. So I don’t think the relative inexperience of the opposition is a problem. Particularly, if I may say so, because of the way David Cameron is now going abroad regularly.

    I’ve just returned from China, I was in China last week and I met some senior Chinese there and David Cameron is going there next week, and we were talking about his visit and they’re very much looking forward to seeing him. And I think these overseas trips are very important for him to do and I’m delighted he’s doing them.

    ANDREW MARR:

    One of the younger members of the Cabinet, David Miliband, I was just talking to in Basra. It is all’s well that ends well, is it finally over down there, how do you read that?

    SIR JOHN MAJOR:

    Well, I’m uncertain. I mean, if you take an audit, we went into Iraq on what turned out to be a false premise. Getting rid of Saddam Hussein I think undoubtedly is a bonus.

    Everything else looks pretty bleak to me. If you look at life within Iraq at the moment, most of the major decisions that needs to be taken haven’t yet been taken by the Iraqi government. If you look at life in Iraq, inflation is 70%, unemployment is 50%, about 3,000-3,500 Iraqis over recent months have been killed every single month.

    ANDREW MARR:

    Was it worth it?

    SIR JOHN MAJOR:

    That doesn’t look to me like a stable situation as a result of policy over the last few years. I don’t think this is going to be looked back on with any pride by the policymakers. I think the Army were given an impossible job which they did as well as it could have been done, but it was almost impossible and the outcome is bleak.

    ANDREW MARR:

    For now, John Major, thank you very much indeed.

  • Mr Major’s Speech to the Bow Group – 23 February 2005

    The text of John Major’s speech at the annual Bow Group lecture, made on 23rd February 2005. The speech was entitled – The Conservative Economic Inheritance – An Examination of Reality.

    JOHN MAJOR:

    The economy is central to politics: now is a good time to look beyond the soundbites and separate fact from fiction.

    First, some background.

    By the late 1970s, our economy was a basket case. Inflation and industrial unrest had dragged us down. We were “The sick man of Europe”.
    In the 1980s, market reforms turned us once again into a competitive nation.

    In the 1990s, inflation was – finally – tamed.

    The 1970s were Labour years.

    The 1980s and 1990s were Conservative years during which the Labour contribution was to oppose the Government’s policy.

    There is a tendency to take the present Chancellor of the Exchequer at his word. A small vignette suggests this can be a mistake.

    On his first weekend as Chancellor, Gordon Brown was given a presentation on the economy. “The figures are fantastic”, he was told by officials at the Treasury, “much better than predicted”.

    “What am I supposed to do”, asked the Chancellor, “write a thank you letter?”. I use the neutral word “asked”: yet, in his biography of the Chancellor, Tom Bower’s use of “snarled” gives a more vivid picture of the exchange.

    That same weekend, the Chancellor’s spin doctor was despatched to brief the media that “errors” and “black holes” had been discovered, all of which “threatened a nightmare”.

    The spinner of this little fib was Charlie Whelan, the Chancellor’s “Man in the Red Lion Pub”, whom you may recall as Alastair Campbell without the charm.

    It was – of course – untrue. He knew it to be untrue. We all now know that it was untrue: none of these “nightmares” emerged. It was pure scene setting. Brown’s intention was to create a climate in which he – and he alone – could claim credit for the economic conditions he had inherited. It also had the secondary purpose of laying the groundwork for future tax rises to be blamed on his predecessors.

    So – what do the figures tell us?

    They are very clear.

    The economy began growing in the First Quarter of 1992.

    By 1997, there had been five years of progressive growth every Quarter.

    During that five year period:

    – interest rates were more than halved – to 6%;
    – inflation fell to 2.6%;
    – unemployment had been falling monthly since 1993;
    – fiscal deficit was narrowing and moving towards surplus.

    Moreover, despite the outcry over alleged punitive Tory tax rises between 1990/97, the facts are striking.

    In 1990/91, tax as a percentage of GDP – the accepted measure – was 35.9%.

    In 1997/8, it was 36%. The net increase over 7 years was 0.1%.

    As Treasury officials had told the incoming Chancellor – the figures were “fantastic” and better than those left by any previous Government.

    Indeed – as corroborative evidence – even as the new Chancellor denounced the Conservatives, he offered tacit admission of our legacy by sticking rigidly to our own expenditure plans – an unprecedented act of homage.

    Economic conditions unwind over a long period. Neither good nor bad policy reveals itself immediately – only in slower time can it be judged.

    When Gordon Brown boasts of the record length of continual growth he is right – he just fails to mention it began in 1992 and that the first half was during the years of Conservative Government. He offers no glimpse that it was created by those Conservatives who tamed the late 1980s boom, bore the pain of squeezing inflation out of the system, and who instigated inflation targeting. Norman Lamont and Ken Clarke should take a bow but the Chancellor writes them out of his script.

    What Gordon Brown writes into his script is the charge that the Conservatives were responsible for “boom and bust”. This is one of those fibs, repeated ad nauseum, until it is so fixed in the public mind it becomes the accepted truth. It is a rewriting of history. In fact, before 1990, all Parties could have had that charge levelled at them: “stop-go” had bedevilled our economy for decades. But, in the early 1990s, it was a Conservative Government that put an end to boom and bust: and it has not returned since.

    But not everything has rolled on unchanged.

    Since 1997, the economy has continued to grow, but taxes have grown far faster. Using the same measure for calculating tax rises as in the Conservative years – the ratio of taxes to GDP – we see taxes have risen from 36% of GDP to 37.1%. This is eleven times as fast. Moreover, Treasury estimates suggest a yet faster rate of increase of taxes in the next Parliament. The IFS, IMF, NIESR, CBI, BCC, and the OECD all concur that taxes must rise because this time, Charlie Whelan’s fictional “black hole” in the current account is real.

    Income tax rates have not risen – they are too visible, too politically sensitive.

    But the facts are as follows:
    – 7½ million taxpayers have been dragged into a higher marginal rate of
    tax by under-indexing thresholds;
    – National Insurance has gone up for Employers, Employees and the Self-employed; the earnings limit has also been abolished, despite the Prime Minister’s categorical assurance it would not do so;
    – Tax allowances – such as those for married couples, have been abolished.
    – Stamp duty tax on house purchases rise – again and again and again;
    – Mortgage Interest tax relief has been abolished;
    – The Council Tax payer has seen bills soar – far beyond inflation.
    – Fuel tax and Vehicle Excise Duty rise repeatedly.

    New and imaginative taxes have been invented, including a tax of £5 billion every year on Pensions creating a crisis that is continuing. The sum total lost to Pensions now exceeds £40 billion. As a result, many pensioners may have to retire later or live on less than they had anticipated.

    The Chancellor was given specific warnings about this – from many quarters: even the Prime Minister knew it was foolish but allowed himself to be overruled by the Chancellor. This folly – which will affect pensioners way beyond this Government’s term in Office – was wholly avoidable.

    Thus far, the cumulative total of tax rises is 66 – despite a growing economy yielding more revenue for the Exchequer without any additional rises whatsoever. Gordon Brown has out-taxed all his predecessors – and every commentator predicts more to come if Labour win the next election.

    Perhaps a more vivid indication of the scale of those rises is this: if they had all gone on to the standard rate of tax, rather than to every nook and cranny of our lives, the basic rate of tax would have risen to 39p in the Pound.

    The market reforms of the 1980s and the death of inflation in the 1990s created the robust and growing economy Gordon Brown inherited.

    But, although there may be a time-lag, tax rises on this scale are bound to have an effect:

    (i) The growth in our productivity has collapsed by one-third since 1997. There is still growth, but far less than in 1997.
    (ii) Private (non-residential) Investment has fallen to 1.1% per annum over recent years – one-tenth of the 11.2% in the mid-90s.
    (iii) We now have the largest Trade Deficit for over 300 years. The Chancellor hopes export growth will correct this but all the signs are that it is set to widen further as our share of world exports is falling.
    (iv) As a competitive Nation, we have dropped from 4th in 1998 to 12th in 2001, and 15th in 2003.
    (v) Household debt is soaring and savings are falling. Under Gordon Brown, the savings ratio has never been above 6.7%; between 1991/7 it was never below 9.3%. This is not a semantic statistic: it means people are becoming very vulnerable to unexpected economic shocks. Live today – and pay tomorrow – is a risky notion if taken too far.

    I could go on – but the central point is simple: slowly, the strong economic position that Labour inherited in 1997 is deteriorating.

    It has not gone – yet. But it is getting worse.

    We will hear none of this from the Chancellor.

    He will talk of success – not tax rises.

    He will talk of growth – not loss of productivity and competitiveness.

    He will talk of enterprise – not the regulatory mountain that now engulfs business and costs them £30 billion.

    So – when we hear exaggerated claims from the Chancellor – a little caution in accepting them would be well justified.

  • Mr Major’s Speech at the Annual Barnett Lecture – 17 November 2003

    The text of John Major’s speech at the annual Barnett Lecture, held at Toynbee Hall in London on Monday 17th November 2003.

    JOHN MAJOR:

    My theme tonight is change.

    We now live in a world without economic boundaries: crumbling for years they were finally smashed by technology.

    As the global economy has taken root, the command economy has taken flight.

    This economic wind is changing even the role of Government itself. Governments can wreck economies with bad policies, they can help build them up: but more than ever before the true engine of growth is private endeavour.

    As the unfettered power of Government diminishes, the power of markets increase. And technology has ensured that markets never sleep. We are now into a continuing revolution that will not settle down into a comfortable pattern: it will accelerate and grow.

    Much has changed in the last 15 years. Not only is the global economy a reality but one super power, the Soviet Union – for so long the glue that kept the West together – is no more. China has emerged from its chrysalis. World demand is tilting towards Asia and the economic challenges are more testing than even a decade ago.

    During much of the 1990’s the world enjoyed substantial growth with rising investment and low inflation but in the last few years, we have seen the flipside of that boom. None of the economic motors has been driving the world towards growth.

    There are bright spots. In the US, the economy is about to grow rapidly.

    Japan is showing renewed signs of economic life, even though her days of massive external investment are gone. Her potential is still huge, although, for the moment, she is merely limping towards recovery.

    China is a different case. She is enjoying rapid growth helped by massive inward investment and an inexhaustible supply of cheap labour. But China’s growth comes with a warning: so cost effective have they become that there is a risk that they will export price deflation.

    The political structure of the world is changing no less rapidly.

    When the Soviet Union collapsed we all rejoiced that the world was safer. It was: the threat of nuclear exchange between superpowers had fallen. But – in politics – the laws of unintended consequences can be harsh. What we did not realise was that this global security came at a price: it unleashed far greater regional instability.

    For example, if the Soviet Union had not collapsed – and Tito had not died – would we have had the bitter civil wars in Bosnia and Kosovo. Probably not.

    Other consequences were more benevolent. Freed from Soviet control Eastern and Central Europe re-embraced democracy and much of it will soon swell the free market of the EU which – within a few years – will stretch from Ireland in the West to the very borders of Russia herself.

    For the moment, there is but one super-power – the US. America is the most powerful political, economic and military nation in the world: no-one can rival her. But, for America, this is not an undiluted benefit: it brings obligations as well as rights. Problems as well as opportunities.

    History is instructive here. When Britain had an Empire, we were widely detested. Hundreds of millions resented our power and envied our wealth. Even as they paid polite lip service to our face, they rejoiced if we were defeated or embarrassed.

    Today, that envy, that resentment, is directed against wealthy nations more generally – and especially against America and Britain, her closest ally. It will take wise and generous policy to turn that tide of opinion.

    It is easy to rail against the mighty – and we may see much of that in London this week – and often a proper sense of perspective is lost. I strongly support the right of people to protect against policies of which they disapprove. But let them remember. America is our closest economic and political ally: without her might at a time of peril, we might not enjoy the right to protest at all.

    In the post Soviet world, two military-political problems loom large: the threat of terrorism and the instability of the Middle East.

    The war in Iraq was very controversial – but no-one should weep for Saddam Hussein and his regime.

    They divided Iraq with terror and left fear, suspicion and hatred behind them. A once rich land became poor. Hundreds of thousands of Iraqis – mainly Shia – were murdered and ten times that number persecuted and driven from their homes.

    The aim of the coalition must be to bring stability to Iraq.

    This will not be easy. Ancient feuds run deep and each day terrorist attacks seek to make a difficult task – impossible.

    There are three main risks:

    (i) losing the tacit support of the Shia tribe;
    (ii) open conflict with Iran; or
    (iii) getting bogged down.

    All are possible.

    Yet, having invaded Iraq, we cannot turn our backs on it. We must aim to leave behind a free nation with a stable government. No-one should suppose this will be easy. It will not. It will be costly in cash and costly in troop deployment. If we cannot find the troops now, I fear we will need them later.

    But – and here is the conundrum – if it is later it may be longer before the security situation improves; longer before an Iraqi Government can be in place, and longer before we can leave Iraq. That equation – early troops and early withdrawal – or later troops and later withdrawal, is a harsh reality.

    One growing concern over the last few years – pre-dating the Iraq conflict – has been the growing division between much of the Arab and the non-Arab Moslem world and the Western democracies. A prime cause of this is the lack of progress in the Arab-Israel dispute.

    MIDDLE EAST PEACE PROCESS

    The question is: is a settlement achievable?

    Certainly, both sides need one. Israel needs security and recognition and acceptance by the Arab States: and Palestine needs a future. An active peace process is vital – without one there is a vacuum into which terror and mayhem step too readily. We have seen too much of that in recent years as a low grade war has simmered, always at the risk of becoming a full scale war.

    The outline of a solution has long been clear. And yet, prospects of achieving it have rarely seemed as grim.

    During the last year, hope has been hijacked as attitudes have hardened.

    Israel has faced a spate of suicide bombings that are part of a deliberate strategy. Wicked men have encouraged foolish young men and women to become human bombs in Israel. The carnage has been frightful.

    In a bleak year, over 400 Israelis have been killed. Many thousands more have been injured. For the third year running the economy has contracted, leaving unemployment at 10% – the highest the State of Israel has ever known.

    And Israelis notice that the Palestinians do not regret the violence of the Intafada.

    It has been bleak for the Palestinians too.

    They have seen:

    – their society fragmented and collapsing;
    – their economy all but destroyed;
    – malnutrition in Gaza rising to a par with the Congo;
    – 30% of Palestinians living on food handouts;
    – 60% living on two dollars a day;
    – and 87% of Palestinian families having one or more family members suffering from psychological difficulties.

    And Palestinians notice that Israel is unrepentant about occupying Palestinian areas.

    Out of that mutual despair, is there any scope for optimism?

    The essentials of this conflict have been unchanging for a long time. There is no new proposal for peace that will suddenly be seized on by all sides. The biggest change needed is one of attitude.

    No-one should expect trust to spring forth from suspicion. It will not be easy to wring out the compromises that both Israel and the Palestinians must make.

    PM Sharon has spoken recently of “painful concessions”; “a Palestinian State”; and “no military solution”. What this implies is unclear – and must necessarily be so – but it must involve compromise on settlements and the line of route of any partition wall.

    A reality check tells us also that the exercise of American power and American diplomacy is crucial to progress for history suggests it is unlikely that a purely bilateral deal can be done – especially now for the Palestinians are in disarray and there is no clear authority in Ramallah.

    A solution to Iraq may change the whole face of the Middle East but a solution to the Arab-Israel conflict would assuredly do so.

    TERRORISM

    This week there is unprecedented security in London. The fear is terrorism. Over many years terrorism has grown bolder and more deadly.

    On 9/11 it over-reached itself and led democracy to declare War on Terror.

    This cannot be a short-term war. It will not be won in this Presidency. Or the next. Or the one after that.

    Terrorism isn’t a nation.

    Terrorism is Al-Qaeda; Hezbollah, ETA, IRA, Hamas, Tamil Tigers, Kashmiri and Punjabi Separatists; … the list goes on. Groups that are secretive, diverse, with their money hidden as effectively as their men and weapons.

    In the mind of the terrorist, no-one, nowhere is immune: not New York, not Baghdad, not London nor even – you may remember – Warrington, where a few years ago – on a sunny Easter Saturday morning I shall never forget – two young boys aged 12 and 3 left home to buy Easter eggs for their family. They never returned: their tiny bodies caught in the eye of an IRA blast.

    The question is: is such a war winnable at all? With one proviso the answer is yes. The proviso is this: we are unlikely to eliminate terrorism entirely because as terrorist groups are beaten back they are likely to splinter into smaller, more radical groups, with more extreme agendas.

    But what we can do is cut back their threat, and lower their potency to a wholly different level.

    To do this, we need international co-operation: especially from countries within whose borders the terrorists take shelter.

    Many of these are Moslem which is a further reason why we need to improve our relationship with them.

    But we need to hurt the terrorists in another way too.

    We need to cut off the flow of their support and, to do that, we need democracy to tackle the grievances that act as the Recruiting Sergeants for militancy.

    These go beyond Iraq and the Arab-Israel dispute.

    We should never lose sight of the political, social and economic long-term problems which will beset us if the rich developed nations continue to get richer and the undeveloped nations fall further behind.

    In some parts of the world, corruption, poverty and the growing epidemic of AIDS condemn untold millions to a life of misery and hardship.

    Some may say – well, it’s their problem. Bad Government, bad economic decisions, bad judgements made this problem. Maybe, but we have to live with the resentment, bitterness and political hostility this causes amongst those outside the circle of prosperity.

    Self-interest joins with common humanity to suggest we should help. If we are right to wage war on terror – and we are – then it is right to wage war on poverty and hardship as well.

    In helping others, we will help ourselves. In removing grievances we cut away the resentment of the “have nots” for the “haves”.

    In the 1940s/50s, the US launched a Plan to deliver Aid and rescue Europe from the devastation of wars. It was, Winston Churchill said, “the most un-sordid act in history.”

    In a world of growing global security – and wealth at a level undreamed of by earlier generations – the developed nations together would be wise to consider another such un-sordid act.

    It will come – for it cannot be ignored. The question is when?

    Too late – and much unnecessary suffering will have been endured. Too late – and there will be little political gain for grudging and delayed humanity.

    But act early, act now, act out of conscience – and not only will we foreclose on misery and hardship to come but we will under-cut the breeding grounds of terror that, at present, are such a threat to our security and our prosperity.

    Let me say a word about domestic politics.

    We are at an immensely fluid time at present.

    The old verities can no longer be relied upon. Every child is no longer – as W S Gilbert wrote – a little liberal or a little Conservative. Or even a little supporter of old or new Labour.

    For generations our politics was largely based on a familiar combination of class, of background and an affiliation to one of the competing philosophies of socialism or the free market. For those political non-conformists who wished to plague both the main political houses, the Liberal Party offered themselves as a safe haven.

    All that is going. The old politics is dying.

    Today’s voters are less interested in ideology and more fluid in voting intention. They are bored with the old arguments and the familiar jibes. They are also puzzled because nothing is clear-cut any more.

    This leads to the widespread (but mistaken) view that “they’re all the same” and “nothing makes any difference”. The result is a General Election with a turnout of under 60%: in which the “don’t knows” and the “won’t votes” score more highly than the winning Party.”

    No-one should dismiss this turnout in 2001 as a “blip”, brought about solely because one Party was unappealing and another not yet seen to be ready for Government. The malaise is deeper and needs to be remedied.

    An underlying problem is that the Commons has been losing status for some years. Some of this is inevitable. Some of the powers it had have been lost to the impact of the global economy. The world has changed and vital decisions must often be reached in wider fora: in the G7, the UN or – most likely – the EU. The Commons has also actively surrendered decision-making making internally to the Scottish Parliament, the Welsh Assembly, the Mayor of London, the Northern Ireland Assembly and – very possibly – a wide range of Regional Assemblies as well. Its decisions, therefore, are often less relevant to more people.

    To balance this, the Commons must look seriously at reform: and by reform I do not mean the pale-pink changes that have been made to “modernise” it. Many of these are for the convenience of MPs and I have no intrinsic objection to that: but they are irrelevant to the need for Parliament to re-assert its authority over the Executive and improve its capacity to influence long-term decisions.

    Our present and future Governments, face complex problems – the consequences of an ever more elderly population – especially upon Pension policy; the need for far higher education standards than we have been able to deliver; – the list is endless.

    None of them are easy.

    None can speedily be remedied. None benefit from the ‘yah-boo’ exchanges that so dismay the political onlooker or the character assassination that has swept into fashion.

    All need a strong, virile Parliament and not a powder-puff legislature dancing to the party games of yore. If the institution declines; if respect is lost for that; if politics is seen as a game not as an essential bulwark of our constitution and our liberties, then we are in serious trouble.

    My theme tonight has been one of change: let me try and bring it together.

    CHANGING WORLD

    In a world of bewildering change, the speed of medical advance is staggering and the demand for medical services is infinite. It will grow: the mapping of the human genome system will lead to an explosion of demand for preventative care and, where this is provided, to an increase in life expectancy. It will be common place for today’s children to live beyond 90 years of age. What changes may they see?

    As so often, the past may give us an idea of the scale of change in the future.

    Last year, I attended the funeral of Her Majesty the Queen Mother and, as I sat in Westminster Abbey I pondered upon the remarkable advances the world has seen during the 100 years of her life.

    At her birth, no-one knew of blood groups, of hormones, of barbiturates. Primitive typewriters, vacuum cleaners and household detergents still lay in the future. Marie Curie had not discovered radium; nor had Einstein perfected his Theory of Relativity. As a child, she would have remembered the amazement – possibly even disbelief – at the news of Count Zeppelin designing a machine that would fly. It would be twenty-five years before Lindburgh would pilot the “Spirit of St Louis” to Paris. Consider what has happened, within the period of that one very long life:

    In 1900, the Europeans were dominant.

    The United Kingdom, France and Russia controlled 80% of the world’s surface. Only Siam had never been governed by the Europeans.

    Even the United States was still a debtor nation, financed largely by the City of London.

    How things have changed.

    The Ottoman Empire has gone.

    The Austro-Hungarian Empire has gone.

    The French Empire has gone.

    The British Empire has gone.

    The Russian Empire has come – and gone.

    The US is now the most powerful nation in the world with China – after 3,000 years of isolation – on course to become her greatest rival. Europe is building unity on the back of 1,000 years of war and establishing a free trade area from Ireland in the West to the very borders of Russia in the East.

    Children born today will see the conquest of the stars.

    They will live longer, see more, do more, know more than any earlier generation.

    They will see the deserts bloom.

    See a genetic rebuilding of failing bodies.

    Live with technical innovations beyond our present imagination.

    It will be a world unrecognisable to their forebears.

    CONCLUSION

    Against the enormous changes that are taking place, we need a longer term approach to policy and an end to the travesty of “sound-bite politics”.

    Soundbite is quite simply a fraud: falsely promises an easy solution to a complex problem. Easy – no problem. Problem – not solved by soundbite.

    The events of 9/11 are giving us a masterclass in consequences. We need politics that confronts the uncomfortable. Politics that rises above the short-term and the soundbite; politics that is long-term; politics that knows it no longer controls all the pieces on the chequerboard; politics that adopts common ideals and rejects common abuse; politics that is directed to issues and not to personalities.

    I will read you a poem you may know and I learned as a child:

    For the want of a nail the shoe was lost.

    For the want of a shoe the horse was lost.

    For the want of a horse the rider was lost.

    For the want of a rider the message was lost.

    For the want of a message the battle was lost.

    For the want of a battle the war was lost.

    For the want of a war the kingdom was lost.

    And all for the want of a horseshoe nail.

    Benjamin Franklin, 1758

    It is the classic illustration of how a chain of events can be triggered by one single incident.

    If it was true in the world of 18th century – it is even more true in the hectic global world of 21st century.

    This world is competitive. Complex. Confusing. And always changing. This is our world, and we would be wise to reflect with care upon how it is and plan for how it could be – for the possibilities are infinite and constrained only by our imagination and our endeavour.

  • Mr Major’s Commons Speech on the 2001 Budget Resolutions Debate – 12 March 2001

    The text of Mr Major’s Commons speech on the 2001 Budget Resolutions Debate, made on the 12th March 2001. This was Mr Major’s last speech in the House of Commons.

    MR JOHN MAJOR:

    Mr Major: “Education, education, education” was originally a cry from Lenin, who did not mean it. I suspect that the Secretary of State, who has just left, does mean it. He is sincere and, in his unavoidable absence, I should like to congratulate him on graciously adopting some of the: proposals of my hon. Friend the Member for Maidenhead (Mrs. May), who is shadow Secretary of State. That behaviour is as welcome as it is unusual, and I hope that future Governments of both complexions will be inclined to follow that particularly good example.

    Turning to the Budget as a whole, I am pleased that the Chancellor has cut taxes and given back to taxpayers a small proportion of the money that he has extracted from them in the past four years. His generosity is not surprising: notwithstanding the problems of foot and mouth, a general election is pending and the public accounts show ample scope for tax reductions and, perhaps, modest expenditure increases. Yet, only a few weeks ago, when the Opposition said that, they were condemned as “irresponsible” by spokesmen from the Treasury and elsewhere. We now see how shallow those attacks were, for if the Opposition were irresponsible, why has the most prudent of Chancellors done what they recommended? In truth, my right hon. and hon. Friends were right to identify the scope for tax reduction. Not only were they right but, if the economy stays on course, there may be scope for even more tax cuts in future.

    A principal reason for that remarkable leeway is the sheer size of tax increases over the past four years. We must disentangle fact from fiction. Prior to the Budget, there had been 26 increases in personal taxation and 19 increases in taxes on business in this Parliament. That number has risen slightly although, given the Chancellor’s remarkable gift for sleight of hand, one must study the small print carefully to find out precisely how many tax increases there are. However, their sum total is enormous. The abolition of tax credits on dividends alone will cost shareholders about £6 billion in the current tax year. The reorganisation of advance corporation tax at the beginning of this Parliament has affected the quality of pension funds for millions of elderly people and cost those funds more than £5 billion during the course of this Parliament; it will do continuing damage until it is changed.

    Even after offsetting tax reductions – of which there have been some, mostly minor, examples – the Inland Revenue’s overall tax yield has risen by an astonishing one third during this Parliament. No wonder the savings ratio has fallen so badly. That is not a wicked Tory calculation; an independent survey shows the average family to be worse off than it was in 1996. The old tax-until-the pips-squeak bruiser Lord Healey must be salivating enviously at the extent of the tax rises forced through by the Chancellor.

    More people have been dragged into tax. An extra 2 million now pay tax; 28 million pay it, compared with 26 million three years ago.

    Mr. Mackinlay That is just nonsense. What about unemployment?

    Mr. Major If it is nonsense, it is Red Book nonsense. Those figures come from the Red Book. Before the hon. Gentleman mutters into his non-existent beard, he should read the Red Book and check. It is possible that the Chancellor has given us more duff facts; we are used to that. However, if they are duff, that is his responsibility, not mine.

    There are 2 million more taxpayers and 700,000 more higher-rate taxpayers than there were four years ago. In addition, mortgage interest relief at source has been scrapped, although I do not object to that particularly. However, not only has MIRAS been scrapped, but stamp duty on home purchase has been increased and national insurance contributions for middle-income earners have risen sharply. So much – on the eve of the next general election – for the promises that the Labour party made to middle England and middle-income groups throughout the United Kingdom on the eve of the last one. Those groups may also care to note that the yield from inheritance tax has soared 50 per cent. during this Parliament. The Chancellor still has no concept – I genuinely believe that he does not understand its value–of letting more of the fruits of a lifetime of work filter down to the people whom the earner most cares about: his own family and the next generation.

    It is no wonder, with such tax increases, that the ratio of tax to gross domestic product has risen 2.5 per cent. to 37.7 per cent. The Chancellor, despite all his promises, has not so much wooed middle England as assaulted it.

    Mr. Geraint Davies Does the right hon. Gentleman know that, taking tax and borrowing together as a share of GDP – given that borrowing is deferred taxation – the figure went down two points from 38.2 per cent. in 1996–97 to 36.2 per cent. in 1999–2000, and down to 34.1 per cent. in the current year? The current figure is due to the spectrum auction of mobile phone wavelengths, but for the previous period, those two points represent the equivalent of an increase of 7.3p in income tax. In other words, the right hon. Gentleman simply borrowed instead of taxing, and tried to fiddle the figures.

    Mr. Major The hon. Gentleman ought to know that his Chancellor changed the way in which the figures are quoted in the Red Book, and the actual equivalent of what he has done is an extra 10p on tax The hon. Gentleman may care to examine that matter. [Interruption.] If it is nonsense, it is the Government’s nonsense in the Government’s own figures. Those are the figures that I am using. I am glad to hear from Labour Members that they do not believe them.

    It is ironic that the Government and the Chancellor have increased taxes so much. During the last Parliament, I remember vividly the present Chancellor and his colleagues, ever ready to find a catchy slogan, repeating the slander of 22 Tory tax rises, with no acknowledgement whatever of any offsetting tax reductions. To call their attacks disingenuous would be kind. They were patently untrue, and a forerunner of the manipulation of facts that has characterised so much – not all, but so much – of what the Government have said and done in the past four years.

    The Government cannot deny that, because the figures for tax increases are now clear. The statistics cast light where the slogans cast deception. Before this Budget, the real increase in taxes over this Parliament was about 4.5 per cent. a year. Obviously, that figure is now a tiny bit lower, but not all that much. That compares with 1.8 per cent. between 1979 and 1997. I am indebted to the Institute for Fiscal Studies for pointing out that there were tax rises of 2 per cent. a year between 1979 and 1990, and of 1.3 per cent. between 1990 and 1997.

    So much for the 22 Tory tax rises, or, indeed, the unsustainable proposition – unsustainable except by malice – that the previous Government wrecked the Tory tradition of low taxation. Some of my right hon. and hon. Friends who rather timidly accepted that fiction in the early part of this Parliament can now feel comforted that it was not true and refute it. They need not concede, but may safely move on and reassert our traditional tax credentials. Taxes were not unduly increased, despite the pressures of a recession that began in the 1980s and cast its shadow into the 1990s – although not, from the point of view of the health of the economy, much beyond 1992.

    The Chancellor is ever ready to gloss over the excellent parts of his inheritance. He cherry-picks the bits on which he can make party political capital, and I do not blame him for that: most politicians do. However, he misses other bits. He is, after all, a very political Chancellor who wishes to be Prime Minister, and he is doing a bit of image building.

    We need more facts and less of the fiction that we so often hear. The economy has been growing steadily since 1992, before – some hon. Members may not wish to hear this next point – sterling left the exchange rate mechanism. Unemployment has also been falling since that economic recovery began, and the very welcome job growth across the country – in both the number and the variety of jobs – has been consistent throughout the previous Parliament and this one. Inflation, too, began to decline in the early 1990s and has remained low. It looks set to fluctuate only within historically narrow parameters.

    Mr. Mackinlay The Chancellor has been skilled, but I put that in perspective. Other factors have contributed, such as the ebb and flow of the economy, and I accept, to an extent, that employment growth was under way during the right hon. Gentleman’s stewardship. I have intervened only because of his breathtaking assertion that people are somehow worse off than in 1996, which defies both belief and the litmus test of what one sees and feels. There was extensive unemployment, particularly among poor and unskilled people, during the period to which he refers, and although I do not apportion credit or blame in respect of employment, people are now in jobs. Demonstrably, they are better off.

    Mr. Major Demonstrably, the people in jobs are better off. That is undeniably so, but I was referring to the scale of tax increases. If the hon. Gentleman reads some of the independent research, he will see precisely why I made that comment.

    As it happens, I was about to give credit to the Chancellor. The economy is in good shape and he can take a great deal of satisfaction from that. I shall not be mealy-mouthed: he can take a good bit of credit for it as well. Were he to be similarly candid, he too would offer credit to his predecessors, because he has built on what they did and on a trend that was established five years before he went to the Exchequer.

    For example, some hon. Members, but perhaps not all, believe that an economic miracle began on 2 May 1997. Let us take a date at random – 1 May 1997. Growth was set to be 3.5 per cent. for the next year. Inflation was 2.6 per cent. and stable. Unemployment was falling rapidly and, although still high, was down to just over 1.5 million. The fiscal deficit was falling sharply – a point that the Chancellor invariably overlooks because it embarrasses his campaign to discredit his predecessors. The trend of a falling fiscal deficit was clear, and it was falling sharply. The right hon. Gentleman can take credit for not wrecking the trend, but he cannot take credit for beginning it, for it preceded him by four years.

    I thoroughly welcome the fact that economic management has reached a maturity whereby the two major parties do not feel it necessary to reverse all the actions of their predecessor. That is beneficial to the British economy, and it will remain so for as long as that is the case. I may be wrong, but I think that the Chancellor took that too far in his first two years by adopting the previous Government’s expenditure plans in toto. I can tell the House, and I hope that it is not a great shock, that we certainly would not have done that. We would have increased them in the two public expenditure rounds that followed, as we had in every public expenditure round since 1979.

    Stakhanovite is one word; masochistic is another, which might perhaps describe more plainly the Chancellor’s disposition. He has been an economic masochist over public spending. We hear a huge amount about public spending, and the Secretary of State for Education and Employment was at it as well this afternoon, but despite the hype about the unprecedented sums for health and education, the fact is that the Chancellor has raised taxes by far more than he has increased expenditure. The public have not noticed because one skill that the right hon. Gentleman has perfected is that of counting, and that includes the capacity to double count, overcount and miscount, which he has done repeatedly.

    Again, I am indebted to the Institute for Fiscal Studies: total Government spending in this Parliament has risen at 1.2 per cent. a year in real terms. That is not only less than tax increases, but less than economic growth. It compares with public spending of 2.6 per cent. in the previous Parliament, which is a point that Liberal spokesmen have often made, although they are not often nice about the Conservative party. I am glad to see a nod of agreement, rather than a shake of the head, from the hon. Member for Sheffield, Hallam (Mr. Allan), because that is undoubtedly the case.

    I concede that much of that expenditure was not discretionary: it resulted from the unavoidable impact of the recession. However, it puts in a better context that hoary old myth about Tory cuts, which the Prime Minister is trying to recycle with his current spate of posters about potential future Tory cuts. Either he is ill-informed or scaremongering – probably the latter.

    The Government’s publicity on cuts is familiar: it is an echo from the past. It was an odd experience in the last Parliament to be taunted by the Labour party over so-called cuts while hostile monetarists attacked us for spending far too much money.

    Mr. Willis Nothing has changed.

    Mr. Major The Rt Hon. Gentleman may be right. The health of the economy in 1997 and subsequently suggests that we may have got that balance about right.

    During this Parliament, the Chancellor has benefited from the supply side reforms of the 1980s and the disinflation brought about by the policies of the 1990s. When he chants his mantra of boom and bust – I lost count of the number of times that he and the Prime Minister uttered such drivel last week – he should remember that the last unsustainable boom was well over a decade ago. That has not stopped the Prime Minister depicting my right hon. Friend the Leader of the Opposition and my right hon. Friend the shadow Chancellor as Mr. Boom and Mr. Bust. [Interruption.] The Financial Secretary to the Treasury sniggers, but that is the politics of sneer and jeer. Neither of my right hon. Friends were policy makers at the time of the last boom, and one of them had barely been in the House of Commons.

    There is a boom and bust today: a boom in tax raising and a bust in the competitiveness of manufacturing industry. Perhaps the Chancellor and the Prime Minister should concentrate on that boom and bust.

    Mr. Geraint Davies Will the right hon. Gentleman give way?

    Mr. Major I shall make a little progress, if the hon. Gentleman does not mind.

    The Chancellor of the Exchequer is a redistributive Chancellor. He tries to hide that fact, but it is evident, and from his perspective he should not hide it. He aims to redistribute to the less well-off, but in general he redistributes to the Inland Revenue. Even his well-intentioned schemes are not wholly successful. I do not disagree with all of them. Bits of what the Chancellor has done have been good social justice, and if I had been in government with the economy that he now has, I would certainly have taken some of the measures that he has taken, and I am not remotely shy about saying so. However, some of those schemes have not been successful.

    The Chancellor abolished the married couples allowance last year, and this year – after a helpful 12-month gap for the Treasury and the Inland Revenue – he has introduced a children’s tax credit to replace it. However, many people will not receive that credit, because it is means-tested and millions will lose either some or all of it on the means-tested taper.

    The organisation of that tax credit is a shambles. As it is based on the highest-earning member of the household, it throws up huge and unacceptable anomalies. If one parent works and earns £42,000 a year, no payment of the child tax credit is made, whereas if both parents are at work, with no one at home with the child, and earn £35,000 each, the full credit is payable. As a means of social justice, attacking poverty and helping low-income families with children, this scheme is nonsense on stilts. If the Chancellor were serious, he would have examined those problems and sought to correct them before introducing the tax credit in its present form.

    The minimum income guarantee is the Chancellor’s safety net against poverty, but it is so complex that more than one third of eligible pensioners do not claim it. The form is so complex and absurd that a large percentage of graduates might not claim it.

    The 10p band extension is right in principle. I do not disapprove of minimising tax on lower income groups. However, the proposal is so niggardly and mean as to be almost pointless. The maximum gain from the Chancellor’s measures in the Budget is 75p a week – that figure should strike a chord with Labour Members. Given pensioners’ response to that amount previously, surely he should have done it differently.

    Many of the main effects of all economic management, by every Chancellor of the Exchequer, become apparent some years after the announcement of the original tax and spending decisions. This Chancellor was lucky. He was lucky in his predecessors – lucky, notably, that my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) and my right hon. and noble Friend Lord Lamont made the painful and unpopular decisions that contributed so much to the subsequent benign situation of which the present Chancellor has made such use in this Parliament. And – unless my memory is failing – I seem to recall that they made those decisions in the teeth of unrelenting opposition, not least from the present Chancellor and the Prime Minister.

    I will not be in the House to see the Chancellor’s legacy at first hand, but much of it is now predetermined. He inherited an economy of falling unemployment and low inflation, and he has maintained it. That was well done; but under his stewardship also, taxes have risen too much. The tax system has become far more complex. Manufacturing industry has declined further. Regulations have soared. Increases in business taxes are undermining competitiveness, and so in due course will the social charter, whose economic folly is not yet fully apparent but will become so. It is, in truth, a mixed record – some good, some bad – for this luckiest and most fortunate of modern Chancellors of the Exchequer.

    I cannot be certain, but this may well be the last occasion on which I shall speak in the House. Let me say that it has been a privilege beyond measure to be here, in this mother of Parliaments. I hope that the next generation of hon. Members, whichever of our great parties they may represent, will feel as I did when I first came to the House; I hope that they will feel that way in future, and I hope that we shall be able to end the miserable political climate of spin and counterspin that has grown up in recent years.

    We need to separate fact from fiction, substance from soundbite, information from innuendo. The public – the electorate – the people who sent us here – deserve more than to be spoon-fed a cocktail of headline-grabbing feel-good stories. They deserve the truth, unvarnished sometimes, but the truth, and every Member of this House, whether Minister or Back Bencher, has the obligation – the duty – to provide it.

    Mr. Jim Cunningham (Coventry, South) I hope that that was not the last speech that the right hon. Member for Huntingdon (Mr. Major) will make in the Chamber. We can agree with some of what he says from time to time and disagree with other things he says, but we must all recognise that he has made interesting contributions to the House over the years – and, indeed, ended up being Prime Minister as a result. I hope that we shall hear from him one last time: he may say things that Labour Members do not like sometimes, but that is the nature of politics and the nature of debate.

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

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

    MR JOHN MAJOR:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Several hon. Members rose–

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Mr. Miller: He is not listening.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • Mr Major’s Speech to 1997 Conservative Party Conference – 20 October 1997

    The text of John Major’s speech to the 1997 Conservative Party Conference, held in Blackpool in October 1997.

    JOHN MAJOR:

    Life has changed a little since I last spoke to you at Bournemouth: changed for you and for me. Five months ago, we lost the election. Like you, I wish events had been kinder to us but – on this occasion – it was not to be. So, today, my first task is to thank the British nation for the trust they placed in Conservative governments over 18 years.

    This year they made a different choice and as democrats we respect their decision – but as politicians we must work to change it at the first available opportunity.

    It’s no great secret how I feel about this Party. It’s the Party I grew up with, that fashioned the chances I had in life, that is full of people who share my hopes and values. To everyone who works in our constituencies in good days and bad – I’d like to say ‘thank you.’ ‘Thank you’ on behalf of our Party and ‘thank you’ for all the warmth and support you have always given to Norma and to me.

    On my first day as Prime Minister, I set out an ambition to build a ‘nation at ease with itself.’

    As I look around today, at the growing confidence of our Nation, at the glittering economic prospects, at the rising growth, the strong trading position, the low inflation, the falling unemployment, the low interest rates, the strong pound, the increasing number of young people in higher education, the rising level of savings and record personal well-being, then I sometimes wonder if we did not build better than we knew. If there is a New Britain, we built it.

    So when the Government boasts about the economy – it’s our economy. When they boast of falling unemployment – it’s our fall in unemployment.

    And – now I think about it – isn’t it odd. Those unemployment figures John Prescott said were ‘fiddled’ are now a triumph for New Labour as they march to the New Jerusalem. Or – as it’s probably now called – the People’s new, New Jerusalem.

    Our election defeat was not your defeat. Perhaps it was mine. Perhaps divided views – expressed without restraint – in the Parliamentary Party made our positions impossible. Perhaps it was the weariness of 18 years in government. Perhaps the democratic instinct of our Nation simply sensed it was time for a change. Probably it was some of all of these things.

    Rather than brood over it, we must accept our defeat as gracefully as we can; we should not waste time in pointless recrimination; we should work in the towns and the cities and the villages and begin to build for the future and the next Conservative Government.

    A few moments ago, we heard that you have endorsed William Hague’s election as Leader and the need for reform of the Party by a massive majority in a far larger vote than anyone expected.

    William is right. We need reform – but we don’t need to re-write every policy. Or change our name. Or deny our past. Or betray the philosophy that built us up. But neither can we leave things as they are.

    It’s a simple choice: reform the Party, back William Hague, re-discover the art of working together, fight every seat for every vote – or fight one another and lose elections.

    I know my choice. I’m backing William. I’m backing him because he’s an able man of talent and integrity with a tough job ahead.

    It’s difficult being the leader of a newly defeated Party. For a while, people won’t wish to listen to what we have to say. But that will pass. The tide will turn and – as the local election results are already suggesting – perhaps more speedily than anyone imagines. If anyone is fearful of our future, they should have heard Jane and Munish a few moments ago, for that is the future of the Conservative Party.

    In the meantime, we must use the time wisely. Party reform – yes. But we must also look at the things we left undone or uncompleted. Education reforms; market reforms; how to make better health care available; a fresh look at reviving local government – a big job there; more welfare reform; the people being left behind as prosperity grows.

    We now have the luxury of time to think anew – and we should use it to build up policies that the broad mass of the British people will know are right – and feel comfortable with.

    I propose to give William Hague the unqualified support – in public and in private – that he has a right to expect from his predecessor. If I should disagree with William, I’ll do it in private, not on College Green, not on the media, not in anonymous briefings to the Press that breed suspicion and distrust. And I’m backing reform because never again must we be constitutionally powerless to deal with people whose behaviour is damaging the Party as a whole.

    The Prime Minister said last week this was ‘the giving age.’ Well, he should know. Because we’ve given him a glowing inheritance. Not just the economy – excellent though it is. We gave him the route map to the settlement in Northern Ireland that I long to see. We gave him the ‘opt out’ from a single currency that – now the information is to hand – he should use without delay and say: ‘the economic case is not yet right: we will not be joining in 1999.’ And we gave him a lottery that – even after they’ve raided it – is still helping charities, schools, village clubs, arts and sport at local level on a truly massive scale.

    It’s good to give. And we should remind people what we gave.

    I’m confident about our future: ignore the pessimists – we can beat Labour. Never forget, their swollen majority is made up from far, far fewer votes than we polled in 1992. Our history might have been different if our votes had delivered Labour’s sort of majority in 1992.

    As I end, I’d like to say something else about the Party. Remember what we are.

    Remember that our Party has served its country in government more often and longer and better than any democratic party in the whole history of western politics.

    As we’ve seen, even such a party can be beaten at the polls. But the Conservative family can only be defeated from within.

    At the end of this week, there’s one strong message that I long to hear from this Conference:

    We are the Conservative Party.

    We exist to serve a nation that is Conservative by instinct.

    We will be back.

  • Review of Economy – 2 May 1997

    Below is Mr Major’s account, from his book, John Major – The Autobiography, relating to the status of the economy.

    JOHN MAJOR:

    As I left office the figures told the story of the fall and rise of the economy. On the day I became Prime Minister the tax burden was 36.3%.

    On 1st May 1997 it was 36.6%, which, over the span, puts our tax record in a proper perspective. During my premiership interest rates fell from 14% to 6%; unemployment was at 1.75 million when I took office, and at 1.6 million and falling on my departure; and the government’s annual borrowing rose from £0.5 billion to nearly £46 billion at its peak before falling to £1 billion. The economy was growing by only around 0.5% in 1990, shrinking by 1.5% in 1991 before recovering to grow by 3.5% in 1997. During the depths of the recession I inherited, all the economic indicators worsened, but they had all been corrected by May 1997. Above all, we had broken the inflationary psychology that has so bedevilled our economy. In November, the rate of inflation was 9.7%. In May 1997 it was 2.6%. It was a fine legacy.